Sensex flat tracking weak global cues; Tata Steel, Hindalco top gainers

Asian stock markets are trading on a mixed note today as investors digested sharp selloffs on Wall Street.

The Nikkei fell 0.3% before recovering while the Hang Seng rallied 2.6%.

In US stock markets, Wall Street indices snapped a four-session winning streak on Thursday, with all three benchmarks ending lower after Facebook-owner Meta Platforms' dour forecast sent its stock plummeting and halted a nascent recovery built on upbeat earnings from other big tech.

Meta shares sank 26.4%, wiping around more than US$200 bn off its market value, according to Reuters calculations, as it blamed Apple's privacy changes and increased competition from rivals such as TikTok for its disappointing outlook.

The decline in marketcap was the largest ever recorded by a US company in a single session, eclipsing when Apple Inc shed US$180 bn on 3 September 2020.

The Dow Jones Industrial Average fell 518 points, or 1.5%, while the S&P 500 lost 112 points, or 2.4%. The Nasdaq Composite dropped 539 points, or 3.7%.

Back home, Indian share markets are trading on a flat note. Benchmark indices started on a muted note in line with weak global cues.

Market participants are tracking shares of Tata Steel, Shree Cements, Siemens, Paytm, and Devyani International as these companies will announce their December quarter results today.

The BSE Sensex is trading down by 129 points. Meanwhile, the NSE Nifty is trading lower by 21 points.

Tata Steel and UltraTech Cement are among the top gainers today. ITC, on the other hand, is among the top losers today.

The BSE Mid Cap index is up 0.2% while the BSE Small Cap index is trading higher by 0.5%.

Sectoral indices are trading mixed with stocks in the realty sector and FMCG sector witnessing selling pressure.

Metal stocks and banking stocks, on the other hand, are trading in green.

Shares of Deepak Fertilizers and TV18 Broadcast hit their 52-week highs today.

The rupee is trading at 74.70 against the US$.

Gold prices are trading up by 0.1% at ₹47,937 per 10 grams.

Meanwhile, silver prices are trading up by 0.4% at ₹60,984 per kg.

Gold is steady today and set for a weekly gain as a weaker dollar, concerns over stubborn inflation and tensions surrounding Ukraine lifted demand for the safe-haven bullion.

Crude oil prices climbed, extending sharp gains in the previous session as frigid weather swept across large swathes of the US, threatening to further disrupt oil supplies.

In news from the FMCG sector, ITC is among the top buzzing stocks today.

FMCG major ITC on Thursday reported a standalone net profit of ₹41.6 bn for the December 2021 quarter, up 12.7% against a profit of ₹36.9 bn in the same quarter last year.

The profit figures came above estimates.

Revenue from sale of products came in at ₹166.3 bn, up 31.3% as against ₹126.7 bn in the corresponding quarter last year.

ITC saw a strong demand in cigarette business, the volumes for which reached pre-Covid levels. It also saw robust FMCG sales and growth in hotels business as the mobility and occupancy increased.

The company’s cigarette revenue came in at ₹62.4 bn for the quarter, growing 13.6% compared to the year-ago period.

Meanwhile, revenue from other FMCG businesses came in at ₹40.9 bn, up 9.3%. Its hotel business also showed significant growth.

ITC said it is spending a considerably large amount on brand building for the non-cigarette FMCG vertical. For the quarter, it spent ₹22.7 bn towards this expense, up 26.4% from the same quarter last year.

The impact of higher raw material inflation was partially negated by implementing strategic cost efficiency initiatives, calibrated price increase, favorable business mix and by giving fiscal incentives to the staff.

The company also announced an interim dividend of ₹5.25 per share. The company has fixed 15 February as the record date and the dividend will be credited by 4 March.

ITC share price is currently trading down by 0.8%. It opened the day 2% higher.

Note that shares of ITC seem to have woken up from underperformance and have gained around 7% since the announcement of the budget on the back of no change in the tax burden on cigarettes.

Have a look at the chart below which shows the company’s performance for the past one year.

Moving on to news from the insurance sector, ahead of its much-awaited initial public offering (IPO), state-owned insurance behemoth Life Insurance Corporation (LIC), has tied up with insurance aggregator Policybazaar.com for distribution of its products.

This is LIC’s first association with an insurance aggregator, and otherwise relies heavily on its large agency force of 1.33 m agents for distributing its products.

In a statement, Policybazaar said they have joined hands with LIC to offer a wide range of term and investment products to consumers.

Policybazaar, the flagship platform of PB Fintech, is the largest online insurance marketplace in the country which distributes products of 51 insurance companies, which include life, general, and standalone health insurance companies.

LIC’s individual agents sourced almost 97% of its new business premium (NBP) in the first six months of fiscal 2022 from its products on a standalone basis.

Further, in fiscal 2021, these individual agents of LIC had sourced 94% of its NBP from individual products. In fiscal 2020, this number stood at 95%.

In other news, LIC’s embedded value has been finalised at more than ₹5 tn according to sources.

Reports also state that LIC is likely to sell its entire stake to IDBI Bank in 2022-23.

Note that market participants are eagerly waiting for the government to indicate LIC's embedded value - a measure of future cash flows in life insurance companies and the key financial gauge for insurers - when it releases the IPO draft prospectus next week.

While there has been speculation about the number - from as low as $53 bn to as high as $150 bn, this is the first time the government, which owns 100% of LIC, is commenting on it.

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

(This article is syndicated from Equitymaster.com)