Nifty 16742.8 (-2.64%)
Sensex 57696.46 (-1.31%)
Nifty Bank 36197.15 (-0.85%)
Nifty IT 35848.05 (-0.86%)
Nifty Financial Services 17779.5 (-1.13%)
Adani Ports 737.45 (0.00%)
Asian Paints 3100.00 (-0.34%)
Axis Bank 675.30 (0.34%)
B P C L 362.00 (-6.19%)
Bajaj Auto 3615.00 (9.95%)
Bajaj Finance 6645.00 (-6.00%)
Bajaj Finserv 16439.00 (-6.00%)
Bharti Airtel 718.00 (-0.05%)
Britannia Inds. 3542.75 (-0.31%)
Cipla 860.00 (-5.71%)
Coal India 152.00 (-4.85%)
Divis Lab. 4471.00 (-6.01%)
Dr Reddys Labs 4320.00 (-6.02%)
Eicher Motors 2701.00 (10.00%)
Grasim Inds 1874.25 (10.00%)
H D F C 2499.90 (-9.80%)
HCL Technologies 1101.00 (-6.01%)
HDFC Bank 1400.00 (-7.50%)
HDFC Life Insur. 645.00 (-6.65%)
Hero Motocorp 2699.90 (9.64%)
Hind. Unilever 2109.30 (-10.00%)
Hindalco Inds. 400.00 (-5.80%)
I O C L 130.00 (6.38%)
ICICI Bank 799.95 (11.68%)
IndusInd Bank 1040.00 (9.34%)
Infosys 1700.00 (-2.05%)
ITC 195.00 (-12.02%)
JSW Steel 703.00 (9.07%)
Kotak Mah. Bank 1999.00 (4.43%)
Larsen & Toubro 1975.40 (9.67%)
M & M 890.00 (6.34%)
Maruti Suzuki 6788.00 (-5.84%)
Nestle India 18162.00 (-6.00%)
NTPC 115.00 (-9.45%)
O N G C 145.00 (-0.62%)
Power Grid Corpn 206.10 (0.00%)
Reliance Industr 2122.65 (-11.86%)
SBI Life Insuran 1049.40 (-10.00%)
Shree Cement 24359.00 (-6.00%)
St Bk of India 567.65 (19.97%)
Sun Pharma.Inds. 676.65 (-10.00%)
Tata Consumer 850.00 (9.78%)
Tata Motors 450.00 (-6.27%)
Tata Steel 1215.00 (8.68%)
TCS 3448.00 (-5.29%)
Tech Mahindra 1470.00 (-7.74%)
Titan Company 2433.25 (2.70%)
UltraTech Cem. 6599.25 (-10.00%)
UPL 712.95 (0.03%)
Wipro 580.00 (-9.48%)

Is it time to shrug allocation in the IT sector?

Is it time to shrug allocation in the IT sector?
by 5paisa Research Team 13/10/2021

In the last two trading sessions, the Nifty IT index snapped the gains made in the first week of October 2021. Is time to shift your focus? Let’s find out.

The Nifty IT index has been moving southwards for the past two trading sessions. Having said that, the gains made in the first week of October 2021 went in vain. The Nifty IT index saw the first sign of weakness on September 24, 2021, by forming a gravestone Doji candlestick pattern.

Gravestone Doji is a bearish candlestick pattern. This pattern suggests a reversal followed by a downtrend. Usually, this pattern is a sign to take profits on a bullish position. The Nifty IT index has created a gravestone Doji candlestick pattern on daily charts.

Moreover, RSI (Relative Strength Index) is at 50.55 slashed down from 76.60 at the end of September 2021. Also, the MACD (Moving Average Convergence Divergence) is swiftly moving downwards towards negative territory. 

Looking at price action, post making a low of 34,719.80 on October 1, 2021, it failed to break its all-time high level of 37,823.15 and instead made a lower high at 36,703.55 level. So purely from a technical perspective, IT index looks exhausted as of now.

Even on the valuation front, the Nifty IT index seems to be quite stretched. To understand the valuation, we took PE (Price to Earnings) data of the Nifty IT index.

The valuation is indeed quite heated and may cooldown. At the current trailing PE level of 36.11, it is way above its 10-year average PE of 20.93. In fact, it's even above the 3 times standard deviation. The valuations and technical indicators do not paint rosy picture about the index. However, result of IT major, Infosys, and Wipro, having a weightage of more than 33 % in IT index has come out with good numbers. Hence, it is better to stay put as of now.

