Closing Bell: Nifty ends at a record high, Sensex surges by 381 points after RBI keeps rates unchanged.
Nifty ends at a record high, Sensex surges by 381 points after RBI keeps rates unchanged on October 8, 2021.
Domestic equity benchmarks Sensex and Nifty extended gains to a second straight day on Friday, October 8, 2021, after the RBI decided to keep the key rates unchanged and remain 'accommodative' after the scheduled review meeting. The market was cheerful about the announcements with the concerns about an earlier-than-expected tightening of monetary policy. Buying in oil and gas, IT, and PSU banking shares lifted the market. IT bellwether TCS was in focus ahead of the Q2 earnings announcement by the company.
On Friday, the Sensex closed 381 points or 0.6% higher at 60,059.1, while the broader Nifty 50 benchmark surged by 104.9 points to settle at a record of 17,895.2. Losses in pharmaceutical and FMCG counters limited the upside. The market extended rally for a second consecutive session and as a result, closed higher in four out of five sessions this week. It was mainly driven by positive global cues, and RBI policy, and the September quarter earnings.
On a sectoral basis, BSE IT and BSE Energy indices witnessed buying interest gaining 1.82% and 2.65%, respectively. The rest of the indices chose to remain subtle and traded almost flat on Friday. In the broader markets, the BSE Smallcap index ended 0.92% higher and the BSE Midcap index was up by 0.16% at the closing bell.
The Reserve Bank of India in its policy review meeting, kept the key lending rate or the repo rate steady at 4%, while the reverse repo rate or the borrowing rate also stayed unchanged at 3.35%.
Reserve Bank of India Governor Shaktikanta Das in his policy address said that, "There should not be any concern about the adequacy of liquidity in the banking system to support recovery or financial markets. Our entire approach is of gradualism, we don't want suddenness or surprises".
With bullish sentiments flowing in the markets, Reliance Industries, Wipro, Infosys, Tata Motors were the top gainers of the day, while SBI, NTPC and Maruti Suzuki were the top losers.
TCS Q2 net profit climbs 14% as shares touch new high
Tata Consultancy Services Ltd (TCS) on Friday reported a 14% increase in consolidated net profit for the second quarter, as strong demand for IT services helped it won new clients and pushed its stock to a new high.
India’s biggest software services exporter said it posted a consolidated net profit of Rs 9,624 crore for the July-September quarter, up from the adjusted net income of Rs 8,433 crore a year earlier.
Revenue from operations climbed 17% to Rs 46,867 crore from Rs 40,135 crore a year earlier.
Ahead of the results, TCS shares hit a new high at Rs 3,990 on the BSE in intra-day trade, before closing at Rs 3,935.30 apiece on profit-taking.
The company's board approved a Rs 7 per share interim dividend for the shareholders.
Other key details:
1) TCS added five new clients in $100-million-plus category during Q2, taking the total to 54 customers.
2) It also added 17 new clients in $50-million-plus band, taking the total to 114 clients.
3) Manufacturing vertical recorded 21.7% growth, followed by life sciences and healthcare with 19% growth
4) Retail and consumer products segment posted growth of 18.4%, and BFSI recorded 17% growth in Q2.
5) North America, TCS’s largest market, clocked 17.4% growth. The UK business grew 15.6% and India at 20.1%.
TCS managing director and CEO Rajesh Gopinathan said that the strong and sustained demand environment is “a once-in-a-decade opportunity” for the company to position itself as the preferred growth and transformation partner for its customers.
“We are using the growth tailwind to invest in strengthening relevant capabilities and building out a comprehensive portfolio of offerings that caters to a broader set of stakeholders in the enterprise across business cycles, strengthening our brand, and making our business more resilient,” he said.
TCS finance chief Samir Seksaria said strong growth and disciplined execution helped the company overcome headwinds from currency and supply-side inflation and deliver expanded margins.
“Our industry-leading profitability and strong cash conversion give us the wherewithal to make the right investments needed to build out the business of the future,” he said.
Chart Busters: Top trading set-ups to watch out for on Monday.
On the last trading session of the week, the benchmark index has opened with an upside gap but thereafter traded in a narrow range. The index has failed to mark a fresh all time high on Friday. On the daily chart, the index has formed a Doji candlestick pattern, which indicates uncertainty near all-time high level. However, the Nifty Midcap 100 and Nifty Smallcap 100 has marked fresh all-time high.
Here are the top trading set-ups to watch out for on Monday.
Xchanging Solutions: Considering the weekly chart, the stock has given a breakout of downward sloping trendline resistance as on the weekend of July 16, 2021, and thereafter witnessed a sharp upside of nearly 52 per cent. After registering the high of Rs 141, the stock has witnessed correction along with low volume. The correction is halted near the 61.8% Fibonacci retracement level of its prior upward move and it coincides with the 20-week EMA level.
