▲ Nifty: 12,938 (+0.50%) ▲ Sensex: 44,180 (+0.52%)
Today, the markets rode on gains made by banks and auto companies. Among the banks, the PSU banks surged higher, and the Nifty PSU Bank index was up 3.5%, supported by the rise in SBI (+5.1%) and Bank of Baroda (+3.5%). Similarly, the Nifty Auto index rose by 3.1%, driven by heavyweights M&M (+10.6%) and Tata Motors (+9.3%). Meanwhile, selling pressure in FMCG and IT stocks continued from yesterday, as the Nifty FMCG index (-1.1%) and Nifty IT index (-0.8%) declined.
Here are the top stories of the day.
Mahindra to make light-weight tractors
The country’s largest tractor maker has announced plans to manufacture light-weight tractors at its Telangana facility. Further, it plans to invest additional ₹100 crore at its existing tractor plant in Telangana. Tractor demand was resilient during the earlier part of this fiscal, when the country was battling lockdown. Even now, tractor manufacturers continue to witness strong retail demand supported by expectations of a higher kharif output and good cash flow in the market. While the offtake numbers during Diwali will be available only in the first week of December, tractor makers are optimistic about volumes given that the demand is currently outpacing supply. Meanwhile, with plans for the new tractor series it seems that M&M is putting money where its mouth is. The stock is up 10.6% today and has gained nearly 18.8% this month.
VIP hopes for demand revival to fuel growth
VIP Industries, Asia’s leading luggage maker, posted a weak Q2 performance, but its losses narrowed from ₹51 crore in Q1 to ₹35 crore in Q2. The company has embarked on a serious cost-cutting exercise and managed to reduce its employee and other expenses by 15% in Q2. Meanwhile, sales nearly doubled from ₹58 crore to ₹108 crore. Further, it plans to cut costs worth ₹180 crore in this fiscal and has stated that 50% of the cost-cutting measures are likely to continue even after sales return to normal levels. Additionally, multiple news stories of vaccines for Covid-19 are building hopes of a faster-than-expected recovery in the travel sector. The stock is up 7.8% today and has gained more than 28.6% in this month.
Wonderla rises as amusement parks reopen
South Indian amusement park chain Wonderla Holidays has re-opened its Bengaluru park, albeit only on weekends and public holidays. The park will run at 40% visitor capacity and at reduced entry-ticket rates. The reopening comes after a closure of over seven months, which led to near zero revenues for the first half of this fiscal as compared to ₹160 crore in the same period last year. However, resumption of operations and cost-cutting measures undertaken over the last two quarters have triggered investor interest in the company. The stock gained 8.8% today.
Closing bell
Banks and NBFCs continued with their upward journey, as the perceived risks of defaults have reduced given the better-than-expected corporate results and the vaccine in sight. The rise in banks is also supporting the rally in the markets, which are at lifetime highs. Further, similar sharp rallies were also seen in equity markets of other major economies, which are not showing any signs of weakness as of now. While the scenario is rosy, it always pays to remain alert and decisive.
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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.