Market Recap for 12 May 2021

Nifty50: 14,696 ▼ -154(-1.0%)
Sensex: 48,690 ▼ -471 (-0.9%)

The markets opened weak and remained negative throughout the day, with selling intensifying towards the closing bell. The market breadth was negative, with 35 of the Nifty50 stocks closing in the red.

Among the sectoral indices, the Nifty PSU Bank (+3.3%) and Nifty Media (+0.6%) remained the top gainers for the second consecutive day. Meanwhile, Nifty Metal (-2.9%) and Nifty Bank (-1.2%) receded the most today.

Here are the top stories of the day.

Siemens hits record high on strong quarter

• Shares of the engineering company soared nearly 10% intraday, and hit their lifetime high of ₹2,143.5. For the March quarter, it reported revenue from operations at ₹3,298 crore, 30% higher YoY. Meanwhile, profit for the quarter jumped 92% to ₹315 crore.
• Profit was boosted by a decline in employee costs and other expenses. Further, the company’s power transmission, digital grid and distribution systems businesses witnessed strong demand. Its order book stands at ₹12,677 crore. The stock closed 3% higher and has risen 27.5% so far this year.

Godrej Consumer soars on strong Q4 

• Godrej Consumer Products’ shares soared 21.4% after a strong Q4. It posted Q4 consolidated sales of ₹2,705 crore, 27% higher YoY. Net profit rose nearly 60% to ₹365 crore.
• The sales was driven by 35% growth in the India business, with the hygiene segment, which includes soaps and sanitisers, growing 38%. The investor sentiment was also upbeat by the change in the top management.

Dr Reddy’s to make Covid-19 drug

• Pharma major Dr Reddy's (+0.2%) has entered into a royalty-free, non-exclusive voluntary licensing agreement with US-based Eli Lilly for the manufacture and sale of the drug baricitinib in India.
• Barictinib has received restricted emergency use approval from the Central Drugs Standard Control Organization (CDSCO) for use in combination with remdesivir for the treatment of Covid-19. Earlier this week, Eli Lilly had announced similar agreements with Sun Pharma (-0.7%), Cipla (+1.0%) and Lupin (+1.0%) to manufacture the drug in India.

Saregama’s Q4 profits surge  

• The music label and film production house reported revenue from operations of ₹123 crore in Q4FY21, up 14% YoY. During the same period, profit after tax surged 151% to ₹37 crore.
• The rise in revenue was supported by a 27% rise in revenue from films and TV. Further, the company Profits got a boost from lower advertisement, royalty and other expenses. The stock is down 5% today but has gained 126% so far in 2021.

Closing bell

The Indian markets extended yesterday’s fall, and aligned themselves to the weakness in key international markets over the last few days. Among the sectoral indices, the Nifty Metal index cracked the most. This was the first significant correction seen in metals since the steep rise that began mid-April. While there are concerns over the rising inflation in the US, in India inflation numbers for April are expected to show signs of cooling off. Further, the index of industrial production (IIP) for March is expected to register a strong rise given last year’s low base. Whether this positive momentum will be maintained remains to be seen.

Good to know

What are debentures?

Debentures are debt instruments that are used by companies to raise long-term funds at a fixed rate of interest. These instruments are generally not backed by any collateral, and thus depend on the creditworthiness of the issuer. Some debentures have a feature of convertibility into shares after a certain point in time. The debentures that can't be converted into shares or equities are called non-convertible debentures (or NCDs). NCDs usually attract a higher rate of return compared to convertible debentures.

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