Sensex Zooms 443 Points, Nifty Ends Above 15,550; Auto & IT Stocks Rally

It was a volatile day for Indian share markets as benchmark indices swung between gains and losses.

Benchmark indices ended on a firm note as a fall in crude oil prices boosted domestic sentiment.

At the closing bell, the BSE Sensex climbed 443 points (up 0.9%).

Meanwhile, the NSE Nifty ended higher by 143 points (up 0.9%).

Maruti Suzuki, M&M, and Asian Paints were among the top gainers today.

Reliance Industries, Power Grid, and NTPC, on the other hand, were among the top losers today.

The SGX Nifty was trading at 15,567, up by 163 points, at the time of writing.

The broader markets also ended on a firm note. The BSE MidCap index and the BSE SmallCap index ended higher by 1.4% and 1.2% respectively.

Barring the energy sector, all sectoral indices ended in green with stocks in the auto sector, IT sector, and realty sector witnessing most of the selling.

As Indian share markets seem to be recovering, you must be wondering when will the markets fully recover.

Asian stock markets ended in the green after a volatile trading session as investors assessed the monetary policy outlook past Powell's acknowledgment of risks of a global recession, while commodity prices slipped too.

The Nikkei ended higher by 0.1% while the Shanghai Composite advanced by 1.6%. Meanwhile, the Hang Seng jumped 1.3%.

European shares fell in early trade, dragged down by energy and mining stocks due to sliding commodity prices on worries about slowing economic growth.

US stock futures are trading on a positive note with the Dow Futures trading up by 59 points.

The rupee is trading at 78.29 against the US$.

Gold prices for the latest contract on MCX are trading down by 0.3% at Rs 50,733 per 10 grams.

In news from the smallcap space, Acrysil has announced that it is doubling its supply of quartz kitchen sinks to IKEA supply AG.

IKEA supply AG is a part of the international IKEA Group Sweden catering to their global requirement.

The production of kitchen sinks for IKEA will start at the end of July and the supply will begin in August.

Chirag Parekh, Chairman & Managing Director of Acrysil, said:

We value our strong business relationship with IKEA which will help to accelerate the growth of our Company by leveraging our strong product offerings to a wider geography.

We believe that we are well-positioned to explore bigger and better opportunities to increase our global footprint.

Acrysil operates in the building materials sector and has a market cap of Rs 14.5 bn.

Following the announcement, Acrysil's share price ended 7.8% higher on the BSE.

The chart above is the Smallcap to Sensex ratio. Despite the sharp rally in small caps, the ratio is 0.47 now.

At this level, it's closer to the long-term median of 0.43 to 0.44, than to the previous peak of 0.58 in January 2018, or the higher peaks earlier.

At the median, this would imply 43,000 for smallcap index, versus 26,384 now. The individual small caps could fetch gains much higher than the index.

But you need to select the best smallcap stocks if you want to ride the rally.

Moving on to news from the steel sector, Tata Steel is working on a plan for transition to low carbon technologies for making steel in the UK and the Netherlands in line with the company's goal to produce CO2-neutral steel by 2050 in Europe.

In October 2021, Tata Steel completed the process of separating Tata Steel UK and Tata Steel Netherlands as two independent companies from Tata Steel Europe.

Speaking on the domestic operations, the company said:

Based on our assessment of the opportunities in the Indian market, we will calibrate our growth plans and timing for implementation.

We are currently focused on completing our expansion project in Kalinganagar to create a state-of-the-art 8 MTPA site.

In the current financial year, Tata Steel will be commissioning a pellet plant, which is 70% complete.

The phase-wise commissioning of the cold rolling mill complex, starting with the pickling line and the cold rolling mill is also planned for the current fiscal.

Both are margin expansionary projects as part of the overall expansion project in Kalinganagar.

Note that metal stocks have fallen over 50% from their peaks this year. Tata Steel is no exception.

Tata Steel is down close to 60% after having a record run last year. The company has announced a stock split and a high dividend this year.

To know more about the company, check out Tata Steel's financial factsheet and its latest quarterly results.

Tata Steel's share price ended 0.4% higher on the BSE today.

Disclosure: Equitymaster Agora Research Private Limited (Research Analyst) bearing Registration No. INH000000537 (hereinafter referred as 'Equitymaster') is an independent equity research ...

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