Market recap for 18 February 2021

Nifty50: 15,118 ▼89 (-0.5%)

Sensex: 51,324 ▼ 379 (-0.7%)

The markets opened with a gap-up, but didn’t stay green for long. Selling pressure landed 27 of the Nifty50 stocks in the red and pulled down the benchmark index along with them. 

In the Nifty sectoral indices, upward momentum continued in PSU Bank (+5.6%), which was the top gainer for the third consecutive session. The IT index (+1.3%) was a distant second. Meanwhile, the Financial Services (-1.4%) and Auto (-1.3%) indices ceded the most today.

Here are the top stories of the day. 

Oil and gas stocks jump on GoI’s infra plans

• The government plans to spend around ₹7.5 lakh crore to build oil and gas infrastructure over the next five years to reduce the country’s dependence on imported energy. India imports a massive 85% and 53% of its oil and gas requirements, respectively. 
• The news sent the oil and gas stocks soaring today. Nifty50 constituents like ONGC (+7.5%), Gail (+6.9%) and BPCL (+4.6%) were top gainers. Similarly, gas distribution companies such as Gujarat Gas (+8.4%) and IGL (+4.3%) saw strong buying interest. 

Indiamart gains on QIP news

• Shares of the B2B e-commerce company rose 6.2% after the company announced its qualified institutional placement (QIP) today. The company aims to raise ₹1,100 crore for potential acquisitions or inorganic growth opportunities in the post-Covid times, reposts suggest.  (any purpose given for the funds raised).
• After posting a robust Q3 performance, the stock has risen 17% so far this month.

Hindustan Copper surges on copper rally

• International copper prices have risen nearly 10% this month and are at their highest level since 2012. The rise is driven by tight supply and strong demand. 
• Higher metal prices augur well for vertically integrated producers such as Hindustan Copper, whose activities range from mining to casting of refined copper. Its shares gained 12.2% coupled with high volumes. 

GIC Re hits upper circuit on privatisation buzz

• Shares of the public sector reinsurer was locked in the 20% upper circuit today as news of its possible privatisation spread. According to reports, the finance ministry in consultation with Niti Aayog will decide whether the company will be privatised. 
• The government currently holds 85.78% stake in GIC Re. For Q3, the company had declared a net profit of ₹987.4 crore against a net loss of ₹1,069.6 crore for the same period last fiscal.

Arvind Fashions plans ₹200 crore rights issue

• The apparel major said that its committee of directors has approved a rights issue worth ₹199.8 crore at ₹135 per share, a 17% discount on yesterday’s closing price. The rights entitlement ratio is fixed at 3 shares for 20 held.
• The rights issue comes after its stock nearly halved in 2020. Further, the company reported a net loss of ₹427 crore for the first nine months of FY21. After the announcement of the rights issue, the stock gained 6.5% today.

Closing bell

The PSU theme is quite evident in the market. The BSE PSU index has gained about 25% compared to the 11% gains in the BSE Sensex this month. Even the top six gainers in the Nifty50 pack, today, were all public sector undertakings (PSUs). The privatisation buzz is getting investors excited and the stock performance gap (over the last one year or so) between major private and public companies has triggered a 'catching up’ game. Meanwhile, the markets, in general, were weak today and so were the cues from other markets in Asia and Europe.

Good to know

What is a rights issue?
A rights issue is an invitation to existing shareholders to purchase additional new shares in the company. The shareholders are offered additional shares at a discount to the market price.

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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.