Paper stocks on a roll

Nifty50: 15,879 ▲+61 (+0.3%)
Sensex: 53,054 ▲+193 (+0.3%)

After a shaky start, markets gradually inched up and closed near the day’s high. Of the Nifty50 pack, 33 stocks closed in the green.

Among the Nifty sectoral indices, Metal (+2.2%) and Realty (+1.9%) were the top gainers, whereas Media and Auto ended with minor declines of 0.1% each.  

Here are the top stories of the day.

Tyre sector likely to see strong growth

• The tyre industry is expected to grow by 13–15% in the current financial year, according to credit rating agency ICRA. This could be aided by stable tyre replacement segment, and sharp recovery in the original equipment manufacturer demand and low base of FY21. 
• With the demand improving, companies are expected to invest ₹20,000 crore for capacity expansion over the next four years. Meanwhile, profit margins are likely to be impacted in the first half of fiscal 2022 by higher prices of raw materials such as natural rubber and oil. Shares of MRF, Apollo Tyres and TVS Srichakra were up by 0.4% to 1% today. 

Sobha expects strong Q1 numbers

• Shares of the Bengaluru-based real estate player soared by 9% intraday, after the company said that it’s June quarter sales rose 45% year-on-year. 
• The total average price realisation improved by about 2% to ₹7,626 per sq ft. Despite pandemic-related challenges, the company plans to move ahead with its planned new launches of 13.3 million sq ft. The company also believes that it will be able to improve its market share in the residential segment. The stock pared some of its early gains and closed 5% higher today. 

Paper stocks surge on rising demand

• An expected revival in demand sent shares of paper manufacturers soaring today, with some of the stocks rising as much as 15% in intraday trade. According to reports, the demand for paper is expected to grow at 11–15% in FY22, with schools, colleges and offices set to reopen in the near future.
• Shares of major paper makers such as JK Paper, Andhra Paper, West Coast Paper and Seshasayee Paper saw gains of 3–7%. Meanwhile, some of the smaller players such as Orient Paper and Star Paper closed around 10–11% higher today.

Titan sees strong growth on low base

• Titan’s jewellery, watch and eyewear segments grew 107%, 280% and 117%, respectively, in the June quarter this fiscal. This growth was mainly due to the low base of Q1FY21 owing to the nationwide lockdown. 
• In the context of the government's rule of mandatory hallmarking of gold jewellery, the company said that all its jewellery stores have a hallmarking license and 100% of the Tanishq, Mia, and Zoya jewellery is hallmarked. Despite a strong recovery in sales numbers, shares of Titan fell 2% today. 

Closing bell

Despite the weakness seen in the markets yesterday and weak Asian cues today, both Nifty50 and Sensex bucked the trend and closed at record high levels. Metal and real-estate stocks, in particular, outperformed other sectors. Higher demand for metals (as a commodity) suggests improving prospects for user industries such as auto and construction. Similarly, growth in real estate can translate to higher demand for cement, metals, consumer durables, etc. 

Good to know

What is a fund of fund (FoF)?
A fund of fund (FoF) is a mutual fund scheme that invests in other mutual funds, exchange-traded funds and even hedge funds. It pools investors’ money and puts it in other schemes rather than directly investing in stocks or any other asset classes. Having exposure to multiple funds helps investors to diversify their portfolio and reduce risk.

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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.