Covid Situation and Global Cues To Be Watched
Markets started the year 2022 on a firm note and gained over one and a half percent. After a strong uptick, the benchmark moved from strength to strength, thanks to healthy buying in the banking & financial pack which was closely followed by metal and auto.
"The participation of the banking pack has changed the market mood of late while other things remain the same. However, the update on the COVID situation combined with the performance of the global markets would play a critical role ahead. Now, the next hurdle is at 17,750 in Nifty. We reiterate our view to focus on the selection of stocks while keeping a check on the leveraged positions," saidAjitMishra, VP - Research atReligareBroking
Volatility and Options Data
India VIX was up by 1.43 percentfrom 16.22 to 16.45 levels. "Volatility has been hovering near 16 levels from the last three sessions and needs to cool down to 15-14 zones for stability in the market," saidChandanTaparia,Vice President|Analyst-Derivatives atMotilalOswalFinancial Services.
On Option front, since it is the beginning of new series, option data is scattered at various strike price. Maximum Call open interest is at 17500 then 18000 strike while Maximum Put open interest is at 17000 then 16500 strike. "Option data suggests a wider trading range between 17000 to 18000 zones while immediate trading range in between 17400 to 17800 zones," he said.
On stocks front, "bullish setup was seen in Coal India, Eicher Motors, Vedanta, Max Financial Services, Bajaj Finance, ICICI Bank, Tata Motors, HDFC Bank, IDFC First Bank, Indian Energy Exchange, L&T Infotech, Muthoot Finance, Axis Bank, Tata Steel, Astral, Tata Chemicals, UPL, L&T Technology, Ramco Cement, TCS, JSW Steel and L&T while weakness in Cipla, Godrej Consumer Products, M&M, Bandhan Bank, UBL and Biocon," said Chandan Taparia.
Market Outlook
"As India widens its vaccine coverage, Bulls ushered in the New Year in style as the Nifty Bank led the rally with good support from other sectoral indices buoyed by positive global cues. As India achieved the fastest rate of growth in Renewable Energy capacity addition during the last few years, it is indeed remarkable that the country was able to meet its non-fossil fuel targets almost a decade ahead of its committed deadline. Market Breadth was extremely positive with a host of Small & Midcaps across sectors posting smart gains," saidSRanganathan, Head of Research atLKPSecurities.
Technical View
"The Nifty50 index has marched forward gallantly and is all set to move up higher. As expected on Friday, we have achieved the target of 17,600. We should now be headed to 17,850 as the next level of resistance. Post that 18,050 would be the next possible target for the Nifty. Since we are in positive terrain, any drop or intra day dip can be utilized to accumulate buy positions for higher targets," saidManish Hathiramani, proprietary index trader and technical analyst at Deen Dayal Investments.
Expert's Take on Rupee
"Rupee traded muted in range near 74.30 as it tried to settle. Good secondary market participation gave a positive trigger but strength in the dollar index kept the rupee in a small range. Going ahead range for rupee can be between 74.10-74.55 a dollar," saidJateenTrivedi, Senior Research Analyst atLKPSecurities.
Top Gainers and Losers
CLOSING BELL
Bulls maintained charged at Dalal Street as the BSE Sensex rallied 929 points and the Nifty50 closed above 17,600 levels, led by banks & financials.
All the sectoral indices, barring Pharma, closed in the green, with Banking & Financials, Metal, IT and Auto leading the rally.
The BSE Sensexclimbed 929.40 points or 1.60 percent to59,183.22, and the Nifty50 jumped271.70 points or1.57 percent to17,625.70, while Nifty Bank was up 940.20 points or 2.65 percent at36,421.90.
Expert's Take On Strong Market
Indian markets opened on a positive note on the first trading day of the year despite mixed Asian market trade. During the afternoon session markets maintained their upward momentum and continued to trade in positive territory, following gains in auto, banking and realty stocks. Healthy buying was observed in blue-chip stocks.
