Sensex Zooms 487 Points; IT & Automobile Stocks Rally

Mon, 11 Jan Closing

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Indian share markets hit fresh record highs today with the BSE Sensex crossing the 49,000-mark on hopes of a robust recovery in Q3 earnings and favourable global cues.

It was reported today that the Union Budget papers will not be printed for the first time since Independence, due to Covid 19 pandemic.

The Union Budget will be presented on February 1 by finance minister Nirmala Sitharaman. The budget session will begin on January 29 and go on till April 8.

At the closing bell, the BSE Sensex stood higher by 487 points (up 1%).

The NSE Nifty closed higher by 138 points (up 0.96%).

HCL Tech and Infosys were among the top gainers today.

The SGX Nifty was trading at 14,496, up by 121 points, at the time of writing.

The BSE Mid Cap index ended down by 0.1%, and the BSE Small Cap index ended down by 0.2%.

On the sectoral front, gains were largely seen in the IT sector, automobile sector and FMCG sector. IT stocks surged following stellar performance of TCS in December quarter.

Metal and energy stocks, on the other hand, witnessed selling pressure.

Over 450 stocks including Tata Motors, HCL Tech, Infosys, Wipro, Ashok Leyland, Varun Beverages, Godrej Consumer, Maruti Suzuki, TCS, TVS Motor, MRF and Avenue Supermarts among others hit new 52-week high.

Asian stock markets closed on a mixed note today as worries over Sino-US tensions continued to weigh on the market, while a jump in new domestic Covid-19 cases also dampened sentiment.

As of the most recent closing prices, the Hang Seng ended up by 0.1% and the Shanghai Composite ended down 1.1%.

US stock futures are trading lower today indicating a negative opening for Wall Street indices. Nasdaq Futures are trading down by 58 points (down 0.4%), while Dow Futures are trading down by 188 points (down 0.6%).

The rupee is trading at 73.42 against the US$.

Gold prices for the latest contract on MCX are trading up by 0.5% at Rs 49,208 per 10 grams.

Gold prices reversed course from a near six-week low touched earlier in the session, although a stronger dollar and higher US Treasury yields capped bullion's gains.

Speaking of the current stock market scenario, note that since the lows in March 2020, the smallcap index has gained more than 110%.

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

Have a look at the history of previous smallcap crashes and rebounds over the last two decades...

As you can see, every big fall in the smallcap index was followed by a sharp up move, a minimum gain 200%. Twice the rebounds were just shy of touching 300%.

Richa believes if you focus on the quality of business, margin of safety in valuations, and an optimum asset allocation, you are likely to create huge wealth for yourself.

In news from the engineering sector, state-run engineering firm BHEL today said it has bagged an order worth Rs 4.5 billion for a steam and power plant from National Aluminium Corporation (NALCO).

The Rs 4.5 billion order has been placed on BHEL by NALCO for its 5thStream Alumina Refinery Expansion Project at Damanjodi, Odisha, the company said in a statement.

With this order, BHEL has not only maintained its track record of supplying all of NALCO's power plants, for both their Smelter plant (10x120 MW) at Angul and Alumina Refinery plant (5x18.5 MW) at Damanjodi, but will also be contributing to the 'Make in India' initiative, the statement added.

BHEL share price ended the day down by 0.8%.

Speaking of stocks, in his latest video, Rahul Shah discusses how to alternate between a deep value portfolio and investment in gold and earn great returns.

In the video, Rahul discusses how to combine the two in a smart way and benefit from the individual strengths of each asset class.

How good is the result of this combination and what happens when you combine a deep value portfolio of mid and small caps with gold?

Tune in to the video to find out more:

Moving on to news from the automobile sector, Tata Motors was among the top buzzing stocks today.

Shares of the company hit a 52-week high of Rs 225, up 13%, on expectations of improved earnings.

In the month of December, the Tata group company reported a 21% increase in total vehicle sales in the domestic market to 53,430 units.

The company's commercial vehicle (CV) domestic sales in the October-December quarter (Q3FY21) stood at 82,155 units, up 48% against the previous quarter.

Tata Motors share price ended the day up by 11.1%.

Auto stocks were also in focus today after automobile dealers' body FADA said passenger vehicle (PV) retail sales in December witnessed a year-on-year increase of 24% to 2,71,249 units.

According to the Federation of Automobile Dealers Associations (FADA), which collected vehicle registration data from 1,270 out of the 1,477 regional transport offices (RTOs), PV sales stood at 2,18,775 units in December 2019.

Two-wheeler sales increased 11.9% to 14,24,620 units last month, as compared to 12,73,318 units in December 2019.

Commercial vehicle sales, however, slipped 13.5% to 51,454 units in December 2020, as against 59,497 units a year ago.

Similarly, three-wheeler sales fell 52.8% to 27,715 units last month, from 58,651 units in December 2019.

Total sales across categories increased 11% to 18,44,143 units last month compared to 16,61,245 units in December 2019.

In other news from the automobile sector, as per a leading financial daily, aggressive options from public sector banks (PSBs) and a general reluctance to use cash for cars has led to an increase in auto financing penetration in passenger vehicles from 75% at the beginning of 2020 to around 80% now.

Auto financiers and dealers say the current buzz is led by the aggression of PSU lenders, which are offering rates lower than private financiers. However the uptick is restricted only to passenger vehicles and not two-wheelers and commercial vehicles.

ICICI Bank head Ravi Narayanan said: "In addition to various favourable macroeconomic factors, the all-time low interest rate is the key element for increased penetration of car finance as it boosts the sale of passenger cars. Additionally, there is a significant rise in demand for used cars for personal mobility. This too is leading to more customers opting for vehicle finance."

PSU banks, which are offering car loans at sub-8% right now, have seen a sharp rise in their loan books.

Indian Bank saw a 90% increase in vehicle loans sanctioned in the third quarter compared to the first half of this fiscal. The jump happened in October with 40% of vehicles financed in mid-segment with average loan amount being more than Rs 5 lakh.

Mahindra & Mahindra (M&M) dealer JS 4Wheel Motor's Nikunj Sanghi said: "In passenger vehicles, PSU banks now have around 17% share of the market, up from 4-5% before because they are cheaper than NBFCs and offer longer tenure loans."

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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