Weekly Market Analysis: Nifty, Sensex close higher on positive global cues; RIL, IndusInd Bank and Paytm in news

Domestic stock indices closed higher for the week on the back of positive global stocks and the threat of Omicron variant of the coronavirus eased. In addition, the Reserve Bank of India kept the key policy rates unchanged to support the recovery of the Indian economy. For the week, the Sensex closed 1.89% to 58786.67 and the Nifty index closed 1.83% higher at 17511.30.

Among Nifty sectoral indices, top gainers were Media [9.1%], PSU Bank [6.2%], Metal [4.9%], Realty [4.7%] and Auto [2.7%]. There were losses in the Nifty sectoral indices, but IT and Energy rose the least by just 0.26% and 0.74%, respectively, while Pharma was flat on a weekly basis.

Foreign Institutional Investors (FIIs) continued their selling in the cash segment. FIIs sold for Rs 9203.6 crore in the cash segment, while Domestic Institutional Investors bought for Rs 7212.3 crore.

In the Nifty 50 index, the top gaining stocks for the week were Hindalco Industries [7.2%], ITC [6.5%], ICICI Bank [5.8%], Asian Paints [5.6%], Tata Steel [5.6%]. Top losers were Coal India [-5.3%], Divi’s Laboratories [-5.3%], Cipla [-2%], Indian Oil Corp [-1.8%] and Power Grid Corp [-1.7%].

Company News

Reliance Industries Ltd: The conglomerate said that it will partner with Abu Dhabi Chemicals Derivatives Company RSC Ltd (TA’ZIZ) to invest $2 billion in setting up a petrochemical production facility in the UAE. The new joint venture will construct and operate a chlor-alkali, ethylene dichloride (EDC) and polyvinyl chloride (PVC) production facility, with an investment of more than $2 billion.

In a separate news, Reliance BP Mobility Limited (RBML), operating under the brand name Jio-bp and The Mahindra Group, announced a non-binding MoU for exploring creation of EV products and services. The MoU also included identifying synergies in low-carbon and conventional fuels and evaluating charging solutions by Jio-bp for Mahindra vehicles including electric 3- and 4-wheelers, quadricycles and e-SCV (Small Commercial Vehicles – sub 4 ton). The partnership will also explore business models such as mobility as a service and battery as a service to help expedite EV adoption in the country.

IndusInd Bank: The lender said that it has received an intimation from the RBI that Life Insurance Corporation (LIC), a shareholder of the bank, has been allowed to acquire up to 9.99% of the total issued and paid up capital of the bank, subject to compliance. The approval is valid for a period of one year i.e. up to December 8, 2022. LIC currently holds 4.95% of the total issued and paid up capital of the bank.

Paytm: Shares of the company closed 2.61% higher after the company’s payments bank received Scheduled Bank status from Reserve Bank of India (RBI) and has been included in the Second Schedule to the Reserve Bank of India Act, 1934. The bank can participate in government and other large corporations issued Request for Proposals (RFP), primary auctions, fixed-rate and variable rate repos, and reverse repos, along with participation in Marginal Standing Facility. It would also be eligible to partner in government-run financial inclusion schemes.

Star Health & Allied Insurance: The company had a tepid stock market debut as shares of the company got listed at 5.69% discount of Rs 849 to IPO issue price of Rs 900, on the NSE. Shares of the company close 0.76% higher at Rs 906.85 per share.

Vodafone Idea Limited: Shares of the company closed over 14% on Thursday after a Business Standard report on Wednesday said that the company has raised money to pay bondholders as the due date approached. The report said that the company has managed to raise funds for the payment of bondholders’ interest of about Rs 6,000 crore on time from December 13, 2021 to March 2022.

Biocon: The Indian drugmaker is in talks with US-based Mylan for a merger of their biosimilar businesses, according to CNBC-TV18 reports, citing people it did not name. Biocon is looking for a controlling stake in the merged business and both the companies may even float an IPO of biosimilar business after the merger. Biocon and Mylan have declined to comment, the report added.

Tata Motors: The automaker has lined up an investment of more than Rs 7,500 crore in the next 4-5 years to strategise a road map for the commercial vehicle business, with electric vehicles at its core, people in the know said, according to a report by Economic Times. The company aims to lead the EV segment in the commercial market as it did with conventional powertrains before, Girish Wagh, executive director–commercial vehicle business unit, told the newspaper.

SpiceJet Ltd: The airline said that it would file an appeal in the Madras High Court against an order of the single bench of the high court directing the airline to wind up its operation. Justice Subramaniam of the Madras High Court had ordered the airline company to wind up its operation as the airline failed to make payments to a Swiss Maintenance, Repair, and Overhaul (MRO) service provider.

Economy News

The Reserve Bank of India kept key policy rates unchanged and maintained an accommodative stance after the three-day Monetary Policy Committee (MPC) meeting on December 8, 2021.

RBI kept repo rate unchanged at 4% and reverse repo rate stood at 3.35%. The Marginal Standing Facility (MSF) rate remained at 4.25%. The MPC said that the policy stance will remain “accommodative” until there is sustainable recovery in the economy. The RBI maintained the FY22 GDP growth forecast at 9.5% and retained the country’s CPI inflation forecast at 5.3% in fiscal year 2022.

India’s factory output rose in October at a similar pace as seen in September, boosted by growth in mining and manufacturing of primary goods. The Index of Industrial Production (IIP) rose 3.2% year-on-year compared with a rise of 3.3% in September, according government data. On a month-on-month basis, the IIP rose 4.3% in October compared with a 2.4% decline in September, as per revised estimates.

Global Markets

The US market had a good weekly gain as fears over the Omicron variant of the coronavirus faded and investors’ optimism improved on the global economic recovery. Technology stocks pushed the indices to new highs as Apple, the tech giant’s market capitalisation neared $ 3 trillion.

Markets also reacted positively to the economic data that was reported during the week. The Labor Department on Thursday reported encouraging numbers as only 184,000 Americans applied for unemployment benefits the previous week.

The Labor Department’s monthly Job Openings and Labor Turnover Survey, or JOLTS report showed that Job openings, a measure of labor demand, increased by 431,000 to 11.0 million in October.

In a separate report, the country’s November consumer price index, reported Friday, rose 6.8% on a year-over-year basis. The inflation was broad-based, although the rising energy prices was one of the main reasons for higher inflation. Excluding food and energy, inflation based on Consumer Price Index rose 4.9%.

For the week, the S&P 500 jumped 3.82%, the Dow surged 4.02% and the Nasdaq soared 3.61%.

In the Asian market, Japanese equities ended higher as investors’ sentiments were boosted by Prime Minister Fumio Kishida’s plans to improve the country’s economy and focus on digitalization opportunities. Nikkei Index gained 1.46% and the broader TOPIX index rose 0.90%.

Chinese stock markets rose for the week after the country’s central bank cut the reserve requirement ratio (RRR) for banks and November factory gate inflation eased as it rose at a slower rate of 12.9%, as against 13.5% rise in October. The CSI 300 Index jumped 3.14%, and the Shanghai Composite Index added 1.63%.