Teji Mandi: Three things investors should know on January 21, 2021

Sensex at 50,000 :

The bull run continues as the market has resumed its journey upwards after a mild correction. Indian bourses have scaled up the new heights today as Sensex touched the level of 50,000.

The rally is majorly supported by the flow of global liquidity. The FIIs have been net buyers during the major part of last year. Positive sentiments have continued in the first month of 2021 as well. The FIIs have poured in ~Rs 20,000 crore in the Indian equity market in January so far.

We believe 50,000 is just a landmark and not the final destination. The Indian economy has a long way to go. And, as it continues to grow, the market will keep scaling new highs.

India is currently the fifth-largest economy in the world. It is tipped to be the third-largest economy by 2030. This talks about the potential that the Indian market has. However, in the short run, valuations seem to be stretched. And, any disruption in global liquidity could lead to a correction.

CV demand far off from previous highs :

Satyakam Arya, MD & CEO of Daimler India Commercial Vehicles (DICV) sees a strong pick up in demand for trucks in 2021.

In a recent interview, he stated that 2021 will be much stronger compared to the Covid-19 dominated year. Yet, it could take 2-3 years before the industry manages to reach the pre-Covid levels.

Currently, within the commercial vehicle space, light commercial vehicles are seen as the favorites of the market while the demand for heavy commercial vehicles and buses continues to remain muted.

We believe the CV cycle has bottomed out but demand is still far away from its peak. The market is currently witnessing demand picking up in LCV and tipper segments. The market has re-rated the CV players like Ashok Leyland and Tata Motors accordingly.

We anticipate that the CV makers have a further re-rating potential once the HCV and bus divisions also start getting traction in the market.

SEBI approves Future-RIL deal:

The Securities and Exchange Board of India (SEBI) has given a nod to the highly anticipated deal between the Future Group and Reliance Retail.

Both parties had entered into a deal worth Rs 24,713 crore in August 2020. However, E-com giant Amazon had raised objections over the deal. It had raised the doubts over the viability of the deal. Amazon had accused Future Group of violating a pact signed between them.

Over the past few months, Amazon had written several letters to the regulatory body, asking it to stall the Future-Reliance deal. It has also filed a plea in Delhi high court, seeking a stay. Taking the high court's order into consideration, SEBI has asked both- the Future group and Reliance Retail- to keep their shareholders informed about the legal dispute.

SEBI's approval is a major relief for Future group and its employees due to its weak financial conditions. It will also reassure RIL and its investors about the prospects of the deal.

However, we would say it is just the first hurdle that has been conquered here. The second chapter of this battle is likely to open in the courtroom soon. In this light, it is too early to make any conclusions about the future viability of the deal.

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