Domestic equity benchmarks jumped to end near the day's high on Monday. IT, auto, FMCG and pharma shares rallied while metals and PSU banks corrected. Steel stocks tumbled after Union Minister Nitin Gadkari reportedly hinted at presence of cartel in the cement & steel industry.
As per provisional closing data, the barometer index, the S&P BSE Sensex, jumped 486.81 points or 1% to 49,269.32. The Nifty 50 index gained 137.50 points or 0.96% to 14,484.75.
The Sensex hit a record high of 49,303.79 and the Nifty hit a record high of 14,498.20 in late trade today. Positive Asian cues and robust FII inflows boosted sentiment.
The NSE's India VIX, a gauge of market's expectation of volatility over the near term, surged 8.57% to 22.41.
The broader market underperformed the benchmarks. The S&P BSE Mid-Cap index fell 0.08%. The S&P BSE Small-Cap index lost 0.17%.
Sellers outnumbered buyers. On the BSE, 1470 shares rose and 1682 shares fell. A total of 147 shares were unchanged.
COVID-19 Update:
Total COVID-19 confirmed cases worldwide stood at 9,02,79,510 with 19,34,786 deaths. India reported 2,22,526 active cases of COVID-19 infection and 1,51,160 deaths while 1,00,92,909 patients have been discharged, according to the data from the Ministry of Health and Family Welfare, Government of India.
India kickstarts the world's biggest inoculation drive, PM Narendra Modi will hold a virtual meeting with chief ministers of all states and union territories on Monday and review the preparedness for COVID-19 vaccine administration across the nation.
In India's vaccination drive, set to start on 16 January 2021, priority will be given to about 3 crore frontline workers, followed by around 27 crore people above the age of 50 and others with co-morbidities. The country has also conducted two dry runs to understand the best way to administer vaccine shots and plug loopholes in logistics and training.
Economy:
Assocham on Sunday (10 January) said that India's economy is showing decisive signs of a 'V-shaped' recovery in 2021 with the return of consumer confidence, robust financial markets, an uptick in manufacturing and exporters braving it out in the global market with never-say-die spirit. The industry chamber further added that it expects immense accruals of economic benefits from the COVID-19 vaccination programme about to be rolled out.
Buzzing Segment:
Shares of four steel companies declined after Union Minister Nitin Gadkari reportedly said that there is a cartel in cement & steel industries, and cement manufacturers are exploiting the situation in the real estate sector, as prices of the two commodities rise.
Every steel company has its own iron ore mines & there has been no increase in labour & power costs but they are increasing rates. It is difficult for me to understand (the reason behind it), the minister reportedly said.
SAIL (down 3.44%), Tata Steel (down 2.48%), JSW Steel (down 0.88%) and Jindal Steel & Power (down 0.44%) edged lower.
Tata Steel's Indian crude steel production rose 2.90% to 4.60 million tons (MT) in Q3 December 2020 (3QFY21) from 4.47 MT in Q3 December 2019 (3QFY20). On a sequential basis, the crude steel production has improved marginally from 4.59 MT in Q2 September 2020 (2QFY21).
Tata Steel India saw strong sales momentum in 3QFY21, however, sales volumes were constrained by lower opening inventory post very strong sales in 2QFY21. As a result, deliveries were 4.66 MT in 3QFY21, lower by 8% as compared to 5.05 MT in Q2 FY21 and lower by 4% from 4.85 MT in 3QFY20.
During the quarter, despite planned maintenance shutdowns, the company was able to ramp-up steel production at Tata Steel Europe by 22% QoQ and 4%YoY to 2.61 MT. This was aimed at replenishing inventory ahead of improving market condition and seasonally better Q4 March 2021 (4QFY21).
While Q3 FY21 steel sales volume declined by 7% QoQ and 10% YoY to 2.11 MT, due to lower opening inventories and COVID-19 impact at beginning of the quarter, the mix of deliveries saw further improvements in the Automotive and Engineering sectors.
Earning Impact:
TCS gained 1.71% to Rs 3173.75 after the IT major reported 16.4% rise in consolidated net profit to Rs 8,701 crore on a 4.7% increase in revenue to Rs 42,015 crore in Q3 December 2020 (Q3 FY21) over Q2 September 2020 (Q2 FY21). The company's September quarter net profit had a post-tax one-time impact of Rs 958 crore due to provision for ongoing litigation with EPIC.
The company's consolidated net profit has grown by 7.2% and revenue has risen by 5.4% in Q3 FY21 over Q3 FY20.
