Sensex Trades Over 700 Points Higher; Dow Futures Up by 111 Points

Mon, 1 Feb 12:30 pm

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   SGX Nifty   

   09:30 am   

   02:30 pm   

   Closing   

Share markets in India are presently trading on a strong note.

The BSE Sensex is trading up by 755 points, up 1.6% at 47,041 levels.

Meanwhile, the NSE Nifty is trading up by 211 points.

IndusInd Bank and ICICI Bank are among the top gainers today. Dr Reddy's and UPL are among the top losers today.

The BSE Mid Cap index is trading up by 0.5%.

The BSE Small Cap index is trading up by 0.3%.

On the sectoral front, stocks from the banking sector, are witnessing most of the buying interest.

On the other hand, stocks from the software sector, are witnessing most of the selling pressure.

US stock futures are trading higher today, indicating a positive opening for Wall Street.

Nasdaq Futures are trading up by 50 points (up 0.4%) while Dow Futures are trading up by 111 points (up 0.4%)

The rupee is trading at 73.06 against the US$.

Gold prices are trading up by 0.2% at Rs 49,208 per 10 grams.

Gold prices started on a positive note this month after a 2% fall in January. On MCX, gold futures rose 0.5% to Rs 49,566 per gram. However, silver futures on MCX surged 6% to about Rs 74,000 per kg, tracking the recent surge in global rates following a GameStop-style squeeze. Posts began circulating on Reddit urging retail investors to buy silver mining stocks and ETFs backed by physical silver bars.

In global markets, spot gold rose 0.3% per ounce while silver rates surged as much as 7.4% to climb a nearly six-month peak. Spot silver hit its highest since August 11 at US$ 28.9 an ounce.

To know more about gold, check out our article on how to invest in gold here: How to Invest in Gold?

Moving on to some of the highlights from the Union Budget 2021...

The government has raised the limit for Foreign Direct Investment (FDI) in the insurance sector to 74% from 49% - with safeguards. FM Sitharaman also that that the government intends to amend the Insurance Act, 1938 and will launch a new investor charter for investor protection. It will launch a securities market code which will include the Government Securities Act and the Depositories Act.

An asset reconstruction and management company will be set up for stressed assets. In FY22, PSU bank recapitalisation plan is of Rs 200 billion. The government will allow sale of distressed assets to Alternate Investment Funds (AIFs). The NCLT framework will also be strengthened to implement e-courts. All divestments announced so far, are to be completed in FY22.

It also proposes to divest two PSU banks and one general insurance company in FY22. Further, divestments of BPCL, Container Corporation, Pawan Hans, and Air India will be completed in FY22. FY22 Divestment target is at Rs 1,750 billion.

The government will create a new list of companies for divestment. The government will form a special purpose vehicle (SPV) for monetising land owned by state-owned PSUs and will set up separate administrative structure for co-operatives.

An independent gas transport system will be set up and 100 more districts will be added under the City Gas Expansion. The government is also looking to double ship recycling capacity by 2024. Seven port projects worth more than Rs 200 billion will be undertaken in FY22. A scheme to assist discoms will be launched with an outlay of over Rs 3,000 billion. The Ujjwala Scheme will cover an additional 10 million beneficiaries.

Five major fishing hubs to be developed to promote the fisheries sector. Additionally, a sea weed park is also being planned in Tamil Nadu.

Social security benefits to be extended to gig and platform workers. Employee State Insurance Corporation benefits too would be provided. Women will be allowed to work in all categories in night shifts too.

The '1 Nation 1 Ration Card' plan is under implementation by 32 States & Union Territories. The Centre will launch a portal to collect data on migrant workers. Further, social security benefits will be extended to platform and gig workers. Minimum wages will apply to all categories of workers.

We will keep you posted on more updates from this space. Stay tuned.

Moving on to stock specific news...

Among the buzzing stocks today is IndusInd Bank.

Private sector lender IndusInd Bank on January 29, 2021 reported a 37% year-on-year (YoY) decline in its December quarter net profit at Rs 8.3 billion on provisions for sour loans and a negligible loan growth.

For the quarter under review, its core net interest income (NII) grew by 11% YoY to Rs 34.1 billion on the back of loan book being stable and a marginal narrowing of the net interest margin (NIM) to 4.12%. The other income came down 8% YoY to Rs 16.4 billion, which resulted in an only 4% increase in the overall income to Rs 50.2 billion.

Even as the income generation faced setbacks, it saw an additional pile-up of potentially sour assets for which it had to set aside money as provisions which in turn ate into the profits. The bank said the gross non-performing assets ratio would have come at 2.9% if not for the Supreme Court standstill order on not recognizing NPAs, as against 2.2% in the year-ago period and 2.2% in September.

The overall provisions rose to Rs 18.5 billion that included Rs 11 billion of Covid-19 related provisions, as against Rs 10 billion in the year ago period.

The bank decided to provide 100% of the requirements for unsecured assets, while in the secured ones, it was lower. Over Rs 5.4 billion of advances on credit cards or nearly 10% of the overall portfolio were slippages, and much of the cards where slippages have been observed are old customers.

The bank expects a capital infusion of over Rs 20 billion from the promoter by February 18 and will not need additional infusion for at least six more months. Any capital will be needed for loan growth purposes or if any inorganic growth opportunity crops up.

At the time of writing, IndusInd Bank share price was trading up by 10.8% on the BSE.

Speaking of the banking sector, check out the monthly returns of major sectors for the month of March and October 2020 in the chart below.

In the chart above, you can see that banks were among the major losers with a cut of 34% in the month of March.

Cut to October they are the biggest gainers for the month with 11% returns!

If you're interested in knowing what could be the reason behind such a change in sentiment, you can read about it in one of the latest editions of Profit Hunter: Banks are booming in a Covid World

Speaking of stock markets, India's #1 trader, Vijay Bhambwani, talks about why he thinks the big boys in the market are now under threat from retail traders., in his latest video for Fast Profits Daily.

Tune in here to find out more:

And 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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