On 21 January, the Sensex scaled above 50,000 for the first time ever and even crossed 50,100 briefly. However, the pressure of traders was very high at these elevated levels and eventually the markets closed over 300 points short of the mark. Finally, the Sensex may have closed 167 points lower but the volatility was very high.

Quarterly season was mixed as far as Thursday was concerned. In terms of quarterly results, Bajaj Auto flattered the street with some excellent export numbers and record sales revenues. Similarly, Asian Paints showed solid growth. Certain companies like Bandhan Bank showed asset stress while Biocon profits weakened on sharply higher costs.

It must be said that foreign investors have kept their faith in the Indian markets despite the volatility. FPIs were net buyers of Rs.1615 crore while DFIs sold Rs.1039 crore on Thursday. On the first day itself, Biden left a mark and promised to ease world tensions substantially. The next few days would be important for the risk-on flows into EMs.

Global markets were relatively more tepid on Thursday. While the NASDAQ continued to be buoyant, most of the other European markets were under pressure as was the Dow Jones index. The SGX Nifty is also trading flat to negative in early trades and it could face the typical Friday blues when traders try to lighten positions ahead of a weekend.

To sum it up, the Sensex and Nifty are poised at crucial levels. Actually, the important level for the Sensex is 51,000, which roughly corresponds with 15,000 on the Nifty. The markets will have to take out both these levels with volumes. For that to happen big results like RIL, ICICI Bank and SBI must give positive signals and the VIX must come down below 20.

I am not suggesting any changes to the existing ideas. Here is a quick rundown on where the various stock ideas stand and what to do.

· Shilpa Medicare given at 460 (CMP- 436) – Hold at Averaged Price

· Manappuram Finance at Rs.173 (CMP-165) – Suggest to hold

· Bectors Foods at Rs.549 (CMP-410) – Hold at averaged price

· Burger King at Rs.171 (CMP-142) – Suggest to hold

· LIC Housing at Rs.433 (CMP-424) – Suggest to hold

· RVNL at Rs.34 (CMP-30) – Suggest to hold

· Trident at Rs.14.50 (CMP-14.55) – Suggest to hold

· GAIL at Rs.141 (CMP-135) – Suggest to hold

· Coal India at Rs.145 (CMP-148) – Suggest to hold

· Piramal Enterprises at Rs.1625 (CMP-1572) – Suggest to hold

· HCL Tech at Rs.985 (CMP-992) – Suggest to hold

· Indiabulls Real Estate at Rs.87 (CMP-82) – Suggest to hold

· ICICI Bank at Rs.547 (CMP-554) – Suggest to hold

I am not giving any fresh ideas on Friday being the weekend and with enough positions open. However, I will suggest five stocks with conviction in the above list that you can still pick up at current levels. This is only if you have not picked up these stocks still. The stocks to pick are: ICICI Bank, HCL Tech, GAIL, LIC Housing and Burger King.

There was a sense of nostalgia when the Sensex broke new highs on 21 Jan 2021. That is because it happened exactly 13 years after that fateful day when the sub-prime implosion in India started with a lower circuit on 21 Jan 2008. Back in 2008, this particular day had triggered a sharp 52% fall in the market wiping out the bull market completely.

Things were quite different in 2021 although the indices did correct from those crucial levels. Most traders rushed to book profits which is natural when a major such psychological level is breached. As a result of this rush to book profits, from the peak the Sensex tumbled 785 points and finally closed at 49,625.

On Thursday, stocks like ONGC, Bharti, SBI and IndusInd lagged in the index. Even heavyweights like RIL and HDFC Bank saw selling pressure all around. All the sectoral indices ended in the red with the worst performer being the PSU Bank index correcting 3%. Global markets continued to rack up gains on Thursday after Biden assured central bank support and that may be good news for all EMs.

Let me put it this way, the legal battle is still on. What has happened on 21 January is that SEBI has given its approval to the deal despite Amazon requesting SEBI not to approve the deal pending the final decision by the Delhi High Court. The SEBI stand is that the approval is based on the facts of the case and will be conditional subject to court approval.

It puts an end to the uncertainty as after dragging along for nearly 5 months, the Reliance Retail deal with Future Group may finally see the light of day. However, as I said earlier, it is a conditional approval that SEBI has given to the deal. The two companies can start the process of Future Group's scheme of arrangement as well as the proposed sale of assets to Reliance Retail.

The Rs.24,713-crore deal was signed in August last year. However, Amazon had objected to the deal on the grounds that since it had a stake in Future Coupons, it had to be given the first right of refusal as per the agreement with the Future Group. However, Future group has all along denied that any such privilege was granted to Amazon. The matter is still pending in the Delhi High Court.