TCS said that constant currency revenue for Q3 FY21 rose 4.1% quarter-on-quarter and 0.4% year-on-year. The IT major's operating margin stood at 26.6% in Q3FY21 compared with 26.2% in Q2FY21. Net margin stood at 20.7% in Q3FY21.
TCS said that all its verticals showed good sequential growth, led by Manufacturing (+7.1%), BFSI (+2%), Life Sciences and Healthcare (+5.2%), Communications & Media (+5.5%) and Retail and CPG (+3.1%). On a year on year, constant currency basis, Life Sciences and Healthcare continued to grow in double digits at 18.2%. BFSI (+2.4%) and Technology & Services (+2.4%) also moved into positive territory.
The IT firm continued to witness a strong rebound in growth and transformation services as customers seek to operationalize new models. Growth in the quarter was led by Cloud Services, Analytics & Insights, Cognitive Business Operations, IoT and Quality Engineering & Transformation Platform Services.
As on 31 December 2020, the company has applied for 5,634 patents, including 134 applied during the quarter, and has been granted 1,713 patents. The company's net cash from operations in Q3 FY21 was Rs 11,952 crore.
Avenue Supermarts added 0.08% to Rs 2970. The company's consolidated net profit surged 16.4% to Rs 446.97 crore on a 10.8% rise in net sales to Rs 7542 crore in Q3 December 2020 over Q3 December 2019.
EBITDA for Q3 December 2020 stood at Rs 689 crore, rising 15.4% from Rs 597 crore posted in the corresponding quarter of last year. EBITDA margin improved to 9.1% in Q3 December 2020 from 8.8% in Q3 December 2019.
Commenting on the performance of the company, Neville Noronha, CEO & MD of Avenue Supermarts, said: “The quarter has seen further improvement in our business and financial metrics. Our overall sales and sales mix is now trending very close to our usual times except for specific customer consumption changes post Covid-19. Apparel, laundry, footwear, travel and such relevant out of home usage categories are taking more time to recover. Agile OPEX management along with a good surge in festival shopping allowed us to deliver a significantly better quarter than the previous two quarters.
Stocks in Spotlight:
Narayana Hrudayalaya added 3.91% to Rs 470. The hospital chain has discontinued operations of the Heart Centre operated in the premises of IQ City Hospital in Durgapur, West Bengal under an agreement with IQ City Foundation (formerly known as SPS Synergy Foundation).
KEC International gained 0.79% to Rs 365.15. The company has secured new orders of Rs 1,024 crore across its various businesses.
Vedanta fell 1.70% to Rs 178.95. The company said its promoters has made voluntary open offer for the acquisition of up to 371,750,500 equity shares representing 10% of the fully diluted voting share capital of the company from the public shareholders. The offer is made at a price of Rs 160 per equity share.
Apollo Micro Systems surged 15% to Rs 149.10. The company in an exchange filing on Saturday announced that it bagged a Rs 49.86 crore order from Bharat Electronics, a Defence Public Sector Undertaking with a repeat order clause, for maximum of 120% of the units originally ordered.
Bharat Heavy Electricals (BHEL) lost 0.76% at Rs 39.05. BHEL on Monday (11 January) announced that it has secured an order for a steam and power plant from National Aluminium Company (NALCO). The order is valued at Rs 450 crore and is a part of NALCO's 5th Stream Alumina Refinery Expansion Project at Damanjodi, Odisha.
Global Markets:
European stocks declined on Monday. The investors focused on the alarming surge in coronavirus cases globally as countries race to vaccinate their elderly, the most vulnerable members of society, and healthcare workers against COVID-19 as fast as they can.
Over the weekend, the U.K.'s Queen Elizabeth and her husband Philip, both in their nineties, received vaccinations against COVID-19, the Buckingham Palace said.
Most Asian stocks ended higher on Monday. Markets in Japan were closed on Monday for a holiday. Shares in South Korea's auto sector surged again on Monday following reports that Hyundai Motor and Apple are set to sign a partnership deal on autonomous electric cars.
China's producer price index fell 0.4% in December as compared to a year earlier, according to the country's Bureau of Statistics. Meanwhile, China's consumer price index rose 0.2% year-on-year in December.
In US, Wall Street scaled new highs on Friday as hopes of more stimulus from Washington were bolstered after U.S. President-elect Joe Biden said his economic package will be in the trillions of dollars.
In economic data, the US economy shed jobs for the first time in eight months in December. Nonfarm payrolls decreased by 140,000 jobs last month, the Labor Department said on Friday. Data for November was revised up to show 336,000 jobs added instead of 245,000 as previously reported.
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