On Friday, the stock has given downward sloping trendline resistance breakout on the daily chart. This breakout was confirmed by above 50-days average volume. Friday’s volume is highest after July 23, 2021, which indicates strong buying interest by market participants. Interestingly, the slope of short and long-term moving averages is rising which is a bullish sign. The 14-period RSI on the daily timeframe is in bullish territory and on Friday, it has surged above its prior swing high. The daily MACD stays bullish as it is trading above its zero line and signal line. The MACD histogram is suggesting a pickup in upside momentum. The technical evidence indicates a strong upside in the coming weeks. The prior high of Rs 141 will act as crucial resistance for the stock. While on the downside, the zone of Rs 112-113 is likely to provide the cushion in case of any immediate decline.
Firstsource Solutions: The stock has formed a spinning top like candlestick pattern as on the weekend of July 23, 2021, and thereafter witnessed correction. The correction is halted near the 38.2% Fibonacci retracement level of its prior upward move. For the last 10 weeks, the stock is oscillating in a narrow range, which resulted in the formation of ascending triangle pattern on the daily chart. Due to the narrow range, the Bollinger band, which have developed on the basis of the last 20-days volatility, has been contracted significantly. This is an early indication of expansion in volatility.
Currently, the stock is on verge of giving a breakout of ascending triangle pattern on the daily chart. In addition, dramatically increased volume indicates that there was a good chance that the upper trendline resistance of ascending triangle would be taken out. The momentum indicators and oscillators are also supporting the overall bullish price structure. The 14-period RSI on the daily and weekly chart is in bullish territory. Furthermore, in the recent sideways to corrective mode, the RSI has taken support near the 60 mark, which indicates that the stock is in a super bullish range as per RSI range shift rules. Going ahead, in case, if the stock is sustaining above the zone of Rs 214-Rs 216, we may witness a sharp upside in the stock. On the downside, the 20-day SMA is likely to act as short-term support for the stock.
This stock has gained over 400% and meets the Trend Template of Mark Minervini.
From the low of Rs 118.25, which was registered in the last week of March 2020, the stock Uflex Limited has gained over 420%. Currently, it has given a downward sloping trendline breakout on the weekly chart.
The stock of Uflex Limited has formed a hammer candlestick pattern as on the weekend of March 27, 2020, and thereafter marked the sequence of higher tops and higher bottoms. From the low of Rs 118.25, the stock has gained over 420% in 80-weeks.
In the current week, the stock has given a breakout of downward sloping trendline resistance formed by connecting swing highs from July 2021. Further, this breakout was supported by a robust volume of more than 5 times of 50-weeks average volume, indicating strong buying interest by market participants. The 50-weeks average volume was 17.73 lakh while in the current week the stock has registered a total volume of 97.09 lakh.
Currently, the stock is meeting the criteria of Mark Minervini's Trend Template. The current market price of the stock is above the 150-day (30-week) and the 200-day (40-week) moving averages. The 150-day moving average is above the 200-day moving average. Since the last 326 trading sessions, the stock is trading above its 200-day moving average.
The 50-day (10-week) moving average is also above both 150-day and 200-day moving averages. The current stock price is above the 50-day moving average. Also, the current stock price is 105% above its 52-week low and currently, it is trading at all time high.
In the last couple of weeks, the stock has outperformed the frontline indices. Also, it has relatively outshined the Nifty 500 with a decent margin. The relative strength comparison with Nifty 50 and Nifty 500 is marking the higher high.
The momentum indicators and oscillators are also portraying a bullish picture. On all the major timeframes, the leading indicator 14-period RSI is in bullish territory. Most importantly, on the weekly chart, the RSI has taken support at the 60 mark and started rising higher, which indicates range shift as per the RSI range shift rules.
Talking purely about the trading levels, the zone of Rs 675-Rs 685 is a crucial resistance for stocks and the level of Rs 545-Rs 525 will act as crucial support for the stock.
Opening Bell: Here’s what you need to know before the market opens on October 11, 2021.
Earnings take centre stage today as market participants will react to the quarterly report of IT bellwether TCS.
After closing on a record high in the previous trading session, an early indication from the SGX Nifty shows that Indian markets are likely to witness a lacklustre start for the week as SGX Nifty is trading down by 6 points or 0.03% on Monday morning. Also, at the start of this new week, markets would first react to Q2 earnings of IT bellwether TCS, which was announced on Friday post market hours.
To give you a brief, TCS reported a growth of 16.8% YoY in its consolidated revenue and all verticals grew 15%+ YoY.
Cues from Asian markets: Asian markets were seen trading in positive terrain on the first trading session of the week with Hong Kong’s Hang Seng surging by 1.88% followed by Japan’s Nikkei 225 at 1.65% and China’s Shanghai Composite, which was up by 0.33%.
