Market recap for 9 December 2020

Nifty50 13,529 ▲ 136 (+1.0%)

Sensex 46,103 ▲ 494 (+1.0%)

The markets continued their record-breaking run as the Nifty50 closed above 13,500 for the first time, and the Sensex leapt past 46,000. Markets across the globe too were bullish today. 

Among the sectoral indices, the Nifty Media (+3.7%) and Nifty Bank (+1.4%) indices were top performers. Meanwhile, the Nifty PSU Bank index (-1.0%) fell due to profit booking after a strong rally seen recently. 

Top gainers (Nifty50)

Top losers (Nifty50)

Here are the top stories for the day.

MTNL plans a recharge

• As a part of its revival plan, MTNL could raise ₹2,138 crore using sovereign guarantee bonds. It has already raised ₹4,361 crore this year. 
• MTNL is struggling to hold fort in an extremely competitive market. However, the news boosted the shares by 6.4% with a spike in volumes. The stock is trading at ₹10.75 (near the face value of ₹10).

Media stocks shoot up

• As recently seen in the travel-sector stocks, optimism around the vaccine boosted sentiments towards media stocks today. Capital raising by PVR and Inox in the last few months indicates strong investor faith in the sector. 
• The Nifty Media index (3.0%) was the top gainer amongst the sectoral indices. Shares of PVR (+7.4%), Inox (+5.5%) and Sun TV (+3.5%) were in the green with above-average volumes.

FDI boost for defence

• The government has tweaked the FEMA (India’s forex act) to raise the foreign direct investment (FDI) limit in the defence sector from 49% to 74% via the automatic route. 
• However, the 74% limit is solely for companies seeking new industrial licences. Shares of key defence companies responded positively. Bharat Electronics (+3.3%), Mazagon Docks (+3.9%), HAL (+1.6%) and Bharat Dynamics (+0.5%) saw gains today.

Electricity costs to drop

• At a recent event, Gautam Adani, Chairman of Adani Group, said that India will emerge as the least-expensive producer of renewable energy, thanks to the boom in the segment. 
• Citing the example of the country’s astoundingly low mobile data rates, he said that a mix of solar, wind energy, storage and digitisation could be transformational in reducing the power costs. Meanwhile, the group’s renewable energy company, Adani Green (-1.7%), has been the top performers this year amongst the top 100 stocks in India.

India’s GDP set to zoom in ’21

• As per a report, India could be the fastest-growing Asian economy in 2021. While the GDP in 2020 may be negative, the cyclical recovery could catapult growth in 2021 to 9.9%. 
• The sharp rise in benchmark indices does resonate with the prevailing optimism. However, the government will also need to watch out for risks of rising expenditure leading to fiscal constraints and a spike in inflation. 

Closing bell

The near-relentless rally in the equity markets has been riding on two key tenets: ‘stimulus’ and ‘recovery’. On the one hand, the stimulus programs across the globe are still on track. After Japan, the market expects the US to launch another stimulus soon. Similarly, the Indian Finance Minister has made it clear that stimulus spending won’t be wound down soon. On the other hand, the news of recovery is flowing from almost every sector. Amid this, cautious optimism could be the way forward.

Good to know

What is a Sovereign Guarantee Bond?

Sovereign-guarantee bonds are securities issued by a company (generally a PSU company) with a promise by the government to discharge the liability of the company in the case of a default.

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Investment in securities markets are subject to market risks; please read all the related documents carefully before investing. The securities quoted are exemplary and are not recommendatory. Past performance is not indicative of future results. Details provided in the above newsletter are for educational purposes and should not be construed as investment advice by RKSV group. Investors should consult their investment advisor before making any investment decision.