Market recap for 7 January 2021

Nifty50: 14,137 ▼ -8 (-0.0%)

  Sensex: 48,093 ▼ -80 (-0.1%)

After a gap-up opening, the markets continued to slide down throughout the day and turned negative in the last hour of trading. However, 27 stocks of the Nifty50 closed in the green. 

Among the sectoral indices, Nifty Metal (+3.8%) and Nifty Realty (+1.3%) were the top gainers, whereas Nifty FMCG (-0.8%) and Nifty IT (-0.6%) were the top losers. 

Here are the top stories of the day.

Rising US truck sales help forging companies

• Shares of forging companies such as Bharat Forge (+8.8%) and Ramkrishna Forging (+3.9%) saw strong buying interest today. Orders for heavy trucks in the US grew 165% YoY in December. 
• Rising US truck sales augur well for Indian forging companies, which typically supply chassis components. Bharat Forge and Ramkrishna Forgings derive nearly 60% and 40% revenues from exports, respectively, with a focus on the US market.

IDFC soars on strong loan growth

• Shares of IDFC Bank gained nearly 11% after the bank reported strong growth in its retail loans in Q3. The retail category grew 24% YoY and now constitutes 64% of the bank’s overall funded assets. 
• Customer deposits, too, grew 41%, with retail deposits growing 100% over Q3FY20 (18% over Q2FY21). This has boosted the bank's CASA ratio to 44.6% this quarter versus 36.5% in Q2FY21.

Metals stocks gain on demand outlook

• A recovery in production and a number of price hikes in Q3 suggests improved fortunes for metal companies. Amid rising raw material prices, the street is particularly bullish on integrated metals players, which are also involved in mining coal and iron ore. 
• Tata Steel (+5.2%) not only led the steel stocks but was also the top gainer in the Nifty50. Meanwhile, Jindal Steel (+4.6%), SAIL (+2.3%) and JSW Steel (+0.6%) also closed with gains.

Sobha Ltd rises on optimistic Q3 update

• The Bengaluru-based real estate company achieved its highest-ever quarterly sales in Q3, without any major launch. The company achieved sales of 11.3 lakh sq.ft., an increase of around 6% YoY. It was able to garner an average price realisation of ₹7,830/sq.ft., a rise of 15% YoY. 
• The stock rose 7.8% today supported by an increase in volumes, after rising nearly 86% in Q3.

Closing bell

Today, the Indian markets ignored positive global cues, as IT and banking heavyweights dragged the benchmark indices down. Meanwhile, the Nifty Midcap 100 and Smallcap 100 indices continued to rise and are playing catch-up. While the Nifty50 is about 15% higher than its pre-Covid peak, the Nifty Midcap 100 has just about recovered and the Nifty Smallcap 100 is still about 27% below its 2018 lifetime highs. Tomorrow, IT giant TCS is expected to announce its Q3 results, and the street expects up to 4% constant currency revenue growth.

Good to know

What is the CASA ratio?
CASA ratio (or current account savings account ratio) is the ratio of the deposits in the current and savings accounts of a bank to its total deposits. Banks do not give interest on current account deposits, while the interest on a savings account is usually low. Higher the deposits in these accounts, the lower is the cost of funds. 

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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.