▲ Nifty: 11,669 (+0.23%) ▲ Sensex: 39,757 (+0.36%)
The Nifty50 witnessed a battle between the heavyweights today. On the one hand, Reliance Industries (-8.6%) put pressure on the index, while on the other hand, banks kept the index above water. The advance:decline ratio was nearly even, as 23 stocks advanced, 26 stocks fell and one remained unchanged. The day’s top gainers were IndusInd Bank (+6.4%), ICICI Bank (+6.0%) and Axis Bank (+5.9%). Meanwhile, Reliance Industries (-8.6%), Divis Labs (-2.7%) and Eicher Motors (-2.5%) were the top losers.
Here are the top stories of the day.
Reliance sees a sell-off post Q2 results
Shares of Reliance Industries saw a major sell-off and fell 8.6% today. The company announced Q2 results on Friday after market hours. In Q2, its consolidated revenues fell 24% over the same period last year to ₹1.16 lakh crore, better than street estimates of ₹1.11 lakh crore. Its net profit fell 6.6% year-on-year to ₹10,602 crore. The company’s performance was impacted by a decline in the refining margin and a weak retail business (due to lockdown), but was supported by the growing digital business. While the results are above street estimates, the stock saw selling pressure as most of the positives seem to be factored in. The stock has outperformed the market indices since the start of this fiscal till the end of last week, rising ~86% versus the Nifty50, which gained ~35%.
ICICI surges as profit rises multi-fold
In general, banks have been able to deliver strong results in the September quarter this year. ICICI Bank announced a steep rise in its net income to ₹4,251 crore as compared to ₹655 crore last year. The asset quality improved with gross non-performing assets for Q2FY21 at 5.17% versus 6.37% last year. The company mentioned that after lockdown restrictions were eased, it is witnessing a month-on-month increase in disbursement of retails products. In fact, mortgage, auto and rural portfolio disbursements have either reached or surpassed pre-Covid levels. The stock was among the top Nifty50 gainers today and rose by 6.0%.
CV sales zoom in October
Domestic volumes for two-wheelers and passenger vehicles grew at a fast clip this October thanks to the festive season. However, what was most surprising was the recovery seen in the commercial vehicle (CV) sales, especially in the medium and heavy vehicles (M&HCV) segment. In October, Ashok Leyland’s domestic sales for this segment grew by 13% year-on-year, while for Eicher Motors (Volvo-Eicher) sales rose by ~25% in the same interval. The recovery in the index of industrial production (IIP) numbers from extreme lows of April 2020 and sharp rise in manufacturing PMI at 58.9 back this trend. Ashok Leyland was a top gainer in the auto pack as it rose 3.9%%. However, Eicher Motors (which also makes Royal Enfield motorcycles) was down 2.5%, mainly due to a 7% year-on-year decline in domestic two-wheeler sales. Meanwhile, Maruti (-1.2%) and Bajaj Auto (-1.3%) fell, while Hero Moto (+1.3%) gained.
Closing bell
While there was a tug-of-war in the large-caps (mainly Reliance vs. banks), the Nifty Smallcap index fell 1.55%. And such movements usually go unnoticed. Meanwhile, the Nifty Midcap has been moving sideways for over two months now, suggesting a lack of direction. Having said that, the October Manufacturing PMI numbers stood at 58.9, the highest in over a decade. And this is reflected in the Q2 results of several companies. However, at this point, investors would be looking for sustenance of this positive trend.
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