F&O expiry: Sensex ends off-record highs; zooms 16% in 2020; Nifty adds 15%

Benchmark indices logged their highest annual gains since 2017 and ended with double digit gains for second straight year. Riding on the back of strong liquidity owing to loose monetary policies and weakening of the US dollar, the S&P BSE Sensex and Nifty50 surged around 16 per cent and 15 per cent, respectively, in 2020.

Add to it, the Sebi's directive on investment in multi-cap funds, the party in the broader indices was even more impressive. The S&P BSE500 gained 20 per cent in CY20 and recorded its best performance in the past three years. Moreover, the S&P BSE Midcap and S&P BSE Small-cap indices have rallied 18 per cent and 29 per cent, respectively in CY20.

Despite the Covid-19 induced lockdown that brought all activity to a standstill for nearly three months, the stock market rally was powered by a strong gush of liquidity from foreign portfolio investors who pumped in $22.4 billion or Rs 1.66 trillion in equities during the year. The flows in November and December are one of the highest ever seen in Indian equities. In the last two months alone, FIIs have poured almost Rs 1.18-trillion in Indian equities, data show.

Thursday's session

Markets traded sideways through the day, moving in the range of around 300 points, and ended 2020's last trading day on a flat note. The S&P BSE Sensex settled 5 points, or 0.01 per cent, higher at 47,751 levels. The BSE barometer of 30 shares hit a record high of 47,897 earlier in the day, clocking stellar gains of 87 per cent from their March lows of 25,639.

The NSE's Nifty50, on the other hand, closed unchanged at 13,982 level. The index scaled mount 14,000-mark in the intra-day session and extended gains to hit record high of 14,010 levels. The index is now up 86.5 per cent from March lows.

Investors comforted from Prime Minister Narendra Modi's declaration that India will begin its Covid-19 vaccination programme in 2021. Meanwhile, dry run for Covid-19 vaccine administration is set to begin in all states from Saturday, January 2.

In the broader market, the S&P BSE MidCap and SmalCap indices outrun frontline indices and settled 0.2 per cent and 0.36 per cent higher, respectively.

On the sectoral front, Nifty FMCG index ended as top loser on the NSE, down 0.4 per cent, while Nifty Realty index closed over 1 per cent higher. 

Global markets

Asian shares edged up on Thursday and ended a tumultuous 2020 at record highs. MSCI's gauge of Asia-Pacific shares excluding Japan rose 0.17 per cent heading towards its latest closing peak. Asian gains were led by Chinese blue chips which rose 1.76 per cent on Thursday after the announcement of a trade deal with the EU overnight. The Hong Kong benchmark rose 0.31 per cent.

However, European stocks retreated on Thursday as investors squared positions on the last trading day of the year. In light trading, UK’s FTSE 100 fell 1.5% and France’s CAC 40 dropped 0.7%. Both markets will close early on Thursday.

(With inputs from Reuters)

 

3:55 PM

MARKET OUTLOOK 2021 :: B Gopkumar, MD & CEO, Axis Securities

>> The year 2020 was a rollercoaster ride, to say the least. The stock markets in 2020 witnessed a fascinating trend. As the market corrected significantly, retail investors started buying quality stocks realizing the value in these companies. Also, lockdown resulted in more people taking to the equity markets and learning nuances. This shift has significant long term implications as more and more participants will be seen in 2021.

 

>> The year 2020 also showed us the resilience of the Indian economy. We performed much better than most developed countries that have far superior health care facilities. Even with a lockdown in place, the Indian corporates managed their cost structure very well and adapted to the conditions better than expectations. India has seen multiple shocks over the last 15 years, due to which the economy has become more resilient, and the pandemic has made it even more resilient.

 

>> 2021 will be a year of growth. We expect the GDP growth rate in 2021 to be closer to double digits, and earnings growth to be 30%+ for India Inc. Union Budget in 2021 could also be a blockbuster. Putting these perspectives together, we are likely to see a robust 2021.

3:54 PM

MARKET OUTLOOK 2021 :: Dhiraj Relli, MD & CEO, HDFC Securities

>> Indian markets saw a sharp fall in Mar-20 and a gradual recovery which has brought us to all-time highs. Despite this, in the past two years, Indian equity markets have underperformed their global peers against the background of perennially expensive valuations.

 

>> Post US elections and vaccine news flow to EM have exploded in Nov-20, equity inflows into Asian markets have risen to a record high. India saw $17.7 bn inflow in 12 months to Nov-20, including $8.3 bn in the same month. Nifty EPS has seen the first upgrade after 23 quarters of a downgrade. 182 of BSE-200 constituents gained in Nov-20, with 116 stocks posting >10% gains MoM, leading to a broad-based rally.

