Sensex Opens in Green; Automobile Stocks Lead

Fri, 1 Jan 09:30 am

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Asian stock markets opened muted as most markets are closed for the New Year holiday and others are expected to see low volumes.

Stock markets in China, Hong Kong and Japan are closed today for a holiday.

In US stock markets, all three major indexes ended the final trading day of the year higher.

Gains were seen after the release of a better-than-expected reading on US weekly jobless claims. The number of first-time unemployment-benefits filers totaled 787,000 for the week ending December 26, the Labor Department said Thursday.

The Dow Jones Industrial Average ended up by 0.7% while the Nasdaq ended up by 0.1%.

The Dow climbed 7.2% in 2020, while for the Nasdaq, it was the best year since 2009 with gains of 44%.

Back home, Indian share markets have opened on a flat note.

The BSE Sensex is trading up by 127 points. Meanwhile, the NSE Nifty is trading up by 38 points.

Both benchmarks recorded double digit gains in 2020. This was the fifth consecutive year when Sensex and Nifty closed in the green. The Nifty climbed 14.9%, while the Sensex advanced 15.8% in 2020.

M&M is among the top gainers today. HDFC, on the other hand, is among the top losers today.

Both, the BSE Mid Cap index and the BSE Small Cap index have opened the day up by 0.5%.

Sectoral indices are trading mixed with stocks in the auto sector and capital goods sector witnessing buying interest. Realty stocks are trading in red.

The rupee is trading at 73.03 against the US$.

Gold prices are trading flat at Rs 50,193 per 10 grams.

Gold prices gained 28% in 2020. Gold prices hit a record high of Rs 56,191, soaring almost 43%.

Meanwhile, silver outperformed gold by advancing 43% in 2020 from Rs 46,691 a kg at the end of 2019 to Rs 67,005 on Tuesday.

Silver hit a record high of Rs 78,000 in August, but corrected later.

Speaking of gold, Ajit Dayal, founder of the Quantum group, shares his views on gold in the latest episode of Investor Hour Podcast.

In the podcast, Ajit also talks about the Covid-19 situation around the world, specific investment opportunities as well as his personal asset allocation strategy.

Tune in here to find out more:

You can also check Ajit's latest article on the best way to start a strong Indian economic recovery here: How India's Economy Can Grow at 10% p.a.

Speaking of stock markets, note that since the lows in March 2020, the smallcap index has gained more than 105%.

While caution is indeed warranted, Richa Agrawal, Research Analyst at Equitymaster, thinks there is still a lot more steam left to this smallcap rally.

Here's what she wrote in a recent edition of Profit Hunter...

• For one, the gap between Sensex and smallcap index is still huge.
  
  In January 2018, the smallcap to Sensex ratio was 0.57 times, versus a long term average of 0.44 times.
  
  At present, this ratio stands at 0.37 times, well below the long-term average.
  
  The possibility of a convergence between growth and value is a lot higher in the smallcap space, than in the large caps.
  
  And then here are some other interesting facts.
  
  Historically, the smallcap index, after a sharp correction, has risen up to 300%.

The above observations have served Richa's smallcap service Hidden Treasure well. Her first batch of essential stock recommendations have offered robust returns so far, as can be seen in the chart below:

While the margin of safety in valuations has come down in these stocks, Richa has recently added another stock to this list.

This company is the world's largest player in a niche segment and its product falls in the essential category. This global leader enjoys unique competitive advantages that are hard to replicate by its peers.

If you are interested in knowing more and in becoming a Hidden Treasure subscriber, here's where you can sign up.

In latest developments from the IPO space, the government has moved a step closer towards the listing of India's largest insurer Life Insurance Corporation of India (LIC).

The Department of Investment and Public Asset Management (Dipam) has selected Milliman Advisors LLP India for ascertaining the embedded value of LIC before its listing, which is seen as India's one of the largest initial public offerings.

The work on determining the embedded value of India's largest insurer would start soon, Dipam Secretary Tuhin Kanta Pandey tweeted.

This would help the government in moving ahead for the listing as the valuation of LIC would be derived. Once valuation is decided, the government will have to appoint merchant bankers for the transaction.

The LIC IPO will help government in getting a substantial chunk in divestment receipts. The government had budgeted Rs 2.1 trillion as divestment receipts for the current financial year, out of which Rs 900 billion was expected to be mopped up from LIC listing and a stake sale in IDBI Bank.

How the above developments pan out remains to be seen.

Moving on to stock specific news...

Jubilant FoodWorks is among the top buzzing stocks today.

Jubilant FoodWorks will invest Rs 920 million to buy a 10.76% stake in Barbeque Nation Hospitality (BNHL), which runs the popular Barbeque Nation (BBQ) chain of restaurants.

"The company will acquire 36,50,794 fully paid-up equity shares of face value of Rs 5 each aggregating to 10.76% stake in BNHL," Jubilant FoodWorks, which operates the Domino's Pizza chain and the Dunkin' Donuts coffee and doughnut chain in India, said in a regulatory filing on Thursday.

Reportedly, the all-cash deal is expected to conclude by 25 January.

Earlier this month, the company announced the launch of a new restaurant chain selling biryani under the Ekdum! brand, capitalizing on the popularity of the rice-based dish. Biryani remains the most ordered dish across food delivery platforms Zomato and Swiggy.

Jubilant FoodWorks will now also own a share in the casual dining market through the investment in Barbeque Nation.

BNHL owns and operates 138 Barbeque Nation brand of casual dining restaurants that offer over-the-table barbeque live grills for diners in 73 cities across India, besides seven restaurants overseas.

Note that earlier this year, BNHL had received approval from the markets regulator for an initial public offering (IPO).

Jubilant FoodWorks share price has opened the day up by 0.6%.

Market participants are also tracking Antony Waste Handling Cell share pricev. The stock is set to make its market debut today.

The company's IPO was subscribed 15 times in total and joined the likes of Burger King India and Mrs Bectors Food Specialities whose offers were also oversubscribed within a few hours of opening.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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