Sensex Trades Marginally Higher; Dow Futures Down by 47 Points

Thu, 4 Feb 12:30 pm

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Share markets in India are presently trading marginally higher.

The BSE Sensex is trading up by 170 points, up 0.3% at 50,426 levels.

Meanwhile, the NSE Nifty is trading up by 41 points.

ONGC and Coal India are among the top gainers today. IndusInd Bank and Tech Mahindra are among the top losers today.

The BSE Mid Cap index is trading up by 1.4%.

The BSE Small Cap index is trading up by 1.5%.

On the sectoral front, stocks from the power sector, witnessing most of the buying interest.

On the other hand, stocks from the telecom sector are witnessing most of the selling pressure.

US stock futures are trading lower today, indicating a negative opening for Wall Street.

Nasdaq Futures are trading down by 4 points (flat) while Dow Futures are trading down by 47 points (down 0.2%)

The rupee is trading at 72.90 against the US$.

Gold prices are trading down by 0.7% at Rs 47,400 per 10 grams.

Gold and silver prices today edged lower in Indian markets today amid a slide in rates of precious metals in global markets. On MCX, gold futures skidded 0.6% to Rs 47549 per 10 grams, extending losses to the fourth day.

Note that in four days, gold has lost nearly Rs 2000 per 10 grams amid a slide in global rates and import duty cut announced in Budget 2021. Silver futures on MCX today declined 1% to Rs 67,848 per kg.

Speaking of silver, in his latest video for Fast Profits Daily, Vijay Bhambwani talks about the recent developments in the silver market.

The silver market is facing a short squeeze and thus the silver price could go up. However, as per Vijay, you should not participate in this frenzy.

In the video below, Vijay explains why.

Tune in to find out more:

And to know more about gold, check out our article on how to invest in gold here: How to Invest in Gold?

Moving on to stock specific news...

Among the buzzing stocks today is Apollo Tyres.

Shares of Apollo Tyres rallied after the company reported a more-than-double increase in its consolidated net profit to Rs 4.4 billion in December quarter (Q3FY21) on the back of healthy operational performance and other income.

The auto tyres and rubber products company had clocked in a net profit of Rs 1.7 billion in the yar ago period and had posted a net loss of Rs 2.4 billion in last quarter.

Total consolidated operating income rose 17.1% year-on-year (YoY) to Rs 51 billion. The company attributed the robust topline performance to strong demand recovery across segments in India, which was driven by strong growth in both replacement and OEM segments.

Consolidated margins were at a decade high at 19.2%, up 297 basis points (bps) quarter-on-quarter (QoQ) and 710 bps YoY. The margin performance was helped by recovery in topline, subdued raw material cost, and control over costs.

That apart, the tyre manufacturer has generated free cash flow (consolidated) of Rs 12 billion till date, helped by recovery in its topline performance, control over costs, and working capital optimization.

The company said that the rise in costs of key inputs (natural rubber, crude derivatives) may reflect in the March quarter (Q4FY21) results. The company also saw a reduction in its consolidated net debt from Rs 60 billion in FY20 to Rs 38 billion in December 2020.

At the time of writing, Apollo Tyres share price was trading up by 6.2% on the BSE.

Moving on to news from the FMCG sector...

Q3FY21 Results: Bajaj Consumer Care Announces 600% Dividend

The board of Bajaj Consumer Care has recommended an interim dividend at the rate of 600% which is Rs 6 per share of Rs 1 each of the company. The board has fixed February 12, as the record date for the purpose.

In its latest quarterly results, the company reported a 17% year-on-year (YoY) growth in consolidated net profit at Rs 5.7 billion in the December quarter (Q3FY21) on the back of healthy revenue. The personal products company posted 17% YoY jump in sales at Rs 2.5 billion.

The company's earnings before interest, taxes, depreciation, and amortisation (EBITDA) margins improved to 25.9% in Q3FY21 from 24.9% Q3FY20. The company said the market share recovery in Q2FY21 continued in Q3FY21 and has been consistently higher than last year across Q3FY20 for the company. Both urban and rural market share has seen strong share growth in Q3FY21.

On standalone basis, in Q3FY21, Bajaj Consumer posted 18.2% YoY sales growth, against 5% YoY sales growth recorded in Q2FY21. EBITDA margins however contracted to 26.6% from 28.9% in previous quarter, due to higher advertisement and sales promotion expenses.

The Hair oil market recovered significantly from Q1FY21 decline of 25.3% to a decline of 1% and 1.4% respectively for Q2FY21 and Q3FY21 with an overall year to date December decline of 9.4%. Urban continues to remain subdued though there has been sequential recovery in Q2FY21 and Q3FY21 over Q1FY21. The value growths continue to lag volume as consumer seeks value for money products and packs.

We will keep you posted for more updates from this space. Stay tuned.

Speaking of small caps, 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.

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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