>> The pandemic has created massive opportunities for some businesses. It has created enormous opportunities for pharmaceutical and chemical companies, the technology industry, for IT offshoring, remotely operating industries. Overall, the Emerging Markets (EM) are going to do better in the coming year. To that extent, India, being part of the EM pack, would also benefit.

>> We believe a large portion of the Nifty run-up is over and, from now on, its rise (if substantial) would be gradual and measured. In the interim, we may see bouts of correction, especially if FPI flows dry up for a couple of days/weeks. Stock-wise moves could continue to take place even as institutions continue to take higher exposure out of their erstwhile preferred 50-80 stocks.

>> We believe that small and midcap space will be back in favour in 2021. One of the most distinguishing characteristics of companies in this segment is higher growth rates than larger peers. Investors have always flocked to this category in anticipation of higher returns, given their potential to report increased profitability and gains in market share.

 

 

3:47 PM

MARKET CLOSING COMMENT :: Vinod Nair, Head of Research at Geojit Financial Services

Markets reached an all-time high on the final day of a tumultuous 2020 which was filled with deep market corrections and unexpected rebounds. However, the European markets lost steam on the final trading day owing to the pandemic and reports regarding an increased tariff on EU products by the United States. Despite the havoc created by the COVID-19 pandemic, the economy is expected to recover in 2021 giving a boost to the equity markets in addition to upgrades in corporate earnings

3:46 PM

Market stats :: Market breadth remains around 1:1

3:45 PM

Sectoral trends on NSE :: IT, FMCG indices end in the red

3:44 PM

Sensex Heatmap at Close :: Only 11 of 30 constituents ended in the green

3:42 PM

CLOSING BELL :: Benchmarks log best yearly gains since 2017

>> Benchmark indices logged their highest annual gains since 2017 and ended with double digit gains for second straight year.

>> Riding on the back of strong liquidity owing to loose monetary policies and weakening of the US dollar, the S&P BSE Sensex and Nifty50 surged around 16 per cent and 15 per cent, respectively, in 2020.

>> Markets traded sideways through the day, moving in the range of around 300 points, and ended 2020's last trading day on a flat note. The S&P BSE Sensex settled 5 points, or 0.01 per cent, higher at 47,751 levels. The BSE barometer of 30 shares hit a record high of 47,897 earlier in the day, clocking stellar gains of 87 per cent from their March lows of 25,639.

3:25 PM

MARKET OUTLOOK 2021 :: Jaideep Hansraj, MD & CEO, Kotak Securities

CY21 will be marked with hopes of early roll-out of the Covid-19 vaccine, normalisation of activities and unperturbed growth recovery. We expect CY21/FY22 to be a better year with likely strong recovery in both the economy and earnings. There will be a remarkable shift in Nominal GDP growth from (-) 6.1% in FY21E to 14% in FY22E which will help corporates to report healthy revenue and earnings growth. This year’s high base effect will keep inflation on a gradual glide path towards 4.8% in FY22. We expect average inflation in FY22E to be 4.7% Vs 6.4% in FY21E. Fiscal consolidation is unlikely to be sharp with gross borrowing only marginally lower than FY21E. However, due to the sharp rise in Nominal GDP growth expect centre’s Gross Fiscal Deficit/GDP to come down to 5.5% in FY22E Vs 7.1% in FY21E. We expect the 10-year GSec yield to inch higher towards 6.25%-6.5% in 2HFY22.

 

We expect earnings of the Nifty-50 Index to rise by 11% in FY21E, by 28% in FY22E and 19% in FY23E. We see a sharp recovery in FY22E net profit coming from automobiles, banks, metals and telecom sector. Our updated free float EPS for Nifty-50 stands at Rs.488 for FY21E, Rs.628 for FY22E and Rs.746 for FY23E. It is interesting to note that last five years earnings CAGR of Nifty-50 has been just 2.6% (i.e. FY16-20). On the low base we expect Nifty-50 earnings CAGR for the period of FY20-23E to be ~18%.

