Sensex Ends 453 Points Higher; IT & Healthcare Stocks Rally

Tue, 22 Dec Closing

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Indian share markets staged a strong recovery from intraday low levels in the afternoon session on the back of buying in IT heavyweights like Infosys, Tata Consultancy Services (TCS), HCL Technologies and Tech Mahindra.

Sentiment got a boost after BioNTech Chief Executive Ugur Sahin said he was confident a Covid-19 vaccine co-developed by his company would be effective against a variant of the coronavirus that has emerged in Britain.

At the closing bell, the BSE Sensex stood higher by 453 points (up 0.99%).

The NSE Nifty closed higher by 138 points (up 1.03%).

HCL Technologies and Tech Mahindra were among the top gainers today.

The BSE Sensex rose over 900 points from the day's lowest level while the Nifty surpassed 13,450 levels.

Note that benchmark indices fell 3% yesterday, snapping six days of gains, as investor sentiment dampened following reports of a new deadly strain of the coronavirus in the UK.

The SGX Nifty was trading at 13,493, up by 164 points, at the time of writing.

The BSE MidCap index ended up by 1.1%, and the BSE SmallCap index ended up by 1%.

All sectoral indices ended in green. Gains were largely seen in the IT sector, healthcare sector and metal sector.

Asian share markets declined today amid jitters over the new coronavirus strain. The Hang Seng ended down by 0.7% and the Shanghai Composite plunged 1.9%. The Nikkei ended down by 1%.

US stock futures are trading mixed following a volatile session that saw the Dow Jones Industrial Average erase a 400-point loss.

Nasdaq Futures are trading up by 42 points (up 0.3%), while Dow Futures are trading down by 54 points (down 0.2%).

European share markets are trading higher, attempting to recover from a brutal sell-off in the previous session.

Official data showed UK GDP grew by a record 16% in the third quarter, but that still didn't make up for an 18.8% decline in the previous quarter when much of the economy was shut down.

The rupee is trading at 73.86 against the US$.

Gold prices are trading down by 0.3% at Rs 50,245 per 10 grams. Domestic gold prices edged lower, mirroring similar trend in international markets.

In one of his videos, India's #1 trader, Vijay Bhambwani shares his view on gold and silver for the coming year.

In the video, Vijay explains the reasons behind staying positive on these assets.

Tune in here to find out more:

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, note that since the lows in March 2020, the smallcap index has gained more than 80%.

While caution is indeed warranted, Richa Agrawal, Research Analyst at Equitymaster, thinks there is still a lot more steam left to this smallcap rally.

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

• For one, the gap between Sensex and smallcap index is still huge.
  
  In January 2018, the smallcap to Sensex ratio was 0.57 times, versus a long term average of 0.44 times.
  
  At present, this ratio stands at 0.37 times, well below the long-term average.
  
  The possibility of a convergence between growth and value is a lot higher in the smallcap space, than in the large caps.
  
  And then here are some other interesting facts.
  
  Historically, the smallcap index, after a sharp correction, has risen up to 300%.

  The above observations have served Richa's smallcap service Hidden Treasure well. Her first batch of essential stock recommendations have offered robust returns so far, as can be seen in the chart below:

  
  

  While the margin of safety in valuations has come down in these stocks, Richa has recently added another stock to this list.

  This company is the world's largest player in a niche segment and its product falls in the essential category. This global leader enjoys unique competitive advantages that are hard to replicate by its peers.

  If you are interested in knowing more and in becoming a Hidden Treasure subscriber, here's where you can sign up.

  Moving on to stock specific news...

  Shipping Corporation of India (SCI) was among the buzzing stocks today.

  India is seeking bids for the strategic sale of state-run Shipping Corporation of India, the nation's largest shipping company. The development comes as the government speeds up asset sales to help bridge the budget gap.

  The government plans to sell about 296.9 million shares of the company, its entire stake of 63.75%.

  Investors can submit bids individually or as part of a consortium. The deadline is March 1, 2021.

  The department has appointed RBSA Capital Advisors LLP to manage the strategic disinvestment.

  The stock of the company hit a 52-week high yesterday on reports that the government may invite expressions of interest (EoI) for the company this week.

  The stock has also witnessed huge buying interest in the past one month on reports that global and domestic players are making a beeline for privatization process for the company.

  During initial discussions, players like Essar Shipping, Adani, Great Eastern Shipping, Vedanta, and Dubai Port World have expressed interest in SCI, reports suggested.

  How the above divestment process pans out remains to be seen. Meanwhile, we will keep you updated on all the developments from this space.

  Note that Prime Minister Narendra Modi's administration is relying on non-tax revenues as the coronavirus-induced lockdowns threatens to push the economy into a historic contraction.

  The government seeks to raise a record Rs 2.1 trillion (US$ 28.5 billion) from asset sales in the current fiscal year to March.

  With big ticket divestment plans hit by the Covid-19 pandemic, the government is readying public-sector companies for minority stake sale in the remaining months of current fiscal.

  So far this fiscal, the government has raised Rs 61.3 billion by selling minority stake in Hindustan Aeronautics and Bharat Dynamics through offer for sale (OFS). The government also divested 15.2% in Mazagon Dock Shipbuilders through an initial public offering.

  In other news, Borosil Renewables share price was also in focus today. The stock of the company witnessed buying interest and climbed for third session in a row, to extend gains after the company announced the successful completion of fund raising of Rs 2 billion through a qualified institutional placement (QIP).

  The solar glass maker said it has raised Rs 2 billion by issuing 1.58 crore shares through QIP.

  The issue opened on December 14, 2020, and closed on December 17, the company added.

  BRL allotted 1,58,04,030 shares of the face value of rupee one each at Rs 126.55 per share. Post the QIP issue, the holding of promoter and promoter group will be 61.92%.

  The funds raised will be utilised by BRL to service its capital expenditure requirements for a brownfield expansion to more than double its solar glass production capacity - from 450 tonnes per day (TPD) to 950 TPD.

  BRL is engaged in the manufacturing of low iron solar glass for application in photovoltaic panels, solar thermal flat plate collectors and greenhouses and is the only solar glass manufacturer in India.

  The company commissioned its first solar glass manufacturing facility at Bharuch in Gujarat. It services India's solar panel manufacturers while simultaneously exporting its products to Europe, Turkey and North America.

  Moving on to news from the IT sector...

  NIIT share price witnessed buying interest today after the company announced that it has scheduled a meeting of the board of directors on December 24, 2020 to inter alia consider proposal for buyback of equity shares of the company.

  Shares of the company surged 7% on the back of above news.

  As of September 30, 2020, the promoters held 34.3% stake in the IT training services company. Individual shareholders, including high net-worth individual Ashish Kacholia (2.53% stake), held a combined 23.4% stake.

  Note that last year, the company had bought shares in buyback for cash at a price of Rs 125 per equity share for an aggregate amount of Rs 3.4 billion.

  Apart from NIIT, other IT stocks also witnessed huge buying interest today. IT majors Infosys, HCL Tech, TCS and Tech Mahindra surged up to 6%.

  Infosys share price hit a fresh record high of Rs 1,224, up 4%. The board of directors of the company are scheduled to meet on January 13, 2021 to consider and approve the audited consolidated financial results of the company for the quarter and nine months ending December 31, 2020.

  We will keep you updated on the latest developments 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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