4 Reasons Why Sensex Surged 848 Points Today

Mon, 17 May Closing

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Indian share markets witnessed positive trading activity throughout the day today and ended higher.

Benchmark indices extended gains as the session progressed and ended on a strong note amid steady fall in Covid-19 cases in India.

The BSE Sensex gained over 850 points and Nifty crossed 14,900 in intraday trade.

At the closing bell, the BSE Sensex stood higher by 848 points (up 1.7%).

Meanwhile, the NSE Nifty closed higher by 245 points (up 1.7%).

IndusInd Bank and SBI were among the top gainers today.

Cipla and Larsen & Toubro, on the other hand, were among the top losers today.

The SGX Nifty was trading at 14,934, up by 224 points, at the time of writing.

Both, the BSE MidCap index and the BSE SmallCap index ended up by 1.6%.

Sectoral indices ended on a positive note with stocks in the banking sector, finance sector and auto sector witnessing most of the buying interest.

Telecom stocks, on the other hand, witnessed selling pressure.

Shares of Balkrishna Industries and UPL hit their respective 52-week highs today.

US stock futures are trading on a negative note today with the Dow Futures trading down by 102 points.

The rupee is trading at 73.21 against the US$.

Gold prices for the latest contract on MCX are trading up by 0.7% at Rs 47,989 per 10 grams.

Here are Top 4 Factors Why Indian Share Markets Rallied Today

Firm Global Cues: In US stock markets, Wall Street indices closed higher on Friday as investors took a weaker-than-expected reading of April retail sales in stride, shaking off a tumultuous week that has been marked by growing inflation fears.

Asian stock markets ended on a mixed note today.

The Hang Seng and the Shanghai Composite ended the day up by 0.6% and 0.9%, respectively. The Nikkei ended down by 0.9% in today's session.

Fall in Covid Cases: Daily cases of Covid-19 in India continued to fall after hitting a peak last week. India recorded 2.8 lakh cases today.

The country has so far reported 25 million cases.

US Bond Yields Fall: Benchmark US 10-year Treasury yields retreated further from a more than one-month high hit last week.

A fall in yields means more money coming to Indian markets.

Sectoral Performance: Gains were also seen as banking, finance, and metal sectors witnessed huge buying interest today. The banking sector ended the day up by 4% today, while the finance sector and auto sector ended their day higher by 3.1% and 1.9%, 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 stock markets, in his latest video, co-head of research at Equitymaster, Rahul Shah talks about his favoured pick for the next decade.

In the video, Rahul talks about an important rule that people who are new to investing should know. This rule holds the key to their long term returns from the stock market.

Tune in to the video below to find out more:

In news from the automobile sector, Balkrishna Industries was among the top buzzing stocks today.

Shares of Balkrishna Industries surged over 10% to hit a record high of Rs 2,138 per share on the BSE in intra-day trade today after the company reported robust March quarter (Q4FY21) numbers.

The stock of the auto tyres and rubber products maker surpassed its previous high of Rs 1,965.9, logged on 12 May 2021.

Balkrishna Industries on Friday reported a 45% increase in consolidated net profit to Rs 3.7 billion for the fourth quarter ended March 2021.

The company had posted a profit of Rs 2.6 billion in the January-March period a year ago.

Revenue from operations climbed 28.7% to Rs 17.5 billion during the quarter under review as against Rs 13.6 billion in the year-ago period.

For the full financial year 2021, the company's revenue from operations stood at Rs 57.6 billion, up 20.4% as against Rs 47.8 billion in the last year.

On a consolidated basis, earnings before interest, tax, depreciation, and amortisation (EBITDA) came in at Rs 5.6 billion for the quarter under review, up by 37% over the same quarter last year. EBITDA for the fiscal year 2021 stood at Rs 18.1 billion and grew by 31% over last year.

The company's standalone revenue came in at Rs 17.5 billion, up 29% year on year (YoY), on the back of healthy volume growth.

The company achieved highest ever quarterly sales volume of 68,002 million ton (MT), up 17% YoY.

The company's board recommended a final dividend of Rs 5 per equity share subject to shareholder approval at ensuing annual general meeting (AGM).

This is in in addition to Rs 12 per equity share paid for 9MFY21. The total dividend paid will be Rs 17 per equity share.

Balkrishna Industries share price ended the day up by 9.8% on the BSE.

Moving on to news from the power sector...

Adani Green Energy in Advanced Talks to Acquire Soft Banks' SB Energy

Adani Green Energy (AGEL) is looking to buy Japan's SoftBank Group's majority stake in solar power producer SB Energy.

This follows the collapse of a plan to sell SoftBank's entire 80% stake in SB Energy to Canada Pension Plan Investment Board (CPPIB) for an estimated US$ 525 million.

The company has begun due diligence of SB Energy.

SB Energy has a portfolio of 7.7 gigawatts (GW) in India. Bharti Enterprises owns the remaining 20% stake in the company. Bank of America and Barclays were handling the sale process.

France's Total has invested US$ 2.5 billion for acquiring a 50% stake in 2.4 GW operating solar assets of the company and a 20% stake in AGEL.

With 3.47GW operational capacity and 15.2 GW portfolio, the Adani-Total joint venture (JV) plans to commission 25 GW by 2025.

According to a leading financial daily, spokespeople for SoftBank Group, Bharti Enterprises, Bank of America and Barclays Bank India declined to comment about the fresh stake sale plans with Adani Green.

There has been sustained interest in India's green economy despite the turmoil caused by the pandemic.

India is running the world's largest clean energy programme to achieve 175 GW of renewable capacity, including 100 GW of solar power by 2022.

How this pans out remains to be seen. Meanwhile, we will keep you updated on the latest news from this space.

Adani Green Energy share price ended the day up by 5% on the BSE.

Speaking of the power sector, it's interesting to note the power exchanged in India is about 4.5% of the overall power production, as can be seen in the chart below.

As per Tanushree Banerjee, Co-Head of Research at Equitymaster, India's power sector is currently in transition. It's driven by increasing reliance on short-term contracts and electricity spot markets.

This transition to the short-term market is happening due to quickly evolving industry dynamics.

Tanushree believes the Indian power sector will see a surge in spot power volumes due to certain factors.

In August 2020, Tanushree recommended a high-quality stock from this space. Subscribers can read the report here (requires subscription).

And if you are not a StockSelect subscriber, here's where you can sign up.

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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