Weekly recap for 24–28 May 2021

Here's a quick wrap-up of the highlights this week.

Nifty50 hits a new lifetime high

The benchmark index closed the week on a strong note, hitting new lifetime highs. The market optimism stems from multiple factors:

• Declining cases – daily new cases have now dropped below 2 lakh from over 4 lakh earlier this month.
• Easing curbs – several regions are expected to ease lockdown restrictions in the next month.
• Fresh stimulus – there is an expectation of a new stimulus package from the government.

Major market movers since Nifty50’s previous high in Feb 2021

IPO market could get a boost

If the market momentum sustains, it could also help to break the lull in the IPO market. Between April and May, there were only two IPOs as compared to nine public issues in March 2021. 

There is a buzz around several big-ticket issues like PayTM (~₹21,000 crore), Zomato (~₹8,250 crore) and, finally, LIC which is estimated to be in the range of ₹55,000-70,000 crore, making it the biggest-ever IPO to hit the Indian market.

Media stocks on the rise

The Nifty Media index was the top sectoral gainer this week, with a rise of 7.1%. As the vaccination drive progresses and the “unlock” theme unfolds, it is widely expected that the media and entertainment sector will see rising demand. Multiplex majors could benefit from it. Further, the decreasing number of single-screen theatres could help increase the market share of multiplex chains like PVR and Inox, which rose 4-5% this week.

Similarly, the improving macro advertising environment is triggering investor interest in media companies such as Sun TV, Zee Entertainment and TV18 Broadcast, which rose between 5 and 11% this week.

Farm biz drives M&M’s revenues

• Auto major M&M reported a 47% year-on-year rise in standalone revenues driven by a 60% growth in its farm equipment vertical, which includes the tractor business. 
• Its profit before exceptional items and tax grew 52% to ₹1,266 crore, again led by the farm equipment business. However, after profit after exceptional items and tax shrank to ₹48 crore mainly due to impairment provisions of ₹886 crore. 
• On 11 May, the company had guided for a 15-20% sequential drop in volumes in the expectations of the second wave. However, the stock has risen 9% since then. 
• The stock was up 2.2% yesterday. and was the top gainer in the auto pack.

Major earnings next week

• Monday: Aurobindo Pharma 
• Tuesday: ITC
• Wednesday: Motherson Sumi, PVR
• Friday: Balkrishna Industries, Bharat Forge, Bank of India

Key data releases next week 

• Monday: Q4 GDP data
• Tuesday: Manufacturing PMI 
• Thursday: Services PMI 
• Friday: RBI’s interest rate decision

Amazon acquires MGM Studios

In other news, Amazon has acquired Hollywood studio MGM, best known for producing the James Bond movie franchise, for $8.5 billion. It is the second-largest acquisition for Amazon after it acquired Whole Foods for $13.7 billion. This deal will enable Amazon to boost its Prime Video library with the catalogue of films and series produced by MGM. This will help Prime Video to compete better with rivals like Netflix and Disney+.

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Disclosures and Disclaimer

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.