10th November 2020 Highlights: Markets touch new high for 2nd day, Q2 corner, recovery rate about 92%, & more.
-10th November 2020-
Sensex 43,277.65 ▲ 1.60%
Nifty 12,631.10 ▲ 1.36%
The markets today reached the highest in history - again. They had touched a new all-time high yesterday too. Bank stocks continued to be the main drivers of today’s rally.
The Indian markets continued their upward journey today, fueled by optimism seen in global equity markets. Banks are doing some serious catching up with the benchmark Nifty50, as good Q2 results of most companies have helped to allay fears of bad loans to an extent. The Bank Nifty index rose 3.8% today and has gained nearly 20% this month. Bajaj Finance (8.9%), IndusInd Bank (+7.2%) and L&T (+6.8%) were the top Nifty gainers today, whereas Tech Mahindra (-5.7%), Cipla (-5.3%) and HCL Tech (-5.0%) lost some ground.
News of Pfizer’s vaccine’s positive trial results and Joe Biden’s election victory has seemingly made markets all over the world cheer up.
Top Gainers (Nifty)
Top Losers (Nifty)
Here are the top stories of the day.
Q2 Results: M&M, Hindalco, GAIL (India)
Mahindra & Mahindra
M&M reported a net profit of Rs 1,311 crores in the July to September quarter. This is a 3% fall from the same period last year.
The net profit figure excludes an impairment cost of Rs 1,149.46 crores.
If we include the impairment cost, the net profit for the quarter under review falls to Rs 162 crores, which is an 88% drop from the same quarter last year.
Total revenue rose 6% to Rs 11,590 crores.
Sales:
Vehicles sold: Dropped 21% to 87,332 units
Tractors sold: Rose 31% to 89,597 units
Exports (vehicles+tractors): Dropped 33% to 7,103 units
The shares of the company rose 0.58% to Rs 619.95 per share. Results were declared around half an hour before the markets closed.
Hindalco
The net profit of the company fell 60.2% to Rs 387 crores in the quarter under review.
Hindalco's revenue from operations rose 5.3% to Rs 31,237 crores.
The company faced a one-time impact of Rs 1,398 crores on account of sale of its Lewisport unit of Aleris.
Segment Revenue:
Novelis: Rose 10.5% to Rs 22,185 crores
Aluminum: Fell 13.3% to Rs 4,796 crores
Copper: Rose 7.3% to Rs 4,774 crores.
The shares of the company ended 1.21% lower at Rs 192.35 per share. Results of the company were declared at least 2 hours before the markets closed.
GAIL (India)
GAIL’s net profit for the July to September quarter fell 8.5% to Rs 1,068.16 crores.
Its revenue from operations dropped by 24.3% to Rs 13,809.86 crores.
Revenue from the marketing of natural gas dropped to 12,330.68 crores from 16,857.98 crores.
The shares of the company ended 4.28% higher at Rs 90.2 per share. The results of the company were declared at least 2 hours before the markets closed.
Laggards strike back while winners take a pause
The news of promising results from the Covid vaccine trials of Pfizer Inc. has triggered strong investor interest in sectors such as hospitality, entertainment and travel, which have been underperforming in recent months. The prospect of businesses returning to normalcy led to a rise in the shares of Indian Hotels (+14.2%), Lemon Tree Hotels (+9.9%), PVR (+5.7%), Indigo (+8.8%) and IRCTC (+4.7%) today. The vaccine, which may require temperature-controlled distribution, has also buoyed hopes of business opportunities for logistics companies such as Snowman (+6.8%) and Blue Dart (+3.7%). On the flip side, shares of diagnostics players—Thyrocare (-8.4%), Dr Lal PathLabs (-5.8%) and Metropolis (-3.9%)—which were on the rise until recently, witnessed profit booking.
Tractors save the day for M&M
For Q2, M&M’s automotive segment (utility vehicles and commercial vehicles) revenues declined nearly 8% primarily due to lower volumes in the wake of lockdown restrictions. However, revenue from tractor sales bucked the trend by rising 33% and contributed to an overall revenue growth of 6% on a year-on-year basis. The net profit (before exceptional items) fell by 3% due to lower other income, despite strong cost control measures taken by the company. The stock has been witnessing consolidation for over three months now, but managed to gain 0.9% today, despite weak results.
Equitas SFB profit more than doubles in Q2
Shares of the recently listed Equitas Small Finance Bank were up 2.3% today, riding on strong Q2 results. The bank’s net profit jumped 108% on a year-on-year basis to ₹103 crore. It witnessed a 32% growth in its net interest income (i.e. the difference between the interest income a bank earns from its lending activities and the interest it pays to depositors). Asset quality also improved as the proportion of gross NPAs decreased to 2.48% from 2.88% a year ago. Last year, the RBI had restricted the bank from opening new branches after it missed the deadline to list its shares. With the bank’s listing on 2 November 2020, these restrictions have now been lifted. The stock has gained 1.2% since listing.
Recovery Rate Climbs Above Over 92%
The recovery rate in India has climbed over 92% with over 79.59 lakh people recovering from the disease.
The government says this is the highest number of recoveries in the world.
The government also says that India has a death rate of 3 deaths per million which is much lower than the global average of 7 deaths per million.
A total of 85.93 lakh people have been detected with the virus so far out of which, 1.27 lakh have died.
-Word of the Day-
Small-cap
Small-cap refers to stocks of small companies.
In India, companies that are smaller than the top 250 companies are called small-cap companies.
A small-cap mutual fund is a mutual fund that invests mainly in small-cap stocks.
Small-cap stocks are considered high-risk high-return investments since they are smaller companies that have a higher potential to grow but also a higher chance of falling.
Closing bell
While the vaccine news played a big role in pushing up the markets today, the fact that there are no major surprises from the Bihar assembly election trends (as of now) is also favouring the bulls. Sector rotation (flow of money from one sector to another) was evident today as medium-term winners Nifty IT (-3.8%) and Nifty Pharma (-4.3%) indices fell and the laggard Nifty Bank index rose 3.8%.
Daily Change: 1-Day Change
Long Term: 20-Year Returns
Returns are per annum. Returns in INR for Sensex & Nifty and in USD for Dow Jones & Nasdaq.
HAPPY INVESTING!
SEE YOU TOMORROW
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