Sensex, Nifty Recover From Day's Low to End Strong; ITC & SBI Rally 6%

Thu, 4 Feb Closing

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Indian share markets recouped early losses and scaled fresh lifetime highs to end today's volatile session higher.

Benchmark indices extended their winning streak as healthy December quarter results, consistent FII buying, and hopes of status-quo in the Reserve Bank of India's February monetary policy, due on Friday, kept optimism intact.

At the closing bell, the BSE Sensex stood higher by 359 points (up 0.7%).

Meanwhile, the NSE Nifty closed higher by 106 points (up 0.7%).

ITC, SBI and Bajaj Finance were among the top gainers today.

The SGX Nifty was trading at 14,888, up by 68 points, at the time of writing.

The BSE Mid Cap index ended up by 1.5%. The BSE Small Cap index ended up by 1.2%.

Sectoral indices ended on a mixed note. Gains were largely seen in the power sector, banking sector and FMCG sector.

Telecom stocks and consumer durable stocks, on the other hand, witnessed selling pressure.

The Nifty Bank index clocked new closing high of 35,345, up 586 points or 1.7%. The index hit record high of 35,413 earlier today.

Shares of Bajaj Finance and Shree Cement hit their 52-week highs today.

Asian share markets ended on a negative note today. The Hang Seng shed 0.7% while the Shanghai Composite stood lower by 0.4%. The Nikkei ended down by 1.1%.

US stock futures are trading higher today indicating a positive opening for Wall Street indices. Nasdaq Futures are trading up by 39 points (up 0.2%), while Dow Futures are trading up by 16 points (up 0.1%).

The rupee is trading at 72.95 against the US$.

Gold prices for the latest contract on MCX are trading down by 0.8% at Rs 47,340 per 10 grams.

Speaking of stock markets, in her latest video, Co-head of Research at Equitymaster, Tanushree Banerjee talks about the eerie similarities between the Game Stop mania and India's popular paint IPO.

What are the similarities and why should they concern you? Tune in to the video to find out:

In news from the IPO space, the initial public offer (IPO) of Brookfield India Real Estate Trust was subscribed 36% so far on the second day of bidding today, driven largely by corporate and individual investors.

The issue received applications for 27.8 million units against the IPO size of 76.2 million units, at the time of Indian share market closing hours.

The portion set aside for institutional investor has subscribed 20.5%, and that of other investors including individuals witnessed subscription of 56.63%.

As per reports, the low turnout by institutional investors is in line with usual trends, as they typically bid for any IPO on the last day.

The Brookfield REIT issue - which is the third REIT to be launched in India - will close on Friday.

The REIT includes five properties in Mumbai, Delhi-NCR and Kolkata that yielded Rs 4,551.4 million in the first six months of this fiscal year.

Before the IPO opened for public bidding, Brookfield REIT raised Rs 17.1 billion from anchor investors.

Sources said the anchor investment round saw participation from financial institutions such as HDFC AMC, SBI Life Insurance, Tata AIG, HDFC Life, Kotak Mahindra AMC and Bajaj Holdings.

REITs act an attractive dividend play as at least 90% of the net distributable cash flows shall be declared and paid once every quarter of a financial year by their manager.

So far, domestic markets have seen Embassy Office Parks REIT in 2019 and Mindspace Business Parks REIT in 2020, both trading at a premium over their issue price.

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

Moving on to stock specific news...

State Bank of India (SBI) was among the top buzzing stocks today.

India's biggest public sector bank (PSB) SBI today reported a 6.9% year-on-year (YoY) drop in standalone net profit at Rs 51.96 billion for quarter ending December 2020. The fall was largely driven by marginal increase in provisions against bad loans.

In the year-ago period, the lender had clocked a net profit of Rs 55.8 billion.

The lender reported operating profit of Rs 173.3 billion for the third quarter of this fiscal, as against Rs 182.2 billion in Q3FY20, translating to a 4.8% decline.

Net interest income was up 3.7% YoY at Rs 288.2 billion during the quarter as against Rs 277.8 billion in Q3FY20.

SBI's total gross advances increased 6.7% to Rs 24.56 trillion. Sequentially, the loan book grew 3%.

Meanwhile, deposits jumped 13.6% YoY to Rs 35.35 trillion.

SBI share price ended the day up by 5.7%.

Moving on to news from the FMCG sector, Tata Consumer Products will expand its fast-moving consumer goods (FMCG) portfolio with clear differentiated products that command good margins, the company's managing director Sunil D'Souza said.

However, forays into non-food businesses are some time away as the company's immediate focus is on scaling up the foods and beverage businesses, he said.

D'Souza added that, "while we are actively looking at acquisitions nationally, we are also keen on strategic bolt-on acquisitions which can give us strong hyperlocal leverage."

The company has agreed to acquire a packaged foods startup that is backed by impact investment firm Aavishkaar Venture Management Services.

In a stock exchange filing, it said that it will buy 100% of the issued and paid-up equity share capital of Kottaram Agro Foods Pvt. Ltd for Rs 1,558 million.

D'Souza said this acquisition was a clear signal that it is actively looking at tuck-in acquisitions across categories.

Earlier this week on Tuesday, the company reported a 25.3% rise in consolidated net profit to Rs 2.4 billion crore for the third quarter ended December 2020, helped by higher sales in branded business.

Its revenue from operations rose 23.1% to Rs 30.7 billion during the quarter under review as against Rs 24.9 billion in the corresponding period last fiscal.

During Q3FY21, the company's revenue from its 'India - Beverages' segment surged 46.1% to Rs 12.8 billion.

The India Packaged Beverages business recorded 10% volume growth, driven by robust growth across most of its brands and market share gains.

Tata Consumer Products share price ended the day up by 1.4%.

Speaking of the FMCG sector, have a look at the chart below which shows the performance of BSE Sensex and BSE FMCG index since 2009:

While the Sensex has offered 393% returns since 2009, the BSE FMCG index has gone up a staggering 532% returns over the same period.

Richa Agarwal, lead Smallcap Analyst at Equitymaster, believes this outperformance could continue for many years.

With a rising population and standards of living, Indian's consumption demand for FMCG products will skyrocket over the coming years.

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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