4 Factors Behind the Sensex Rally, Bharti Airtel's Right Issue, and Buzzing Stocks Today

Tue, 31 Aug Pre-Open

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Indian share markets ended on a strong note yesterday.

Benchmark indices scaled new record peaks as Jerome Powell's speech last Friday suggested interest rate hike in the US could be later than previously thought.

At the closing bell yesterday, the BSE Sensex stood higher by 765 points (up 1.4%).

Meanwhile, the NSE Nifty closed higher by 226 points (up 1.4%).

Bharti Airtel and Divi's Laboratories were among the top gainers.

Tech Mahindra and Eicher Motors, on the other hand, were among the top losers.

The BSE Mid Cap index and the BSE Small Cap index ended up by 1.7% and 1.6%, respectively.

On the sectoral front, gains were largely seen in the metal sector, power sector, and telecom sector.

Shares of Bajaj Finance and Info Edge hit their respective 52-week highs.

Gold prices for the latest contract on MCX were trading down by 0.4% at Rs 47,344 per 10 grams at the time of closing stock market hours yesterday.

Here are Top 4 Factors Why Indian Share Markets Rallied

Positive Global Cues: The positive sentiment of major global markets spilled on to the Indian market.

Most Asian markets closed in the green after the US Fed chair's dovish stance on the course of monetary stimulus and rate hikes.

Federal Reserve's Dovish Stance: US Fed chairman Jerome Powell's dovish stance seems to have boosted market sentiment. Powell hinted that the US central bank is not willing to quickly move towards raising rates.

The post-pandemic rally in the market has been mostly liquidity-driven and participants believe the market has more steam left as the liquidity tapering exercise is not likely to begin as early as was anticipated.

Positive Macro Data: The foreign direct investment (FDI) into the country rose more than two folds to US$17.6 bn during April-June this fiscal on account of measures such as policy reforms and ease of doing business, an official statement said on 28 August 2021.

Total FDI inflow rose to US$22.5 bn during the first three months of 2021-22 as against US$11.8 bn in the same period last year. Total FDI comprises equity inflows, reinvested earnings and other capital.

FDI equity inflow grew by 168% in the first three months of 2021-22 (US$17.6 bn) compared to the year-ago period (US$6.6 bn).

Sectoral Performance: Gains were also seen as telecom, metal, and banking sectors witnessed huge buying interest yesterday. The telecom sector ended up by 3.5% today, while the metal sector and banking sector ended higher by 2.6% and 2.1%, respectively.

We will keep you updated on how these factors develop in the coming days and what effect they have on Indian stock markets. Stay tuned!

Speaking of the stock market, India's #1 trader, Vijay Bhambwani, talks about how you should trade in the month of September, in his latest video for Fast Profits Daily.

Tune in to the video below to find out more:

Top Stocks in Focus Today

Among the buzzing stocks today will be L&T.

Shares of Larsen & Toubro (L&T) hit a record high of Rs 1,684.8, up 3% on BSE yesterday, after the company announced that its construction arm, L&T Construction, has bagged a slew of orders in India and abroad for its various businesses.

According to L&T's classification, the valuation of the orders lie between Rs 100 bn to Rs 250 bn.

L&T's buildings & factories business secured an order to construct multilevel parking and an advocates chamber for the High Court at Allahabad while the power transmission & distribution business bagged an order for the turnkey construction of a substation in Saudi Arabia.

The company's smart world & communication business also bagged a smart city project.

Note that L&T's core engineering and construction business remains best placed to benefit from any capex upcycle, supported by its leaner asset-light business model and diversified segments.

Sandhar Tech share price will also be in focus today.

Shares of Sandhar Technologies rallied 13% to Rs 294.3 on the BSE yesterday on reports that US electric vehicle maker Tesla is in talks with at least three Indian suppliers to source critical parts as part of its plans to enter the Indian market.

The company is looking to source critical electronic, electrical and mechanical components, even as Sona BLW Precision Forgings (Sona Comstar), Sandhar Technologies and Bharat Forge are understood to be among the Indian firms already supplying components to it, the Economic Times reported.

The company is seeking critical electrical, electronic and mechanical components, the report said, citing people familiar with the matter.

The parts include instrument panels, windshields, differential brakes, gears and power seats.

Also, in the electric vehicle (EV) two-wheeler space, the company has already onboarded Ampere, Ather Energy, Revolt and Mahindra Electric among others in the e-mobility domain with talks progressively on with Ola- Electric as well.

Nazara Technologies Eyes Rs 1 bn from Real-Money Gaming Business

Nazara Technologies is betting big on real-money gaming and hopes to achieve Rs 1 bn in revenues by the end of fiscal 2022, said the company's chief executive Manish Agarwal.

In the past year, real-money gaming has been fraught with regulatory bottlenecks with states, including Tamil Nadu, introducing changes to their laws to ban real-money gaming platforms.

Agarwal said the Madras High Court judgment favoring real-money gaming platforms and global opportunities could help ramp up the business, as it gears up to make acquisitions in the space.

In an interview, Agarwal said,

• The fact that real-money gaming contributes 80% to all e-gaming revenues and recent positives coming from various court judgments is giving us confidence. Considering the positives emerging from the space, we are looking to scale this business.

At present, skill-based gaming contributes to Rs 150 m of Nazara's overall revenues.

Last week on Friday, Nazara announced the acquisition of OpenPlay Technologies for Rs 1.9 bn, its second acquisition in the real-money and skill-based gaming space.

Bharti Airtel Board Approves Rs 210 bn Rights Issue

Bharti Airtel shares gained 5% on the BSE yesterday after the telecom services provider announced Rs 210 bn rights issue.

In an exchange filing on Sunday, Bharti Airtel said,

• The rights issue is priced at Rs 535 per fully paid-up equity share, including a premium of Rs 530.
  
  Further, the rights entitlement ratio entails one equity share for every 14 equity shares held by eligible shareholders as on the record date.

As far as terms of payment of the issue price are concerned, 25% is to be paid on application, balance in two more additional calls as may be decided by the board or committee of the board, based on the company's requirements within an overall time horizon of 36 months.

The promoter and promoter group of the company will collectively subscribe to the full extent of their aggregate rights entitlement along with any unsubscribed shares in the issue.

While utilization of the issue proceeds has not been disclosed, this is the third fund raising round in the last three years after it raised a cumulatively Rs 420 bn in the financial year 2020 (37% dilution) through a successive issuance of rights, qualified institutional placement (QIP), and foreign currency convertible bond (FCCB).

Including the upcoming rights issue, it will be a cumulative 46% dilution in less than three years.

How this pans out remains to be seen. Meanwhile, stay tuned for more updates from this space.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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