5 Reasons Behind the Sensex Rally, Top Q3FY21 Results, and Buzzing Stocks Today

Tue, 16 Feb Pre-Open

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Indian share markets witnessed positive trading activity throughout the day yesterday and ended on a strong note.

Benchmark indices extended their winning streak into third straight session with both Sensex and Nifty hitting their fresh record high levels.

At the closing bell yesterday, the BSE Sensex stood higher by 609 points (up 1.2%).

The NSE Nifty closed higher by 151 points (up 1%).

Axis Bank and ICICI Bank were among the top gainers.

Both, the BSE Mid Cap index and the BSE Small Cap index ended higher by 1.4% and 0.4%, respectively.

On the sectoral front, gains were largely seen in the banking sector and finance sector.

Gold prices for the latest contract on MCX were trading flat at Rs 47,318 per 10 grams at the time of closing stock market hours yesterday.

5 Factors Why Indian Share Markets Rallied Yesterday

Firm Global Cues: Asian share markets traded on a form note yesterday with as the global rollout of the COVID-19 vaccine raised hopes of a faster economic recovery. Apart from this, reports of fresh US stimulus also boosted sentiment.

Recovering Economy: Index of Industrial Production (IIP) for the month of December turned positive again and showed an expansion of 1%, primarily led by basic metals, pharmaceutical and petrochemical products, and overall positive growth in the manufacturing sector.

This comes after IIP had contracted by 1.9% in November. It had expanded in October and September after six straight months of contraction due to COVID-19.

Besides, the consumer price index (CPI)-based inflation, the key price indicator used by the monetary policy committee (MPC) for policy formulation, fell to a lower-than-expected 4.06% in January compared with 4.59% in December.

FII Inflows: Firm capital inflows from the FPIs is also boosting market sentiments.

Foreign portfolio investors (FPIs) have pumped in Rs 219 billion in the Indian financial markets in February so far.

Upbeat Q3FY21 Earnings: So far, India Inc's earnings reports have beaten analysts' expectations, improving investor sentiments. The market is also bullish on the prospects of earnings upgrades.

Sectoral Indices End in Green: Most sectoral indices witnessed huge buying interest yesterday. The BSE banking index and the BSE finance index surged 3.3% and 2.7%, respectively.

We will keep you updated on how these factors develop in the coming days and what effect they have on Indian stock markets. Stay tuned!

Speaking of the current stock market scenario, note that we've seen a stellar rally post budget and then a rangebound week with a slight bullish bias.

Nifty firmly held 15,000 but the bulls seem to be tiring now. The breadth of large-cap stocks is not convincing enough to hold market at higher levels.

In the latest Momentum Moves video, Brijesh Bhatia elaborates on these points and what you should expect this week.

As per Brijesh, the Nifty might reverse if the Nasdaq 100 reverses from the reversal level of the harmonic pattern which is placed at 13,750-13,967.

Nasdaq and Nifty reversing will be double whammy for the IT index which has formed a bearish candlestick pattern.

Tune in to the video below to find out more:

Top Stocks in Focus Today

Indian Railway Finance Corporation Ltd (IRFC) will be among the top buzzing stocks today.

IRFC has reported a growth of 15.4% at Rs 10.5 billion for the quarter ended December 2020. During the same period of the last fiscal, the company had reported a net profit of Rs 9.1 billion.

Its total revenue from operations rose 8% to Rs 39.3 billion during the quarter under review.

The total revenue from operations from the first nine months of the current fiscal grew by 10.8% on a year-on-year (YoY) basis at Rs 113.2 billion.

The board of directors of the company also declared an interim dividend of Rs 13.8 billion translating to Rs 1.05 per share for the financial year 2020-21.

Motherson Sumi Systems (MSSL) share price will also be in focus today. The stock of the company rallied to hit its fresh 52-week high yesterday as investors cheered the auto ancillary company's stellar December quarter earnings.

The auto components major reported a nearly four-fold jump in consolidated net profit at Rs 12.7 billion for the quarter ended December. The company had posted a consolidated net profit of Rs 3.4 billion in the same period last fiscal.

Note that the stock price of Motherson Sumi Systems has rallied over 60% in the last three months and is up more than 26% year to date.

Market participants will also track Deepak Nitrite share price as the company delivered a strong operational performance during the quarter ended December with its consolidated earnings before interest, taxes, depreciation, and amortization (EBITDA) growing 25% year-on-year (YoY) to Rs 3.4 billion.

The company also saw its consolidated EBITDA margin expand by 330 basis points (bps) to 27.4%.

The margin accretion of the company has been driven by increased volumes and higher efficiency in plant operations of the phenolics business supported by better sourcing, logistics and marketing for the wider product basket including Isopropyl Alcohol (IPA).

Finance Ministry to Infuse Rs 30 bn into State Run General Insurance Companies

In news from the insurance sector, the Finance Ministry will infuse Rs 30 billion capital into state-owned general insurance companies during the current quarter in a bid to improve their financial health.

Last year, the Union Cabinet headed by Prime Minister Narendra Modi cleared proposal to provide capital support to National Insurance, Oriental Insurance and United India Insurance.

The cabinet had also decided to increase the authorised share capital of National Insurance Company (NICL) to Rs 75 billion and that of United India Insurance Company (UIICL) and Oriental Insurance Company (OICL) to Rs 50 billion each to give effect to the capital infusion decision.

Finance Minister Nirmala Sitharaman in the Budget announced privatization of two public sector banks and one general insurance company in 2021-22 beginning April.

In 2017, state-owned companies New India Assurance Company and GIC of India went public.

How the above developments pan out remains to be seen.

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

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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