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Infosys Q2 profit climbs 12%, ups revenue guidance

by 5paisa Research Team 13/10/2021

Infosys Ltd has reported an increase of almost 12% in consolidated net profit for the July-September quarter, as revenue jumped and it added more clients than a year earlier.

India’s second-largest software services exporter posted a net profit of Rs 5,421 crore for the quarter ended September 2021, up from Rs 4,845 crore in the same period last year. Profit rose 4.4% from the April-June quarter.

Consolidated revenue surged by a fourth to Rs 29,602 crore from Rs 24,570 crore a year earlier and rose 6.1% from Rs 27,896 crore in the previous quarter.

In dollar terms, the company’s revenue increased 19.4% from a year earlier and 6.3% from the previous quarter in constant currency.

Infosys benefited as revenue from a deal with Daimler, signed in December last year, started kicking in. The Indian company is helping Daimler transform its IT operating model and infrastructure in a multi-billion-dollar deal.

The company also raised its revenue guidance from 14-16% to 16.5-17.5%. It kept its margin guidance unchanged at 22-24%.

Other key details:

1) Infosys had a total of 1,714 clients at the end of September, up from 1,487 a year earlier.
2) It added 117 clients during Q2, compared with 96 in the same period last year.
3) The company now has 35 clients in $100-million-plus band and 62 in $50-million-plus.
4) Infosys had 2,79,617 employees as of September-end, up from 240,20 a year earlier.
5) Attrition rate jumped to 20.1% from 12.8% as hiring activity in the IT sector surged.
6) Operating margin came in at 23.6% in Q2, a decline of 1.8% YoY and 0.1% QoQ.

Management Commentary:

Infosys CEO and managing director Salil Parekh said the company’s “stellar performance” and “robust growth outlook” continue to demonstrate its strategic focus and the strength of its digital offerings.

Parekh said Infosys is witnessing a strong market opportunity with global enterprises rapidly accelerating their digital journeys.

He added that the company’s sustained investments in expanding capabilities, including the differentiated cloud play, has uniquely positioned it to emerge as the preferred cloud and digital transformation partner.

“Given this continued momentum we have further increased our revenue growth guidance to 16.5-17.5%,” he added.

Chief operating officer Pravin Rao said Infosys is expanding its college graduates hiring programme to about 45,000 for the year. He added that the company is preparing to embrace the hybrid work model as more than 86% of its employees in India had received at least one dose of Covid-19 vaccine.

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Closing Bell: Nifty closes on record high, Sensex surges by 452 points lead by Tata Group stocks.

Closing Bell: Nifty closes on record high, Sensex surges by 452 points lead by Tata Group stocks.
by 5paisa Research Team 13/10/2021

Indian market continues the bull run as Nifty ends at a closing high and Sensex up by 452 points. Tata Group shares rally.

Domestic Benchmark Indices Sensex and Nifty rose for the fifth consecutive trading session and closed at record high levels on Wednesday, October 13, 2021. Strong buying was seen in metal, IT and auto stocks, while some selling pressure was observed in realty stocks. In the broader markets, BSE midcap and smallcap indices jumped by 1.56% and 0.59%, respectively.

At the closing bell on Wednesday, the Sensex was up 452.74 points or 0.75% at 60,737.05, and the Nifty gained 169.80 points or 0.94% at 18,161.80. Around 1602 shares have advanced, while 1504 shares declined, and 118 shares remain unchanged.

Top gainers of the day were, Tata Motors, M&M, Tata Consumer Products, Power Grid Corp and ITC. Maruti Suzuki, ONGC, Coal India and SBI Life Insurance were among the losers.

On sectoral front, the auto index added 3.5%, while energy, infra, IT, metal, power and capital goods were up by 1%.

Tata Motors was up by almost 22% to a 52-week high of Rs 523.85 on the announcement that its electric vehicle entity will get funding from TPG Group to the tune of Rs 7,500 crore.

Tata Power shares powered ahead to a lifetime high of Rs 232.40 as the Tata Group's power utility is in a partnership with Tata Motors to develop electric vehicle (EV) charging infrastructure. Tata Chemicals clocked a fresh 52-week high of Rs 1144.50.

