Weekly Market View – 2nd January 2021

Indian Market Outlook:

The Key benchmark indices rose over 1 percent over the week on the back of optimism over economic recovery, liquidity and stimulus support, and vaccine developments. Indian markets are relentlessly scaling new highs with Nifty-50 breaching the 14,000 level and BSE Sensex close to the 48,000 mark. Nifty ended the week 1.96 percent higher at 14018 points while Sensex ended 1.91 percent higher at 47869 points. Borader market outperformed the key bechmark indices. BSE Midcap index ended 2.76 percent higher, while the BSE Small cap index rose 3.31 percent, during the course of the week. Foreign Institutional Investors were the net buyers during the week; bought equities worth Rs.7404 crore while the DIIs were the net sellers of Rs.4172 crore. The macro numbers like GST collection and current account surplus are supportive from an economic perspective. Going forward, the year 2021 is likely to see a good start, at least in the first few months, wherein the Union budget, US government’s new policy initiatives and the Covid vaccine drive would be the key driving factors. Considering the sharp runup, we expect that the markets would consolidate in the near term. Investors are advised to predominantly stick to good quality large businesses. The coming week marks the beginning of the earnings season. IT pack would be first hitting the markets with TCS releasing its earings on 8^th January, 2021. On Economic front Nikkei Markit Manufacturing PMI and Nikkei Services PMI (Dec) would be relased on 4^th January and 6^th January 2021 respectively.

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Economic News:

• The country’s exports declined marginally by 0.8% to $26.89 billion in December 2020, due to contraction in sectors like petroleum, leather and marine products, according to preliminary data released by the Commerce Ministry on Saturday. The trade deficit in December widened to $15.71 billion, as imports grew by 7.6% to $42.6 billion, the data showed. Exports in December 2019 was $27.11 billion, while imports stood at $39.5 billion. In November 2020, the exports were down by 8.74% In April-December 2020-21, the country’s merchandise exports contracted by 15.8% to $200.55 billion, as compared to $238.27 billion in the same period of 2019-20.

• The country’s rabi foodgrains production including wheat in the ongoing 2020-21 crop year is expected to be better than the previous year’s record of 153.27 million tonne, according to Agriculture Minister Narendra Singh Tomar. Sowing of rabi (winter) crops is underway. The rabi sowing begins from October immediately after the harvest of kharif (summer) crops. Wheat and mustard are major rabi crops. The crop year runs from July to June. For the 2020-21 crop year, the Centre has set a target of a record foodgrains output of 301 million tonne, out of which it expects 151.65 million tonne to come from the rabi season.

 Industry News:

• Passenger vehicle sales in India grew in strong double digits for the fifth straight month in December, as the market continued to witness pent-up demand and preference for personal mobility solutions amid the coronavirus pandemic. Industry estimates put sales last month at around 2.78 lakh passenger vehicles, nearly 18% higher compared with 2.36 lakh units a year earlier. These are dispatches from factories to dealerships, as automakers in India do not report monthly retail sales to customers. The country’s largest carmaker, Maruti Suzuki NSE 0.55 %, reported growth of 14.6%, selling 140,754 units in December.

• Bank credit growth on a year-on-year basis stood at 5.4 per cent in September quarter of the current fiscal year compared to 5.7 per cent growth in the previous quarter, RBI data showed. Credit growth for metropolitan branches, which have major share in bank credit, decelerated to 3.3 per cent year-on-year in September 2020 quarter as compared to 4.7 per cent in April-June. It however improved for the bank branches in rural, semi-urban and urban areas, according to the data released by the Reserve Bank of India (RBI).

Company News:

• TVS Motor Company on Saturday reported a 17.5 per cent increase in total sales to 2,72,084 units in December. The company, which primarily makes two-wheelers and three-wheelers, had sold 2,31,571 units in December 2019, TVS Motor Company said in a statement. The total two-wheeler sales during the month stood at 2,58,239 units as against 2,15,619 in December 2019, up 20 per cent.

• Mahindra & Mahindra Ltd. is in discussions with an investor for selling a majority stake in Ssangyong Motor Co. as India’s largest SUV maker reassesses its investments amid the pandemic. Mahindra will hold 30% or less in Ssangyong if the deal goes through and will also do a 25% capital reduction, Pawan Goenka, managing director of the Indian automaker said at a briefing Friday It expects to sign the term sheet next week and will conclude the transaction by Feb. 28, he said. The company had purchased 70% stake in Ssangyong for $368 million in 2010.

• The Securities and Exchange Board of India on Friday imposed penalties on Reliance Industries Ltd., its chairman and managing director, Mukesh Ambani, as well as two other entities for alleged manipulative and fraudulent trading in the shares of erstwhile Reliance Petroleum Ltd. back in November 2007. Fines of Rs 25 crore and Rs 15 crore have been imposed on Reliance Industries Ltd. and Ambani, respectively. Besides, Navi Mumbai SEZ Pvt. Ltd. has been asked to pay a penalty of Rs 20 crore and Mumbai SEZ. Ltd. has been directed to pay Rs 10 crore. Bot the latter companies are promoted by Anand Jain, who once served in the Reliance Group.

Global News:

• K. completed its divorce from the European Union, leaving the bloc’s single market and customs regime more than four years after voting for Brexit and with the country gripped by a deepening crisis. The end of the transition period at 11 p.m. in London on New Year’s Eve launched the U.K. on a new path on its own, free from EU laws, able to strike trade agreements around the world and to reshape its economy. “This is an amazing moment for this country,” Prime Minister Boris Johnson said in his New Year’s message. “We have our freedom in our hands and it is up to us to make the most of it.”

• India will make vaccines free nationwide, Thailand’s capital will close entertainment venues and Hong Kong plans to roll out inoculations in February as authorities in Asia try to suppress recent outbreaks. Sydney has mandated masks in many indoor settings as the pandemic shows no signs of slowing down in 2021.

(Source:Bloomberg Quint, Economic Times, BusinessToday, Business Standard, Financial Express,Investing, Moneycontrol, livemint)

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