Market Recap for 8th October

▲ Nifty: 11,834 (+0.82%)    ▲ Sensex: 40,182 (+0.76%)

Hi there!

Today, the Indian markets had two reasons to cheer. First, the global cues were strong on renewed hopes of a fresh stimulus in the US. And second, the Indian IT stocks rose sharply after the strong Q2 performance by TCS, which helped the index to continue its upward march for the sixth day in a row. Among the sectoral indices, the Nifty Bank index was up nearly 1.0%, led by HDFC Bank which gained 2.3%. On the other hand, the thematic index Nifty Energy index lost 0.9%, dragged down by Reliance (-0.7%) and ONGC (-2.7%).

Here are the top stories of the day.

Getting 'IT' right

With a 4.8% quarter-on-quarter growth in revenues*, TCS has beaten market expectations of ~2.6% growth. The BFSI and Retail verticals led the growth and a rebound was seen in all geographies. Operating margins also showed an uptick. Further, the company closed deals worth $8.6 billion, indicating a strong order book. It has announced a buyback program of ₹16,000 crore and an interim dividend of ₹12 per share. Its shares gained over 5% intraday before settling 3% higher than the previous close. TCS’ strong results also had a spillover effect on other IT stocks such as L&T Infotech (+7%), Mindtree (+5.7%) and Infosys (+2.6%). Interestingly, the rise in stock prices was accompanied by above-average volumes, indicating strong investor interest. Another IT major, Wipro will also consider a buyback during its upcoming board meeting on 13 October. The stock was a top Nifty50 gainer today with a rise of 7.3%.

*on constant currency terms

Cement stocks strengthen

With the recovery in the real estate sector and housing loan disbursals, a revival in demand in the cement sector was expected. Large-cap cement stocks have gained 7-10% this month (outperforming the Nifty50, which is up 5.2%). For cement makers, Q2 is seasonally the weakest quarter of the year due to heavy monsoon rains across the country. In Q3, pent up demand (after the disruption due to Covid-19) and improved rural demand are expected to support the revival of the cement sector. Among the major cement players, Ultratech (+3%), ACC (+2.5%) and Ambuja Cement (+1.1%) witnessed strong gains today.

Crude oil reverses last week’s losses

US crude oil prices have gained over 9% this week and have fully recouped the losses of last week. Supply-side concerns emerged as oil workers evacuated rigs before Hurricane Delta hits the US Gulf Coast. Further, the deadlock over the stimulus has been replaced by hopes of a piecemeal stimulus. A fresh round of stimulus could help improve demand for oil and provide support to crude oil prices. Some volatility in crude prices is expected today after the release of the US jobs data. Meanwhile, in India, MCX Crude oil prices were up 1.9%.  

Closing bell

The RBI will announce its monetary policy tomorrow. The market expects the rates to remain unchanged and the RBI to maintain its accommodative stance. The RBI could also release its GDP expectation for FY21. Banking stocks could see higher trading interest tomorrow.