Market Recap for 27 May 2021

Nifty50: 15,337 ▲ +36 (+0.2%)
Sensex: 51,115 ▲ +97 (+0.1%)

The benchmark indices struggled for direction for most of the day and traded in a narrow range. However, they made a decisive upward move in the last hour of the trading session. The market breadth was positive, with 34 of the Nifty50 stocks closing in the green. 

Banking stocks witnessed buying interest, as indicated by the rise in Nifty PSU Bank (+2.8%) and Nifty Bank (+1.1%). Meanwhile, Nifty Realty (-1.1%) was the top loser among the sectoral indices today.

Here are the top stories of the day.

BPCL hits 52-week high on bumper dividend 

• Shares of the state-owned oil refiner hit their new 52-week high after it announced a strong March quarter. It declared a final dividend of ₹58/share, which translates to a dividend yield of 12.3%.
• Standalone profit for Q4 stood at ₹11,940 crore as compared to a  ₹1,361 crore loss reported in Q4 last year. The surge in profit comes on account of an exceptional gain of ₹9,876 crore received for the sale of the Numaligarh Refinery and due to lower tax expense. Meanwhile, standalone revenue from operations rose 21%. For the full year, its gross refining margins stood at $4.0/barrel versus $2.5/barrel last year. The stock closed 0.8% lower today but has risen over 11% so far this month.  

Cummins India’s Q4 profit drops

• The diesel-engine maker reported revenues of ₹1,231 crore, up 19% year-on-year, supported by strong domestic sales. The export business continues to suffer due to the pandemic. Meanwhile, profit dipped 1% year-on-year due to higher tax expenses. 
• The company expects its markets to fully recover in FY22. The stock closed 3.8% lower today and has declined nearly 8% this month.

Wedding demand boosts Kalyan Jewellers’ Q4

• The accelerated shift from unorganised to organised players and strong wedding-related demand helped the leading jewellery chain to post a 43% YoY rise in revenues in Q4. Meanwhile, profit grew to ₹74 crore, up 54% versus last year.  
• However, on a full-year basis, it reported a loss of ₹6 crore due to a one-time write off of ₹100 crore in its Middle East business and a revenue loss suffered in Q1FY21. Its shares fell 3.6% today and trade 21% below its issue price.

Burger King declines on Q4 losses 

• Shares of the QSR chain fell as the company reported a loss of about ₹26 crore in the March quarter as it reeled under the impact of the pandemic. Its Q4 revenue rose marginally by about 3% YoY.
• The company has 265 stores in the latest Q4, which it aims to raise to 320 by FY22. Its shares fell 2.4% today but have risen over 150% from its issue price, since listing in December 2020.

Closing bell

At present, there are multiple factors that are in favour of the market rise—declining daily new cases, hopes of easing curbs and the expectation of a stimulus package from the government. The Nifty50 has hit a new lifetime high and broken out of a consolidation phase. Instead of price correction during the second wave, the markets underwent a time correction for nearly 4-months. Traders should strategize keeping two things in mind. These include the increase in volatility due to several data releases next week and sector rotation that could ensue in the coming days.

Good to know

What is a corporate spin-off?
A corporate spin-off refers to an existing company turning one of its business verticals into an independent entity. Since the new company is a part of the larger business, shareholders get the benefit of the growth in the spun-off entity. The parent company may also give its investors shares of the new entity. If done right, spinoffs have a strong potential to unlock value for both investors and the parent business. To know more, watch the video 👇

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Investment in securities markets is 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.