Market Update for 14 January 2021 – L&T strengthens on steady order flow

Gold prices on the decline

  • Gold prices have been falling since last week as a stronger US dollar puts pressure on the yellow metal. Gold and silver prices in India declined by over 1% today.
  • The US government is expected to announce a stimulus package worth $2 trillion, which could result in higher inflation. This can lead to volatility in the price of gold which is purchased as a hedge against inflation.

Japanese Nikkei hits record highs

  • Today, Japan’s benchmark index Nikkei hit its highest level in the last 30 years. It rose 0.8% supported by a rally in technology shares and better-than-expected core machinery orders. These orders grew 1.5% over the past month, indicating a pick-up in the economy.
  • The Nikkei last peaked in 1990 and declined for nearly two decades thereafter. It started rising after 2012 and has since delivered positive returns in all the years except 2018.

L&T strengthens on steady order flow

  • During Q3, shares of the engineering and construction giant gained 43% on the back of steady order flow across its business segments.
  • In the last two days, the company has announced receipt of orders in the range of ₹1,000–2,500 crore for a variety of projects spanning commercial and residential buildings, transportation infrastructure, metallurgical plants, and power transmission and distribution. Its shares were up 1.8% today.

JK Tyre zips ahead on subsidiary’s performance

  • Shares of the tyre maker were up 6.6% today, coupled with a spike in volumes after its subsidiary Cavendish Industries witnessed a record 30% YoY jump in Q3 sales to ₹788 crore. Further, its EBITDA rose 128% YoY to ₹157 crore.
  • Cavendish, which makes tyres for trucks, LCVs and tractors, was acquired in 2016. It contributes nearly 25% of JK Tyre’s total revenues (as of FY20). JK Tyre holds an 86% stake in Cavendish.