Sensex Rises 500 Pts, Nifty Tops 17.5k; Eicher Motors, Coal India Surge 3%

Financial markets in China and Japan are closed today for a public holiday.

The Hang Seng is trading down by 0.6%.

In US stock markets, Wall Street indices ended on a negative note but near record highs on Friday, the last trading day of 2021, marking the second year of recovery from a global pandemic.

The Dow Jones Industrial Average fell 60 points, or 0.2%, while the S&P 500 slipped 13 points. The Nasdaq Composite dropped 97 points, or 0.6%.

All three major US stock indexes scored monthly, quarterly and annual gains, notching their biggest three-year advance since 1999.

For 2021, the S&P 500 soared 26.9%, beating both the Nasdaq’s 21.4% rise and the Dow’s 18.7% climb.

Back home, Indian share markets are trading on a positive note.

The BSE Sensex is trading up by 484 points. Meanwhile, the NSE Nifty is trading higher by 140 points.

TCS and HDFC Bank are among the top gainers today. IndusInd Bank, on the other hand, is among the top losers today.

The BSE Mid Cap index and the BSE Small Cap index are trading higher by 0.6% and 0.9%, respectively.

All sectoral indices are trading in green with stocks in the automobile sector and realty sector witnessing most of the buying.

Shares of EClerx Services and Persistent Systems hit their 52-week highs today.

Finance stocks will be in focus today after rating agency CRISIL said that non-banking financial companies (NBFCs) showed resilience in 2021 despite the coronavirus pandemic woes and are expected to witness continued momentum in growth this year.

According to senior Director and Deputy of CRISIL Krishnan Sitaraman, the baseline assumption is that the worst is behind NBFCs and things will start improving here on.

The asset under management (AUM) of shadow banking players is expected to grow at 6-8% in the current financial year and 8-10% in the next financial year, Sitaraman said.

The rupee is trading at 74.31 against the US$.

Gold prices are trading down by 0.1% at ₹48,058 per 10 grams.

Meanwhile, silver prices are trading down by 0.3% at ₹62,449 per kg.

Gold is steady today as higher US Treasury yields offset safe-haven buying sentiment due to an Omicron-driven surge in Covid-19 infections globally.

Crude oil prices rose as the market kicked off 2022 on a positive note, although concerns over demand waning due to rapidly spreading Covid-19 pandemic limited gains.

In news from the automobile sector, passenger vehicle (PV) sales fell for the fourth consecutive month despite strong demand in the local market in December, as the global shortage of semiconductors cramped production across automakers.

Even market leaders Maruti Suzuki and Hyundai Motor India were affected.

Industry estimates as many as 2,55,000 passenger vehicles were dispatched from factories last month, a decline of around 8% over 2,77,000 units sold in the year-ago period.

However, overall sales of passenger vehicles in the local market breached the 3 m-mark for the third time last calendar year, growing by about 27% to 3.08 m units. PV sales had previously crossed the 3-m mark in 2017 and 2018.

Automakers in India report wholesale dispatches made to dealers and not retail sales to customers.

The maker of Nexon SUV, Tata Motors has overtaken Hyundai Motor to become the second largest seller of PVs for the first time in close to a decade.

Tata Motors also earned the distinction of posting its highest ever monthly sales in December 2021, highest quarterly sales in October-December 2021 and highest annual sales since inception in 2021.

Meanwhile, Maruti Suzuki sold 123,016 units last month, a decline of 13% over 140,754 units sold in December 2020. The company’s senior executive director Shashank Srivastava said supply constraints of semiconductors have been progressively improving. Maruti achieved a little less than 90% of the planned production last month, up from 40% in September and 60% in October.

Srivastava added that while demand remains robust with booking inflow, enquiries growing over last year, there are some uncertainties. These uncertainties include inflation, high commodity prices, and the consequent price hikes which impact consumer sentiments.

Maruti Suzuki currently has pending orders of 230,000 units.

Moving on to news from the power sector, NTPC is among the top buzzing stocks today.

State-run NTPC is mulling acquiring 5% equity stake in Power Exchange of India (PXIL) that provides various electricity trading options.

The PXIL is India’s first institutionally promoted power exchange, which has been providing various electricity trading solutions and connecting buyers as well sellers since 2008.

According to reports, power giant NTPC is mulling this decision in view of the government’s intention to increase the share market to 25% of total electricity supply in India by 2023-24.

NTPC cannot buy more than 5% equity stake in the PXIL as it could also be a seller or buyer on the trading platform.

According to the data available on the Ministry of Corporate Affairs portal, the authorised share capital of the PXIL is ₹1.2 bn and paid-up capital is ₹584.7 m.

The government intends to expand the share of the spot power market in total electricity supply in the country to 25% by 2023-24. This is likely to be part of the draft National Electricity Policy (NEP).

How this pans out remains to be seen.

NTPC share price is currently trading up by 1.2%.

Speaking of the power sector, it’s interesting to note the power exchanged in India is about 4.5% of the overall power production, as can be seen in the chart below.

View Full Image

As per Tanushree Banerjee, Co-Head of Research at Equitymaster, India’s power sector is currently in transition. It’s driven by increasing reliance on short-term contracts and electricity spot markets.

This transition to the short-term market is happening due to quickly evolving industry dynamics.

Tanushree believes the Indian power sector will see a surge in spot power volumes due to certain factors. 

This article is syndicated from Equitymaster.com