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Asian share markets are trading lower today as the spread of the Omicron variant in developed nations threatened to derail economic recoveries and the tightening plans of some central banks.

The Hang Seng and the Shanghai Composite are trading down by 0.6% and 0.1%, respectively. The Nikkei is down 0.5%.

In US stock markets, Wall Street indices fell aggressively on Black Friday as a new Covid variant found in South Africa triggered a global shift away from risk assets.

The downward moves came after World Health Organization (WHO) officials on Thursday warned of a new Covid-19 variant that's been detected in South Africa.

The Dow Jones Industrial Average fell more than 1,000 points at its session low and ended the day down 905 points or 2.5%, for its biggest one-day percentage price and percentage drop of 2021. The Nasdaq Composite fell 2.2%.

Back home, Indian share markets opened deep in the red. However, benchmark indices recouped early losses and are presently trading marginally higher.

The BSE Sensex is trading up by 203 points. Meanwhile, the NSE Nifty is trading up by 47 points.

At open, the Sensex fell as much as 600 points while the Nifty fell below 16,800-mark.

Reliance Industries is among the top gainers today. Nestle and HDFC, on the other hand, are among the top losers today.

The BSE Mid Cap index is trading down by 0.9%. The BSE Small Cap index is trading lower by 1.8%.

Sectoral indices are trading on a mixed note with stocks in the power sector and realty sector witnessing most of the selling pressure.

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

Shares of Rajesh Exports and Deep Polymers hit their 52-week high today.

The rupee is trading at 74.86 against the US$.

Gold prices are trading up by 0.4% at 47,753 per 10 grams.

Gold edged higher today as concerns over the impact of the possibly vaccine-resistant Omicron coronavirus variant supported the precious metal's safe-haven appeal.

Crude oil prices rose, recouping some losses after Friday's plunge of about US$10 a barrel.

In news from the consumer durables sector, Voltas is planning to set up a compressor manufacturing unit in partnership with an international partner and will invest around 5 bn.

The leading domestic air-conditioner maker said it is planning to invest in a joint venture company, with an international partner, which requires PN3 (Press Note 3) approval.

The Tata group company’s MD and CEO Pradeep Bakshi did not share any details of its international partner, but said it is one of the largest compressor manufacturers globally.

Here’s what he told at an investors roundtable of PLI schemes on white goods.

For that, we have already filed for PN3 approval and we are waiting for it. Once it is done, we will be setting up the plant.

We plan to invest a minimum of 3.5 bn on compressor manufacturing and another 1.5-2 bn for air-conditioning.

The company is yet to decide on a place for its compressor manufacturing plant as it is still waiting for the finalisation of the PN3 application.

Note that the government has already approved the proposals of Voltas for manufacturing of Cross Flow Fan (CFF), Heat Exchangers and Plastic Moulding components under the PLI scheme.

Earlier this month, the government had announced the selection of 26 proposals with a committed investment of 39 bn for the air conditioner sector.

Under the PLI, the government has approved the 5.4 bn proposal from Daikin Industries, the world's leading air-conditioning company to manufacture compressors, heat exchangers, sheet metal components and plastic moulding components.

Shares of Voltas are presently trading up by 0.6%.

Speaking of the current stock market scenario, despite the BSE Small cap index surging over 1.8 times, Richa Agarwal, lead Smallcap Analyst at Equitymaster, believes small cap stocks are set for a massive up move in 2021 and beyond.

Here's why...

The Smallcap to Sensex ratio has risen from 0.32 times to 0.48 times. This compares to long term median of 0.43 times. It has moderated from 0.51 in August 2021 post the recent rise in Sensex.

More importantly, it is way lower than the previous peak ratios: 0.76 in September 2005, 0.68 in January 2008, 0.55 in September 2010, and 0.58 in January 2018.

SmallCap to Sensex ratio
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SmallCap to Sensex ratio

This relative valuation indicator suggests there is still a lot of juice in the rally.

Moving on to news from the fintech space, Paytm shares will be in focus today.

After a turbulent debut, Paytm’s top executives spent 90 minutes on a call with investors and analysts on Saturday as they dissected its business model and raised questions on monetization.

One 97 Communications, the parent of Paytm, ended last week 17% below its offer price of 2,150, after falling to as low as 1,271 at one point.

One 97 Communications’ losses widened to 4.74 bn in the July-to-September quarter from a year ago amid rising expenses. Revenue rose more than 60% in the same period, boosted by growth in financial, commerce and cloud services.

Chief Executive Officer Vijay Shekhar Sharma highlighted the company’s ramp-up in the key segment of lending an important and fast-growing market in credit-starved India, where digital fintechs such as Paytm are serving millions of consumers and merchants.

Paytm said its financial services segment saw higher revenues and profitability after volume growth, its commerce business which includes stock trading, airline and movie ticketing have bounced back, and increased uptake of cloud services has boosted advertising revenue.

The fintech company, which is heavily focussing on the financial services segment, also said it disbursed 2.8 m loans in the quarter under review, double as compared to the previous quarter.

Paytm also said that it has transferred its online Payment Aggregator business to Paytm Payments Services in a bid to comply with RBI's new guidelines for Payment Aggregators and Payment Gateways which will come into effect on 1 January 2022.

On the IPO proceeds, the company which recently launched India’s biggest IPO worth 183 bn said it will provide an update on utilisation effective next reporting period following the actual utilisation of the funds.

Paytm share price opened the day down by 4% and is currently trading marginally lower.

(This article is syndicated from Equitymaster.com)

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