"Sentiments were upbeat as Finance Ministry said that Goods and Services Tax (GST) revenues grew 13 per cent to over Rs 1.29 lakh crore in December 2021, as compared to Rs 1.15 lakh crore GST revenues in the same month last year, mainly due to pickup in economic activity and anti-evasion steps. However, traders overlooked report that India’s manufacturing activity lost some momentum in December easing to a three month low after hitting a 10 month high in November, amid fears that the rapidly spreading third wave of the Coronavirus (Covid-19) pandemic may hit consumer sentiment and output," saidNarendraSolanki, Head- Equity Research (Fundamental), at AnandRathiShares & Stock Brokers.
Top Gainers and Losers
Bajaj Finserv, Bajaj Finance, ICICI Bank, IndusInd Bank, Tata Steel, and HDFC Bank are the biggest gainers in the BSE Sensex. However, Dr Reddy's Labs, Tech Mahindra, M&M, Nestle India, Titan and HUL were the only losers in the BSE Sensex.
No Major Lockdowns Seem To Be Making The Street Happy
The state governments have imposed several COVID-19 restrictions to check the spread of virus, but there is no major lockdown-like situation seen in 2020, though India reported 33,750 cases in the 24 hours to 8am on Monday, the highest since September 2021, which overall seems to be making the street happy as there won’t be impact on earnings and economic growth.
“Even though Omicron is spreading fast, the market doesn’t expect any restriction on the economic activity that will impact growth and earnings,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Market Update
:The benchmark indices remained strong for second consecutive session with the Nifty50 rising 279.60 points or 1.61 percent to17,633.60, and the BSE Sensex climbing963.27 points or 1.65 percent to59,217.09.
The broader markets also joined the party, with the Nifty Midcap 100 and Smallcap 100 indices rising more than1 percent each.
Stock Action
Quarterly Earnings To Start Next Week
The December quarter earnings season will be kicked off by the technology companies next week. Infosys, TCS and Wipro will release their quarterly earnings on December 15, while HCL Technologies will announce numbers on December 14.
HDFC Bank will also declare results next week, on Saturday, December 15.
Shivam Autotech in Focus
The company has appointed Rakesh Guptaas Chief Financial Officer.
"Meeting of board of directors of the company today as scheduled and approved the appointment of Mr. Rakesh Gupta, as Chief Financial Officer designated as Key Managerial Personnel of the company," said the company in its BSE filing.
Laxmi Organic Industries
India Ratings has upgraded Laxmi Organic Industries'Long-Term Issuer Rating to ‘AA-’ from ‘A+’. "The Outlook is Stable," said the rating agency.
BPCL plans Rs 25,000-crore green power push to be net zero on emissions by 2040
State run-Bharat Petroleum Corporation Ltd (BPCL) is setting aside Rs 25,000 crore to build a robust renewable energy portfolio by 2040 and is putting in place a team to push the diversification, which will be strategic to the company’s ambition to be “net zero” on emissions by the year.
Even as the public sector oil marketing company is in the process of privatisation, BPCL aims to build 10 gigawatts (GW) of renewable energy capacity by 2040 through organic and inorganic routes. The company currently has a capacity of 45 megawatts (MW).
Nifty Financial Services jumped over 2 percent led by Bajaj Finserv, Bajaj Finance and ICICI Bank
Vinod Nair, Head of Research, Geojit Financial Services:
Monthly volume data continued to be mixed with weakness in two-wheelers and tractors. Demand for SUVs was good and commercial vehicles dispatches to dealers turned green, supported by LCVs. PV demand fell for the fourth consecutive month due to global shortage of semiconductors and cramping production. In addition, subsequent price hike and pandemic uncertainties added pressure. However, positive indicators like softening of commodity price, rise in economic activities, capex, encouraging farm data and marriage season will bring growth in Auto industry during 2022.
Market update at 2 PM: Sensex is up 823.18 points or 1.41% at 59077, and the Nifty jumped 238.30 points or 1.37% at 17592.30.
Karur Vysya Bank Q3 business update
: Total deposits grew 7.7% YoY; loan growth at 7.1% YoY.
