Sensex Opens above 50,000-Mark; Tata Motors & Bajaj Finance Top Gainers

Thu, 21 Jan 09:30 am

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Asian share markets rose for the third straight session today, tracking gains in US peers. The Nikkei is trading up by 0.7% and the Hang Seng is trading up by 0.1%.

In US markets, Wall Street indices hit all-time highs on Wednesday as Joe Biden prepared to take charge as US President, while Netflix shares surged after saying it will no longer need to borrow billions of dollars to finance its TV shows and movies.

The Dow Jones Industrial Average rose 165 points, or 0.53% while the Nasdaq Composite gained 220 points, or 1.7%.

Back home, Indian share markets have opened on a strong note, following the trend on SGX Nifty and tracking firm global cues.

Market participants are tracking shares of Asian Paints, Bajaj Auto, MCX India, SBI Cards and Payment Services, Bandhan Bank and Biocon as these firms are set to post their December quarter numbers today.

The BSE Sensex is trading up by 276 points. Meanwhile, the NSE Nifty is trading higher by 84 points.

Tech Mahindra is among the top gainers today. Power Grid, on the other hand, is among the top losers today.

Both, the BSE Mid Cap index and the BSE Small Cap index have opened the day higher by 0.8%.

All sectoral indices are trading in green with stocks in the automobile sector and energy sector witnessing most of the buying interest.

Shares of Tata Elxsi and Sheela Foam hit their 52-week highs today.

The rupee is trading at 72.89 against the US$.

Gold prices are trading up by 0.3% at Rs 49,675 per 10 grams.

Speaking of the current stock market scenario, note that since the lows in March 2020, the smallcap index has gained more than 100%.

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

Despite rallying more than 100% since the March 2020 lows, Richa believes small-cap stocks are set for a massive up move in 2021 and beyond.

Here's what she wrote in a recent edition of Profit Hunter...

• The P/E for smallcap index doesn't make sense. There are thousands of listed small companies. Some have negative earnings. The base is not a valid data to work with.
  
  That said, the closest proxy to relative valuations is the Smallcap to Sensex ratio,
  
  Historically, this ratio has averaged 0.43x. In the previous mega runs of the smallcap index, this ratio has gone as high as 0.75x.
  
  In January 2018, when smallcaps peaked, the ratio was at 0.58x.
  
  Guess where this ratio is now after a 100% run up in the smallcap index?
  
  0.38.
  
  It's lower than the median over 2 decades.

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 telecom sector, mobile phone service providers have sought a reduction in licence fees, removal of goods and services tax on those fees, spectrum acquisition charges and spectrum usage charges, besides a refund of input tax credits along with tax and custom duty exemptions in the upcoming budget.

"In this challenging time, the industry also faces major upcoming expenses on infrastructure upgradation like spectrum auction, 5G introduction, network expansion and fiberisation, which is very critical for providing future communication services," SP Kochhar, director general of the Cellular Operators Association of India (COAI), said in a statement detailing the sector's budget recommendations.

According to the association, which represents Reliance Jio, Bharti Airtel and Vodafone Idea, the relaxation of certain levies is critical for a sector that contributes Rs 580 billion annually to the government exchequer and has invested Rs 11.24 lakh crore till date.

"The industry recommends that the licence fee is brought down to 1% from 3% at the earliest to cover admin costs by the DoT/government," Kochhar said.

Telecom companies currently pay 8% of their adjusted gross revenue (AGR) to the government, of which 5% goes towards the Universal Service Obligation Fund. COAI proposed that the fund be abolished and called for the effective rate of spectrum usage charges be reduced by 3% for the three telcos.

COAI also sought exemption from payment of service tax for the period of April 2016 to June 2017.

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

Speaking of the Budget, in one of his videos for Fast Profits Daily, Vijay Bhambwani talks about the Union Budget 2021.

In the video, Vijay cover the sectors which would basically see the highest amount of expectation, buying and selling momentum.

Which stocks can you expect to move pre- and post-budget?

Tune in to the video to find out more:

In news from the oil & gas sector, crude oil production fell 3.6% and natural gas shrank 7.1% in December from a year earlier as producers struggled with ageing fields.

ONGC, the nation's largest producer of oil and gas, registered a 2.8% decline in oil production while Oil India's output was down 16.2%, according to the Oil Ministry data.

Fields operated by the private sector witnessed 11.6% decline in oil production.

India's oil production has been falling for almost a decade due to ageing fields and the absence of any major discovery for years. Both state and private players have been working on investment plans to raise recovery from older fields.

Domestic gas output, however, is expected to rise in the coming months as new fields have begun production.

Crude oil imports increased 3.4% in December from a year earlier. The consumption of petroleum products was 1.8% lower than the previous December. The dependence on crude import for domestic consumption was 84.8% in December.

The price of the Indian basket of crude averaged US$ 49.84 per barrel in December as against US$ 43.34 in November and US$ 65.50 in December 2019.

Moving on to stock specific news...

Havells India is among the top buzzing stocks today.

Consumer electrical goods maker Havells India on Wednesday reported a 74.5% jump in its consolidated net profit to Rs 3.5 billion for the third quarter ended on December 2020 (Q3FY21).

The company had posted a consolidated net profit of Rs 2 billion in the October-December quarter a year ago.

Its revenue from operations was up 39.7% to Rs 31.8 billion during the period under review as against Rs 22.7 billion in the corresponding period last fiscal.

Revenue from its cables segment was up 27.1% to Rs 9.1 billion. Revenue from switchgears segment was Rs 4.4 billion, up 32.1%.

Meanwhile, in a separate filing, the company said its board has declared an interim dividend of 300%, which is Rs 3 per equity share.

The board also appointed Namrata Kaul as an independent director of the company.

Havells India share price has opened the day up by 4.5%.

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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