Market Recap for November 20, 2020





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The markets showed signs of weakness in the first half of the day and it seemed as if yesterday’s fall would continue. However, they staged a recovery in the second half and closed in the green, supported by a rise in financial, FMCG and IT stocks. Bajaj Finserv (+9.2%), Titan (+5.2%) and GAIL (+4.2%) were among the top Nifty gainers. The index could have got more wings if it weren’t for the 3.6% fall in the heavyweight Reliance Industries.

Here are the top stories of the day...

Nestle India rises to 4-month high on strong rural demand

Nestle India rose 2.7% today to 17,400 and was one of the top contributors to the Nifty FMCG index (+1.1%). A rise in in-home consumption has led to double-digit growth in its key products (such as noodles, sauces and coffee) during the September quarter. As per the management, Tier 2, 3 and 4 towns and rural markets are doing extremely well, while operational issues continue in the urban markets. However, the company is seeing increased traction in online sales, which have nearly doubled over the last one year and now contribute 4% of sales. The company plans to invest 2,600 crore over next 3-4 years to increase its manufacturing capacity.  

BEL surges on robust order book and future outlook

State-run defence company Bharat Electronics (BEL) expects 10-15% sales growth over the medium term versus a modest 6.6% growth in FY20. A strong order book of 52,700 crore (which is over 4 times its FY20 sales) and expectations of future order inflow are supportive to the sales momentum. The company also expects to maintain EBITDA margin in the range of 20-21% during this period. BEL’s debt free status is also comforting to an investor. The stock rose 5% today and has gained nearly 25% this month.

Graphite electrode makers soar as demand improves

Graphite India and HEG are among India’s largest makers of graphite electrodes, which are used in electric-arc furnaces in making steel. Both these companies suffered losses in Q2 on account of lower volumes and sales realisation per unit. However, improving economic activity and easing lockdown curbs are expected to help improve the demand for graphite electrodes. The improvement in demand is already visible as sales have grown for Graphite India (19%) and HEG (38%) on a quarter-on-quarter basis. As per reports, graphite electrode prices in China have risen nearly over 20% in the last two months and are at year-high levels. The Graphite India management recently commented that the downcycle of the electrode industry is bottoming out. The uptick in the steel sector supported by a revival in the infrastructure development and auto industry augurs well for graphite electrode makers. Investor interest in these stocks is evident as shares of Graphite India (+34%) and HEG (+21%) have gained sharply this month, backed by strong volumes.

Closing bell

Global cues are positive as most Asian and European indices traded in the green today. The recovery in the prices of key commodities such as crude oil (+19%) and copper (+6%), this month also indicates general optimism toward demand. While the Covid cases continue to rise in most parts of the world, the hopes of the vaccine becoming available (sooner or later) are helping to keep investor concerns at bay.

That's all for today. 
We'll be back on Monday!
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Disclosures and Disclaimer 

Investment in securities markets are subject to market risks; please read all the related documents carefully before investing. The securities quoted are exemplary and are not recommendatory. Past performance is not indicative of future results. Details provided in the above newsletter are for educational purposes and should not be construed as investment advice by Commerce Insiders group. Investors should consult their investment advisor before making any investment decision.

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