Market Recap for 2 June 2021

Nifty50: 15,576 ▲ 1 (+0.0%)
Sensex: 51,849 ▼ -85 (-0.1%)

 The markets opened weak, but gathered pace in the second half and managed to close flat. The Nifty50 was nearly evenly split, with 27 of its constituents closing positively. 

Among the sectoral indices, buying was strong in Nifty PSU Bank (+3.0%) and Nifty Metal(+2.1%), while Nifty IT and (-0.7%) and Nifty FMCG (-0.5%) were the top losers today. 

Here are the top stories of the day.

Motherson Sumi’s profits grow three-fold

• The Noida-based auto-ancillary major’s total revenues rose 19% YoY from growth in the company’s domestic wiring harness and its plastic modules division. On account of higher revenue and lower tax expenses, consolidated profit in the March quarter stood at ₹714 crore, up 290% YoY.
• Its March quarter revenues were higher than pre-COVID levels as industrial activity picked up globally. However, the company says that production shutdowns in India and semiconductor shortages are likely to be headwinds in the near term. The stock hit its lifetime high today and closed nearly 15% higher. 

PVR’s losses surge in March quarter

• The multiplex chain recorded a 71% decline in revenue from operations in the March quarter, primarily due to regional lockdowns. Meanwhile, losses grew from last Q4’s ₹74 crore to ₹289 crore. All the screens are shut down as of date on account of the second wave. 
• During Q4, the company claims to have reduced its largest overheads, namely rental costs and other expenses, by 49% and 41% YoY respectively. As per the management, the pipeline of movie releases remains strong and it expects the performance to bounce back stronger as things start to normalize after mass vaccinations. The stock gained 0.8% today, but has been flat since the start of 2021. 

India’s exports spike but so does trade deficit

• In May, India’s exports jumped by 67% YoY to $32 billion, fueled by growth in engineering goods, pharma, petroleum products and chemicals. Despite the rise in exports, India’s trade deficit widened to $6 billion, an increase of 75% versus May 2020. Thus, India was a net importer in May 2021.
• This is because the country’s imports also surged by 68% YoY to $38 billion. This was led by a sharp rise in imports of oil as well as electronic goods, according to data released by the government on Wednesday.   

Greaves Cotton to ramp up e-mobility focus

• Greaves Cotton, which is a diversified engineering company, will inject ₹70 crore into its electric two-wheeler segment, as per reports. The company has decided to invest ₹110 crore in capital expenditure this year, of which ₹70 crore are set aside for its electric two-wheeler plant at Ranipet in Tamil Nadu. The stock was flat today but has gained nearly 50% so far this year. 
• The company plans to fund this capex expansion by using its reserves of profits. It had made its foray into the e-mobility segment in 2018 through the acquisition of Coimbatore-based Ampere Vehicles. In India, 143,837 electric two-wheelers were sold in FY21 compared to 152,000 units sold in FY20, according to the Society of Manufacturers of Electric Vehicles.

Closing bell

Even though the Nifty50 closed flat for yet another day, what is interesting is the movement during the day. Despite a weak opening, the market was able to claw back up, indicating buying interest in the market. As we move towards the RBI’s interest rate decision on Friday, volatility is expected to rise in rate-sensitive sectors such as banks, auto and real estate. The street expects the lending rate to remain unchanged at 4%.

Good to know

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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.