Market recap for 2 February 2021

Nifty50: 14,647 ▲ 366 (2.5%)

 Sensex: 49,797 ▲ 1,197 (+2.4%)

After a strong gap-up, the benchmark indices stayed volatile but maintained their upward trajectory. In the Nifty50, 43 stocks closed with gains.

Meanwhile, every Nifty sectoral index closed in the green today with the Auto (+4.0%) and Realty (+3.7%) indices gaining the most.  

Here are the top stories of the day. 

HDFC’s Q3 profit beats estimates

• HDFC, India’s largest home loan financier, reported a 65% YoY decline in net profit at ₹2,926 crore. However, the figure was higher than analysts’ estimate of ₹2,712 crore. 
• However, it is important to note that earnings for Q3 were not comparable with Q3 of last fiscal, as it included a one-time gain of ₹9,020 crore resulting from the sale of stake in Gruh Finance. On a like-to-like basis, the company’s net profit grew 27% YoY to ₹3,694 crore. Shares of the company closed 3% higher today.

TVS Motor’s domestic volume grows faster than peers

• Most two-wheeler majors reported muted domestic sales growth in January except TVS Motors (+7.8%). TVS posted an impressive 26% YoY growth to 2.1 lakh units in the domestic market. 
• Meanwhile, Hero MotoCorp (-1.5%) reported a 4% YoY decline in sales to 4.6 lakh units. Sales of Bajaj Auto (+2.1%) remained flat at 1.5 lakh units, whereas Eicher (+2.2%) managed to grow its domestic two-wheeler sales at 5% YoY to 64,372 units. 

Indigo Paints soars after strong debut

• At ₹2,607, Indigo Paints debuted on the NSE at a 75% premium over its issue price of ₹1,490 per share. The stock closed with a total gain of nearly 110% today. 
• The ₹1,176 crore IPO was subscribed 117 times. In terms of revenue from sales, Indigo Paints is the fifth-largest player in the decorative paints space. Meanwhile, shares of other paint companies such as Akzo Nobel (+3.5%), Asian Paints (+0.9%), Berger Paints (+0.5%) and Kansai Nerolac (-0.8%) showed mixed reactions.

Dixon Technologies posts strong Q3 profits

• Shares of Dixon Technologies gained 4.0% today as its Q3 revenues and profits jumped 120% and 134% YoY, respectively. The net profit of ₹61 crore beat street estimates of ₹45 crore.
• The contract manufacturer saw a nearly 200% YoY rise in its consumer electronics business, which contributed 62% of its total revenues. Dixon’s shares have risen five times to ₹15,696 since their March ’20 low of ₹2990 per share. Its board has approved a 1-to-5 stock split.

Closing bell

The markets are seeing a V-shaped recovery from last week’s fall. The pro-growth Budget has helped boost investor confidence, which is reflecting in the stock prices. Today, the Nifty50 and Sensex closed exactly at their recent peak hit on 20 January 2021, making a typical double-top formation. Whether the indices will take resistance here (and fall) or breakout (and rise) remains to be seen. Meanwhile, the street expects the RBI to maintain its accommodative stance in the upcoming meeting on Friday.

Good to know

What is squaring off ?
It refers to closing all your open trading positions in intraday and F&O trading. If you have bought, you must sell and if you have sold, you must buy so that at the end of the transaction the position is nil.  

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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.