The frontline indices, BSE Sensex and Nifty50, staged a smart recovery and ended higher on Monday. The 30-pack index ended 153 points higher at 57,260 mark and the Nifty reclaimed its 17,050 level.
The bounce-back rally was powered by a one per cent rise in Reliance Industries’ stock which was among the top gainers yesterday. On the Sensex, the stock accounted for 52 per cent of the total gains.
RIL’s stock made a splash on the bourses after brokerages gave a thumbs-up to the 21 per cent across-the-board tariff hike done by Reliance Jio in its prepaid plans.
According to analysts at brokerage firm Jefferies, Reliance Jio’s tariff hikes have brought its discount back to 13-20 per cent versus Bharti Airtel in the prepaid smartphone segment.
This, the brokerage says, should keep Jio’s subscriber momentum intact. As, 2G feature-phone users, low-end JioPhone users and high-end JioPhone users will have to spend up to 4.4x more over a 24-month period to upgrade to JioPhone Next, the brokerage has raised Jio’s enterprise value by eight per cent to $96 billion.
Back home domestic brokerage Kotak Institutional Equities has upgraded the stock to ‘Buy’ from ‘Add’ citing favourable reward-risk balance post the recent correction and relative sharp underperformance versus peers in telecom and retail business.
That said, if one ignores RIL’s performance, the overall market movement was volatile on Monday with more sellers than buyers on Dalal Street.
Market bulls are trying hard to regain composure as investors remain uncertain on whether the newly identified Omicron variant would really derail economic recoveries and the tightening plans of some central banks.
Going ahead, analysts believe the ‘overreaction’ to the development is over and any market fall from here on should be used to add to positions from a medium-to-long term perspective.
According to G Chokkalingam, founder and chief investment officer at Equinomics Research, the global markets overreacted without waiting for the scientific assessment of Omicron on rate of hospitalisation, death rates and efficacy of existing vaccines.
Thanks to recent corrections, valuation of the domestic equity market has moderated with the trailing PE of the Sensex cooling off to 26.7 from a recent peak of 30.
This, he says, has made Indian markets more attractive for investors from a long term perspective.
As regards Tuesday, news flow around the new coronavirus variant is expected to keep the indices volatile today.
Moreover, investors will also track Infrastructure Output data for October and Q2 GDP data to be released later in the day.
Stocks of Zomato, IRCTC, Godrej Properties, and Tata Power will be on investor radar today due to the scheduled rejig of the MSCI indices.
The Standard Index (India) will see seven additions and two deletions, and will see weight changes for certain stocks such as HDFC Life and Piramal Enterprises.
Overall, analysts expect India to see a net inflow of approximately $500 million with all the adjustments.
Lastly, in the primary market, the initial public offer of Star Health and Allied Insurance Company will open for subscription today.
Backed by ace investor Rakesh Jhunjhunwala, the company plans to raise up to Rs 7,249 crore in the price band of Rs 870 to Rs 900. The initial public offer will close for subscription on December 2, 2021.
Given the company’s valuation of around 5.5x FY21 market cap/GWP, which are in line with recent deals in the sector, most analysts recommend subscribing to the IPO from a long-term perspective.
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