Most active stocks on NSE in terms of volumes
RBI approves cross border remittance via the Money Transfer Service Scheme of Fino Payments Bank
Fino Payments Bank has received the RBI approval for commencing International Remittance business under the Money Transfer Service Scheme (MTSS). The Bank will be undertaking inward cross-border money transfer activities and will be partnering with an Overseas Principal. It has also received the approval to partner with one of the largest global remittance service providers as its Overseas Principal. The stock was trading at Rs 384.30, up Rs 13.55, or 3.65 percent. It has touched an intraday high of Rs 393.00 and an intraday low of Rs 368.20.
Ravi Singh, Vice President, Head of Research at ShareIndia
After strong December sales figure, Tata motors share price is poised to touch the levels of Rs 520-550 in near term. The technical setup is showing a bullish trend in the counter. Any dip or correction will be an opportunity for fresh entry.
Market update at 1 PM
: Sensex is up 761.20 points or 1.31% at 59015.02, and the Nifty jumped 219 points or 1.26% at 17573. Bajaj Finserv, Axis Bank, Eicher Motors and Coal India are the top gainers while IndusInd Bank, HDFC and HDFC Bank are the most active stocks.
Federal Bank business update
: Q3 total deposits grew 9% YoY and was up 2% QoQ. Loan growth at 12% YoY. CASA ratio at 36.7% as of December 31, 2021.
M&M Financial Services business update:
Q3 disbursements grew 39% YoY. December disbursements jumped 42% YoY. Q3 collection efficiency at 95%. The company expects positive trend to continue in Q4.
Dhanlaxmi Bank Q3 business update:
Total deposits grew 5.5% YoY and grew 1.4% QoQ. CASA ratio at 33.1% against 33.5% (QoQ).
Dhaval Ajmera, Director of Ajmera Realty and Infra Ltd on Maharashtra Government waving property tax on residential units up to 500 sq ft.
: The decision to waive the property tax for housing units under 500 sq ft. area is yet another step to accentuate demand. The earlier announced waiver was only on the general component of property tax, the current move makes it holistic. The demand stimulus from the state government is surely going to sustain positive sentiment amongst the home buyers.
Wall Street Week Ahead: Defensive stocks may be ripe for reversal after stellar December
Investors have piled into traditionally defensive stocks in the last weeks of the year, spurring a rally some believe may lose steam early in 2022. The S&P 500's top-performing sectors this month are consumer staples, real estate investment trusts, healthcare and utilities. Each of the sectors, which are viewed as popular destinations during times of uncertainty, have risen by 9% or more in December and outpaced the broader index's gain of about 5%.
By contrast, the S&P 500's energy and information technology sectors, among the year's best performers, are up 2.9% and 3.3% for December. The broader index is up 27% in 2021 and on track for its third straight year of double-digit gains.
Market update at 12 PM:
Sensex is up 619.95 points or 1.06% at 58873.77, and the Nifty jumped 179 points or 1.03% at 17533. Bajaj Finserv, Coal India and Eicher Motors are the top gainers while Tata Motors, TCS and RBL Bank are the most active stocks.
Auto, financials, IT and realty added over a percent each while the midcap and smallcap indices are also rading in the green.
Rohit Poddar, Managing Director, Poddar Housing and Development on Maharashtra government waiving property tax on residential units up to 500 sq ft:
It is a welcome move of waiving off the property tax. This will certainly impact the lives of nearly 16 lakh residential homes in Mumbai. We believe it will be offset by the real estate industry rebounding, with the mid-to upper-end segments purchasing flats in unprecedented numbers. The revenue shortfall of the Government will be filled by the top section certainly.
Morgan Stanley on Reliance Industries
: The research firm has an overweight call on the stock with target at Rs 2,925 per share. The company's new energy stack continues to fall in place as India progresses to decarbonisation target. Acquisition of a Sodium Technology player has multiple synergies with green plans. The company's refinery is potentially adding value in developing carbon anode side of the battery. The stock was trading at Rs 2,388.30, up Rs 20.15, or 0.85 percent. It has touched an intraday high of Rs 2,391.75 and an intraday low of Rs 2,364.95.
