Weekly Market Analysis 01-10-2021

Benchmark Indian indices, which rose for five weeks in a row, fell for the week ended on October 1 as investors squared off their positions and booked profits. For the week, the Nifty fell 1.8% to close at 17532.1 and the Sensex was down 2.1 % to end at 58765.6.

In Nifty 50 index, the top losers were Tech Mahindra (-9.5%), Bharti Airtel (-8.6%), Asian Paints (-7.9%), Bajaj Finserv (-7.3%) and HCL Technologies (-6.2%) on a weekly basis. Top weekly gainers were Coal India (13.6%), NTPC (12.6%), Power Grid (8.9%), Indian Oil Corp (8.7%) and ONGC (7.5%).

Top sectoral gainers were S&P BSE Utilities (7.2%), BSE Power (6.4%), Nifty PSU Bank (6.1%), Nifty Energy (5.9%). Top losers were Nifty IT (-6.3%), BSE Tech (-5.3%), BSE IT (-5.2%), BSE Telecom (-5.1%).

Stocks related to power sector rallied as the economic rebounded and the consumption of electricity improved, according to Ind-Ra report. There continues to be higher demand for power and Coal India, the biggest supplier of coal to power plants in India, increased production due to the shortage of coal availability. This pushed the company’s shares higher as their revenue and earnings are likely to increase.

Company News

Public-sector enterprise Coal India will ramp up supplies to utility companies to address their coal shortage that has left most of the country’s power plants close to running out of fuel as electricity demand is rising. It has increased supply to power plants to 1.4 million tonnes on a daily basis and the company expects this will ensure some sort of normalcy in power plants present across the country.

Public-sector bank Indian Overseas Bank has been removed from Prompt Corrective Action (PCA) restrictions by the RBI. This decision will give the bank more leeway for lending, especially to corporations and grow the network, subject to prescribed norms like minimum regulatory capital, net NPA and leverage ratio on an ongoing basis.

Zee Entertainment Enterprises’ board refused to hold an Extraordinary General Meeting as demanded by shareholder Invesco. The company in a statement said that the board has arrived at a conclusion that the requisition is invalid and illegal and the company has accordingly conveyed its inability to convene the meeting.

Paras Defence & Space Technologies had a bumper stock market debut as its share prices rose 181% to Rs 492.45 on the NSE, as against its issue price of Rs 175 apiece. The stock zoomed 185% over the issue price and was locked in the upper circuit of 5% at Rs 498.75 on the BSE. The company has been admitted to dealings on the exchange in the list of ‘T ‘ group of securities, the BSE said in a notice.

Economy News

India’s core sectors’ output grew at 11.6% in August, as against a contraction of 6.9%in the year-ago period, according to government data. Among the eight core sectors, four sectors showed double-digit growth, but crude oil and fertilisers output declined.

In addition, the seasonally adjusted IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) rose to 53.7 in September, from 52.3 in August, indicating an expansion and overall positive sentiment in business conditions across the sector.

Further, the Government of India has received Rs. 8,08,672 crore, which is 40.9% of corresponding budget estimates (BE) of 2021-22 of Total Receipts, up to August, 2021. The total receipts comprises of Rs. 6,44,843 crore of Tax Revenue (Net to Centre), Rs. 1,48,650 crore of Non Tax Revenue and Rs. 15,179 crore of Non Debt Capital Receipts, as per data released by the Controller General of Accounts (CGA). Total Expenditure stood at Rs. 12,76,681 crore, which is 36.7% of corresponding BE 2021-22, out of which Rs. 11,04,813 crore is on Revenue Account and Rs. 1,71,868 crore is on Capital Account. 

Global Markets

The US markets closed lower for the week as investors were worried over rising and persistent inflation and higher interest rates woes. Stocks related to energy sector gained. Rising U.S. Treasury yields weighed on investors’ sentiments during the week and many market participants viewed the Federal Reserve’s policy statement as hawkish. In addition, no progress in rising the federal debt ceiling and stimulus uncertainty continued to weigh on the markets. For the week, the the Dow dropped 1.35%, the S&P 500 lost 2.21%, and the Nasdaq plunged 3.2%.

Japanese stocks also fell, tracking U.S. markets and declined during the week. The Nikkei 225 Index lost 4.89% and Topix lost 5% in the week.

Chinese equities ended the week on a mixed note as some positive news related to the debt-laden China Evergrande Group eased investor worries. The CSI 300 index marginally rose by 0.35% for the week. Shanghai Composite Index fell 1.24% and Hang Seng rose 1.59%.