SAILing through tough times

Nifty50: 15,799 ▲+61 (+0.3%)
Sensex: 52,474 ▲ +174 (+0.3%)

Today, the Nifty50 opened with a gap-up and fluctuated throughout the day. However, it closed the day around its opening level, which indicates indecision. Even though the markets were up, 27 of the Nifty50 stocks closed in the red.

Among the Nifty sectoral indices, Metal (+2.6%) and IT (+1.5%) gained the most, whereas Realty (-1.0%) and Media (-0.9%) were the top losers. 

Here are the top stories of the day.

SAIL reports strong Q4 numbers

• The state-owned steel manufacturer reported a 44% YoY growth in standalone revenues to ₹23,286 crore, which was backed by its best-ever quarterly sales volume. Lower taxes helped to push up the profits by 26% to ₹3,444 crore. 
• The company saw improvement in steel demand as the economy recovered in the second half of FY21. Going ahead, it plans to focus on increasing volumes and enhance the share of value-added products. The stock rose nearly 5% today and has gained almost 13% so far this month.

Real estate reels under the second wave

• Nine out of 10 builders warned that they expect more delays in their projects because of the second wave, according to a survey conducted by the industry body Credai. The reasons for the delay in projects are the shortage of workforce and hold up in getting approvals.
• Most of the builders are also facing challenges such as weak demand, rise in raw material costs and a credit crunch. The report states that the second wave had a more severe impact on the sector than the first one. The Nifty Realty index has risen by 7% since April.

Air traffic to recover fully only by FY23

• According to a Crisil report, air traffic will remain sluggish during FY22 due to the impact of the second wave. The airline industry is likely to witness full recovery in passenger traffic only by the fourth quarter of FY23. 
• Localised lockdowns and other restrictions led to the passenger traffic in May 2021 dropping to half of that seen in February 2021. Shares of airline operators such as InterGlobe Aviation, Spicejet and Jet Airways were flat today but have risen 10–15% so far this fiscal.

NHPC’s profit jumps 80%

• State-owned hydro power giant NHPC’s consolidated net profit rose sharply by 80% in Q4 to ₹464 crore. The profit rose despite a fall of 26% in the revenue from operations.
• The surge in profit in Q4 was led by a 24% drop in total expenses and more than doubling of other income. However, the shares of NHPC fell 0.7% today but have gained nearly 6% so far this fiscal. 

Closing bell

The markets closed at their lifetime high. There is optimism around the recovery in economic activities as restrictions ease and the vaccination drive gathers momentum. The rise in the Nifty Metal index suggests that underlying demand has strength. However, at the same time, inflation is inching up too. On Monday, inflation numbers for May will be announced, and the street expects the consumer inflation (CPI) to rise. In general, rising inflation doesn’t augur well for the markets, because after a point it poses the risk of a hike in interest rates.

Good to know

What is the Consumer Price Index?

The Consumer Price Index (CPI) is a measure of the prices of goods and services sold in retail markets over a certain period. It reflects the prices of a basket of goods and services including food, oil, medicines and transportation. The percentage change in the CPI indicates whether the cost of living in a country is rising or falling.  

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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.