MARKET RECAP 11/12/2020

 

Nifty50 13,513 ▲ 35 (+0.2%) 

Sensex 46,099 ▲ 139 (+0.3%) 

 

Today, the markets opened and closed nearly at the same point, indicating indecision. A similar pattern was seen on Tuesday as well. However, on a weekly basis the markets were comfortably bullish with a rise of 2.2%. 
Meanwhile, among the Nifty sectoral indices, Metal (+1%) and PSU Bank (+1%) were top gainers and Pharma (-0.6%) and IT (-0.4%) were top losers. 

Top gainers (Nifty50)

ONGC	▲ 5.4%
NTPC	▲ 5.1%
GAIL	▲ 5.0%

 

Top losers (Nifty50)

Axis Bank	▼ 2.3%
Divis Labs	▼ 2.2%
Adani Ports	▼ 1.2%

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Here are the top stories for the day.

Oil companies ride on a crude surge

       Crude oil is on the boil and has risen nearly 26% in November. Oil explorers such as ONGC (+5.4%) and OIL India (+4.7%) are riding this wave, and have seen share prices spike. 

         Crude oil prices are rising on the expectation that demand for oil will rise even in the next year as vaccines roll out across the globe.

NMDC pumping iron

 

         Iron ore prices have risen 70% this year due to a surge in demand from China. Prices are at ~$157/tonne, the highest since 2013. The momentum expected to continue even in 2021, given the strong demand and restrained supply. 

        Margins of commodity players spike during such price surges because the costs don’t rise proportionately. The price rise augurs well for NMDC, India’s largest producer of iron ore. Its share rose 2.9% today and have gained 35% this quarter.

Spicejet gets a booster shot

 

       Shares of Spicejet (+5.5%) have been on a roll after the airline signed an MOU with Snowman Logistics (+5.8%) to distribute vaccines across India and overseas. Snowman will handle ground logistics while SpiceJet will provide air connectivity for the temperature-controlled distribution of vaccines. 

        As per reports, Spicejet has also tied-up with Om Logistics for a similar arrangement. Shares of Spicejet have nearly doubled over the last two months thanks to the revival in the travel industry.

Indian Hume Pipe bags large order

        Indian Hume Pipes has received a letter of acceptance from the UP government for water supply schemes—a project worth ₹550 crore. While the exact contract value is yet to be finalised, orders worth ₹400 crore are guaranteed as per the agreement.  

        For FY20, the company’s revenues stood at ₹1,623 crore and profits came to ₹73 crore. The company’s shares rose 4% after the news. Meanwhile, Gayatri Projects rose 5% and was locked in its upper circuit after receiving orders worth ₹1,332 crore from the UP government for piped drinking water schemes.

 

Closing bell

The sustained price-rise in various commodities, such as crude oil, iron ore, and steel, generally indicates that the demand is in recovery mode. However, it also means that companies that use these commodities as raw materials (say automobiles and infrastructure) would see a jump in input costs. 

If these companies are not able to fully pass on the increase in costs to customers, their margins could come under pressure. On the other hand, higher product prices could spike consumer inflation. Are we entering an inflationary spiral? 

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Good to know

What is a market order?

A market order is a buy or sell order to be executed immediately at the current market prices. As long as there are enough sellers and buyers, market orders are filled.

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