4 Factors Behind the Stock Market Rally, PLI Scheme for Telecom Equipment Manufacturers, and Buzzing Stocks Today

Tue, 4 Jan Pre-Open

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Indian share markets ended on a strong note yesterday.

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 yesterday, 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.

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

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.

Gold prices for the latest contract on MCX were trading on a flat note at Rs 48,090 per 10 grams at the time of closing stock market hours yesterday.

Here are 4 Factors Why the Stock Market Zoomed Yesterday

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 yesterday, 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:

Top Stocks in Focus Today

Among the buzzing stocks today will be HDFC Life Insurance and Exide Industries.

Shares of Exide Industries gained 2.3% yesterday 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.

Fino Payments Bank share price will also be in focus today.

Fino Payments Bank said it has received approval from Reserve Bank of India (RBI) for starting 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.

Telecom Equipment Makers Reach Rs 62 bn Production in First Year of PLI

Ever since the launch of the production linked incentive (PLI) scheme for the telecom industry, telecom equipment manufacturers have produced over Rs 62 bn worth of products with an investment of Rs 2.5 bn.

With over 765.1 million broadband subscribers, India is the world's second-largest telecom market. The telecom sector in the country employs four million people directly and accounts for 7% of all foreign direct investment (FDI).

Over the next five years, it is estimated that the maximum utilisation of the scheme funds will result in gradual production of around Rs 2.4 tn and exports of around Rs 2 tn.

Big multinational players such as Ericsson and Nokia have been pushing production and investment so far, with Indian companies demanding an extension to meet their targets, reasoning they only have four months to meet the first-year milestones.

The telecom department had given its nod to 31 proposals under the PLI scheme, counting Rs 33.5 bn in investments spread over four and a half years.

The players selected as per the scheme included Nokia India, Ericsson's Jabil unit, Flextronics, Foxconn, Coral Telecom, VVDN Technologies, HFCL, Dixon Technologies, Tejas Networks, Akashastha Technologies, and GS India.

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.

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.

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