Market recap for 18 December 2020

Nifty50 13,760 ▲ 19 (+0.1%)

Sensex 46,960▲ 70 (+0.1%)

After a weak start, the day ended on a positive note thanks to IT stocks, which helped pull up the indices. 

Among the Nifty sectoral indices, IT (+1.5%) and Pharma (+1.2%) were the top gainers, whereas Realty (-0.6%) and PSU Bank (-0.7%) were the top losers.

Here are the top stories for the day.

Indian IT firms rally

• Indian IT stocks inched up as Accenture Plc raised its revenue growth forecast for FY21 (it follows a Sep-Aug fiscal) from 2-5% earlier to 4-6%. 
• Its healthy deal pipeline and improving demand outlook augurs well for Indian tech companies such as Infosys (+2.3%), Mphasis (+2.1%), Wipro (+1.7%) and TCS (0.4%) compete in the same (US and EU) markets.

Flyers on the rise

• Indian airlines carried 63.5 lakh passengers in November, 20% higher than October. While this looks encouraging, the number is down 51% from last November. 
• The passenger load factor ranged between 66% and 77%. With airlines now allowed to operate at 80% capacity, there is room for growth once all flight restrictions are lifted. Meanwhile, shares of airline companies—Indigo (+9.0%) and Spicejet (+42.1%)—have posted strong gains in December.

PVC price hike boosts DCW

• Polyvinyl chloride (PVC) prices are up by ~28% in Q3FY21 after an increase of ~19% in Q2. The rise in price is largely attributed to supply-side shortages. 
• Shares of DCW, a diversified chemical company, rose 7.6% today coupled with a surge in volumes. In FY20, DCW earned about ₹454 crore of revenues from PVC sales. 
• Further, rise in PVC prices also augur well for PVC pipe makers as sales jump with buyers of pipes advancing their purchase in anticipation of the price hike. Major pipe makers such as Finolex Industries (+1.3%), Astral Poly (+2.5%) and Supreme Industries (+0.4%) ended the day on a positive note.

Garware Poly surges 

• Garware Polyester announced that it has started manufacturing paint protection film (PPF), making it the first Indian company to enter the segment. PPF is used by automobile makers and has an estimated global market size of $500 million. 
• Garware, which clocked a revenue of about ₹925 crore in FY20, expects PPF to contribute ₹300 crore (about 20%) to revenues in FY23. The stock rose 6.1% today and is trading at its lifetime high.

Closing bell

The markets registered their seventh consecutive week of gains. Reasons? There are many. First, the market sentiment is positive as vaccination programmes begin in the UK and the US. Second, there are hopes of another round of stimulus in the US. Third, the prices of commodities have risen, indicating growing demand from user industries.

This year, traders have been surprised not just by the rally but its steepness. Meanwhile, the next week will be truncated due to Christmas holidays and traders may tend to liquidate their positions ahead of a long weekend.

Good to know

What is guidance?

Guidance is a forecast given by the management of a company about its performance prospects over the next quarter or year.

Source: Nasdaq

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Investment in securities markets are 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.