Sensex Ends 487 Points Lower; Bajaj Auto & Maruti Suzuki Top Losers

Fri, 12 Mar Closing

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After opening the day on a strong note, Indian share markets witnessed huge selling during closing hours and ended their day 1% lower.

Benchmark indices witnessed a sharp selloff across all sectors in the afternoon session with the Sensex declining more than 700 points in intraday deals, while Nifty fell below 15,000 level.

Investors turned cautious followed the signing of a US$ 1.9 trillion US stimulus bill into law on Thursday and a further dovish tilt from the European Central Bank that had prompted a retreat in bond yields and eased global concerns about rising inflation.

US 10-year Treasury yields rose again today, back above 1.6% and on track to rise for the seventh straight week.

At the closing bell, the BSE Sensex stood lower by 487 points (down 1%). Meanwhile, the NSE Nifty ended down by 144 points (down 1%).

Power Grid was among the top gainers today. Bajaj Auto and Maruti Suzuki, on the other hand, were among the top losers today.

SGX Nifty was trading at 15,032, down by 170 points, at the time of writing.

The BSE Midcap index ended down by 0.5%. The BSE Smallcap index ended up by 0.1%.

On the sectoral front, automobile stocks, banking stocks and FMCG stocks were among the hardest hit.

Shares of 3M India and Lakshmi Machine hit their respective 52-week highs today.

SBI share price was in focus today after the lender said it will conduct e-auctions of 12 bad accounts this month to recover dues of over Rs 5.1 billion under sale to asset reconstruction company (ARC) mechanism.

Asian share markets ended on a mixed note today. The Nikkei ended higher by 1.7% while the Hang Seng ended down by 2.2%.

US stock futures are trading lower today indicating a weak opening for Wall Street indices with the Dow Futures trading down by 62 points (down 0.2%).

Gold prices for the latest contract on MCX are trading down by 1.1% at Rs 44,375 per 10 grams.

The rupee is trading at 72.81 against the US$.

Speaking of the current stock market scenario, note that the BSE Small-cap index broke past the 21,000- barrier earlier this month.

The index had crashed to a multi-year low of 8.6k back in March 2020. Who would have thought that in less than a year, the index will come roaring back and go up a massive 133%?

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 130% 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 IPO space...

Rakesh Jhunjhunwala-backed Nazara Technologies is set to launch its three-day initial public offering (IPO) on March 17.

The online gaming company has fixed the issue price at Rs 1,100-1,101 apiece. At the upper end of price band, the issue will fetch nearly Rs 5.8 billion to the company.

Rakesh Jhunjhunwala owned 11.51% shares in Nazara Technologies at the end of September quarter of 2020.

Note that this is a second attempt by the company to list its shares on the bourses. It had earlier filed preliminary papers with markets regulator in February 2018 and had received approval to float the IPO, but the firm did not launch the issue.

The company, popularly known for its games on World Cricket Championship, Chhota Bheem and Motu Patlu series, will see a sale of 49,65,476 equity shares by the promoters and existing shareholders, according to draft red herring prospectus (DRHP) filed with capital markets regulator.

The entities which will be selling shares in the IPO include Mitter Infotech LLP (a promoter of the company), IIFL Special Opportunities Fund, Good Game Investment Trust, IndexArb Securities and Azimuth Investments.

How this IPO sails through remains to be seen.

Speaking of IPOs, as per an article in The Economic Times, investors' cost of borrowing to punt on IPOs is set to spike as the rush of issues next week could push up demand for funding.

Six IPOs, including Anupam Rasayan, Laxmi Organic, Craftsman Automation, Kalyan Jewellers, Suryoday Small Finance Bank and Nazara Technologies, which will raise about Rs 51 billion, will open for subscription in the next one week.

The article stated that the interest rate to borrow for investing in these IPOs could go up by at least 200 basis points from the current 7-8% levels. NBFCs are gearing up for short-term funding requirements to the tune of at least Rs 750 billion.

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

Moving on to stock specific news...

Dixon Technologies was among the top buzzing stocks today.

Shares of Dixon Technologies hit a record high of Rs 20,855.60, up 4%, having gained as much as 8% in the past three trading days, after the company fixed March 19, 2021 as the record date for 1:5 stock split i.e. from Rs 10 to Rs 2.

Dixon Technologies said the rationale behind the stock split is to encourage wider participation of small investors and to enhance the liquidity of the equity shares at the stock market.

Stock of the company has zoomed over 600% from its 52-week low of Rs 2,899.95, touched on March 24, 2020.

The company reported its highest ever quarterly revenue of Rs 21.8 billion in October-December quarter (Q3FY21) on the back of improved consumer sentiment, festive season sales and strong order book.

Dixon Technologies share price ended the day up by 2.7%.

Speaking of stock markets, in his latest video for Fast Profits Daily, Brijesh Bhatia, Research Analyst at Equitymaster, talks about his favourite sector to bet on for the long term.

A few weeks ago, Brijesh did a video on energy stocks. He said these stocks are good picks for the short term and the market validated that view.

But what about the long term? Which is the best sector, long term investors should bet on? Brijesh discusses these points in the video below.

Tune in to find out more:

Moving on to news from the realty sector, shares of Prestige Estates jumped 4% after the company said it has completed phase I of its Rs 91.6-billion deal with Blackstone Group at Rs 74.7 billion.

The deals comprises of sale of 21 million square feet of assets by Prestige Group to Blackstone. These include six completed office assets, four under construction offices, and nine retail malls.

Post the deal, the company will be left with residential projects, some minor rental assets and net debt of Rs 10 billion.

Prestige Estates share price ended the day up by 1%.

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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