 

With fresh stimulus coming from BoJ & ECB and likely stimulus coming from Fed early next year we expect FPI flows to remain strong in initial months of CY21. Overall we expect FII flows to range between US$ 15 & 20 bn in CY21 as compared to more than US$ 23 bn received in this calendar year. CY20 has favoured the high growth and beta stocks. Most of the high growth and quality stocks are now ‘priced to perfection’ leaving scope for potential re-rating in value stocks. As we go into CY21 with few vaccines coming in the market it is be ideal to play the recovery theme for next year. In this scenario cyclical sectors and stocks could score over defensives in CY21. Returns, in CY21 could be more broad-based as compared to the wide divergence seen in CY21. Returns could also be a function of earnings upgrades and potential of any re-rating which could be higher in case of value stocks in CY21.

 

We see markets behaving differently in first half and second half of CY21. Q3 earnings season could turn to be strong due to healthy advance tax figures and also lead to some earnings upgrades. We can expect Nifty to go anywhere between 14,000 & 15,000 range sometime in first quarter of CY21. Post budget and Q4 result season we expect markets to go into some kind of consolidation phase and witness time correction. We expect moderation in monetary policies and rising yields scenario in 2HCY21, which will lead to mean reversion of valuations towards 10/15 year averages. Based on these thesis we have used the previous 15 years peak of 19x Fw PE multiple to value the Nifty-50 to derive at our CY21 end target. We expect Nifty-50 to end CY21 somewhere ~13,500 and BSE Sensex to end at ~46,000.

3:18 PM

Small yet focused approach makes City Union Bank an interesting bet

With every disruption in the banking sector, whether concerning asset quality or a change in preference, the industry has reinvented to either offer new products or diversify into new territories. The 115-year-old Kumbakonam (Tamil Nadu)-headquartered City Union Bank (CUB), however, is an exception.

 

Having started as an outfit catering for small businesses, CUB remains committed to the segment and draws roughly 72 per cent of its business from Tamil Nadu and almost 90 per cent from south India. READ MORE

3:03 PM

Expert View :: MOFSL on Reliance Jio's free domestic offnet calls

>> This was expected, as TRAI said Zero IUC Charges from 1st Jan'21 and RJio  had committed that this charge would be only till iuc is not zero.
 

>> Secondly today they are net recipient of IUC vs net payer nearly 1 year back when they had announced plans charging seperately for offnet calls. So there is no argument to keep charging customer going forward

>> Thirdly, RJio price plans already offer 1000 min free offnet calls (other operators), which is much above its current offnet MOU of ~400-450mins. So revenue contribution from offnet calls would be insignificant.

 

2:42 PM

Global Markets check

European stocks retreated on Thursday as investors squared positions on the last trading day of the year, while wider coronavirus lockdowns in Britain and news that the United States had raised tariffs on some EU products dampened sentiment.

 

Trading volumes were thin, with many traders away on New Year’s Eve and major European bourses closed. In light trading, UK’s FTSE 100 fell 1.5 per cent and France’s CAC 40 dropped 0.7 per cent. Both markets will close early on Thursday.

Asian shares edged up on Thursday. Asian gains were led by Chinese blue chips which rose 1.76 per cent on Thursday after the announcement of a trade deal with the EU overnight. The Hong Kong benchmark rose 0.31 per cent.

Elsewhere, Australian shares fell 1.43 per cent after tighter restrictions on movement were announced in an effort to quash fresh COVID-19 cases.

 

Markets in Japan and South Korea are on holiday on Thursday, having closed at three-decade and record highs the day before.

(via Reuters)

2:36 PM

NEWS ALERT :: Jubilant Foods to acquire 11% stake in Barbeque Nation

>>  Jubilant Foodworks Limited has entered into a Share Subscription Agreement and Restated Shareholders’ Agreement to acquire 10.76% stake in Barbeque Nation Hospitality Limited

(Click here for details)

2:32 PM

Stocks that hit 52-week high on BSE today

COMPANY	PRICE(rs)	52 WK HIGH	CHG(%)
APL APOLLO TUBES	862.35	868.00	3.35
ASIAN PAINTS	2750.30	2754.70	0.61
BAJAJ FINANCE	5305.00	5372.75	-0.55
BERGER PAINTS	753.55	758.20	0.03
DEEPAK NITRITE	942.95	954.80	1.62

2:24 PM

ICICI Bank hits 10-month high, nears 52-week high on robust growth prospect

Shares of ICICI Bank hit a 10-month high of Rs 538, up 2 per cent, on the BSE on Thursday in an otherwise range-bound market on expectation of higher growth going forward. Stock of the private sector lender was trading at its highest level since February. Moreover, it is 2 per cent away from its 52-week high level of Rs 550 touched on February 2, 2020. READ MORE

 

2:21 PM

Covid vaccine dry run to be held in all states on Jan 2, say TV reports