Sensex, Nifty Open at Fresh Record Highs; M&M and Bajaj Finance Top Gainers

Wed, 16 Dec 09:30 am

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Asian stock markets climbed today as investors moved with confidence that vaccinations and additional monetary and fiscal support from governments will drive economic growth.

The Hang Seng is trading up by 0.9% while the Shanghai Composite is trading higher by 0.2%. The Nikkei is up 0.3%.

In US stock markets, hopes of a US$ 1.4 trillion US spending package and a likely regulatory authorization to Moderna Inc's Covid vaccine pushed stocks higher.

The Dow Jones Industrial Average gained 337.8 points, or 1.1%, while the Nasdaq climbed 1.3%.

Back home, Indian share markets have opened the day on a strong note.

Market participants will be tracking the meeting of markets regulator which is set to discuss some crucial issues pertaining to capital and commodity markets today.

The BSE Sensex is trading up by 306 points. Meanwhile, the NSE Nifty is trading higher by 83 points.

M&M and Bajaj Finance are among the top gainers today.

Both, the BSE Mid Cap index and the BSE Small Cap index have opened the day up by 0.6%.

Barring telecom stocks, all sectoral indices are trading on a positive note with stocks in the realty sector and metal sector witnessing maximum buying interest.

Sugar stocks are in focus today as reports emerged that the Union Cabinet may consider a proposal to provide export subsidy worth Rs 36 billion to sugar mills for the marketing year 2020-21 in today's meeting.

The rupee is trading at 73.49 against the US$.

Gold prices are trading up by 0.4% at Rs 49,618 per 10 grams.

To know more about gold, you can check out our detailed article on investing in gold here: How to Invest in Gold?

Speaking of stock markets, in his latest video, India's #1 trader, Vijay Bhambwani, explains why he doesn't think we will see a market crash in the short term.

Is there a serious correction on the horizon for the equity markets? After all, we've seen the rally suffer from a loss of momentum recently.

Does this mean a correction is just around the corner?

Tune in to the video to find out more:

In news from the mutual funds space, investment in mutual funds through systematic investment plans dropped to a 31-month low of Rs 73 billion in November amid challenging economic environment.

Investment through the Systematic Investment Plans (SIPs) route had risen in October after six months of continuous decline.

Fund collection through SIP was Rs 77.9 billion in September and August while in July, it was 78.3 billion. It dropped below the Rs 80 billion-mark in June to Rs 79.2 billion.

The mutual fund industry witnessed an inflow to the tune of Rs 73 billion through SIPs in November as compared to Rs 78 billion in the preceding month, data from the Association of Mutual Funds in India (Amfi) showed.

This was the lowest-level since April 2018 when investment through the route was Rs 66.9 billion.

Reports stated that SIPs have fallen because investors want to maintain some kind of liquidity at their end as the current situation is uncertain when it comes to their jobs and businesses.

Reports also stated that since the last three days of November were non-business days, a significant amount of SIP flows might not be reflected in the official numbers.

Meanwhile, 3.39 lakh SIP accounts increased in November.

Note that, equity mutual funds, which mainly depends on SIP for flows, saw a an outflow of Rs 129.2 billion in November, making it the fifth straight month of withdrawal as investors booked profit amid higher market valuations.

Currently, mutual funds have over 34.1 million SIP accounts through which investors regularly invest in mutual fund schemes.

We will keep you updated on the latest developments from this space. Stay tuned.

Speaking of mutual funds, note that on September 11, the capital markets regulator issued a circular directing multi-cap schemes to deploy at least 25% each in large-, mid-, and small-caps. At present, such schemes manage Rs 1.47 trillion in assets.

Assuming every fund rebalances, the circular is expected to trigger a move of around Rs 280 billion from largecaps to smallcaps.

Richa Agarwal, lead smallcap analyst at Equitymaster, believes this move would be net positive for select smallcap stocks. As per Richa, there could be a speculative rally across smallcaps.

Here's what she wrote about it in one of the editions of the Profit Hunter:

• It would be myopic and imprudent to bet on any smallcap in the hope of a regulation driven rally.
  
  That said, you must invest in smallcaps selectively with long-term horizon in mind.
  
  Here's why...

• You see, despite the rally in smallcaps since March, there is still a huge valuation gap between smallcaps and Sensex.
  
  The ratio of smallcaps to Sensex stands at 0.37 now, as compared to long-term average of 0.44 times.
  
  This means certain smallcaps will witness a significant rebound, irrespective of regulations.

Richa believes this could be a once in a decade opportunity to get rich from select smallcaps.

Moving on to stock specific news...

Bharat Petroleum Corporation (BPCL) is among the top buzzing stocks today.

State owned refiner BPCL, which is in the midst of privatization, on Tuesday said its board will meet on Wednesday to consider buying out Oman Oil Company in the Bina refinery project in Madhya Pradesh.

The company in a filing also said that its board will also consider merging Bharat Gas Resources (BGRL) with itself.

BPCL holds a 63.68% stake in Bharat Oman Refineries (BORL), which built and operates a 7.8 million tonne oil refinery at Bina in Madhya Pradesh.

The company board will on December 17 consider a proposal for in-principle approval for acquisition of 36.62% of equity shares in BORL from OQ S.A.O.C. (formerly known as Oman Oil Company S.A.O.C.), BPCL said.

This would amount to the acquisition of 888 million equity shares from OQ.

BPCL share price has opened the day up by 0.7%.

Market participants are also tracking Borosil Renewables share price.

The board of directors of the company is scheduled to meet on Thursday, December 17, 2020 to consider the proposal to infuse capital in lieu of securities, issued through a preferential allotment, not exceeding Rs 250 million.

Note that shares of Borosil Renewables, formerly known as Borosil Glass Works, surged 16% yesterday and hit a fresh record high of Rs 182.60 on the BSE.

In the past two trading days, the stock of the houseware manufacturer has zoomed as much as 39% as the government is set to levy duty at 9.71% on textured tempered coated or uncoated glass imports (of which the company is the sole manufacturer in India) from Malaysia.

The duty will be effective after the issuance of final customs notification by Ministry of Finance, Government of India in this regard in due course, the company said.

We are closely tracking this sector and will keep you updated on all the top news from this space. Stay tuned.

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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