Sensex ends tad up, but fails to hold 37,000-mark; Banks, financial stocks drag14 min read . Updated: 13 Jul 2020, 03:44 PM IST Devansh Sharma
- Indian benchmark equity indices closed marginally higher in a choppy trade on Monday, lead by gains in IT and FMCG stocks
- Tech Mahindra, closing 5.6% higher, was the top Sensex gainer, followed by HCL Tech, RIL, Bharti Airtel and Infosys
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Indian benchmark equity indices closed marginally higher in a choppy trade on Monday, led by gains in IT and FMCG stocks.
After hitting an intraday high of 37,024.20, Sensex settled at 36,693.69, up 0.27% or 99.36 points. Nifty ended 36.65 points or 0.32% higher at 10,802.70.
BSE Finance and BSE Bankex were top sectoral laggards while BSE Energy gained the most followed by BSE IT, BSE Metal and BSE Telecom.
Tech Mahindra, closing 5.6% higher, was the top Sensex gainer, followed by HCL Tech, RIL, Bharti Airtel and Infosys. Power Grid, Bajaj Finance, HDFC Bank and HDFC Ltd were among the laggards.
Of 30 Sensex shares, 11 closed in the red.
Reliance Industries Limited's market valuation zoomed past the ₹12 trillion mark, driven by a sharp rise in its share price. The market-heavyweight stock closed 3.22% higher.
Q1 earnings set to hit multi-year low, guidance on pace of recovery critical
As lockdown has further weighed on an already weak earnings trajectory, corporate earnings in April-June period is likely to see multi-year low bearing the full impact of two months of low or no business activity. More than the earnings, analysts and investors will keenly watch out for management commentaries on the pace of recovery. Extended lockdown in metro towns, rise in unemployment and wage reduction across the country have weakened consumer sentiments, hurt consumption. (Full report)
Nifty Auto up 0.6%
Revenues of auto component manufacturing industry could decline by 14-18% in the current fiscal, owing to a sharp decline in domestic vehicle sales and exports, according to ratings agency Icra. The decline in aftermarket revenue, due to the covid lockdown, will further dent the earnings of component suppliers.
RIL, Britannia hit fresh highs
Top gainers on Nifty Metal index
Jio receives another tranche of investment; gets Rs42,000 cr from KKR, Vista, Mubadala others
Reliance Industries Ltd's Jio Platforms on Monday received another tranche of payment from PE funds KKR, TPG, Vista Equity Partners and sovereign wealth funds ADIA and Mubadala, filings with the registrar of companies shows.
Collectively, Jio Platforms has received ₹42,057.9 crore from these investors.
The latest tranche of payments comes after Jio said it had received ₹30,062.43 crore on Saturday from L Catterton, PIF, Silver Lake, and General Atlantic Singapore.
On 7 July, Facebook Inc-owned Jaadhu Holdings LLC paid the subscription amount of ₹ 43,574 crore to Jio Platforms Ltd for a 9.99% stake in the latter.
Tata Motors June quarter update indicate benign liquidity position at JLR
For Tata Motors Ltd, reducing costs and investments, conserving cash were among the ways to withstand the covid-19 disruption.
The update for the June quarter indicates early benefits of these efforts. The UK-based Jaguar Land Rover (JLR), a major driver of earnings for Tata Motors, ended the quarter (Q1 FY21) with decent cash of about £2.7 billion. (Full report)
Yes Bank FPO opens on July 15
Yes Bank has been in news lately for the spurt in its NPAs and deterioration of its financial position. The bank is coming with an FPO to raise additional equity from the public. Further purchase offer (FPO) is a process by which a listed company raises fresh capital by issuing new equity shares to the public. The existing investors though do not look much excited about the FPO as the floor price has been set at ₹12, almost 50% lower than the market price. At 2:07 p.m, one share of Yes bank is trading at ₹22.10. The stock has fallen almost 17% from its Thursday closing.
Rupee settles on a flat note at 75.19 against US dollar.
India GDP to contract 7.5% if covid-19 vaccine delayed: Bank of America Securities
A longer wait for a vaccine against covid-19 virus may lead to a contraction of up to 7.5% in the Indian GDP in FY21, a foreign brokerage said on Monday.
Economists at Bank of America Securities also revised down their base case estimates on the real GDP within a week, and now expect it to contract by 4% because of a drop in economic activity.
It can be noted that multiple efforts to find a vaccine against the dreaded virus are on both globally as well domestically, but no timelines have been announced yet. (Full report)
RIL, Infosys top contributors in Sensex rally
Top gainers on Nifty IT
Global IT spending to decline by 7% in 2020 due to covid-19: Gartner
Worldwide spending on information technology is likely to total $3.5 trillion in 2020, down 7.3% from last year, according to the latest forecast by Gartner, Inc.
