Market recap for 29 January 2021

Nifty50: 13,634 ▼ 182 (-1.3%)

 Sensex: 46,285 ▼ 588 (-1.2%)

The markets opened with a gap-up but kept drifting downward throughout the day, barring a few brief surges into the positive. However, towards the end, they plunged into the red. The selling was broad-based as 43 of the Nifty50 stocks declined today.

Among the sectoral indices, the Nifty PSU Bank and Nifty Bank rose 1.6% and 0.6%, respectively, while the Nifty Auto (-2.8%) and Nifty IT (-2.5%) were the top losers today.

Here are the top stories of the day. 

Sun Pharma’s Q3 beats street estimates

• The pharma major reported Q3 net profit of ₹1,853 crore, beating street estimates of ₹1,379 crore. Crucially, net profit more than doubled from ₹914 crore during the same period last year. The consolidated revenue rose by a more modest 8% to ₹8,837 crore. 
• The surge in profits is a result of an increase in other income and improvement in global speciality sales owing to recovery from the pandemic. The company also announced an interim dividend of ₹5.5 per share. The stock closed 4.2% higher today.

Tata Motors’ Q3 earnings rise on JLR bounce back

• The automaker posted an impressive rise of 67.5% YoY in consolidated net profit to ₹2,941 crore. The numbers beat the street estimates of ₹1,173 crore by a wide margin. 
• Meanwhile, revenue from operations rose 5.5% to ₹75,654 crore. The major driving factor was Jaguar Land Rover, which delivered an impressive 38.1% YoY rise in its profit before tax. 
• On the domestic front, passenger vehicles and commercial vehicles showed marked improvement with 78% and 21% YoY rise in revenues, respectively. The stock has risen over 40% this month ahead of the results but was down 1.5% today.

Shriram Transport soars on improved asset quality

• The used-vehicle and fleet financer’s net interest income for Q3 rose by 2% to ₹2,202 crore, beating street estimates of ₹2,076 crore. However, net profit declined 17% to ₹727.7 crore, owing to a nearly 52% YoY increase in loan provisioning, which stood at ₹674 crore. 
• Its asset quality showed sharp improvement with net NPA at 3.22% as compared to 6.09% last year. The disbursements rose 9.9% YoY. The stock surged 16.2% today.

Dr Reddy’s Q3 underperforms expectations 

• The shares of Dr Reddy’s Laboratories fell 5.3% today as the company reported a consolidated net profit of ₹20 crore for Q3 versus street expectations of ₹709 crore. The profits were impacted by an impairment charge of around ₹600 crore. 
• Its revenues grew 12% YoY to ₹4,941 crore, driven by new product launches and volume increase in the European and Indian businesses which grew 34% YoY and 26% YoY, respectively. 

Pre-Covid growth levels expected in two years

• As per the 2021 Economic Survey, India is expected to grow at 11% in FY22, 6.5% in FY23 and 7% in FY24. However, as the rollout of the vaccines picks up traction, economic activities would get normalized, leaving upside potential to the above estimates. 
• What is also encouraging is that the Indian government may continue its expansionary fiscal stance in order to sustain the recovery in demand.

Closing bell

This week, the Indian markets witnessed a 5% decline, the steepest weekly fall in the last eight months. Not just Indian markets, even major equity markets globally are reeling under volatility and selling pressure. The India VIX has risen 20% this month, which suggests that traders expect volatility to rise in the days ahead.

On Monday, sector-specific movements based on Budget announcements will be the order of the day. Generally, most Budget positives and negatives get factored in the price on the same day.

Good to know

What is an InvIT?
Similar to a mutual fund, an infrastructure investment trust or InvIT is an instrument that allows individuals and institutional investors to pool together capital to develop infrastructure projects. The investors earn a small portion of the income from the project as a return.

Yay ? or  ? Nay?
We'd love your thoughts on this market recap.

Haven't tried out Upstox yet? Click here to open your account now!

Disclosures and Disclaimer

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.