Market recap for 7 December 2020

Nifty50 13,355 ▲ 97 (+0.73%)

Sensex 45,426 ▲ 347 (+0.77%)

The markets opened with a gap-up and continued to rise for the rest of the day. The bulls clearly had an upper hand today and buying interest was seen in FMCG stocks such as HUL (+3.2%) and ITC (+2.8%) and financials such as HDFC (+2.5%) and SBI (+2.2%). The sentiments were broadly positive after the prime minister stated over the weekend that the Covid-19 vaccine will be available soon.  

Top gainers (Nifty50)

Top losers (Nifty50)

Here are the top stories for the day.

ONGC’s overseas arm strikes oil

ONGC Videsh Ltd (OVL), the overseas arm of state-run oil exploration company ONGC, has struck oil at its onshore block in Colombia. OVL, which is wholly owned by ONGC, has a 70% stake in the block. While the exact value of the find has not been announced, it is said to be a large onshore block that offers several exploratory opportunities. The company now plans to drill more wells to explore the other opportunities in the block soon. The stock rose by over 4.5% intraday and closed 3% higher for the day. It has risen 21% in November and is up over 16% in December. The rise in share prices is backed by higher-than-average volumes, indicating strong investor interest. In 2020, ONGC has been one of the laggard stocks, having dropped 29% versus a 10% rise in the Nifty50. It seems to be catching up with the broader market trend now.

IRCTC soars with high volumes

In India, the first vaccine doses will be available in a matter of weeks and the vaccination programme will begin after experts give a go-ahead. The optimism over the vaccine and passage of time since the first lockdown seems to be making people now adjusted to the situation and comfortable with travelling again. The effects of the improving sentiments were seen in the price of shares of IRCTC, which was up as 6.8% today and closed at ₹1,678. Today’s gains follow a 13.9% rise on last Friday. The sharp rise in the price of the state-run company comes after a nearly seven-month-long consolidation within the range of ₹1,300–1,400. Meanwhile, other travel industry-related stocks that saw gains today include Spicejet (+6.8%), Indian Hotels (+3.5%), EIH (+3.7%), Chalet Hotels (+12.3%), Lemon Tree (+14.3%).

India’s gold imports drop in November

High gold prices and a weak economic scenario are impacting demand for gold in India, the world’s second-largest consumer (after China). As per reports, India’s gold imports fell 41% YoY in November to about 33 tonnes (about ₹16,000 crore). Even the festival of Diwali didn’t help in boosting the demand for the yellow metal. Gold prices fell by about 5.7% in November, even as the US dollar index dropped 2.3%. This is contrary to the general trend in gold prices, which move inversely to the US dollar index.

Closing bell

The rise in the Indian markets today was surprising since key Asian markets fell by 1% on average. Further, major European indices too were trading in red at the time of publishing this newsletter. Positive liquidity flows, a steady drop in new Covid-19 cases and positive news on the vaccines are helping investor sentiments. This week, the inflation data release (on Friday) is a major event that investors will watch out for.

Good to know

What are derivatives?

Derivatives are securities that derive their value from an underlying asset (say shares of Tata Motors) or benchmark (say the Nifty50 index). Common derivatives include futures and options. Investors typically use derivatives to hedge (protect) existing positions and traders use them to build leveraged positions.

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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.