Market Recap for 19 November 2020

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Nifty50 12,771 (-1.29%)    ▼ Sensex 43,599 (-1.31%)

The markets saw some swift downward movement today. The benchmark indices closed near the day's lows, which is something we have not seen since the start of the month. The market breadth also turned negative with 36 of the Nifty50 stocks ending in the red. Among the sectoral indices, the Nifty Bank index dived 2.8% mainly due to selling in ICICI Bank (-4.1%) and HDFC Bank (-2.6%). FMCG stocks played the defensive role and lifted the Nifty FMCG index up 0.4%. Meanwhile, ITC rose 2.1% and was among the top gainers today.  

Here are the top stories of the day.

L&T sees action after bagging another bullet train order 

L&T has bagged yet another order to build an 87-km stretch of the Mumbai-Ahmedabad bullet train project. While the company didn’t disclose the exact value of the project, its classification as a mega order suggests that it is worth over ₹7,000 crore. In October, the company had won a mega order for a 237-km stretch of the same project. Together, these projects account for over 60% of the total distance of 508 km between Mumbai and Ahmedabad. The company’s order flow has picked up momentum over the last month or so, after a sluggish first half of this fiscal. Consequently, its share price has risen by 20% this month. However, the stock saw profit-booking today and ended 1.6% lower, after a sharp rise of 6.2% seen yesterday.

Titan gains on improved traction during festive season

Titan’s jewellery business, which contributes about 80% of the total revenues, registered a 15% growth in the 30-day festive period (from Dussehra to Diwali) this year, as compared to the same period last year. The growth rate is encouraging, given sales in this business segment were at 98% of the level seen in Q2 last year. Meanwhile, the watch and wearables business (accounting for nearly 15% of revenues), which had seen slower recovery (55%) in Q2, has now reached sales levels of last year. Today, the stock had gained almost 5% intraday. However, it succumbed to selling pressure along with the broader markets and ended the day with gains of 0.9%.

Gold prices slump today but remain in a broad range

The global risk sentiment has reduced due to the optimism over the vaccine, and that is putting pressure on gold prices. But at the same time, rising Covid cases pose a risk to the economic recovery, thus hinting at the need for a fresh stimulus. This dichotomy has led to gold prices trading in a range over the past few weeks. However, phases of consolidation are generally followed by sharper movements, which is what we witnessed today. Further, the dollar index bounced back, and gold and silver prices, (which move inversely to the dollar index) slumped 0.8% and 1.8%, respectively. 

Closing bell

It is not just the Indian markets which saw some selling pressure today. The US markets ended weak yesterday (-1.1%) and today key Asian and European indices are down in the range -0.4% to -1.0%. The rally that we saw over the last few months was riding on two wheels: (1) better-than-expected corporate results in the September quarter and (2) the gush of liquidity (stimulus) to support economies during the pandemic. A puncture in any of these wheels could slow down or hit the brakes on the rally. So far, most companies have given an encouraging outlook for the coming quarter. However, there is an impasse in the US regarding the next stimulus, which is something that the markets may be concerned about. 

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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.