Among other Tata group stocks, Nelco, Tata Coffee, Rallis India, Tata Communications, Tata Consumer Products, Titan Company, Tata Metaliks, Tata Steel and India Hotels have all rallied 3-5% on the bourses today.

According to market experts, the mood of the global market is muted by inflation fears and high bond yields ahead of the release of US inflation data. But, the Indian market is robust due to the upcoming festival season.

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Zee-Invesco tussle takes a new twist as Reliance enters the scene

by 5paisa Research Team 13/10/2021

The controversy surrounding Zee Entertainment Enterprises Ltd and minority investor Invesco has turned uglier, with the billionaire Mukesh Ambani-controlled Reliance Industries Ltd being dragged into the imbroglio. 

On Tuesday, Zee managing director and chief executive officer Punit Goenka said that Invesco was trying to oust him because he chose Sony India over a large Indian conglomerate for a merger with the broadcaster.

Goenka didn’t name the conglomerate. But Invesco, a US-based asset manager that is the biggest institutional shareholder in Zee Entertainment, claimed on Wednesday that the Indian company was Reliance, which owns media companies TV18 and Network18.

“We wish to make clear that the potential transaction proposed by Reliance (the ‘strategic group’ referenced but not disclosed in the October 12 communication by Zee) was negotiated by and between Reliance and Goenka and others associated with Zee’s promoter family,” Invesco said.

Invesco also said that, as ZEE’s single largest shareholder, its own role was to help facilitate that potential transaction “and nothing more”. Invesco added that it rejects all assertions made by Zee on Tuesday. 

“We specifically note that the implication that we as a shareholder would seek out a transaction for Zee that is dilutive to the long-term interests of ordinary shareholders, including ourselves, simply defies logic,” Invesco said.

Invesco, through its funds Invesco Developing Markets Fund and OFI China Global LLC, had previously called for a meeting of Zee shareholders to oust Goenka. After Zee refused to hold the meeting, the two shareholders approached the Bombay High Court and the National Company Law Tribunal. The cases are pending.

Previously, Zee founder and Goenka’s father, Subash Chandra, had questioned Invesco’s intentions behind seeking the removal of Goenka.

Zee-Sony deal contours

Last month, Zee had struck a deal with Sony India to merge the two companies. As part of the deal, Sony would get a majority stake in the combined company and would nominate a majority of the board of directors. However, Goenka would stay as MD and CEO for five years.

The merged entity will effectively own the biggest suite of entertainment content services in India, bypassing Disney India and Star India. It will also be bigger than Viacom 18, the joint venture of billionaire Mukesh Ambani’s Network 18 Group and US-based ViacomCBS.

Interestingly, Sony and Viacom18 were engaged in merger discussions but scrapped the talks last year as the Ambani-led group reportedly wanted a majority stake in the combined entity.

Stock market reaction

Meanwhile, the stock market reacted quite negatively to the latest comments and counter-comments, at least in so far as shares of the Reliance-owned media companies.

Shares of TV18 Broadcast Ltd took a tumble on Wednesday, going down by 5.7%. Shares of Network18 Media Investments Ltd slipped 5.5% after touching a one-year high earlier in the day. This, even as the parent company Reliance Industries Ltd was up more than 1.1% and the benchmark Nifty rose just under 1%. 

Shares of Zee Entertainment, too, rose on Wednesday and ended 3.6% higher at Rs 317.25 apiece.

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Wipro Q2 net declines but still beats street estimate; stock climbs 2%

by 5paisa Research Team 13/10/2021

Wipro Ltd, the third-largest software services firm in the country, saw its net profit decline 9.6% even as sequential revenue growth at 7.7% helped the company beat analyst estimates for the quarter ended September 30, 2021.

The company reported a net profit of Rs 2,930.6 crore for the July-September period. This was up nearly 19% compared with the year-ago period. However, higher costs shrunk the sequential earnings by nearly a tenth. Analysts had expected the company to pull in a net profit of under Rs 2,900 crore.

Wipro’s revenue rose 7.8% sequentially to Rs 19,670 billion ($2.7 billion), and reported a 30.1% rise compared to the same quarter last year. In the process, the company also beat street expectations on its revenues.

This added fresh fuel to the company’s stock, which rose 2% to close at Rs 672.55 a share in a strong Mumbai market on Wednesday.

