Market recap for 9 April 2021

Nifty50: 14,834 ▼ -38 (-0.2%)
Sensex: 49,591 ▼ -154 (-0.3%)

The markets opened weak and remained in negative territory for most of the day. Of the Nifty50 stocks, 26 closed in the red.

Among the sectoral indices, Nifty Pharma (+3.0%) and Nifty PSU Bank (+2.0%) were the top gainers, while Nifty Bank (-1.0%) and Nifty Financial Services (-0.7%) were among the top losers.

L&T bags large solar PV project in Saudi Arabia

• The renewable energy arm of L&T has secured a ‘major’ contract for the 1.5GW Sudair Solar PV project in Saudi Arabia. Although the infra major did not disclose the exact value of the project, the term ‘major’ indicates the project value is in the range of ₹5,000–7000 crore. The project is considered the largest solar plant in the country and is also one of the largest in the world. 
• The project, which is being set up in Riyadh Province, has a 30.8 sq km land parcel available to install a total capacity of 1.5GW PV solar modules. Shares of L&T were down about 1% in a weak market.

PLI for solar in the works

• To reduce import dependency, the government has recently approved a ₹4,500 crore production-linked incentive (PLI) scheme for solar module manufacturing. The incentives for the scheme are likely to range from 2.25% to 3.75% of incremental sales of manufactured goods. 
• Bids for the scheme are likely to begin in the next two weeks, while beneficiaries will be identified in July. Some companies that are a part of the solar value chain include Tata Power (which makes solar cells via its subsidiary) and Borosil Renewables (the only solar glassmaker in India). Further, in order to support local manufacturing, the government will levy a basic customs duty of 40% and 25% on imported solar modules and cells  from FY23. 

Westlife enables 24x7 delivery at McDonalds 

• The operator of the burger chain in southern and western India will keep select stores in Mumbai running for 24x7 food delivery. The announcement comes after the state allowed restaurants to run deliveries 24x7 after it went into partial lockdown. 
• Although dine-in business has taken a hit, organised restaurant chains have benefited from a strong delivery network, both in-house and that provided by food-delivery apps. Shares of Westlife Development gained about 1.1% today, while Jubilant FoodWorks and Burger King remained flat. 

Srei Infra receives EoI for capital infusion

• Srei Infrastructure Finance has received an expression of interest for a capital infusion of $250 million (~₹1,860 crore). The investors include US-based Arena Investors LP and Singapore's Makara Capital Partners. Following the development, the stock was locked in its 20% upper circuit.
• In the wake of the pandemic, the Kolkata-based NBFC has been under stress due to mounting provisioning. In Q3, it reported a loss of ₹3,810 crore. However, the stock has been on an uptrend of late and has over 38% in April so far.  

Closing bell

Even though the markets were dragged by banks and the global cues were a mixed bag, the markets continued to find support from various areas. Yesterday, metal stocks helped lift the markets, and today it was pharma and IT. It seems that while the domestic situation is becoming increasingly challenging (mainly due to rising Covid cases), investors are seeking refuge in sectors that have higher export revenues.

Next week, inflation data will be announced on Monday evening. The street expects it to be 5.40% for March (versus 5.03% in February). If so, it will be a sharp jump from around 4% in January. 

Good to know

What are STCG and LTCG on equity?

Profits made from the sale of stocks and equity mutual funds is called capital gain on equity. Any capital gain made from sale within 12 months of purchase is treated as short-term capital gains (STCG) and is taxed at 15%. Meanwhile, gains made from sale after 12 months are called long-term capital gains (LTCG) and are taxed at 10%.  

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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.