6th November 2020 Highlights: Markets up over 1.2% again, Q2 corner, Sebi makes 2 big announcements, & more.
-6th November 2020-
Sensex 41,893.06 ▲ 1.34%
Nifty 12,263.55 ▲ 1.18%
The markets ended up by nearly 1.26% today. This comes after yesterday’s nearly 2% rise. Reliance Industries was one of the main drivers of today’s rise.
The Indian markets had a gap-up opening today and were able to maintain the upward momentum till the end of the day. The positive move was supported by Reliance Industries (+3.5%) and financial institutions such as HDFC Bank (+3.0%), Kotak Mahindra Bank (+2.3%) and HDFC (+1.7%). Meanwhile, Maruti (-2.8%), Gail (-1.8%) and Bharti Airtel (-1.5%) were among the top losers in the Nifty50. Overall, this week has been positive for the markets, and the Nifty50 gained over 5%.
Top Gainers (Nifty)
Top Losers (Nifty)
Here are the top stories of the day.
Q2 Results: Cipla
The net profit of the company stood at Rs 665.43 crores in the July to September quarter. This is a 41.18% rise from the same quarter last year.
Cipla's revenue from operations rose 14.62% to Rs 5,038.29 crores during the same time frame.
Segmental Revenue:
Pharmaceuticals: Rose 13.9% to Rs 4,966.43 crores
New ventures: Rose 111.89% to Rs 99.57 crores
The shares of the company fell 0.45% to Rs 789.95 per share. Results were declared after the markets closed.
WhatsApp Pay Gets NPCI Approval
WhatsApp received the approval of the National Payments Corporation of India (NPCI) to launch its payment service.
Whatsapp Pay will be launched via a multi-bank model similar to Google Pay, PhonePe, etc.
NPCI is a retail payments organization that operates United Payments Interface (UPI) in India.
It has allowed WhatsApp to expand its user base in a staggered manner, starting with a maximum registered user base of 2 crores.
The WhatsApp payment system has been running in beta version since 2018 with 10 lakh users.
RBI had not allowed WhatsApp pay because it had not met data localization norms until now.
Voltas hits lifetime high on impressive results
India’s leading AC maker Voltas reported Q2 revenue from operations of ₹1,612 crore, significantly higher than street estimates of around ₹1,300 crore. It’s room-AC business contributed nearly 35% of the revenue and grew by 9% on a year-on-year basis. The room-AC segment saw a 60% drop in sales in Q1 when the country was reeling under the lockdown. In Q2, the company not only saw a revival in sales but also marginally increased its market share to 26.8% in August 2020 versus 26.2% in Q1. Its projects business (which contributes nearly 58% of revenues) posted a 15% revenue growth. It has an order book of ₹6,852 crore, more than double the sales of last year. Although the company’s Q2 consolidated net profit fell 26% over the same period last year on account of provisions made in the project's business, the numbers were above street expectations. Voltas’ shares gained 1.0% today and hit a new lifetime high. The recent ban on AC imports augurs well for the company and its domestic peers.
MRF zips ahead on improved margins
MRF’s Q2 consolidated revenues from operations rose 6% on a year-on-year basis to ₹4,244 crore. Crucially, the Chennai-based tyre maker witnessed a near 80% growth net profits. Lower raw material costs and tight control on operating costs allowed the company to expand its operating margin from 8% last year to around 14% in Q2. Today, the stock was up 2% intraday but ended in the negative (-0.5%). It has gained nearly 4.9% this month. Most tyre makers are seeing growth in the replacement market. However, recent reports suggest that dealer-level sales in the festive season so far are not as encouraging as the manufacturers’ volumes. While the exact picture would be clear after Diwali, sluggish dealer-level sales could lead to an inventory pile-up. In such a scenario, the outlook for automakers and ancillary manufacturers, such as tyre companies, could weaken.
India Cements makes a comeback
India Cements saw a sharp rise in its net profits in Q2 to ₹71.4 crore as compared to ₹16.9 crore in Q1 this year and ₹8.7 crore in Q2 last year. The jump in profits is attributed to lower raw material cost and cost control across the board. However, its revenues were down 14% versus the same period last year. The stock rose almost 6% intraday, but saw profit booking and closed nearly flat (-0.1%). In October 2020, shares of most cement makers, such as ACC (+18.3%), Ambuja Cement (+19.6%) and JK Cement (+22.8%), outperformed the Nifty50 (3.5%) by a wide margin.
All Mutual Funds NAV Cut-off Timings Restored: Sebi
The NAV cut-off time of all mutual funds has been restored to 3 pm.
A few days ago, the NAV cut-off timings for equity mutual funds only had been restored to 3 pm. NAV cut-off timings for debt funds had not been restored.
Now, effective 9th November, every mutual fund’s NAV cut-off is being restored.
NAV cut-off timings had been changed in April this year in view of staffing issues faced during the lockdowns.
The cut-off timing applicable on Groww will be communicated to users via email and on the app soon.
What is meant by NAV cut-off timing?
NAV cut-off timing determines which day’s NAV you’ll get.
Investing after the NAV cut-off time results in you getting the next applicable day’s NAV and not the same day’s.
Sebi Introduces New Subcategory of Equity Mutual Funds
Sebi has introduced a new subcategory of equity mutual funds called Flexi-cap.
Mutual funds belonging to this subcategory will be supposed to invest at least 65% of the assets in equity. That is the only condition it needs to meet.
This is very similar to the existing multi-cap fund subcategory.
However, recently, Sebi introduced a new rule. Multi-cap funds must invest at least 25% of their assets in large-cap, 25% in mid-cap, and 25% in small-cap stocks.
At this point, most multi-cap funds invest most of their assets in large-cap stocks, a small portion in mid-cap stocks, and an even smaller portion in small-cap stocks.
The new rule by Sebi meant that multi-cap funds would have to make major changes to their holding pattern.
With this new Flexi-cap subcategory, many existing multi-cap funds might simply re-categorize themselves as Flexi-cap funds and continue with their existing holding pattern.
According to Sebi, multi-cap funds should invest evenly across large, mid, and small-cap stocks as that is the true definition of “multi-cap”.
Flexi-cap funds will be truly flexible and will not have any holding restrictions apart from the rule that at least 65% of the assets must be invested inequities.
What are large, mid, and small-cap stocks?
This is a way to categorize stocks by the size of the companies.
Large-cap means: 100 largest companies by market capitalization
Mid-cap means: 101 to 250 largest companies by market capitalization
Small-cap means all other companies. Large-cap stocks are considered less risky than mid-cap stocks.
Mid stocks are considered less risky than small-cap stocks.
Small-cap stocks are considered the riskiest of the three.
Closing bell
The US Fed has kept the interest rates unchanged, which is favourable for the markets. Meanwhile, the outcome of the US presidential election seems nearly certain. It remains to be seen whether the above developments are already factored in and the market will witness a reality check now. Further, the US unemployment data will be released today, and upbeat numbers could provide a further boost to an already rising market. However, any shock may not be received well. Back home, the Nifty50 is just a whisker away from its all-time high and the mood is bullish. At this point, what is almost forgotten is the ongoing India-China border tensions, which could pose a risk to the markets.
Daily Change: 1-Day Change
Long Term: 20-Year Returns
Returns are in INR for Sensex & Nifty and in USD for Dow Jones & Nasdaq.
HAPPY INVESTING!
SEE YOU TOMORROW
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