Today’s Market Summarised

  • The market had a gap-down opening with the benchmark index, Nifty 50, starting the day at the level 11,281. After taking support near 11,250 levels, Nifty bounced back to end the day at 11,308, down by 0.12% or 12 points. The rather flat close in red comes after four back-to-back days of closing in green. The bulls may be just resting before the next blast!
  • At the time of our market close, Asian markets are mostly up, while European markets look very mixed.
  • Nifty Auto (up 2.03%) and Nifty PSU Banks (2.37%) outperformed the market. PSU Banks rally has long been overdue, as share prices had not moved even after generally positive Q1 results.
  • Nifty Bank moved up 0.17% to close at 22,264. This means that PSU Banks rallied without the help of neither general indices Nifty nor Nifty Bank backing it, which is great news!

News Picks

  • HCL Tech moved up by 4.66% to close at Rs 715.65 and became today’s top gainer in Nifty 50. The jump huge jump was attributed to reports suggesting that Indian tech companies including HCL would be involved in developing India’s defence eco-system.
  • Shares of Eicher motors moved up 2.74% to Rs 22,031 after the company received shareholders approval for a stock split. One equity share of face value Rs 10 will be converted  into ten equity shares of Re 1 each. The move has been long-awaited by the market, and was welcomed accordingly. Would you trade in Eicher Motors stock if the price is Rs 2,200 instead of Rs 22,000? 
  • Shares of Public-sector Bank State Bank of India (SBI) became the 2nd highest mover in Nifty 50 today. The stock moved up 4.33% to Rs 203.5, as a delayed response to great Q1 results. The rally by Nifty PSU Bank was led by SBI. A great psychological resistance at Rs 200 was also broken along the way.
  • Shares of Interglobe Aviation (INDIGO) closed at Rs 1,034.45, up 10.09% after the company accepted reports stating it was planning to lease back 12 of its ATR 72-600 aircrafts and engines. Yesterday, IndiGo’s board had decided to raise Rs 4,000 crore through sale of shares to institutional investors. The airlines sector has been one of the worst affected by the COVID-19 pandemic. The company had posted a net loss of Rs 2,842.57 crores for the quarter ended June 30.
  • Infrastructure Development Finance Company (IDFC) shares shot up to Rs 26.15, up 15.20%. The stock is trading in green for the 7th continuous session and has gained 40% during this period!
  • Motherson Sumi closed the day at Rs 116.5, up by 8.22%. Yesterday, the company had reported a consolidated net loss of Rs 1,191.65 crore for June quarter 2020. Chairman of the company, Vivek Chaand Sehgal, told the media about his intent to work with car makers to build a truly Indian car. He also remarked that the company was “Aatmanirbhar”, and has very few challenges up ahead.
  • Bosch shares rallied by 7.67% to Rs 14,280.10 despite reporting a consolidated net loss of Rs 120.83 crore for the first quarter. Managing Director of the company had said that the focus for the upcoming quarters will remain on the agriculture sector, particularly on tractor demand.

Markets Ahead

Prices of gold has crashed over Rs 4,500 in the last two days for 10g. And, as we discussed last day, this may be good news for the market. Gold is considered as a safe-haven asset. Institutions and individuals buy gold a lot more when they feel that the economy is about to crash. Prices of the precious metal have rallied since before the COVID market crash. The current fall may indicate return of normalcy to the market, if sustained.

Also, the rally of public-sector banks is the main event of the day. As you may know, Nifty Bank has lagged Nifty in its recovery from the COVID-19 market crash. But Nifty PSU Bank has been worse. Although there is a negative outlook in the short term, most Indian financial institutions are in a good position to overcome this crisis. The market loves certainty, and even if bad loans are expected to peak this financial year, banking sector will outgrow it. There are no two ways, if you are bullish about the Indian economy, you HAVE to be bullish on our finance sector as well!