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Market Recap for 21st October

Nifty: 11,937 (+0.34%) Sensex: 40,707 (+0.40%)


The markets did a yo-yo today! After a gap-up opening, the Nifty50 fell 250 points, and then recovered to end the day with a marginal gain. While the drop was triggered by selling pressure in large caps such as Reliance Industries (-1.54%) and TCS (-2.23%), the recovery was powered by HDFC Bank (1.74%) and HDFC (1.51%). Among the sectoral indices, Nifty Bank (1.3%) and Nifty Metal (2.2%) were up. On the other hand, the Nifty FMCG (-0.9%) and Nifty Media (-0.6%) indices were down.

Here are the top stories of the day.

Hindustan Zinc rises on strong silver sales

The producer of zinc, lead and silver posted strong Q2 results. Sales of silver grew 114% over the same period last year as compared to the total sales growth of 25%. The strong rise in silver sales was due to higher silver prices in Q2, which was further aided by depreciation in the rupee. The company’s net profits rose 43% from the previous quarter but dropped 7% over the year due to higher depreciation, finance costs and taxes. Another reason for the stock’s rise today was its bumper dividend of ₹21.30 per share. That’s a dividend yield of 9.1% based on today’s closing price. The stock was amongst the top performers in the metals pack and was up 4.4% for the day.


L&T Infotech soars after Q2 results

Today, while other key IT stocks witnessed profit booking, L&T Infotech (LTI) bucked the trend, jumping 4.7% after announcing strong Q2 results. LTI’s profit grew 26.7% YoY and 9.7% QoQ supported by healthy revenue growth and margin expansion. The company sees opportunities as organisations increasingly embrace digital transformation. It claims to have a strong deal pipeline and recently won a deal worth over $40mn for analytics services. The company expects further traction in the digital, cloud and analytics space.


Higher provisioning in Q2 impacts Bajaj Finance

Bajaj Finance saw its Q2 net profit fall to ₹965 crore—down 36% from the same period last year—missing the street expectation of ₹1,037 crore. The sharp drop in net profit was due to large provisions to the tune of ₹1,700 crore (versus ₹594 crore in Q2 last year) made to factor in risks due to Covid-19. The company claims to have adopted a cautious approach and focused more on cutting costs rather than growing revenues. Income growth for Q2FY21 was a mere 4% YoY (reflected by its net interest income). The company expects to achieve pre-Covid levels of loan originations by March/April 2021, supported by a bounce-back in the economy in FY22. The stock witnessed selling during the day and dropped by nearly 5%, but later recovered and closed almost flat (-0.3%) for the day.


Closing bell

Bearish and bullish forces were equally powerful in the markets today. Such days pose a challenge for directional traders. Amid this uncertainty, a wait-and-watch approach is generally preferred till the market moves decisively. In this tug of war, midcap and smallcap stocks are likely to become vulnerable.

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