Indian Share Markets End Flat; M&M and SBI Top Gainers

Wed, 13 Jan Closing | Yash Vora, TM Team

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After opening the day at record high levels, Indian share markets erased gains to end on a flat note led by a decline in healthcare and consumer durable stocks.

Benchmark indices turned volatile in the afternoon session, dragged by index heavyweights HDFC twins and Reliance Industries.

Reliance Industries share price was in focus today after it was reported that the stock's weightage in the NSE Nifty slipped to as low as 9.82% on Monday and stood at 10.08% on Tuesday, which led to the stock losing its top rank to India's largest private sector lender HDFC Bank.

At the closing bell, the BSE Sensex stood lower by 25 points. Meanwhile, the NSE Nifty ended up by 1 point.

In early trade, the Sensex rose over 250 points to hit fresh record high tracking positive global cues.

M&M was among the top gainers today. Bajaj Finance, on the other hand, was among the top losers today.

SGX Nifty was trading at 14,588, down by 9 points, at the time of writing.

The BSE Mid Cap index ended down by 0.6%. The BSE Small Cap index ended lower by 0.4%.

Sectoral indices ended on a mixed note with stocks in the telecom sector and auto sector witnessing buying interest.

Consumer durable stocks and healthcare stocks, on the other hand, witnessed selling pressure.

Asian share markets ended mixed today with hopes for another vast US virus relief package offset by political upheaval in Washington and surging virus cases.

The Nikkei ended up by 1% and the Shanghai Composite ended down by 0.3%. The Hang Seng fell 0.1%.

US stock futures are trading flat. Nasdaq Futures are trading up by 23 points, while Dow Futures are trading up by 42 points (up 0.14%).

The rupee is trading at 73.17 against the US$.

Gold prices for the latest contract on MCX are trading up by 0.54% at Rs 49,309 per 10 grams.

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Speaking of stock markets, note that since the lows in March 2020, the smallcap index has gained more than 100%.

While caution is indeed warranted, Richa Agrawal, Research Analyst at Equitymaster, thinks there is still a lot more steam left to this smallcap rally.

Despite rallying more than 100% since the March 2020 lows, Richa believes small-cap stocks are set for a massive up move in 2021 and beyond.

Here's what she wrote in a recent edition of Profit Hunter...

• The P/E for smallcap index doesn't make sense. There are thousands of listed small companies. Some have negative earnings. The base is not a valid data to work with.
  
  That said, the closest proxy to relative valuations is the Smallcap to Sensex ratio,
  
  Historically, this ratio has averaged 0.43x. In the previous mega runs of the smallcap index, this ratio has gone as high as 0.75x.
  
  In January 2018, when smallcaps peaked, the ratio was at 0.58x.
  
  Guess where this ratio is now after a 100% run up in the smallcap index?
  
  0.38.
  
  It's lower than the median over 2 decades.

Richa believes if you focus on the quality of business, margin of safety in valuations, and an optimum asset allocation, you are likely to create huge wealth for yourself.

In news from the IT sector, Tata Elxsi was among the top buzzing stocks today.

Tata Elxsi share price zoomed over 15% to hit a new high of Rs 2,424 on the BSE after the company reported strong December quarter results (Q3FY21) with double digit quarter on quarter (QoQ) revenue growth and industry leading operating margins.

Tata Elxsi's revenues increased 10.9% QoQ at Rs 4.8 billion. In constant currency terms revenues grew 10% QoQ mainly led by growth in transportation, broadcast & communication and healthcare segment.

Earnings before interest and tax margins increased around 300 basis points (bps) to 27.8%.

Profit after tax (PAT) increased 33.3% QoQ to Rs 1.1 billion.

In a statement, Tata Elxsi CEO and Managing Director Manoj Raghavan said the company saw all-round growth across industries and geographies. Raghavan added that the company has seen new customer additions and large deals in both the industries in the quarter.

The company has also closed some large deals, including a multi-million dollar deal with a European Tier 1 supplier for vehicle electronics and software, and with a North American Tier 1 supplier for autonomous driving, Raghavan said.

To know more, you can read Tata Elxsi's Q3FY21 result analysis on our website.

Moving on to news from the automobile sector, Mahindra & Mahindra (M&M) today regained the market-capitalisation of Rs 1-trillion after the firm's stock hit an over two-year high of Rs 817, surging 5% on the BSE.

The stock of car and utility vehicles company was trading at its highest level since October 2018.

Shares of the company have continued their upward trend so far this months as the company increased price in the tractor segment across models; and personal & commercial range of vehicles due to the increase in commodity prices.

In another development, M&M and Ford Motor Co have called off their joint venture (JV).

As part of the JV, Ford was to cede most of its Indian operations to M&M. The companies attributed the decision to changes in global economic and business conditions caused, in part, by the global Covid-19 pandemic since the agreement was first announced.

M&M share price ended the day up by 5.7%.

In other news, auto stocks were in focus today with the BSE Auto index rising over 1% after billionaire Elon Musk-led Tesla registered a subsidiary company in India.

According to a Registrar of Companies (RoC) filing, the new entity Tesla India Motors and Energy Private is registered in Bengaluru, Karnataka and is classified as a subsidiary of a foreign company.

It has also registered its office in Lavelle Road, a business district in the southern city, with paid-up capital of Rs 1 lakh and an authorised capital of Rs 15 lakh, according to the filing.

Tesla has named Vaibhav Taneja, Venkatrangam Sreeram and David Jon Feinstein as the three directors in the newly formed entity in the country.

The state government had earlier said that Tesla would open a research and development (R&D) centre in Bengaluru but that it had offered space for any other plans the company may have including a manufacturing plant.

Note that Tesla's likely entry into India comes at a time when the union and state governments have been encouraging higher adoption of green vehicle technologies to help bring down the carbon footprint.

We will keep you updated on the latest developments from this space. Stay tuned.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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