Gap up opening seen; but FPIs hold the key

KS Badri Narayanan Chennai | Updated on March 01, 2021

Investors would closely track bond yields, geopolitical tensions and inflation data for further market direction

Global and Asia-Pacific markets point to a strong opening for Indian markets. SGX Nifty, which is ruling at 14,751, points to at least a 200-point gap-up opening for Nifty. The Nifty March futures on Friday crashed almost 4 per cent to close at 14,578.

Asia Pacific markets too opened with sharp gains. Key markets such as Japan, China, Australia and Hong Kong are up between 1 and 2 per cent.

Foreign fund flows will continue to dictate the market direction, said market experts. In one of the biggest pull-outs in recent times, FPIs on Friday (net) sold shares worth ₹8,295 crore. The market crashed almost 4 per cent.

The market may continue with its consolidation given weak global cues. Investors would closely track bond yields, geopolitical tensions and inflation data for further market direction and would monitor developments around new US stimulus announcement.

According to analysts, the GDP data has come as a big relief, as it shows the economy is beginning to turn around. India has officially exited the technical recession phase, as official data on Friday showed that the country's Q3FY21 GDP grew by 0.4 per cent. However, they had expected a much better number and await further pick-up in the coming months before celebrating.

“The Q3 GDP number indicates growth at 0.40 per cent, reflecting the recovery in growth across a spectrum of sectors. Finally, economic growth is in the positive territory. But the trajectory of growth would depend to a significant extent on the efficacy with which the second wave of the pandemic is contained, if it happens, as appropriate growth supporting fiscal and monetary policies are already in place," said Joseph Thomas, Head of Research - Emkay Wealth Management.

According to Rusmik Oza, Executive Vice President, Head of Fundamental Research at Kotak Securities: “We are not extremely bearish on the market as the massive stimulus which is likely to continue in this calendar year and economic recovery put together should provide support to market at lower levels. For India, most of the factors driving markets are in place except for valuations. As time goes by, India’s valuations will moderate making it a good ‘buy on dips’ market, going forward."

Even high valuations do not provide much comfort and thus, correction was long overdue, said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd. Investors should take this opportunity to buy on dips while traders should trade cautiously with stock-specific action and book profits at regular intervals, he further said.

Stocks to watch

Auto stocks: Autmobile companies will start disclosing their sales figures for February. The Street expectation is that two-wheelers may report weak sales figures due to lack of demand. On the other hand, tractor will continue to show robust numbers on the back of good rabi sowing season, experts said. Others such as LCV, SUV and MUVs are likely to show flat growth.

Reliance Industries: Reliance Strategic Business Ventures Limited, a wholly-owned subsidiary of Reliance Industries, has acquired additional equity stake in its investee company skyTran Inc. for $26.76 million, increasing its shareholding to 54.46 per cent on a fully diluted basis. skyTran is a technology company incorporated under the laws of Delaware, US, in 2011. skyTran has developed breakthrough passive magnetic levitation & propulsion technology for implementing personal transportation systems aimed at solving the problem of traffic congestion globally.

Indian Oil Corporation has said that it will invest ₹32,946 crore to expand the Panipat refinery capacity to 25 million tonnes per year from 15 mtpa.

KEC International Ltd has secured new orders worth ₹1,140 crore across its various businesses. According to a disclosure to the exchanges, the RPG group company has said transmission & distribution business has secured orders for ₹963 crore in the Middle East and Africa, railways business won an order of ₹113 crore for 2 x 25 kV Overhead Electrification (OHE) and associated works for speed upgradation in India and civil business bagged ₹64 crore worth infra works in the hydrocarbon segment in India.

The Board of Directors of APL Apollo Tubes has considered and approved a draft scheme of amalgamation of Shri Lakshmi Metal Udyog Limited and Apollo Tricoat Tubes Limited with the itself. Upon coming into effect of the scheme and in consideration of the amalgamation of Apollo Tricoat, APL Apollo will allot one share of APL Apollo for every share held in Apollo Tricoat. As the entire, issued, subscribed and paid-up share capital of Shri Lakshmi is held by APL Apollo and its nominees, the share capital of Shri Lakshmi stands automatically cancelled and there will be no issue and allotment of shares to APL Apollo or the nominees as APL Apollo and its nominees, it further said.

HKG: Board of HKG Ltd as approved fund raising of ₹45 crore through rights issue to eligible shareholders. For the purpose of giving effect to the rights issue, the detailed terms in relation to the rights issue, including but not limiting to the issue price, rights entitlement ratio, record date, timing and terms of payment will be determined in due course, it said.

Rajapalayam Mills: The rights issue committee of the company has approved the issue of 12,29,360 shares of face value ₹10 each at an issue price of ₹569 a share for an amount aggregating to ₹6,9.95 crore. The board has fixed March 5 as the record date for the rights issue.

Acrysil Ltd has announced that the capacity expansion of one lakh units at its Bhavnagar plant in Gujarat has been completed. The commercial production of an additional one lakh units has commenced from February 25, 2021. The manufacturing capacity of quartz kitchen sinks has increased from five lakh units to six lakh units per annum.

Published on March 01, 2021

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