Market recap for 19 February 2021

Nifty50: 14,981 ▼137 (-0.9%)

Sensex: 50,889 ▼434 (-0.8%)

The markets showed weakness right from the opening. Although the Nifty50 breached into the green momentarily, it succumbed to selling pressure towards the end of the session, pulling 38 of the benchmark index’s components into the red. 

All Nifty sectoral indices closed in the red. Today also put a stop to the Nifty PSU Bank index’s frenetic sprint. In fact, it was the top loser among the sectoral indices, ceding 4.7%. It was followed by the Nifty Auto index (-2.6%).

Here are the top stories of the day. 

RIL plans to demerge O2C business

• As per reports, the oil-to-retail conglomerate is planning to demerge its oil-to-chemicals (O2C) business into a wholly-owned subsidiary. It is believed that the move will help the company to attract global investors like Saudi Aramco, which is in talks with RIL for a stake in the latter’s oil business.
• According to the plan, RIL’s O2C business, which includes its refining and petrochemicals assets, fuel retail (51% in a JV with BP) and bulk wholesale marketing businesses, will get hived off into a step-down subsidiary. The street expects that the reorganisation could lead to an eventual listing of key business verticals. Shares of RIL rose 0.6% today amidst a weak market.

IDFC First Bank to raise ₹3,000 crore

• Shares of IDFC First Bank saw strong buying interest today and have gained nearly 20% this week. The bank’s board has approved plans to raise ₹3,000 crore. It had raised ₹2,000 crore via an institutional placement in June 2020.
• Its management believes that the fundraise puts the bank in a strong position to take advantage of economic recovery. It is also expected to support a 25% growth in its retail lending book, for many years to come.
• The stock rose to its highest level in three years and closed 7.8% higher today.

Dr Reddy’s gets vaccine ready 

• The pharma major said that it has initiated the process with the DGCI for emergency-use authorisation of the Sputnik V vaccine in India. The company will present the safety profile of its Phase 2 study and interim data of the Phase 3 study, which is expected to be completed by 21 February.
• This vaccine is found to have 91.6% efficacy against the coronavirus. If authorised, the Sputnik V vaccine will be the third vaccine to be authorised for use in India after Covishield and Covaxin. Shares of Dr Reddy’s gained 2.3% today in an otherwise weak market.

Trent catches momentum after Q3 results 

• The easing of Covid-related restrictions along with improving consumer sentiments helped Trent work its way back to recovery in Q3. After consolidating for the last two months, the stock seems to have garnered buying interest. 
• The stock beat the weakness in the market, and closed 1.7% higher. The stock has jumped 26% in February. Its movement this week has taken the stock near its lifetime high of ₹804.7. 

Profit booking seen in PSU bank shares

• Earlier this week, there were reports that the government has shortlisted four PSU banks for privatisation. This created a buying frenzy in the shares of IOB, Bank of India, Bank of Maharashtra and Central Bank, which gained around 60% in a matter of three days. 
• However, investors chose to book profits today, ahead of the weekend. Shares of these PSU banks fell in the range of 6-10%. 

Closing bell

The markets closed in the red for four consecutive sessions, resulting in a drop of 1.2% in the Nifty50 on a weekly basis. The index performance was weighed down by fall in the IT (-2.2%), FMCG (-1.7%) and Pharma (-3.4%) indices this week. 

Next week will witness the expiry of the February derivatives contracts on Thursday, while the GDP figures will be announced on Friday. This week’s counter-trend movement and the abovementioned events are likely to keep the volatility high. Traders need to be nimble in order to not get caught on the wrong foot.

Good to know

What is day trading?
Day trading is the practice of buying and selling a stock, commodity, or any security within a single trading day. Say, you buy a stock for ₹100 and sell it on the same day (before market closing), when the price climbs to ₹105. 

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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.