4 Reasons Why Sensex Rallied 929 Points Today

Mon, 3 Jan Closing

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Indian share markets witnessed positive trading activity throughout the day today and ended on a strong note.

Benchmark indices kicked-off new calendar year 2022 on a solid note as fresh record highs in the global markets bolstered investors' confidence.

At the closing bell, the BSE Sensex stood higher by 929 points (up 1.6%).

Meanwhile, the NSE Nifty closed higher by 272 points (up 1.6%).

Coal India and Eicher Motors were among the top gainers today.

Cipla and Dr Reddy's Lab, on the other hand, were among the top losers today.

The SGX Nifty was trading at 17,698, up by 258 points, at the time of writing.

The BSE Mid Cap index and the BSE Small Cap index ended up by 1.1% and 1.2%, respectively.

On the sectoral front, gains were largely seen in the metal sector, banking sector and finance sector.

Shares of Birlasoft and Fortis Healthcare hit their respective 52-week highs today.

Financial markets in China and Japan were closed today for a public holiday. While, other Asian stock markets ended on a mixed note today.

The Hang Seng ended down by 0.5%.

US stock futures are trading on a positive note today with the Dow Futures trading up by 90 points.

The rupee is trading at 74.26 against the US$.

Gold prices for the latest contract on MCX are trading on a flat note today at Rs 48,090 per 10 grams.

Here are 4 Factors Why the Stock Market Zoomed Today

No major lockdowns: State governments have imposed several Covid-19 restrictions to slow the virus' spread, but no major lockdown-like situation is expected in 2022, even though India reported 33,750 cases in the last 24 hours, the most since September 2021, which appears to be making the street happy because earnings and economic growth will not be affected.

GST collection: The GST collection remained above Rs 1 tn for the sixth month in a row, coming in more than Rs 1.3 tn in December, 13% higher than the same month last year, but lower than Rs 1.31 tn mopped up in November.

Positive auto sales data: Tata Motors, the maker of Nexon SUV, has overtaken Hyundai Motor India to become the second-largest seller of passenger vehicles in the domestic market for the first time in close to a decade in December 2021.

The company also earned the distinction of posting its highest-ever monthly sales in December 2021, highest ever quarterly sales in October to December of 2021 and the highest annual sales since its inception in 2021.

On the other hand, Bajaj Auto said it sold 30% more vehicles in the overseas market at over 2.5 million units in calendar year 2021 over the year earlier despite the challenging global environment.

The 2.5-million vehicles exports in 2021 were also the highest ever for the company in a calendar year, Bajaj Auto Ltd said in a statement.

Mahindra and Mahindra (M&M) too registered a 10% rise in its domestic passenger vehicle sales. It stood at 17,722 units last month compared to 16,182 units in December 2020.

Sectoral gains: Market players purchased stocks across the board today, with metal, banking, and finance indices all seeing solid gains.

Energy and auto sector stocks also gained more than 1.4% each.

We will keep you updated on how these factors develop in the coming days and what effect they have on Indian stock markets. Stay tuned!

Speaking of stock markets, Yazad Pavri talks about the five most overvalued large-cap stocks in India, in his latest video.

Tune in to the below video to find out which stocks make the cut:

In news from the insurance sector, HDFC Life and Exide Industries were among the top buzzing stocks today.

Shares of Exide Industries gained 2.3% in early trade today after HDFC Life Insurance said it has completed the acquisition of Exide Life by allotting over 87 m shares of the company to Exide Industries.

Accordingly, Exide Life became a wholly-owned subsidiary of the company with immediate effect from 1 January 2022.

HDFC Life Insurance on Saturday said it has completed the acquisition of 100% stake in Exide Life Insurance from Exide Industries after receiving all the regulatory approvals, reports said.

In September 2022, the private insurer had announced its plan to buy 100% of the share capital of Exide Life Insurance for Rs 66.9 bn.

The deal was approved by the Competition Commission of India (CCI) in November and by the Insurance Regulatory and Development Authority of India on 31 December 2021.

'Pursuant to the agreement, there was a cash pay-out of Rs 7.3 bn and 87 m equity shares at an issue price of Rs 685 per share were allotted to Exide Industries', HDFC Life said in a release on Saturday.

According to the release, effective from 1 January 2022, Exide Life will operate as a wholly owned subsidiary of HDFC Life, while Exide Industries now holds 4.1% stake in HDFC Life.

HDFC Life Insurance's Managing Director and Chief Executive, said,

• We recognise that the life insurance market in India is multi-faceted, where one solution might not fit all.
  
  Different distribution channels and a varied product mix help cater to different customer cohorts across the diverse Indian geography, and this acquisition is an important milestone towards our strategic objective of bringing more people into the fold of financial protection.

Shares of Exide Industries and HDFC Life Insurance ended the day up by 1.2% and 0.3%, respectively.

Speaking of the insurance sector, have a look at the chart below which shows the investment assets of non-life insurers and life insurers over the past 10 years:

As per Tanushree Banerjee, Co-Head of Research at Equitymaster, the above chart is enough proof of how big an earning opportunity is the zero-cost float to the non-life insurers. Their investment assets under management is nearly 11 times that of life insurers.

Back in April 2021, Tanushree recommended a high-quality stock from this space. Subscribers can read the report here (requires subscription).

And if you are not a StockSelect subscriber, here's where you can sign up.

Moving on to news from the macroeconomic space...

India's Manufacturing PMI Falls in December

India's manufacturing Purchasing Managers' Index (PMI) fell from November's high to 55.5 in December. PMI in November had hit a 10-month high at 57.6.

At 55.5 in December, the seasonally adjusted IHS Markit India Manufacturing Purchasing Managers' Index (PMI) pointed to a robust improvement in overall operating conditions that was elevated by historical standards. This was despite the headline figure slipping from November's ten-month high of 57.6.

Moreover, the latest quarterly reading was at 56.3, its highest since the final quarter of fiscal year 2020-21.

The IHS Markit in a report stated that the health of the manufacturing industry improved in December, with new work growth and production remaining sharp in spite of losing momentum.

Business confidence strengthened, but sentiment was again dampened by concerns surrounding supply-chain disruptions, Covid-19 and inflationary pressures.

The report stated that even as the rate of inflation eased to a three-month low, input costs rose sharply and at an above-trend pace. New orders in December were driven by strong demand conditions, fruitful marketing and new client wins.

'The upturn was sharp, despite being the slowest since September. Similarly, production rose at a sharp pace that was nevertheless the weakest in three months', it said.

Manufacturers reported a monthly increase in overall cost burdens. Companies reported higher prices for a wide range of items including chemicals, electronic components, and textiles. Output charges rose as some companies transferred higher cost burdens through to clients.

Concerns over elevated price pressures hampered business confidence in December, with firms also worried that the pandemic and supply-chain issues could dampen the recovery next year. The overall degree of optimism remained below its long-run average, despite improving from November's 17-month low.

Spending trends were mixed, and input inventories expanded, the report stated.

International demand for Indian goods continued to improve in December. New export orders rose for the sixth month in succession, albeit only slightly.

We will keep you updated on the latest developments from this space. Stay tuned.

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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