Taking Stock: Banks surge, Sensex and Nifty end the week on a high
The mood of the market remained exuberant on hopes of a speedy economic recovery and expectations of further fiscal and monetary support.
Deepak Jasani, Head Retail Research, HDFC Securities: Indian markets strengthened during the week as investors cheered optimism about a potential treatment for coronavirus and pick up in business activity. Above average rainfall and upbeat global cues on trade talks among U.S. and Chinese officials following weeks of escalating tensions boosted investor sentiments. The Nifty closed the week higher by 2.43% up for the second consecutive week. Markets ended higher on all 5 trading days. Broader markets mildly outperformed the benchmark indices. NSE Midcap and Smallcap indices gained by 2.6% and 3.7% respectively. Market breadth remained in favour of the bulls with 6 shares advancing for every 5 declining shares.
Mid and smallcaps are correcting/consolidating as expected. Some profit taking in these is advisable. Within largecaps, banks have been doing well for the past 5-6 sessions and we could soon see a shift in attention to some other sector. Nifty continues to do well gaining ground gradually without raising too many eyebrows.
Nirali Shah, Senior Research Analyst, Samco Securities: Nifty50 index formed a big bullish candle after witnessing increased participation from the banking stocks which closed with the gains of almost 10 percent. The rally in BankNifty index has charged the bulls enough and has led Nifty50 to surpass a brief resistance at 11530. Traders are advised to remain careful about the fact that Nifty50 is at overbought levels and the potential upside might be limited. The immediate support is now placed at 11200; maintain a bullish outlook until this is not violated.
Nagaraj Shetti, Technical Research Analyst, HDFC Securities: Nifty continued its upside momentum for the sixth consecutive sessions on Friday and closed the day on a decent gains of 88 points. A reasonable positive candle was formed at the highs with minor upper shadow. Nifty made a new swing high of 11686 and closed near the highs. Though, Nifty moved up continuously in the last 6-7 sessions, the broader trend of the market was range bound. Friday's upmove in the broader market was mainly contributed by the excellent up move in the front line Banking, PSU Banking and Financial stocks. The overall market breadth was reasonably positive with decent upmove was observed in the mid and small cap segments.
The intermediate resistance as per weekly and monthly chart has been broken on the upside at 11500 levels in last week and Nifty closed just above it. Apparently, this action could signal upside breakout of the hurdle, but market internal movement on the daily chart was subdued with range bound movement. Now, one needs to be cautious about 11500 holding in the next week to consider this as a sustainable upside breakout. The near term trend of Nifty continues to be positive. A sustainable movement for the next week is likely to pull Nifty towards the next upside levels of 12000 and higher for the coming week. Formation of any significant reversal pattern at the highs is expected to trigger profit booking from the highs.
On the technical front, the outperformance continued on the first day of the September series as well. The Bank Nifty outperformed the benchmark indices in the August series and rallied by more than 9…
Buzzing Stock: Max India fell 5 percent on BSE on the day of its relisting on August 28. The stock debuted at Rs 80 on BSE but fell 5 percent soon to touch its lower price band at Rs 76. Max India resumed trading on BSE and NSE on August 28. The company, earlier known as Advaita Allied Health Services Limited, is a part of the $3 billion Max Group. The new ‘Max India’ is the holding company of Max Group’s senior-care business ‘Antara’ and a skilling company, ‘Max Skill First’.
Market at Close: The Indian stock market witnessed some handsome gains led by rally in banking stocks. Sensex is up 353.84 points or 0.9 percent at 39467.31, and the Nifty jumped 88.30 points or 0.76 percent at 11647.60. IndusInd Bank, Axis Bank, ICICI Bank, State Bank of India are the top gainers while Reliance Industries, HDFC Bank, HDFC, Kotak Mahindra Bank and ICICI Bank are the top positive contributors.
Among the sectors, the banking index jumped 4 percent while the midcap index added half a percent. Nifty Auto shed over half a percent while the metal index ended in the red.
ICICI Bank sells 2% stake in ICICI Sec: Shares of ICICI Bank jumped 5 percent while those of ICICI Securities fell about 2 percent in intraday trade on BSE on August 28 after the bank said it had sold 6,442,000 shares or 2 percent stake of ICICI Securities for Rs 310 crore via open market transaction.
After the share divestment, ICICI Bank now holds 77.22 percent stake as of June quarter in ICICI Securities.
This sale was to meet SEBI guidelines of 25 percent minimum public shareholding requirement, the lender said in a notice to BSE.
ICICI Securities Limited (I-Sec) is a subsidiary of ICICI Bank. It offers services like broking, distribution of financial products, wealth management and investment banking.
As of June 30, 2020, ICICI Bank held 79.22 percent equity holding (25,52,16,095 shares) in ICICI Securities, as per data on BSE.
Buzzing stock: Shares of GMR Infrastructure surged almost 10 percent to hit their fresh 52-week high of Rs 28.25 on BSE on August 28.
The stock got traction after reports emerged that the company is going through a restructuring exercise that will result in it retaining just the airport business.
The rest of its verticals - energy, EPC and urban infrastructure - will be carved out under GMR Power and Urban Infra Limited (GPUIL). At present, both GPUIL and GMR Power Infra, which housed the energy business, were units of GIL.
Milkbasket plans to launch IPO next year
Daily grocery delivery platform Milkbasket has advanced its plan to launch an initial public offering by the second half of next year, buoyed by strong growth in business in recent months amid the pandemic, PTI reported, quoting a top company executive.
Speaking to PTI, Milkbasket co-founder and CEO Anant Goel said the rapid adoption of at-home grocery delivery amongst consumers during the pandemic has provided an impetus to target an initial public offering (IPO) in just a year.
"Milkbasket has a near-perfect record of reaching growth targets since being founded in 2015. The rapid adoption of at-home grocery delivery amongst consumers due to the pandemic has provided us with an impetus to target IPO in just a year, which we had initially planned for the year 2023," he said.
Milkbasket, which already offers delivery of over 9,000 products across fast-moving consumer goods (FMCG), dairy, fruits and vegetables categories in five cities (Delhi, Noida, Gurugram, Ghaziabad and Bengaluru), currently has an average revenue run rate (ARR) of about USD 100 million.
Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research
The current economic crisis has created a huge shortfall between the GST compensation requirement for states which is estimated to be Rs 3 lakh crore and the projected Rs 65,000 crore of compensation cess collection by the centre.
While the central government has estimated that only Rs 97,000 crore is on account of the introduction of GST, it may have to facilitate the funding of the entire gap of Rs 2.35 lakh crore through a mix of borrowings both directly from RBI and from the market.
Such borrowings are expected to be, however, serviced through the future receivables from GST compensation cess, the validity of which may get extended from the initial period of 5 years ending in June 2022.
In our opinion, the decision to fund this gap through debt will further elevate the borrowing levels of the states in the current year to around Rs 9-10 lakh crore from Rs 6.32 lakh crore in FY20.
With the fiscal deficit of the states having already climbed to 2.8 percent of gross state domestic product (GSDP) in FY20 (RE), there is a risk that the consolidated deficit of the centre along with the states will get into double digits in FY21.