Nifty50: 18,127 ▼ 71 (-0.3%)
Sensex: 60,826 ▼ 241 (-0.3%)
Every year, traders look forward to the “Santa Claus Rally”… when the stock market rallies during the last week of December and the first two days of January. Although it originated in the United States, it has not been uncommon in Indian markets for a decade now.
But here we are… One day to the Christmas weekend and the markets couldn’t get any gloomier. So much so that even some solid economic numbers from the world’s strongest economy failed to impress traders. Reason: COVID is back, new and more virulent, and this time it goes by the name BF.7 variant. Almost like a toxic lover, this sticky virus returns when we finally move on. What can we say but disguise yourself and stay safe.
- Nifty and Sensex fall after opening higher.
- 41 of the NIFTY50 stocks in the red.
- Indian indices were not impressed by the positive data on the US economy.
All sectoral indices closed in the red, with Realty (-1.4%) and PSU Bank (-1.2%) the top losers.
|Top earners||Today’s change|
|Sun Pharma||1015 ▲ 9.5 (+0.9%)|
|SBI Life||1,245 ▲ 10 (+0.8%)|
|UltraTech cement||7,000 ▲ 49 (+0.7%)|
|Top losers||Today’s change|
|UPL||728 ▼ 26 (-3.5%)|
|M&M||1234 ▼ 31 (-2.4%)|
|Bajaj Finserv||1547 ▼ 34 (-2.2%)|
⭐ Reliance adds METRO India to cart
TRUST (NSE): 2,577 ▼ 7.5 (-0.2%)
Reliance retail, a subsidiary of Reliance Industries, has announced the acquisition of 100% stake in METRO India. This will be through an all-cash deal worth ₹2,850 crore. METRO India is a division of German wholesaler Metro. It was the first company to introduce cash and carry business format in India. It currently operates 31 large stores in 21 cities. The company reported sales of ₹7,700 crore for the financial year ended September 2022. According to Reliance management, this acquisition is in line with its new retail business and will further strengthen its physical store footprint across India.
⭐ Aviation supplies fail to take off
INDIGO (NSE): 1,970 ▼ 45 (-2.2%)SPICEJET (NSE): 37.4 ▼ 1.5 (-3.9%)
Shares of Interglobe Aviation and SpiceJet were down 2.8 percent and 5.1 percent, respectively, during the day. This after the health ministry announced that India will start random Covid testing of 2% of international travelers arriving in India.. The decision comes after a spike in COVID cases in several countries, including China. Any travel restrictions could have an adverse impact on the aviation sector, which has yet to fully recover from the losses caused by the pandemic.
⭐ The new acquisition of Tata Communications
TATACOMM (NSE): 1.261 ▼ 9.5 (-0.7%)
Tata Communication has acquired 100% stake in US-based The Switch Enterprises, a provider of video production and live streaming services. The all-cash deal is valued at ₹486.3 crore. This deal will help Tata Communications expand its video connectivity business and build a presence in the media ecosystems of Europe and North America.
⭐ FPIs are targeting real estate stocks
Foreign portfolio investors (FPIs) have been busy year-end shopping in Indian equities and are moving into real estate. For the second consecutive month, FPIs turned net buyers as they piled in ₹ 9,017 crore in Indian markets. Nearly half – about ₹4,421 crore – of the inflows in the first half of December went to the real estate and construction segment. According to market experts, FPI’s interest in real estate may be due to the fact that it is more connected to the local economy, which remains resilient despite global challenges.
Investor protection play
The Indian stock market was quite volatile in December, with the benchmark Nifty50 index falling 3.3% this month alone. However, some defensive stocks from the Pharma and FMCG sectors enjoy strong appeal among investors. Why is this happening? Let’s explore.
What are defensive stocks?
Defensive stocks include stocks of companies that tend to be stable regardless of market or economic conditions. These include sectors such as pharmaceuticals and consumer goods such as FMCG and utilities.
In an economic slowdown, people tend to cut back on discretionary spending such as cars, leisure travel, etc. However, spending on staples such as soaps, toothpaste and healthcare facilities remained stable. To take advantage of this robust demand, investors are moving their “smart money” into defensive stocks in a recession.
What’s the trigger now?
Successive interest rate hikes in major economies to combat inflation are likely to weigh on economic growth. As the fear of recession (in economies like the US) grows, investors prefer defensive stocks.
Not only local traders but even Foreign Portfolio Investors (FPIs) are treading cautiously in this economic climate. In the first half of December, FPIs have channeled nearly ₹3,932 crore or 43% of their total investments into the FMCG and healthcare segment.
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