Sensex gains 350 points, Nifty above 15,850; realty, automobile stocks surge

The Hang Seng was up 1.1% while the Shanghai Composite rose 1.5%. The Nikkei climbed 1.9%.

In the US stock markets, Wall Street indices closed lower on Friday, posting a weekly loss to close out the month, with renewed concerns about a rise in cases of the Delta variant SARS-CoV2 and disappointing results from Amazon partly blamed for the slump.

The Dow Jones Industrial Average slipped 149 points, or 0.4% and posted a 1.3% gain for the month. The Nasdaq Composite lost 106 points, or 0.7% on Friday and added 1.2% for the month of July.

Back home, Indian share markets opened on a positive note today, following the trend on SGX Nifty.

HDFC, PNB, and Varun Beverages are among the 49 companies slated to report their June quarter results today. 

The BSE Sensex is trading up by 346 points. Meanwhile, the NSE Nifty is trading higher by 101 points.

Titan is among the top gainers today. Tech Mahindra, on the other hand, is among the top losers today.

The BSE Mid Cap index and the BSE Small Cap index have opened higher by 0.7% and 0.8%, respectively.

All sectoral indices traded higher, with stocks in the automobile sector and realty sector witnessing most of the buying interest.

Shares of L&T Infotech and SRF hit their 52-week highs today.

The rupee was at 74.37 against the US dollar.

Gold prices fell 0.8% at ₹47,875 per 10 grams, while silver prices were down 0.5% at ₹67,886 per kg.

Gold edged lower as the dollar held steady, with traders eyeing monthly US jobs data to gauge the health of the labour market.

Speaking of the current stock market scenario, note that the BSE smallcap index has surged 188% since the crash in March 2020.

Despite the index being up more than 1.8 times, Richa Agarwal, lead Smallcap Analyst at Equitymaster, believes smallcap stocks are set for a massive up move in 2021 and beyond.

Here’s why.

The Smallcap to Sensex ratio, a metric referred to get a sense of relative valuations, currently stands at 0.48 times. To be sure, this is higher than a median of 0.43 times.

And yet, it’s the lowest of all the peaks in the smallcaps so far. In the last cycle which peaked in January 2018, when the ratio touched 0.49, the peak was still 9 months away.

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Here’s what Richa wrote in a recent edition of Profit Hunter:

When it comes to buying smallcap stocks, especially at this point in the rebound rally, you will need a bottom up approach, and a long term horizon.

In fact, if you don’t have the stomach to withstand a 20%-30% kind of corrections and volatility, this space may not be for you at all. And you should stop reading right here.

As per Richa, smallcaps are a great opportunity to make some big returns. But you need to stay disciplined when it comes to allocating money. And you need to be sharp when picking the right stocks.

In news from the automobile sector, passenger vehicle (PV) sales soared 47% year on year (YoY) in July, driven by pent-up demand as state governments eased Covid-induced restrictions as well as low base a year ago.

Industry estimates that carmakers dispatched around 290,000 passenger vehicles last month, up from 197,791 units in July 2020.

Automakers in India report wholesale dispatches from factories and not retail sales made by dealers.

Market leader Maruti Suzuki sold 133,732 units last month, up 37% compared to July 2020.

However, the company said the YoY comparison is not meaningful because July 2020 had a much lower base due to pandemic-related disruptions.

Hyundai Motor India, the country’s second-largest carmaker, reported a 26% YoY increase in volumes in July at 48,042 units.

Tata Motors doubled its PV sales last month at 30,185 units.

In the commercial vehicle segment, Tata Motors registered 81% increase in volumes at 21,796 units, albeit on a low base.

VECV more than doubled its sales year on year in July at 3,631 units.

Meanwhile, its Japanese rival Toyota dispatched 13,105 passenger vehicles, more than double of 5,386 units it sold in July 2020.

Honda sold 6,055 cars last month against 5,383 units a year earlier.

It can be seen that the overall market condition has improved, with Covid-19 infections staying low.

We will keep you updated on the latest developments from this space. Stay tuned.

Moving on to news from the realty sector, DLF is among the top buzzing stocks today.

DLF is planning to develop 27 m sq ft of residential space in the medium term with a revenue potential of ₹300 bn, on the back of higher demand for houses from corporate executives amid the shift to work from home.

The company sold apartments worth ₹30.8 bn in 2020-21. These included ₹10.1 bn from the sale of 36 units at its super luxury ‘The Camellias’ project, where demand was strong despite the lockdown.

A company official said that DLF is looking to generate sales of ₹40 bn in fiscal 2022 with ₹10 bn every quarter.

The company will develop 7 m sq ft of residential space in 2021-22, one of the highest in recent times, and then up to 6 m sq ft every year.

DLF’s net sales bookings totalled ₹10.1 bn, a more than six-and-a-half times increase from a year earlier, while sales from new launches were ₹5.4 bn.

DLF share price has opened the day up by 0.8%.

(This article is syndicated from Equitymaster.com)