Sensex zooms 397 pts, Nifty ends above 15,800; ICICI Bank, HDFC jump 3% each
Premium- Indian share markets ended on a positive note on Tuesday, with the Sensex up 397 points and the Nifty ending 120 points higher
Indian share markets clocked healthy gains on Tuesday, ending higher for the day.
Benchmark indices edged higher during today's session less-than-expected rise in June retail inflation helped put stimulus pullback worries at ease amid a rally in global stocks.
At close, the BSE Sensex was higher by 397 points, or 0.8%, while the NSE Nifty closed 120 points higher.
ICICI Bank and Grasim Industries were among the top gainers today. Adani Ports and HCL Technologies, on the other hand, fell the most.
The SGX Nifty was trading at 15,832, up by 144 points, at the time of writing.
The BSE MidCap index ended on a flat note, while the BSE SmallCap index ended up by 0.5%.
Sectoral indices ended on a positive note with stocks in the banking sector, finance sector and metal sector witnessing most of the buying interest.
IT stocks, on the other hand, witnessed selling pressure.
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Shares of Minda Industries and Finolex Cables hit their respective 52-week highs today.
Asian stock markets ended on a positive note today. The Hang Seng and the Shanghai Composite ended the day up by 1.6% and 0.5%, respectively. The Nikkei ended up by 0.5% in today’s session.
US stock futures are traded flat, with Dow Futures down 32 points.
The rupee was at 74.49 to a dollar.
Gold prices for the latest contract on MCX were up 0.1% at ₹47,810 per 10 grams.
In news from the pharma sector, Shilpa Medicare was among the top buzzing stocks today. Shares of Shilpa Medicare surged over 3.4% to ₹623.5 on the BSE today on the back of transfer of active pharmaceutical ingredient (API) business to subsidiary.
The board of Shilpa Medicare has approved the transfer of API business consisting of Unit-1 and Unit-2 situated at Raichur, Karnataka, by way of slump sale to a wholly-owned subsidiary of the company.
API business is being spun-off into a separate company which would be a wholly owned subsidiary (to be incorporated) of Shilpa Medicare to be engaged in the business of manufacturing of active pharmaceutical ingredients and intermediates.
The board of directors of the company approved the proposed transaction on 12 July, including authority to officers of the company to enter into the business transfer agreement to give effect to the transaction which will be executed in due course. The sale is expected to be completed on or before 30 September 2021.
The transaction will be between related parties as the seller and buyer would be holding company and wholly owned subsidiary respectively.
The transaction is proposed to be carried out for a consideration and would be at arms length.
The slump sale will result into operational synergies and lead to overall cost optimisation.
It will also result in a focused approach with the desired management band width and operational plans for each business of the company separately.
It will provide greater flexibility in pursuing long-term growth plans and strategies.
Also, it will help the management to efficiently exploit the available funding opportunities for each business independently.
Shilpa Medicare share price ended the day down by 0.5% on the BSE.
Speaking of the current stock market scenario, note that the BSE Smallcap index touched life-time high recently.
Despite the index being up more than 157% since the March 2020 lows, Richa Agarwal, lead Smallcap Analyst at Equitymaster, believes smallcap stocks are set for a massive up move in 2021 and beyond.
As per Richa, the smallcap to Sensex ratio is a good metric to gauge while coming to some conclusions about relative valuations.
So, what is this indicator suggesting now?
As you can see from the chart below, the ratio currently stands at 0.46 times, as compared to long term average of 0.43 times.
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Here's what she wrote about it in a recent edition of Profit Hunter:
"In the last one year, the smallcaps have done well to cover the gaps with the large peers. But it could be premature to call this a peak. In the previous two rounds, the average ratio has been 0.57, suggesting more upside from these levels."
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.
Moving on to news from the mining sector:
NMDC to Reduce Iron Ore Price
State-owned NMDC said it has reduced the prices of lump ore and fines by ₹200 per tonne each.
Iron ore is the key raw material for steel making. Any change in its prices has a direct impact on the rates of steel.
After the price revision, a tonne of lump ore or high grade iron will cost ₹7,450 a tonne while the buyers will get iron ore fines or inferior grade ore for ₹6,360 per tonne, NMDC said in a BSE filing.
The revised prices exclude royalty, district mineral fund (DMF), national mineral exploration trust (DMET), cess, forest permit fee, and other taxes, the company said.
It added that the new rates are effective 10 July.
On 6 June, NMDC had fixed the rates for lump ore at ₹7,650 a tonne and for fines at ₹6,560 a tonne.
NMDC, under the Ministry of Steel, is India's single largest iron ore producer, presently producing about 35 m tonne (MT) iron ore annually from its three fully mechanized mines located in Chhattisgarh and Karnataka.
Besides, the company is also involved in the exploration of other minerals like copper, rock phosphate, lime stone, dolomite and gypsum.
NMDC share price ended the day up by 3.8% on the BSE.
(This article is syndicated from Equitymaster.com)
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