Market recap for 28 January 2021

Nifty50: 13,817 ▼ 149 (-1.0%)

 Sensex: 46,874 ▼ 535 (-1.1%)

Continuing the trend from the past few days, the markets displayed weakness from the start and ended about 1% below yesterday’s closing. The day witnessed a decline in 33 of the Nifty50 stocks. 

Among the sectoral indices, the Nifty Bank gained 0.2%. Meanwhile, the Nifty Realty and Nifty IT fell 2.2% and 2.1%, respectively.

Here are the top stories of the day. 

Festive demand boosts Maruti’s Q3

• India’s leading passenger carmaker reported a 13.2% YoY rise in net sales to ₹22,367 crore. The rise in sales could be due to the festive season push, customers’ preference for personal mobility and some early buying in December in the anticipation of a price hike in January.  
• Cost-reduction efforts and higher other income pushed up the net profits, which rose 24.1% to ₹1,941 crore. Despite the strong Q3 performance, the stock witnessed selling pressure and fell 3.4% today.

IDBI Bank emerges strong in Q3

• An 89% YoY decline in bad loan provisions helped the public-sector lender to record net profit of ₹378 crore in Q3. A year ago, the Mumbai-based bank reported losses of ₹5,763 crore.  
• The net interest income increased by 18% to ₹1,810 crore during the same period. The bank’s net NPA stood at 1.9% compared to 5.2% last year, suggesting an improvement in asset quality. In the upcoming Budget, the government is also likely to announce its divestment plans for IDBI Bank, Shares of IDBI closed 1.8% higher today, amid a weak market.

Cosmo Films surges on strong profit growth

• The packaging films maker reported a nearly 75% YoY surge in net profit to ₹63 crore, supported by better operating margins and inventory gains. Net profit rose despite a marginal 1% YoY decline in sales. 
• Investors were upbeat as the company also declared an interim dividend of ₹25 per share, which translates to a dividend yield of 5%. This is the most generous dividend declared by the company in the last 20 years. The stock rose 12.6% today.

Gold demand falls to record lows in 2020

• In 2020, the demand for gold in India dropped 35% YoY to a 25-year low of 446 tonnes, as per the World Gold Council. That said, an over 20% rise in gold prices helped soften the blow, value-wise. 
• The fall in demand was attributed to lockdowns and high prices. However, the scenario improved in the December quarter as the festive period and the upcoming wedding season helped revive demand. Meanwhile, gold prices have been consolidating for the last three weeks.

Closing bell

The Dow Jones fell over 2% yesterday as investors felt that there is over-excitement in the markets. This is especially true given the frenzied buying in certain stocks by retail traders, leading to hedge funds getting squeezed. Taking cues from the US markets, Indian markets were weak today and suffered a fifth consecutive day of decline. The tension over the farm bills is getting prolonged and amid this, net selling by foreign investors (who were largely buyers until recently) over the last few days is being seen as a negative sign. While the market does expect the upcoming budget to be pro-growth, the selling seen over the last few days gives a feeling that much of it is priced in.

Good to know

What is a rights issue?

A rights issue is an invitation to existing investors to purchase more shares of the company. Rights issues are priced lower than stock’s current market price. Investors not wishing to subscribe to the rights issue can sell their rights through the rights entitlement trading platform on the stock exchange or via an off-market transaction.

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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.