Markets end winning streak

Nifty50: 16,568 ▼45 (-0.2%)
Sensex: 55,629 ▼162 (-0.2%)

After a gap-up opening, the benchmark indices slid downward throughout the day and ended in negative territory, snapping the four-day long rally. The market breadth favoured the bears, with 30 of the Nifty50 stocks closing in the red.  

Sectorally, Nifty’s FMCG (+0.6%) and PSU Bank (+0.2%) indices closed the strongest, while Bank (-0.8%) and Metal (-0.8%) were the top losers today.

Here are the top stories of the day.

HAL soars on deal with GE for Tejas aircraft

As per reports, the state-run defense and aerospace company has placed a ₹5,375 crore order with US-based General Electric (GE) Aviation. This is the largest ever order placed by HAL. As per the deal, GE Aviation will supply engines and support systems to power the Tejas light combat aircraft (LCA). 

HAL’s collaboration with GE Aviation will be boosted further with the manufacturing of these engines locally under the LCA MkII program. Its shares closed 5.2% higher today.

RBI removes restriction on HDFC Bank credit cards

The RBI today lifted the restriction on HDFC Bank on issuing new credit cards, which was imposed after the bank reported repeated outages in its digital platforms. Following this, shares of the leading private lender rose over 3% intraday. However, the stock gave up its gains and closed lower for the day.

Credit cards account for 25–30% of HDFC Bank’s fee revenue. As per analysts, the removal of restrictions is timely in the wake of the upcoming festive season, when strong growth is seen in credit card and unsecured credit products.

Investors high on liquor stocks

Liquor stocks witnessed a surge today with shares of United Breweries, Globus Spirits, United Spirits and GM Breweries rising 5–10%. The recent jump comes after several states across the country have eased lockdown restrictions.  

Further, as per United Spirits, the outlook for Indian alcoholic beverage markets remains positive owing to favourable demographics, rising disposable incomes, and growing rural consumption.  

Closing bell

The gap-up opening and weak closing indicates that the short-term uptrend has lost some steam. It also indicates that markets run the risk of profit booking or consolidation in the coming days. Meanwhile, the revival of monsoon is a positive indicator for industries with rural connection, e.g. tractors and the consumption-driven FMCG sector. FMCG stocks also benefit from being defensive, in case markets witness some correction.

Good to know

What is a dividend-payout ratio?
The dividend-payout ratio reveals how much of a company’s net profit is given out to its shareholders as dividend. It is calculated by dividing the dividend paid by the net profit. For instance, assume that a company’s net profit is ₹10 crore and it pays a dividend of ₹7 crore. This means the dividend-payout ratio is 70%. A higher dividend-payout ratio is usually good for investors, unless the company has better avenues to reinvest profits.

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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.