Improving Manufacturing Activity, BEML Stake Sale, and Top Buzzing Stocks Today

Tue, 5 Jan Pre-Open

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On Monday, Indian share markets ended at record highs as investor sentiment improved after the country gave emergency use approvals to two coronavirus vaccines over the weekend.

The government gave emergency use approvals to two coronavirus vaccines, produced by AstraZeneca and Bharat Biotech.

Apart from the above, positive GST data collections, improving manufacturing PMI and impressive auto sales in December led to a growth of optimism among investors.

At the closing bell yesterday, the BSE Sensex stood higher by 308 points (up 0.6%). The Sensex rose above the 48,000 mark for the first time yesterday.

Meanwhile, the NSE Nifty closed higher by 114 points (up 0.8%).

ONGC and TCS were among the top gainers.

Both, the BSE Mid Cap index and the BSE Small Cap index ended up by 1.4%.

Barring banking stocks, all sectoral indices ended in green. Gains were largely seen in the metal sector, auto sector and IT sector.

IT stocks witnessed buying interest yesterday as the sector kick starts its October-December quarter (Q3FY21) earnings from the current week.

TCS is scheduled to announce its Q3FY21 results on Friday, January 8, 2021. The board will also consider declaration of a third interim dividend to the equity shareholders.

Gold prices for the latest contract on MCX were trading up by 1.9% at Rs 51,180 per 10 grams at the time of closing stock market hours on Monday.

Speaking of stock markets, Brijesh Bhatia, Research Analyst at Equitymaster, talks about the best sector for 2021, in his latest video for Fast Profits Daily.

Tune in here to find out more:

Top Buzzing Stocks Today

RCF share price will be among the top buzzing stocks today.

The Government of India is planning to sell 10% stake in Rashtriya Chemicals and Fertilisers (RCF) through an offer for sale (OFS). The Department of Investment and Public Asset Management (DIPAM) has sought bids from law firms to act as legal advisers and assist the government in the process.

Coal India share price will also be in focus today as the company has spent over Rs 80 billion as capital expenditure (capex) till December 2020, and is looking to meet a revised target of Rs 130 billion of such expense by the end of FY21, an official said on Sunday.

The capital expenditure target for the financial year F21 was initially set at Rs 100 billion.

Market participants will also track L&T share price.

The Income Tax Department yesterday carried out limited verification exercise at the office premises of the Zee Group and L&T to verify into their bogus inputs about tax credit.

A senior IT official said, "there are no searches or raids, but we are carrying out limited verification exercise at the offices of the Larsen and Toubro and Zee group as we had information that they had claimed bogus input tax credit."

Rupee Rises to 4-Month High

The rupee ended 10 paise higher at 73.02 per US$ yesterday, amid buying seen in the domestic equity markets.

The domestic currency opened 18 paise higher at 72.94 per US$ against Friday's close of 73.12 per dollar and traded in the range of 72.90-73.03.

Government Invites Bids for Stake Sale in BEML

In news from the defence sector, the central government has announced its decision to disinvest 26% out of its total 54.03% stake in the state-owned defense and engineering company BEML.

As part of Prime Minister Narendra Modi's privatisation drive, the government is seeking expressions of interest to cut its stake in the company, which will also see management control shift to the successful bidder.

SBI Capital Markets will be the transaction advisor to advise and manage the strategic disinvestment process.

According to the press release, the sale will be done through an open competitive bidding route where interested bidders will be required to submit an expression of interest by March 1.

The department of investment and public asset management (DIPAM) has set the minimum net worth requirement for bidders at Rs 14 billion, and has kept the last date for submitting bids at March 1, 2021.

Companies, limited liability partnerships (LLPs) and funds eligible to invest in India can participate in the bidding process, however government companies have been barred from participating.

Consortium bidding has also been permitted where lead member must have a minimum 51% stake in the consortium. The lead member should have profit after tax in at least three years out of immediately five preceding years.

BEML share price gained up to 7% yesterday on the back of above news.

Note that the government is also going ahead with privatisation of state-run companies such as BPCL, Container Corporation of India, Shipping Corporation of India and Air India.

The government had set a disinvestment target of Rs 2.1 lakh crore for the ongoing fiscal year, of which over Rs 900 billion is expected from the sale of stake in financial institutions including LIC and IDBI Bank, while the larger chunk is expected from the divestment of public sector enterprises.

CAG Seeks Performance Audit of PSU Bank Recapitalisation

The Comptroller and Auditor General of India (CAG) has written to the finance ministry seeking details about the ongoing performance audit of government's massive recapitalisation exercise of public sector banks (PSBs).

CAG is doing performance audit on recapitalisation of PSBs after 2016-17 and it has written a letter to the Department of Financial Services, Ministry of Finance, seeking various information, including rationale for distribution of capital among different PSBs.

For the current fiscal, the government has earmarked Rs 200 billion for the capital infusion into the PSBs. Of this, the government allocated Rs 55 billion to Punjab & Sind Bank in November 2020 for meeting the regulatory requirement prescribed under the Basel III guidelines.

Reports state that the audit may be going to analyze the impact of capital infusion in PSBs and how it has been able to improve the financial parameters such as Return on Assets (ROA), Return on Equity (ROE) and rate of growth of advances.

Manufacturing Activity Expands for the Fifth Straight Month

In news from the economic space, manufacturing sector activities showed a marginal improvement in December compared to the previous month even as employment generation remained low, showed the widely-tracked IHS Markit purchasing managers' index (PMI) survey.

PMI inched up to 56.4 in December compared to 56.3 in November. However, it remained lower than 58.9 in October and 56.8 in September, the two months during which the economy saw a gradual lifting of lockdowns.

Manufacturing, in the Index of Industrial Production (IIP) rose by 3.5% in October, according to the latest figures. However, it might come down going forward in line with PMI results, warned Pollyanna De Lima, Economics Associate Director at IHS Markit.

International demand for Indian goods rose in December, but evidence indicated that growth was hampered by the Covid-19 pandemic. As a result, new export orders increased at the slowest pace in the current four-month sequence of expansion.

Input cost inflation accelerated to a 26-month high in December.

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

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