SEBI has put a caveat to the deal that the pending litigation before the Delhi High Court and arbitration proceedings by Amazon should be specifically mentioned while they were seeking shareholders approval and also for NCLT approval. It is not clear if Amazon would still pursue the case considering FEMA restrictions involved in taking a stake in a retail play.

While the government has got initial expressions of interest it is looking at something more concrete to be available as an offer. However, the government is confident that the real interest in BPCL could come from a consortium of global oil majors and investment funds jointly willing to pay top dollars for the government stake in BPCL.

It has already been confirmed by Mr. Anil Agarwal of Vedanta group that he had submitted an initial bid for BPCL. In addition, others like Apollo Global and I-Squared Capital have also evinced interest. Oil producers from Middle East and Russia’s state owned Rosneft were keen on the assets of BPCL but had developed second thoughts over the open offer requirement which would have added on to their cash flow burden.

The government proposes to sell its entire 53% stake in BPCL for a consideration of $6.5 billion and exit the company altogether. This will be one of the test cases of strategic divestment as it is more of privatization and less of a mere divestment of stake. A good response to the BPCL stake sale will also be crucial to divestment revenue targets.

Serum Institute, which is part of the Cyrus Poonawala group, is currently manufacturing and marketing the AstraZeneca / Oxford vaccine in India. On 21 January, it faced a major tragedy at its Pune complex when five people were killed after a massive fire broke out at one of its vaccine manufacturing complexes.

In fact, the pictures of the scene showed thick black smoke billowing from the complex. According to reports from the company, the fire did not emanate from the COVID vaccine producing centre but from the BCG vaccine production centre. The BCG vaccine is an anti-TB vaccine and Serum is the largest manufacturer of these vaccines in India.

Adar Poonawala has meanwhile assured the people of India and the Government that the unfortunate tragedy at the plant would not in any way hamper their commitment and their efforts to manufacture and make the vaccines available for use as per the committed schedule. This would be critical to ensure the fight against COVID is not impacted.

It may be recollected that Serum Institute of India has licensed the shot developed by Oxford University and AstraZeneca jointly and also plans to stockpile 50 million doses a month of Novavax vaccines. Serum will manufacture for India, other emerging markets and also for the World Health Organization. The state government has ordered a probe.

HDFC AMC reported 8.17% fall in Dec-20 quarter consolidated revenues on a yoy basis at Rs.481.86 crore on slower flows into mutual funds. For the quarter, the operating profits were down 7.28% at Rs.371.77 crore and it could have been worse had the company not managed its operating other expenses more efficiently.

The Profit after tax for the Dec-20 quarter was up 4.74% at Rs.369.26 crore on higher other income making up for the lower operational revenues. There was clear pressure on flows resulting in weaker revenues. PAT margins expanded from 67.19% to 76.63% in Dec-20. There were also concerns expressed that the poor performance of many its funds may be resulted in tepid flows.

Regarding the sharply higher other income, it must be noted that the other income component includes the notional profits recognized post the fair valuation of non convertible debentures held by the AMC. These NCDs are secured by pledge of equity shares. However, it must be noted that this is just a notional profit that was booked in other income due to falling yields.

Federal Bank reported third quarter net profit down 7.4% at Rs.418 crore due to higher provisioning for doubtful debts. For the Dec-20 quarter, Federal Bank reported 6.63% growth in revenues on a yoy basis at Rs.4089 crore. The top line growth was driven by growth in Treasury income and interest on retail banking while corporate banking was down.

In terms of profitability, the operating profits were up 31.81% at Rs.1002 crore in the Dec-20 quarter. This growth was on the back of lower interest cost due to falling rates, during the pandemic. Profit after tax (PAT) was down -7.41% at Rs.418 crore due to sharply higher provisioning which spiked from Rs.163 crore last year to Rs.439 crore this year.

Operating margins expanded from 19.83% in Dec-19 quarter to 24.51% in the Dec-20 quarter, on the back of better operating metrics. However, the pressure of higher provisioning was visible in the net margins. PAT margins consequently contracted from 11.78% in Dec-19 quarter to 10.23% in the Dec-20 quarter.

The one thing that is evident from the results is that the asset quality may have come under some pressure. The provisions for doubtful debts was Rs.439 crore in the Dec-20 quarter compared to just Rs.163 crore in the Dec-19 quarter. However, such provisions were lower than the Rs.625 crore in Sep-20 quarter.

Gross NPAs fell marginally to 2.67% and due to the substantial provisions in the last two quarters it led to the net NPAs tapering to a more reasonable level of just 0.61%, which means moratorium risk could be largely provided for. However capital adequacy is just about 14% and that restrains book expansion.