Weekly Market View – 9th January 2021

Indian Market Outlook:

The Key benchmark indices rose over 1 percent over the week on the back of positive global cues, optimism on vaccine rollout, healthy business figures reported by banking and auto companies and hopes of strong quarterly outcomes. Joe Biden’s confirmation as the next US president on Thursday led to a global rally which also lifted sentiment on Dalal Street on Friday. Nifty ended the week 2.35 percent higher at 14347 points while Sensex ended 1.91 percent higher at 48782 points. Broader market outperformed the key benchmark indices. BSE Midcap index ended 5.32 percent higher, while the BSE Small cap index rose 3.55 percent, during the course of the week. Foreign Institutional Investors were the net buyers during the week; bought equities worth Rs.8758 crore while the DIIs were the net sellers of Rs.4948 crore. Crude oil prices hit their highest levels in nearly a year on Friday, gaining 8 per cent on the week, supported by Saudi Arabia’s pledge to cut output and strong gains in major equity markets. Rising crude oil prices negatively impacts industries such as FMCG and Paint. Meanwhile the National Statistical Organization (NSO) predicted that the economy will contract 7.7 per cent in the current financial year ending in March. TCS Q3 numbers beats the street estimates which also raised earning expectation of other IT firms. Key results to watch next week are Infosys, Wipro, Tata Elxsi, HCL Technologies, L & T financial Holdings, PVR, HDFC Bank and Jindal Saw. On Economic front CPI Inflation (Dec) and Industrial Production (YoY) (Nov) would be released on 12^th January, 2021.

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Economic News:

• The Reserve Bank of India said it will resume normal liquidity management operations as the economy and financial market conditions stabilise. The first steps announced by the central bank will help target the price of liquidity by pushing up short-term rates even as the banking system remains flush with funds. “On a review of evolving liquidity and financial conditions, it has been decided to restore normal liquidity management operations in a phased manner,” the central bank said in a release on Friday.

• India’s fiscal deficit is expected to be around 7.5 per cent of the GDP for the current fiscal owing to moderation in revenue collection due to the COVID-19 crisis, experts said. This would be a 100 per cent jump from the Budget estimate of 3.5 per cent of GDP pegged for the current fiscal. The government had pegged the fiscal deficit at Rs 7.96 lakh crore or 3.5 per cent of the GDP in the Union Budget 2020-21, which was presented by Finance Minister Nirmala Sitharaman in February 2020.

Industry News:

• India’s primary steelmakers JSW Steel, Tata Stee, Steel Authority of India and JSPL reported a jump in production on the back of improved capacity utilisation and the domestic sales during the December quarter of FY21 reached pre-covid levels owing to better demand. State-owned Steel Authority of India reported a 9% growth in crude steel production for the quarter under review at 4.37 million tonnes (mt) as against a production of 4 mt during the same period last year. SAIL’s sales volume also registered a growth of 5.6% during the Q3 of FY 21, at 4.32 mt.

• The life insurance industry saw a 2.7 per cent contraction in premium collection in December, a second consecutive month of decline. Insurers earned new business premiums (NBP) of Rs 24,383.42 crore during the month, compared to Rs 25,079.79 crore in December 2019. While private insurers, 23 in total, recorded a 22 per cent growth rate, state insurance behemoth, Life Insurance Corporation, saw its NBP contract 15 per cent. NBP is the premium acquired from new policies in a year. Top private insurers such as HDFC Life, ICICI Life, and Max Life Insurance registered double-digit growth in December.

Company News:

• Tata Consultancy Services, the largest IT services exporter in India, reported a consolidated net profit of Rs 8,701 crore for the quarter ended December 2020, rising 7.2 percent sequentially, backed by strong demand-led revenue growth. The September quarter net profit had a post-tax one-time impact of Rs 958 crore due to provision for ongoing litigation with EPIC. Consolidated revenue for the quarter increased 4.7 percent sequentially to Rs 42,015 crore, and the year-on-year increase was 5.4 percent for the quarter. TCS won deals worth $6.8 billion in October-December quarter and would enjoy tailwind of large deals in Q4FY21. TCS Chief Executive Officer Rajesh Gopinathan said deal momentum will ensure that the company will post a double-digit growth in the year ending March 2022.

• Reliance Infrastructure has completed the sale of its entire holding in a power transmission joint venture with the state-run Power Grid Corporation of India for an enterprise value of Rs 900 crore, the Anil Ambani-led company said on Saturday. The cash-strapped and loss-making company had signed a deal with India Grid Trust (IndiGrid) in November for the sale of its 74% stake in the joint venture, Parbati Koldam Transmission Company, which runs an inter-state power transmission line between Himachal Pradesh and Punjab. The divestment is a part of Reliance Infrastructure’s plan to divest assets to reduce debt.

• Tata Steel Ltd. on Friday said its total output from India operations rose 3% to 4.60 million tonnes during October-December quarter of the current financial year. The output from company’s operations in India was at 4.47 MT in the year-ago period, Tata Steel said in a statement. Its sales from India operations during the period under review were at 4.66 MT, down 4% from 4.85 MT in the same quarter of 2019-20 financial year.

Global News:

• The U.S. labor market lost jobs in December for the first time in eight months, reflecting a plunge in restaurant employment that highlights how surging coronavirus infections are taking a greater toll on parts of the economy. Nonfarm payrolls decreased by 140,000 from the prior month, according to a Labor Department report Friday that bucked economists’ forecasts for a modest gain.

• China urgently needs to take steps to contain financial stability risks as the economy’s recovery takes hold, according to the International Monetary Fund. Virus relief measures that are “potentially distortionary” should be gradually phased out, the Washington-based lender said in its annual Article IV report released Friday.

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

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