Sensex Falls Over 750 Points from Day's High; Metal and Realty Stocks Witness Selling

Thu, 21 Jan Closing

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After opening the day on a strong note, Indian share markets witnessed a sharp sell-off during closing hours today and ended lower.

Benchmark indices gave up early gains and slipped into the red during the last hour of trading amid reports of a massive fire that broke out in the Serum Institute of India (SII), the manufacturer of Covidshield vaccine.

In early trade today, Indian share markets rose in sync with Asian peers and tracking overnight gains in the US market.

At the closing bell, the BSE Sensex stood lower by 167 points. The NSE Nifty ended down by 54 points.

The BSE Sensex tanked 785 points from record high levels of 50,184 to hit an intra-day low of 49,399.

Bajaj Finance was among the top gainers today. ONGC, on the other hand, was among the top losers today.

SGX Nifty was trading at 14,643, up by 10 points, at the time of writing.

The BSE Mid Cap index ended down by 0.9%. The BSE Small Cap index ended lower by 0.7%.

Sectoral indices ended on a mixed note with stocks in the consumer durables sector and energy sector witnessing buying interest.

Realty stocks and metal stocks, on the other hand, witnessed selling pressure.

Shares of Ceat and Polycab India hit their respective 52-week highs today.

Bajaj group stocks were in focus today. Bajaj Finance share price and Bajaj Finserv share price rose 4% after announcing their December quarter results, while Bajaj Auto share price gained 3% ahead of its quarterly results announcement.

Asian share markets ended mixed today. As of the most recent closing prices, the Nikkei ended higher by 0.8% while the Hang Seng ended down by 0.1%.

US stock futures are trading in green. Nasdaq Futures are trading up by 56 points (up 0.4%), while Dow Futures are trading up by 10 points (up 0.03%).

The rupee is trading at 72.98 against the US$.

Gold prices are trading up by 0.2% at Rs 49,617 per 10 grams.

Note that the BSE Sensex crossed the historical milestone of 50,000 in today's session as benchmark indices scaled fresh lifetime highs on the back of favourable global cues.

The BSE Sensex rose from 40,000-mark hit on October 8, 2020 to 50,000 in just 74 sessions. Developments on the vaccine front, a change of guard in the United States, FII buying and recovery in economic growth are the key factors behind this rally.

Our editors have been pointing out for many weeks now about the risky nature of the market as Covid-19 remains an overhang and the economic outlook remains uncertain. The Sensex valuation is at nearly 40 times.

Have a look at the two charts below, in the order they have been placed.

Near Term Volatility in Sensex Compensated by Long Term Gains

The year-on-year change in the Sensex was hardly predictable but someone who stayed invested multiplied every lakh nearly 14 times.

As per Co-head of Research at Equitymaster, Tanushree Banerjee, 2021 could be one of the best years for individual investors.

Here's what she wrote in one of the editions of Profit Hunter:

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  Most professional fund managers can't afford to have long time horizons. A year or two of poor performance and they risk the sack.
  
  But an individual investor can sit tight over high conviction stocks and invest consistently to see the magic of compounding.
  
  Just like the investors in Titan saw their wealth creation unfold since 2004.
  
  So, 2021 could be extremely profitable, over time, provided you reset your portfolio with the right kind of safe assets and safe stocks.
  
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  Prepare well and ensure you make the most of it.

In her latest video, Tanushree discusses the best safe assets for 2021.

Tune in to the video here:

In latest developments from the IPO space, the initial public offer of Indigo Paints was subscribed 4.6 times so far on January 21, the second day of bidding. The offer will close on January 22.

Investors including employees have put in bids for 25.5 million equity shares against offer size of over 5.5 million equity shares.

The reserved portion of retail investors was subscribed 7 times. The portion set aside for qualified institutional buyers was subscribed 48% and non-institutional investors have put in 4 times bids against their reserved portion.

The price band for the issue has been fixed at Rs 1,488 and Rs 1,490 per share. At the upper end of the price band, the IPO is expected to fetch Rs 11.7 billion.

Meanwhile, the public offer of Home First Finance Company, which opened for subscription today, was subscribed 79% by noon hours today.

The affordable housing finance company's public issue received bids for 12.4 million equity shares against an offer size of more than 15.6 million shares.

The public issue comprises a fresh issue of Rs 2.7 billion and an offer for sale (OFS) of Rs 8.9 billion by promoters True North Fund V LLP and Aether (Mauritius), investor Bessemer India Capital Holdings II Ltd, and two individual shareholders-PS Jayakumar and Manoj Viswanathan.

Yesterday, the company raised a little over Rs 3.46 billion from anchor investors, ahead of its initial share-sale.

The company has fixed a price band of Rs 517-518 per share.

Half of the issue is reserved for qualified institutional buyers, 35% for retail investors and 15% for non-institutional buyers.

How the above IPOs sail through remains to be seen. Meanwhile, we will keep you updated on the latest developments from this space.

Moving on to stock specific news...

Reliance Industries (RIL) was among the top buzzing stocks today.

Shares of the company rose over 3% today after the oil-to-telecom behemoth received a go-ahead from the markets regulator for its deal with Future Group.

Shares of Future Retail and Future Enterprises were also locked in the 5% upper circuit limit.

In August last year, Mukesh Ambani's Reliance Industries had agreed to acquire the retail business of Kishore Biyani-led Future Group in a mega-deal involving the consideration of Rs 247.1 billion.

After Future's agreement with RIL, Amazon said the deal was a violation of a non-compete clause and a right-of-first-refusal pact it had signed with the Future Group. The deal also required Future Group to inform Amazon before entering into any sale agreement with third parties.

On its part, the Future Group said that it had not sold any stake in the company, and was merely selling its assets and had therefore not violated any terms of the contract.

Amazon had also sent a letter to the markets regulator, the BSE and the NSE asking them not to approve the Future-Reliance deal as there was an interim stay order on the same.

The market regulator gave its nod to the deal on Wednesday and noted that, "Company shall ensure that the shares of the transferee entity issued in lieu of the locked-in shares of the transferor entities is subjected to lock-in for the remaining period post scheme."

Reliance Industries is scheduled to report its October-December quarter (Q3FY21) earnings on Friday, January 22.

Reliance Industries share price ended the day up by 2.1%.

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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