Coal India share price jumps after rise in coal production in December
Coal India share price jumped over 4 percent after the company reported rise in December 2021 coal production. Coal India Limited on January 1, 2022 reported a 3.3 percent rise in coal production to 60.2 million tonne (MT) in December. The state-owned company had produced 58.3 MT of coal in the corresponding month of the previous fiscal, it said in a filing for exchanges on Saturday.
The firm's coal output increased 5.3 percent to 413.6 MT during the April-December period from 392.8 MT in the corresponding period of the previous fiscal, it added. Coal offtake increased in December 2021 by 15.7 percent to 60.7 MT compared to 15.5 MT in December last year.
NCC gags five new orders worth Rs 1,898 crore in December 2021
NCC has received five new orders totaling to Rs 1,898 crore (exclusive of GST) in the month of December, 2021. Out of this, three orders of Rs 988 crore pertain to Building Division and balance two orders of Rs 910 crore pertain to Water Division. These orders are received from State Government agencies and do not include any internal orders, the company said in an exchange filing. The stock was trading at Rs 72.05, up Rs 1.75, or 2.49 percent. It has touched an intraday high of Rs 72.65 and an intraday low of Rs 70.30.
HDFC Securities on S H Kelkar and Company
We believe the company would be a major beneficiary of increasing demand from FMCG companies specifically present in personal care, packaged foods & dairy products. Management guided for 12-13% CAGR in revenue over the next 3-4 years. Company said that gross margin would be sustainable at 42-43% area in the medium term. We expect 12.5% revenue CAGR over FY21-24E largely led by strong volume growth in the end user industry.
We believe margin should remain around 15-16.5% over the same period largely due to pressure in gross margin and higher expenses. We estimate ~9% PAT CAGR on the back of strong revenue and steady margin. Recently global giant Firmenich Aromatics took 10% stake in the company. This would help SHK in technological & R&D newer product development. Management said that the company will maintain distribution policy of 30-40% via dividend/buybacks as no major capex is planned in the medium term.
At CMP of Rs 155, the stock trades at 15.5x/12.4x of FY23E/FY24E EPS. We feel that investors’ can buy the stock at in the band of Rs 155-158 and add on dips at Rs 137 for base case target price of Rs 172.5 (14.5x Dec-2023E EPS) and bull case target price of Rs 184 (15.5x Dec2023E EPS) over the next two quarters.
Market update at 11 AM
Sensex is up 570.58 points or 0.98% at 58824.40, and the Nifty jumped 163.30 points or 0.94% at 17517.30. TCS, Bajaj Finserv and Coal India are the top gainers while Tata Motors, TCS and RBL Bank are the most active stocks.
Among the sectors, auto, financials, capital goods and realty added a percent each while the midcap and smallcap indices are also trading in the green.
Just in
: India December manufacturing PMI at 55.5 against 57.6 (MoM).
Gaurav Garg, Head of Research, Capitalvia Global Research
: The Indian benchmarks made a positive start on the first trading session of the calendar year 2022. Market participants will be cautious as the Reserve Bank said India’s current account slipped into a deficit of 49.6 billion in the third quarter. There may be some buzz in NBFCs stocks as Crisil rating agency report showed continued momentum in their growth. Some respite may come in the market as Foreign Institutional Investors (FIIs) net bought shares worth Rs. 575.39 crore, while domestic institutional investors (DIIs) net purchased shares worth Rs. 1,165.62 crore in the Indian equity market on December month.
Research suggests that 17200-17300 may act as an important levels in the market to stay positive. If the market sustained the level of 17200-17300, we can expect it to trade till the range of 17500-17600. Technical indicators also support positivity in the market.
Rupee Opens
The Indian rupee has opened flat at 74.35 per dollar on January 3.
