Bears dominate Dalal Street

Nifty50: 15,727 ▼-151 (-0.9%)
Sensex: 52,568 ▼-485 (-0.9%) 

After a weak opening, markets drifted downward and faced selling pressure through the day. In all, 43 of the Nifty50 stocks declined, indicating broad-based weakness. 

All Nifty sectoral indices closed in the red except IT index, which ended flat. Metal (-2.1%) and PSU Bank (-1.9%) indices were among the top losers today.

Here are the top stories of the day.

Auto sales register strong growth in June

• Total retail sales of vehicles across segments grew nearly 23% year-on-year in June 2021, according to the Federation of Automobile Dealers Associations (FADA). The growth was driven mainly by pent-up demand, which was seen after most states reopened. However, as compared to June 2019 (pre-COVID), total sales were about 28% lower.
• FADA expects the positive momentum to continue in July, especially as states in southern India reopen. It highlighted that the semiconductor shortage is creating supply mismatch and hampering growth in PV sales. Shares of auto majors like Tata Motors (-3.4%), Bajaj Auto (+0.6%), M&M (-0.3%), Eicher Motors (+0.7%) and Hero Moto (-0.2%) saw mixed returns today. 

Macrotech Developers posts strong Q1 numbers

• The real estate developer, known for the brand name Lodha, reported an 88% year-on-year (YoY) growth in pre-sales (units sold before completion) to ₹957 crore in Q1. This comes amid a low-interest rate environment and pent-up demand. 
• However, on a quarter-on-quarter basis there was a 62% drop in pre-sales, as the stamp-duty cut in some states boosted sales in the March quarter. Meanwhile, the company has been on a debt cutting spree. It has managed to reduce its debt by ₹3,600 crore in this quarter from ₹16,075 crore in March 2021. Shares of Macrotech were up around 4% today.

Bajaj Healthcare surges on Covid drug license

• Shares of Bajaj Healthcare rose 7.3% today after it received a license from the Defence Research and Development Organisation (DRDO) to manufacture and market the Covid drug 2-Deoxy-D-Glucose (2-DG).
• The drug helps in the faster recovery of hospitalised patients and reduces supplemental oxygen dependence. Bajaj Healthcare is the second company after Laurus Labs (+0.2%) to receive DRDO's nod to market and manufacture 2DG. 

IPOs see strong interest

• The two ongoing IPOs—Clean Science and Technology and GR Infraprojects—are receiving strong traction from investors. On Day 2, the IPO of specialty chemical manufacturer Clean Science and Technology was oversubscribed by more than 4 times.
• Similarly, The public issue of road infrastructure company GR Infraprojects has been oversubscribed by around 5.5 times. These two IPOs are expected to raise ₹2,500 crore in total. You can apply for these IPOs on Upstox.

Closing bell

Major international indices traded lower today after the US Federal Reserve talked about possibly reducing the economic stimulus. This would mean lesser money (read: liquidity) being injected into the financial system. Meanwhile, on a broader basis, the Nifty50 continues to oscillate in the range of 15,450–15,900. Generally, when the markets are range-bound, they give confusing signals to traders. A breakout on either side of the range could give clear directional cues. Today, when all the sectoral indices ended negative, only the IT index closed positively, offering a ray of hope. 

Good to know

What is unit economics?

Unit economics is a tool to measure a company’s revenue or cost per unit of its product or service. For example, a multiplex chain or an airline would calculate its revenue per seat. Similarly, a telecom operator tracks average revenue per user (ARPU). Understanding a business in this manner helps to forecast profits as the number of customers increases and to alter product specification to cut costs. 

Unit economics can be used to calculate how much money a business is making per unit after deducting the expenses. For instance, the IPO-bound food-delivery firm Zomato recently reported that it is making ₹22.9 per order after subtracting the delivery cost, discounts to its customers and other variable costs. 

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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.