Sensex Jumps 500 Points as IT & Auto Stocks Rally; Bajaj Finserv, Coal India Among Top Gainers

Wed, 9 Feb 10:30 am

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Asian stock markets are higher today, extending US gains and shrugging off concerns over rising crude oil prices and US inflation data scheduled for later this week.

The Nikkei jumped 1.1% while the Hang Sang rallied 2%. The Shanghai Composite is trading higher by 0.4%.

In US stock markets, tech companies and banks helped drive Wall Street indices higher as the market bounced back from an early slide to more than make up its losses from the day before.

The Dow Jones rallied 1.1% while the Nasdaq Composite zoomed 1.3%.

Back home, Indian share markets opened on a positive note following the trend on SGX Nifty.

Benchmark indices are trading on a strong note deriving support from Asian markets that are largely higher.

Market participants will track shares of Nykaa, Power Grid, Tata Power, Berger Paints, and ACC as these companies will announce their December quarter results today.

The BSE Sensex is trading up by 534 points. Meanwhile, the NSE Nifty is trading higher by 157 points.

Bajaj Finserv and IndusInd Bank are among the top gainers today. NTPC, on the other hand, is among the top losers today.

The BSE Mid Cap index is up 0.6%. The BSE Small Cap index is trading higher by 0.5%.

Barring oil & gas, all sectoral indices are trading in green with stocks in the IT sector, auto sector and consumer durables sector witnessing most of the buying.

Shares of NALCO and Gujarat Narmada hit their 52-week highs today.

The rupee is trading at 74.67 against the US$.

Crude oil prices are up today after two sessions of losses as industry data showed an unexpected drop in US crude and fuel stocks, offsetting concerns of a possible rise in supplies from Iran.

Gold prices are trading up by 0.1% at Rs 48,433 per 10 grams.

Meanwhile, silver prices are trading up by 0.3% at Rs 62,553 per kg.

Gold is steady today, trading near a one-week high scaled in the previous session, as inflationary risks and Russia-Ukraine tensions underpinned the safe-haven metal, despite the prospect of an aggressive rate hike by the US central bank.

In global market, spot gold was at US$1,825.9 per ounce while US gold futures dipped 0.1% to US$1,826.3.

Speaking of the precious yellow metal, how lucrative has gold been as a long-term investment in India?

The chart below shows the annual returns on gold over the last 15 years...

As you can see, barring just two years - 2013 and 2015, gold has delivered positive returns in 13 of the last 15 years.

The recent price volatility in the bullion market has rattled many traders. Even with the recent volatility in prices, gold remains among the best performing commodities this year to combat the fallout from the coronavirus pandemic.

In news from the travel support service sector, IRCTC is among the top buzzing stocks today.

Indian Railway Catering and Tourism Corporation (IRCTC) on Tuesday reported a sharp rise in its December quarter earnings with net profit rising 167.4% year-on-year (YoY) and 32% sequentially. This was due to a low base in the year-ago period and contribution from all the segments.

Profit for the quarter stood at Rs 2.1 bn, up from Rs 780.8 m in corresponding period last fiscal and Rs 1.6 bn reported in September 2021 quarter.

The PSU company's revenue stood at Rs 5.4 bn, up 141% YoY. On a sequential basis, the topline growth was 33.4%.

In its exchange filing, IRCTC said,

• The outbreak of coronavirus pandemic globally and in India is causing significant disturbance and slowdown of economic activity. However, the business activities of the company are going gradually on track in line with the lifting of restrictions as were imposed by the State and Central governments.

Internet ticketing segment, which contributed 58% to revenue, recorded more than double growth in business at Rs 3.1 bn for the December 2021 quarter, up from Rs 1.4 bn reported in the same period last fiscal.

The company's second largest segment in terms of business revenue - Catering also clocked more than a double growth at Rs 1.1 bn against Rs 500 m reported in the year-ago period.

IRCTC's board of directors declared an interim dividend of Rs 21 per share for the financial year 2021-22.

The company has fixed 18 February as record date for the purpose of its payment.

IRCTC share price is currently trading up by 2.5%.

To know more, check out IRCTC's 2020-21 annual report analysis.

Speaking of stock markets, in his latest video, Brijesh Bhatia discusses whether this is the beginning of the end for IT stocks.

Brijesh, who was bullish on IT stocks so far, explains how things are changing and the charts don't look so positive anymore.

Moving on to news from the consumer durables sector, Bajaj Electricals is all set to demerge its power transmission and power distribution businesses into a new company called Bajel Projects while retaining the consumer products and lighting businesses in the parent company.

The new company will be listed on the bourses and shareholders will receive a stake mirroring their stake in the parent company.

Note that shareholders of the company have been seeking this demerger for a long time given the completely different nature of the businesses and an absolute lack of synergies between them.

In an interview, the company's executive director Anuj Poddar said it was a very logical thing to split the businesses and the timing is right now.

• It's all part of what we call building on the Bajaj Electricals 2.0. We're working on becoming more agile and nimble. I tthink this demerger was a core step to making that happen.

Over the past three years, Bajaj Electricals has pared debt and executed various EPC (engineering, procurement and construction) projects taken by its power transmission and distribution business to help it start with a clean slate.

Yesterday, the company reported a 12% year-on-year fall in its consolidated revenues for the December quarter to Rs 13.2 bn. Net profit for the quarter under review halved to Rs 480 m.

Historically, the company has had lower margins than listed peers like Havells and Crompton Greaves. Poddar attributed this to the EPC business dragging down profits and lower margins for its consumer products business.

He added that the company also outsources the manufacturing of about 80% of its consumer products produced in India and it also has some legacy cost inefficiencies.

Bajaj Electricals has now undertaken an exercise to improve its consumer products margins by 1% every year through internal cost reductions and premiumisation through its Morphy Richards brand. It has also increased prices to the tune of 11-12% over the past year.

Bajaj Electricals share price is currently trading down by 0.2%.

To know more, check out Bajaj Electricals 2020-21 annual report analysis.

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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