4 Reasons Why Sensex Rallied 832 Points Today

Mon, 1 Nov Closing

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Indian share markets witnessed positive trading activity throughout the day today and ended on a strong note.

Benchmark indices reversed their 3-day losing streak led by renewed buying interest in metal, IT and select financial shares following the recent correction.

Sensex reclaimed the 60,000-mark and surged to a high of 60,220, while the Nifty touched a high of 17,954.

Broader markets also logged strong gains in today's session.

At the closing bell, the BSE Sensex stood higher by 832 points (up 1.4%).

Meanwhile, the NSE Nifty closed higher by 258 points (up 1.5%).

IndusInd Bank and Hindalco were among the top gainers today.

UPL and Bajaj Finserv, on the other hand, were among the top losers today.

The SGX Nifty was trading at 18,024, up by 274 points, at the time of writing.

The BSE Mid Cap index and the BSE Small Cap index ended up by 1.8% and 1.1%, respectively.

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

Shares of Blue Star and Minda Corporation hit their respective 52-week highs today.

Asian stock markets ended on a mixed note today.

The Hang Seng and the Shanghai Composite ended down by 0.9% and 0.1%, respectively. The Nikkei ended up by 2.6% in today's session.

US stock futures are trading on a positive note today with the Dow Futures trading up by 143 points.

The rupee is trading at 74.86 against the US$.

Gold prices for the latest contract on MCX are trading up by 0.1% at Rs 47,686 per 10 grams.

Here are 4 Factors Why the Stock Markets Were Up Today

Positive Macro Data: Goods and Service Tax (GST) collections for October, the beginning of a demand-boosting festive season, came in at Rs 1.3 tn, compared to Rs 1.2 tn in September, indicating strengthening economic recovery in the second half of the fiscal year 2021-22.

October GST collections were not only the second highest for the fiscal year, but the second highest monthly collections since the introduction of the nationwide tax in 2017. The highest ever was also this year, at Rs 1.4 tn in April.

In a statement, Financial Minister said,

• This is very much in line with the trend in economic recovery. This is also evident from the trend in the e-way bills generated every month since the second wave.

IPO Frenzy: After a month-long gap, the primary market is heading for a busy time, with 5 firms including Paytm's parent One97 Communications and Policybazaar parent PB Fintech lining up their IPOs to raise over Rs 270 bn collectively.

The other three firms are Sapphire Foods India, which operates KFC and Pizza Hut outlets, decorative aesthetics supplier SJS Enterprises and microcrystalline cellulose manufacturer Sigachi Industries.

Healthy September Quarter Results: Today's market rally was also supported by better earnings from IRCTC, SAIL and HDFC.

Mortgage lender HDFC reported a standalone net profit of Rs 37.8 bn for the quarter ended 30 September 2021. This is an increase of 32% from Rs 28.7 bn in the same period last year as dividend income soared.

While, domestic steel giant SAIL India reported an over 10-fold jump in its consolidated net profit at Rs 43.4 bn for the second quarter ended September 2021, mainly on low-base effect.

Sectoral Gains: Market participants bought shares across the board after the recent correction bought valuations down. Metal, telecom, realty, banking and IT - all indices witnessed strong gains today.

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 stock markets, in his latest video, Co-head of Research at Equitymaster Rahul Shah talks about the selling plan one should have in place right before a market crash.

Does a perfect selling strategy exist? What are its key rules or principles?

Rahul answers these questions in the video below. Tune in to find out more:

In news from the travel support services sector, IRCTC was among the top buzzing stocks today.

Indian Railway Catering & Transportation Corporation (IRCTC) reported a 386% year on year (YoY) rise in net profit to Rs 1.6 bn for the quarter ended September 2021.

The platform company's revenue from operations in the quarter spiked 357.3% YoY to Rs 4 bn.

Both the bottomline and topline of the company were aided by a low base in the year ago quarter and improvement in demand in the said quarter.

While all segments of IRCTC performed strongly on a YoY basis, the largest segment - Internet ticketing - had a stellar quarter.

Sales from internet ticketing spiked 355% YoY to Rs 2.7 bn as the company saw robust railway ticket sales in the quarter as travelling picked up.

The reopening of states post the second wave of the Covid-19 pandemic along with a high vaccination rate improved mobility in the economy during the reported quarter.

Catering, which is the second-largest revenue contributor, saw its sales rise 315% YoY to Rs 714 m in the reported quarter as the government eased restrictions on serving of food on railway platforms as well as on trains.

The surge in business activity also meant higher costs for the company. During the quarter, total expenses incurred by the company nearly doubled to Rs 2.1 bn, largely led by catering and tourism services.

IRCTC share price ended the day up by 1.1% on the BSE.

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

Moving on to news from the finance sector...

Ujjivan Financial Services on Saturday said its board has approved amalgamation of the company with its subsidiary Ujjivan Small Finance Bank in order to comply with market regulator's minimum public shareholding norms.

The decision was taken based on the recommendation of the audit committee and committee of independent directors in a meeting held on Saturday, Ujjivan said in a regulatory filing.

As per the scheme of amalgamation, Ujjivan Financial Services (transferor company) will be merged with Ujjivan Small Finance Bank (transferee company), and the dissolution is to be without the winding-up of the transferor company.

The amalgamation is subject to approval from the Reserve Bank of India (RBI), capital markets regulator, public shareholders of the companies involved, as well as the national company law tribunal (NCLT).

Ujjivan is the holding company and promoter of Ujjivan Small Finance Bank (SFB).

Ujjivan presently holds 83.32% of the equity shareholding and 100% of preference shareholding of Ujjivan SFB.

As per the minimum shareholding norms, the promoter's minimum initial contribution in the SFB arm should be at least 40%.

If the promoter's initial shareholding in the SFB is in excess of 40%, then it is to be brought down to 40% within a period of 5 years from the date of commencement of operations of SFB.

The aforesaid period of five years is expiring on 31 January 2022 for the transferee company (being SFB), and the proposed amalgamation among other business objectives and benefits would enable the transferee company to ensure the aforesaid compliance.

Once the scheme comes to effect, Ujjivan SFB would issue and allot to the shareholders of Ujjivan Financial Services 115 equity shares of the bank for every 10 equity shares of Ujjivan.

Ujjivan said the amalgamation would result in formation of a larger and stronger entity having greater capacity for conducting its operations more efficiently and competitively.

Ujjivan Financial Services share price ended the day down by 0.5% on the BSE.

Speaking of the current stock market scenario, note that the BSE smallcap index has surged 188% since the crash in March 2020.

Despite the index being up more than 1.8 times, Richa Agarwal, lead Smallcap Analyst at Equitymaster, believes smallcap stocks are set for a massive up move in 2021 and beyond.

Here's why...

The Smallcap to Sensex ratio, a metric referred to get a sense of relative valuations, currently stands at 0.48 times. To be sure, this is higher than a median of 0.43 times.

And yet, it's the lowest of all the peaks in the smallcaps so far. In the last cycle which peaked in January 2018, when the ratio touched 0.49, the peak was still 9 months away.

Here's what Richa wrote in a recent edition of Profit Hunter...

• When it comes to buying smallcap stocks, especially at this point in the rebound rally, you will need a bottom up approach, and a long term horizon.
  
  In fact, if you don't have the stomach to withstand a 20%-30% kind of corrections and volatility, this space may not be for you at all. And you should stop reading right here.

As per Richa, smallcaps are a great opportunity to make some big returns. But you need to stay disciplined when it comes to allocating money. And you need to be sharp when picking the right stocks.

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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