Weekly Market Analysis 22-10-2021

Benchmark Indian equity indices closed lower for the week after rising for two weeks in a row as rising energy prices, profit booking by investors and weak domestic cues weighed on domestic markets. Corporate earnings were also softer than expected. For the week, the Sensex closed 0.8% lower to 60821.60. The Nifty closed 1.2% lower at 18114.9.

Foreign Institutional Investors and Domestic Institutional Investors were net sellers for the week. FIIs sold for Rs 7353.04 crore and DIIs sold for Rs 4504.40 crore. 

For the week, Nifty FMCG was the worst affected as it fell 6.2%. Metal lost 5.5%, Realty dropped 5.3% and Pharma was down 5.3%.

Among sectors only banking and financial services sectors gained. Nifty PSU Bank gained 3.9% Nifty Bank rose 2.5% and Nifty Financial Services rose 1.9%.

Top losers in Nifty 50 were Asian Paints (-9.6%), Hindalco Industries (-8.9%), Eicher Motors (-8.4%) ITC (-7.8%) and Hindustan Unilever (-7.4%). Top gainers were Kotak Mahindra Bank (7.6%), Tech Mahindra (6.1%), ICICI Bank (4.4%), HDFC (3.4%) and SBI (2.5%).

Company News

Reliance Industries: The conglomerate posted a significant jump of 46% in its consolidated net profit to Rs 15479 crore in the second quarter of FY22, from Rs 10602 crore in the year-ago period. The jump was attributed to good performance of its oil business and better-than-expected sales in its retail business as demand rebounded. Consolidated revenue surged almost 50% year-on-year to Rs 1.74 lakh crore.

Hindustan Unilever Ltd: The FMCG major reported an 8.9% year-on-year rise in standalone profit at Rs 2,187 crore in the second quarter of FY22. Its operating revenue grew 11.2% to Rs 12,724 crore in Q2FY22 from the year-ago period. Rising input prices capped the company’s growth, while price hikes supported operating profit margin. The results did not beat analyst expectations and shares fell 7.4% during the week. The negative sentiments also had a negative effect on other FMCG stocks like Dabur, Emami, ITC, Godrej Consumer, Tata consumer, United Spirits, etc.

Asian Paints: Shares of the company dropped after it posted lower-than-expected earnings in Q2FY22. Its consolidated net profit fell 28.25% to Rs 595.96 crore in the second quarter, from Rs 830.37 crore in the year-ago period. The decline was attributed to higher raw material costs amid steep inflation. Operating revenue increased 32.6% to Rs 7,096 crore from Rs 5,350 crore, due to higher volume growth in domestic decorative business.

HCL Technologies: The IT services firm reported that its operating revenue rose 11.% to Rs 20655 crore in Q2FY22, from Rs 18594 crore in the year-ago period. Net income increased 3.9% to Rs 3265 crore in Q2FY22, from Rs 3124 in the year-ago period. The company’s board has declared an interim dividend of Rs.10/- per equity share for FY22.

HDFC Life Insurance: The company posted a decline of 15.83% in its consolidated net profit to Rs 275.91 crore in the second quarter of FY22, as against a net profit of Rs 327.83 crore in the year-ago period. Total income of the insurer during the quarter rose to Rs 20,478.46 crore, compared with Rs 16,426.03 crore in the year-ago period. The net premium income increased to Rs 11,445.53 crore in Q2FY22, from Rs 10,056.71 crore in the year-ago period.

Jubilant Foodworks : The company reported a 58.11% rise in its consolidated net profit to Rs 119.82 crore in Q2FY22, as against a profit of Rs 75.78 crore in the year-ago period, boosted by higher sales. Its operating revenue rose to Rs 1116.19 crore, from Rs 816.33 crore.

Global Markets

In the US markets, better-than-expected results from corporate America boosted investor sentiments. Healthcare, realty, utilities and insurance companies gained. For the week, the Dow rose 1.08%, the S&P 500 jumped 1.64%, and the Nasdaq advanced 1.3%

Additionally, hopes of more fiscal stimulus from the Biden administration boosted investors’ sentiments. Next week, all the big tech companies like Apple, Alphabet, Microsoft, Facebook, Amazon will report their earnings.

In Asian markets, Chinese equities indices closed higher. For the week CSI 300 rose 0.56%, Shanghai Composite edged up 0.29% as tech stocks climbed. Also, China Evergrande Group met its interest obligation on an offshore bond, pushing its share prices higher.

China’s gross domestic product grew at a slower pace during the July-September quarter at just 4.9% due to strict measures taken by the Chinese government to arrest the spread of the pandemic. The GDP grew at 7.9% during the April-June quarter. Investors’ sentiment was dampened after media reports said that China has started shutting down schools, cancelling hundreds of flights and ramping up mass testings following a new outbreak of COVID-19.

In addition, high commodity prices amid uncertainty worries over Evergrande Group’s debt crisis capped gains in the Chinese market. However, officials ensured to calm fears about the property sector.

Japan’s stock markets fell for the week, as the Nikkei 225 index lost 0.91% and the broader Topix was down 1.07%. The yen depreciated against the US dollar.

According to Japan’s government data, the country’s export growth slowed down sharply in September, falling to 13.0% year-on-year (YoY) from the previous month’s growth of 26.2% YoY. Imports surged to 38.6% year-on-year.