The US dollar declined by 0.35% on Friday in quiet holiday trading and absence of any major economic data. However, a sharp fall was prevented on risk aversion in the global markets. The dollar ended 2021 on a strong note gaining nearly 7% on hopes the US Fed will hike rates sooner than its peers, said ICICIDirect.
Rupee future maturing on January 27 appreciated by 0.10% on weakness in the dollar and rise in risk appetite in the domestic markets. Further, rupee gained strength on FII inflows. However, sharp gains were prevented as investors remained vigilant ahead of economic data from the country, it added.
Market at 10 AM
Benchmark indices extended the opening gain and trading at day's high with Nifty around 17500
The Sensex was up 479.89 points or 0.82% at 58733.71, and the Nifty was up 137.50 points or 0.79% at 17491.50. About 2360 shares have advanced, 679 shares declined, and 96 shares are unchanged.
Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments:
The Nifty is in positive terrain, the breakout level was 17350 and we managed to close above that on Friday. This should allow the index to move higher to 17575-17600 and then 17800.
A good base has been formed at 17100 and as long as we can keep above that, all dips can be utilized to accumulate long positions.
Buzzing
Eicher Motors' Motorcycles sales jumped 7 percent to 73,739 units in December 2021, against 68,995 units in December 2020.However, its export rose 144 percent at 8,552 units versus 3,503 units, YoY.
The company's Commercial vehicle segment sales increased by 25.8 percent to 6,154 units during December 2021, against 4,892 units sold in December 2020.
Its total domestic sales were up 27.6 percent at 5192 units versus 4069 units, YoY.
Eicher Motors was quoting at Rs 2,677.70, up Rs 87.75, or 3.39 percent on the BSE.
Edelweiss Financial raises over Rs 4,500 mn through public issuance of NCDs
Edelweiss Financial Services (EFSL), announced that the issue of Secured Redeemable Non-Convertible Debentures (NCDs) has been successfully completed and the company has allotted 45,62,472 NCDs of the face value of Rs 1,000 each, amounting to Rs 4,562.47 million.
EFSL had decided to do an early closure of the issue on December 22, 2021 against the scheduled closure on December 27, 2021.
Edelweiss Financial Services was quoting at Rs 73.65, up Rs 1.75, or 2.43 percent on the BSE.
UPL swaps USD 700 mn acquisition loan with a sustainability loan
UPL has raised a second tranche of USD 700 million sustainability linked loan (SSL) on December 31, 2021 with a reduction of interest cost by 35bps and an opportunity for a further reduction of 5bps on achievement of sustainability indicators agreed with the banks.
The first tranche of USD 750 million was raised in March and April 2021. Of the USD 1.45 billion, the debt maturity for USD 1.25 billion gets extended by two years to FY 2026 (against FY2024 earlier). The SLL also provides a complete pre-payment flexibility
UPL was quoting at Rs 751.60, up Rs 4.55, or 0.61 percent on the BSE.
Bajaj Auto December auto sales
Bajaj Auto sold 3,62,470 units in December 2021 against 3,72,532 units in December 2020, down 2 percent. Its domestic sales has increased by 5% at 1,45,979 units against 1,39,606 units and exports were down 7% at 2,16,491 units versus 2,32,926 units, YoY.
Bajaj Auto was quoting at Rs 3,262.50, up Rs 11.70, or 0.36 percent.
The BSE Auto index rose 1 percent supported by the Eicher Motors, Tata Motors, Tube Investments
Forex reserves decrease by $587 million to $635.08 billion
India's forex reserves decreased by $587 million to $635.08 billion for the week ended December 24, the RBI said on Friday. In the previous week ended December 17, the overall reserves had decreased by $160 million to $635.667 billion. The kitty had touched a lifetime high of $642.453 billion in the week ended September 3, 2021.
For the reporting week ended December 24, the dip in the overall reserves was on account of a decline in foreign currency assets (FCA), a major component of the overall reserves. FCA dipped by $847 million to $571.369 billion in the reporting week, the RBI data showed.