Other key details:

1) IT services segment revenue was at $2.58 billion, an increase of 6.9% QoQ and 29.5% YoY.

2) Non-GAAP constant currency IT services revenue increased by 8.1% QoQ and 28.8% YoY.

3) IT services revenue was at the higher end of the $2.53-2.58 billion band projected in July.

4) Attrition shot up to 20.5% during the quarter on a trailing 12-month basis, from 15.5% as of June 30.

5) Wipro expects Q3 revenue from IT services in a range of $2.63-2.68 billion. This means a sequential growth of 2-4%.

Management commentary:

Thierry Delaporte, CEO and managing director of Wipro, said, “The Q2 results demonstrate that our business strategy is working well. We grew at over 4.5% organic sequential growth for a second quarter in a row, resulting in a 28% YoY growth in the first half of this financial year.”

Delaporte also said that Wipro surpassed the $10-billion milestone of annualized revenue run rate.

Jatin Dalal, chief financial officer at Wipro, said the company sustained its operating margins in Q2 in a narrow band even after absorbing the full impact of its recent acquisitions and investing significantly in our business across sales, capabilities and talent.

“We completed a salary increase covering 80% of our colleagues, making it the second hike in this calendar year. We delivered a robust growth in EPS of 23.8% YoY,” Dalal added.

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Top 10 Index Funds.

Top 10 Index Funds.
by 5paisa Research Team 13/10/2021

Passively managed funds such as Index funds are gaining momentum. Read on to find the detail about index funds that track the frontline equity index, Nifty 50.

Investors who are not well versed with equity investment, however, want to benefit from the equity investment can opt for index funds. According to data from the Association of Mutual Funds in India (AMFI), Asset under management (AUM) surged almost three times during in last year. AUM at the end of September 2021 stood at Rs 33824 crore against Rs 12581 crore the same month last year. Although most of the investment comes in schemes that replicate indices such as Nifty 50 and S&P BSE Sensex, others are also gaining ground now. So you will find index funds imitating mid-cap and small-cap indices also.

Given this popularity, Navi AMC recently launched the cheapest Nifty 50 index fund that has an expense ratio of 6 basis points. Besides expense ratio what is also important before selecting an index fund is tracking error. Tracking error is the difference in actual performance between the fund and its corresponding benchmark. So even if the index fund has a very low expense ratio, and a higher tracking error, it may not solve the purpose of investing in index funds. Hence, it is important to look at both expense ratio and tracking error before committing your fund to an index fund.

Below table shows the index funds that track Nifty 50 and is sorted based on tracking error.

This is the table code -

Name  

Expense Ratio  

Tracking Error  

AUM in Cr  

NAV (Rs)  

SBI Nifty Index Fund  

0.17%  

0.10%  

1530  

160.28  

HDFC Index Fund-NIFTY 50 Plan  

0.20%  

0.10%  

4000  

167.79  

UTI Nifty Index Fund  

0.20%  

0.11%  

5216  

120.46  

DSP Nifty 50 Index Fund  

0.21%  

0.13%  

122  

16.3  

ICICI Prudential Nifty Index Fund  

0.17%  

0.14%  

2160  

181.37  

IDFC Nifty Fund  

0.16%  

0.15%  

357  

38.22  

L&T Nifty 50 Index Fund  

0.25%  

0.16%  

80  

20.28  

Aditya Birla Sun Life Index Fund  

0.34%  

0.18%  

257  

179.19  

LIC MF Index Fund – Nifty Plan  

0.49%  

0.18%  

50  

103.22  

Nippon India Index Fund – Nifty Plan  

0.20%  

0.20%  

420  

31.59  

Franklin India Index Fund – NSE Nifty Plan  

0.26%  

0.20%  

458  

146.78  

Tata Index Fund – Nifty Plan  

0.19%  

0.21%  

200  

116.68  

Motilal Oswal Nifty 50 Index Fund  

0.10%  

0.30%  

105  

14.91  

IDBI Nifty Index Fund  

0.16%  

0.67%  

220  

35.38  

Kotak Nifty 50 Index Fund  

0.20%  

0.67%  

91  

11.4  

The above table shows that though, Motilal Oswal Nifty 50 Index Fund has the lowest expense ratio, it has a higher tracking error. Hence, the best combination is the fund that has lower expense and tracking error.

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