Factors Behind the Stock Market Crash, September Quarter Results, and Top Buzzing Stocks Today

Tue, 27 Oct Pre-Open

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Indian share markets witnessed a sharp sell-off yesterday and ended their session deep in the red.

At the closing bell yesterday, the BSE Sensex stood lower by 540 points. Meanwhile, the NSE Nifty ended down by 163 points.

Hero MotoCorp was the top loser in NSE. Meanwhile, the top gainers in NSE were HDFC Life Insurance and Nestle India.

The BSE Mid Cap index ended down by 1.8%. The BSE Small Cap index fell 0.9%.

On the sectoral front, automobile stocks and metal stocks were among the hardest hit.

Gold prices were trading up by 0.1% at Rs 50,893 per 10 grams at the time of closing stock market hours yesterday.

Domestic gold prices edged lower yesterday, before erasing losses later in the session, as elusive US stimulus package and a stronger US dollar put pressure on the yellow metal.

Note that in recent weeks, gold prices have remained in a narrow range, after losing momentum since hitting a record high of Rs 56,200 per 10 grams in August.

Yet, gold prices are up about 30% so far this year in Indian markets. Most of these gains are seen as gold is seen as an inflation hedge amid unprecedented pandemic-driven stimulus across the world.

To know more about gold, visit our YouTube Playlist on gold investing.

Speaking of the stock markets, India's #1 trader Vijay Bhambwani talks about how there are better days ahead for the stock market in 2021 in his latest video for Fast Profits Daily.

In this video below, Vijay shares that since commodity prices have recovered along with the stock market, they are now pointing towards an economic recovery.

So, does it mean that the stock market will go up now?

Tune in here to find out more:

Top Stocks in Focus Today

Kotak Mahindra Bank will be in focus today on reports that the lender is exploring a potential takeover of smaller rival IndusInd Bank.

It was reported that the promoters of Kotak Bank and their counterparts in IndusInd Bank have engaged in discussions for the merger via a share swap. If such a deal is clinched, it could significantly expand Kotak Mahindra's presence in the Indian banking sector, particularly in the retail segment.

However, the promoter of IndusInd Bank, IndusInd International Holdings (IIHL), completely denied the above reports.

Vedanta will be among the buzzing stocks today as the Indian subsidiary of Vedanta Resources Ltd. (VRL), approved a dividend of Rs 9.5 per share amounting to Rs 35 billion (US$ 476 million). The outflow follows US$ 1.2 billion in payouts announced by cash cow unit Hindustan Zinc earlier this week.

The decision comes two weeks after the failure to delist Vedanta which has curtailed the London-based holding company's ability to easily access cash from its units and pare down elevated debt.

Market participants will also be tracking auto stocks today. Shares of automobiles companies, mainly two-wheelers, were under pressure yesterday on concerns of festive season failing to boost vehicle demand.

According to reports, estimates by Federation of Automobile Dealers' Association (FADA) suggest that the demand for passenger vehicles is expected to decline by 25% this Navratri-Dussehra season, as compared to the last year.

Bajaj Auto share price and Hero MotoCorp share price slipped over 6% yesterday, while TVS Motor Company and Eicher Motors were down in the range of 2-4%.

Top Factors Why Indian Stock Markets Crashed Yesterday

Here are the main factors behind yesterday's stock market selloff:

Automobile and Metal Stocks Bleed: Shares of automobiles companies witnessed huge selling pressure yesterday on concerns of festive season failing to boost vehicle demand.

Meanwhile, the BSE metal index fell as much as 3.5% after JSW Steel reported lower than expected earnings for the quarter ended September 2020.

Weak Global Cues: Weak global cues also dampened sentiment as coronavirus cases increased in the United States and some European nations which raised concerns over global growth.

Rising Coronavirus Infections: US reported the highest single-day spike of over 85,000 cases on October 23, while France also recorded more than 50,000 cases in a day on October 25. Italy ordered to close bars early and shut gyms, while Spain announced nationwide curfew to control rising infections.

Reliance-Future Deal Set on Hold: Selling pressure was seen in index heavyweight Reliance Industries after the Singapore International Arbitration Centre (SIAC) passed an interim order asking Future Group to put its plans of selling its retail business to Reliance Group on hold.

Q2FY21 Results: Nestle India Posts 10% YoY Rise in Revenues; Polycab Posts 6% Fall

FMCG giant, Nestle India reported a 10% year-on-year (YoY) increase in revenue for the quarter ended September.

The company's net sales rose on the back of improving demand in the first quarter of operations after the government eased lockdown curbs and its factories limped back to normal capacities. Domestic sales rose 10.2% YoY while its exports rose 9.4% YoY to Rs 1.6 billion. The company also saw an increase of 15% YoY in its operating profit and an expansion of 1.1% in its operating margin.

However, the company saw its profit decline 1% YoY. This bottom line fell because the profit was boosted in the year ago quarter after the government cut corporate tax rates.

Nestle India's brands such as Maggi noodles and sauces, Kit Kat, and Nescafe witnessed double-digit growth. The company said that sales through its e-commerce channels almost doubled in the quarter and now contributes to 4% of Nestle India's domestic sales.

Polycab India reported strong operational performance for the quarter ended September 2020 (Q2FY21).

Polycab India's consolidated net profit jumped 14% to Rs 2.2 billion in Q2FY21.

Revenue declined 6% YoY to Rs 21.1 billion as against 50% YoY decline seen in Q1FY21. Sequentially, revenue surged 116.4%.

On the segmental front, wires and cables business declined 7% YoY to Rs 17.4 billion in Q2FY21 from Rs 18.8 billion in Q2FY20.

Fast moving electrical goods business grew 25% YoY to Rs 2.4 billion in Q2FY21 from Rs 1.9 billion in Q2FY20.

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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