Market Analysis from 15- January-2021

Nifty50: 14,433 ▼ 161 (-1.1%)

Sensex: 49,034 ▼ 549 (-1.1%)

The markets opened the day on a weak note and continued to drift downward for the rest of the day. Among the Nifty50 stocks, 42 closed in the red, indicating selling pressure across the board.

Every sectoral index in the Nifty fell, with the Nifty IT (-2.2%) and Nifty PSU Bank (-1.9%) indices losing the most today.

Top gainers Today’s change

Top losers Today’s change

Here are the top stories of the day.

PVR gains despite Q3 losses

For Q3, multiplex major PVR reported consolidated revenues of ₹320 crore versus last year’s figure of ₹924 crore. Its performance was impacted by the staggered re-opening of cinemas, which are allowed to run at just 50% capacity.
It suffered a net loss of ₹49 crore versus a net profit of ₹36 crore last year. However, the figure is better than the street’s estimated loss of ₹213 crore. The company has successfully negotiated its rental and maintenance costs by 80% for the first nine months of FY21, citing challenges due to the pandemic. The stock gained 2.6% in an otherwise weak market.
IDFC First forays into the credit card business

While most banking stocks were reeling under selling pressure today, shares of IDFC First Bank gained 4.5%. The bank is entering credit card business and will levy interest rates ranging between 9% and 36%, which is being seen as disruptive.
Generally, most credit card players levy interest in the range of 34-40% on an annualised basis. IDFC First Bank aims to onboard two lakh customers by March 2021. Meanwhile, shares of SBI Cards (-0.2%) were largely unaffected by the development.

Tata Steel Long Products surges on Q3 results

Shares of Tata Steel Long Products were locked in the 20% upper circuit today. The specialty steel maker reported 36.5% YoY growth in its consolidated revenues for Q3.
From a ₹112 crore loss in Q3 last year, it has turned around with a net profit of ₹304 crore due to high sales growth and better cost controls.
Gail announces buyback and interim dividend

The state-owned gas distribution company will buy back 6.97 crore shares—2.5% of the total paid-up equity—at ₹150 per share, a 7.7% premium over today’s closing price.
An interim dividend of ₹2.5 per share has also been announced alongside the buyback. The company has fixed 28 January as the record date for the buyback and dividend. Meanwhile, the stock declined 3.3% today.
Closing bell

In line with the drop in most global equity markets, the Indian markets traded in the red today. Profit booking was witnessed across the board and all sectoral indices ended negatively. Although the markets gained 0.6% over the last week, today’s price action favours a bearish trader.

Among the Q3 results that have been announced so far (mainly IT majors), there have not been any negative surprises. The news from the US is also positive, given that it has announced the $1.9 trillion stimulus package. Yet, the investors are choosing to book profits as if it is all priced in.

What is book building?

Book building is a process for discovering the price of shares. The company offering the shares announces a price range and asks investors to bid on it. The bids are submitted to the lead merchant banker (also called the book runner) who enters the bids in a book. Finally, the shares are sold at a price, also referred to as the cut-off price, which is determined by the proportion of bids received at each price.