Market Recap for 1 June 2021

Nifty50: 15,574 ▼ -7 (-0.0%)
Sensex: 51,934 ▼ -2 (-0.0%)

The markets opened at a new high but slipped into the red soon after. Although the closing was flat, 31 of the Nifty50 stocks declined today.

Among the sectoral indices, mild buying was seen in the Nifty Media (+0.3%) and Nifty IT (+0.1%) stocks. Meanwhile, the Nifty Metal (-0.7%) and Nifty PSU Bank (-0.5%) indices were the weakest today.  

Here are the top stories of the day.

Defence stocks get make-in-India boost

• Defence-related stocks got an initial boost today as the Ministry of Defence (MoD) announced a list 108 items of defence equipment that must be compulsorily bought from indigenous sources.
• Of the 108 items, 49 will be banned from import after December 2021. For the other items, the import ban will be implemented in a phased manner by December 2025. Shares of Bharat Electronics, Hindustan Aeronautics, Bharat Dynamics opened the day with gains in the range of 4–5%. However, the initial cheer was short-lived and the stocks ended the day with gains of 1 to 2%.

Narayana Hrudayalaya’s profits soar 

• Hospital chain Narayana Hrudayalaya reported a near-five-fold jump in net profit for the March quarter to ₹68 crore. During the same period, revenue grew 12.7% to ₹838 crore. 
• Notwithstanding the strong performance, the company is cautious about the business recovery in the near term in light of localised lockdowns and restrictions on international travel. The stock surged 12% today and has gained over 21% since the beginning of May.

Balrampur Chini bets big on ethanol

• In Q4, the sugar major reported a 41% decline in revenue from operations. It chose to trade its export quota rather than exporting sugar, leading to lower revenue. Meanwhile, profit declined by only 2.4% YoY and was strongly supported by the high-margin ethanol business.  
• The company strategically reduced sugar production and focused on higher ethanol production. This is in line with the company’s plans to reduce dependence on the sugar segment. It has approved capex worth ₹425 crore for a distillery facility that will be operational by December 2022. The stock closed flat today, but rose 9% last month.

Manufacturing PMI hits 10-month low

• India’s manufacturing activity dropped to a 10-month low in May as the second wave dented economic activity. The Manufacturing Purchasing Managers’ Index (PMI), which reflects factory activity and orders, fell to 50.8 in May from 55.5 in April. Nonetheless, a figure above 50 indicates expansion in activity. 
• The street was expecting a reading of 52. However, the pandemic-triggered fresh lockdowns and their adverse impact on demand took a toll on manufacturing activity.

Closing bell

After delivering a strong rally in May, markets started June on a quiet note. While today’s closing was nearly flat, what is to be observed is that the market breadth was weak. As the majority of the large caps have already declared their Q4 results, the attention will now shift to this week’s data releases, which will show the macro-economic reality. The manufacturing PMI was a disappointment. The services PMI data on Thursday and the RBI’s rate decision on Friday will drive further action.

Good to know

What are face value, market price and share premium?

The face value of a stock represents the original cost of a single share of a company. Companies use the face value to declare dividends or stock splits since the market value of a stock keeps changing on a daily basis. The market value of a stock is the price that investors are willing to pay for a single share of a company. Meanwhile, share premium is the difference between the issue price and the face value of a stock. If a stock has a face value of ₹10, while the company launches its public issue at ₹60, the share premium is ₹50.

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Investment in securities markets is 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.