Overnight cues from US markets: US stocks ended with a negative bias on Friday. The tech-heavy Nasdaq underperformed its counterpart as it slipped 0.5%, while the S&P 500 and the Dow slipped 0.2% and 0.03%, respectively. All eyes on Wall Street were glued to the monthly jobs report for September. According to reports, the US added just 1,94,000 to its non-farm payroll in September. In spite of a weaker than anticipated job growth, the unemployment rate dropped to 4.8% in September from 5.2% which was seen in August.
Last session summary: On Friday, RBI kept key policy interest rates unchanged for the eighth consecutive time. As a result, the Indian benchmark indices ended the day with gains of over 0.50%. Meanwhile, the broader markets too witnessed buying interest with Nifty Midcap 100 adding 0.43%, while Nifty Smallcap 100 jumped over 1%. Among the sectoral indices, Nifty IT and Nifty PSU Bank were top gainers, on other hand, Nifty Realty and Nifty FMCG were top losers.
For the week, Nifty gained 2.07% and with this, it recorded its highest weekly close. While the broader markets were seen outperforming the benchmark indices with Nifty Midcap and Smallcap jumping over 3%, both indices hit a fresh all-time high last week. On the sectoral front, Nifty IT, Nifty Media and Nifty Auto soared over 4%, on other hand, Nifty FMCG and Nifty Pharma dipped 1% and 0.5%, respectively.
FII’s and DII’s activity on Friday: FIIs and DIIs were net sellers to the tune of Rs 64.01 crore and Rs 168.19 crore, respectively.
Important quarterly earnings to watch out for: Delta Corp, HFCL, RKForge, Saregama, Tata Metaliks, Tinplate.
Aditya Birla Sun Life AMC makes dull stock exchange debut
Aditya Birla Sun Life Asset Management Co Ltd made a lackluster debut on stock exchanges on Monday as its shares listed at its initial public offering price before inching lower.
Shares of the mutual fund house began trading on the BSE at Rs 712 apiece, the same as the issue price. The shares touched a high of Rs 721 and a low of Rs 700 apiece in the first few minutes of trade.
Analysts say a not-so-exciting response to the IPO and the fact that the issue was entirely an offer for sale could be among the reasons for the muted listing.
The tepid opening comes after Aditya Birla Sun Life AMC's IPO was subscribed 5.25 times, thanks mainly to qualified institutional buyers’ bidding for more than 10 times the portion reserved for them. The quota set aside for non-institutional investors was covered 4.4 times while retail investors’ portion was subscribed 3.24 times.
The mutual fund house is a subsidiary of publicly listed Aditya Birla Capital Ltd, the financial services holding company of the diversified Aditya Birla Group led by billionaire Kumar Mangalam Birla.
Aditya Birla Capital’s board had approved taking the unit public on April 14 this year. The MF house filed its draft red herring prospectus with the Securities and Exchange Board of India five days later.
The IPO had opened on September 29 and closed on October 1. This makes Aditya Birla AMC the fourth mutual fund house in India to go public. The IPO was a complete offer for sale by Aditya Birla Capital and its Canadian partner Sun Life. The total IPO size was Rs 2,768.25 crore.
Aditya Birla Capital owned 51% of the AMC while Sun Life held 49% before the IPO. Their respective stake has fallen to 50.01% and 36.49% after the IPO.
Aditya Birla Sun Life AMC’s valuation, AUM comparison
The company is India’s fourth-largest mutual fund house by assets. It joins three other mutual fund companies on the bourses—Nippon Life India MF (formerly Reliance Mutual Fund), HDFC MF, and UTI MF.
Nippon Life floated its IPO in October 2017, HDFC MF in July 2018 and UTI AMC last September. HDFC AMC is the largest with a market value of Rs 62,064 crore. Nippon Life AMC is valued at Rs 27,774 crore and UTI AMC at Rs 13,257 crore.
Aditya Birla AMC was targeting a valuation of Rs 20,500 crore at the upper end of its price band. However, it is currently valued a tad lower than this level.
Overall, India has almost three dozen mutual fund companies. The biggest MF is SBI Mutual Fund, with assets under management (AUM) of Rs 5.24 trillion at the end of June 2021. ICICI MF and HDFC MF are neck and neck, with an AUM of about Rs 4.3 trillion and Rs 4.2 trillion, respectively.
Aditya Birla AMC is ranked fourth and reported an AUM of Rs 2.75 trillion. In addition, it had also Rs 450 crore in assets under domestic fund of funds, according to the Association of Mutual Funds in India.
Nippon Life is ranked sixth with an AUM of Rs 2.4 trillion as of June 30 and Rs 1,737 crore under local fund of funds. Kotak Mahindra MF and Axis MF are the other large asset managers in India with AUM of Rs 2.46 trillion and Rs 2.1 trillion, respectively, excluding fund of funds. UTI MF had an AUM of Rs 1.87 trillion at the end of June.