While the global economy is expected to witness a ‘swoosh’ recovery from the covid-19 pandemic, IT spending will experience more of a ‘swoop’ recovery, said the research firm. The hardest hit segment will be devices as cost containment will continue to reduce spending significantly through 2020.
Future Retail, Larsen & Toubro Infotech top gainers on BSE MidCap index
After touching a high of 37,024.20 in the early deals, at 1:00 pm the benchmark Sensex pared most of the gains and traded 54.57 points or 0.15% higher at 36,648.90. Nifty Fell 102 points from day's high to 10,792.50, down 24.45 points or 0.23% from its previous close.
TechM, up 4%, was the top Sensex gainer, followed by RIL, HCL Tech, Infosys and ITC. HDFC Bank, Bajaj Finance, HDFC, Power Grid and SBI were among the laggards.
Of 30 Sensex shares, 10 were in the red.
Shares of DMart owner Avenue Supermarts fall 6% on weak Q1 performance
Shares of Avenue Supermarts, which owns and operates retail chain DMart, fell 6.04% after it reported 88% drop in its consolidated net profit for the quarter ending 30 June, 2020.
The company cited covid-19 for its net profit decreasing to ₹40 crore as against ₹323 crore in the year-ago period. The company's consolidated total income fell 32% to ₹3,933 crore as against ₹5,826 crore in June 2019.
AT-1 bonds see resurrection post Yes Bank episode
In the race to beef up capital, India’s banks have kept open the option of raising money through the much maligned additional Tier-1 bonds.
HDFC Bank last month had said it was looking to raise ₹50,000 crore capital, of which the additional Tier-1 bonds would be a part. Canara Bank plans to raise ₹3,000 crore through these bonds. The country’s largest lender State Bank of India’s board will meet later this week to approve fund raising, of which perpetual bonds would be a part. (Full report)
Top gainers on Nifty Pharma
Nifty Pharma up 0.5%
Sales of medicines recorded a growth of 2.4% year on year (y-o-y) in June, indicating a recovery from two consecutive months of decline caused by the lockdown to prevent the spread of covid-19. Sales for the month came in at ₹11,250 crore, with all segments, especially chronic drugs, showing a rebound, according to data from market research firm AIOCD-AWACS.
Nifty Bank drops 1%
India’s banking sector is likely to see muted first quarter results, as lenders continue to strengthen their balance-sheets through higher provisions against the covid-19 impact. The previous quarter had seen banks, especially private sector entities, increasing provisions to cushion against future asset slippages.
Banks are expected to report 7% year-on-year growth in pre-provision profit, while private banks are to report 11% growth, according to brokerage firm Phillip Capital Pte. Ltd.
Top Laggards on Nifty Bank
Yes Bank stock dips over 11% after large amount of share transaction
Shares of Yes Bank tumbled over 11% during early hours on Monday following reports that the Securities and Exchange Board of India (SEBI) may look into a large amount of share transaction of the bank under the Securities Lending and Borrowing Mechanism (SLBM).
Wipro has no plan to lay off employees at the moment: Rishad Premji
Wipro Ltd has not laid off a single employee due to the impact of the covid-19 pandemic, chairman Rishad Premji said at the company’s 74th annual general meeting (AGM) held virtually on Monday. “Also we have no plans to lay off at the moment," Premji said.
However, Wipro continues to drive cost reductions through various “operational means" to wade through the challenging times, he said, addressing investor queries. (Full report)
Motilal Oswal maintains 'buy' on Tata Motors
Motilal Oswal has maintained 'buy' rating on Tata Motors with a target price of ₹126. "Post the resumption of operations, the Range Rover Sport, the new Range Rover Evoque, and the Land Rover Discovery Sport emerged as the best-selling vehicles. Customer response to the new Land Rover Defender has been overwhelmingly positive, and as retailers have come back on line, there has been a surge of interest in the Land Rover. Deliveries for the Defender have started to ramp up in the quarter, with 1,970 vehicles sold in June. This has come after operations only just resuming in the UK/Europe (May) and the US (June); China operations are scheduled to begin in July. The stock trades at 2.7x FY22 EV/EBITDA and 0.7x P/BV. Maintain Buy, with TP of ~INR126 (Jun’22-based SOTP)," the brokerage said.
Glenmark Pharma cuts price of oral antiviral Fabiflu by 27% in India
Glenmark has announced a price reduction of 27% for FabiFlu®. The new MRP is ₹75 per tab from the earlier ₹103 per tab. Most covid patients exhibiting mild to moderate symptoms can benefit from FabiFlu®. Glenmark has also completed the phase 3 clinical trial with Favipiravir (FabiFlu®) in mild to moderate covid-19 patients in India. The trial results will be available shortly.
PNB Housing Finance up 1%
PNB Housing Finance said it will seek shareholders' approval next month to raise up to ₹45,000 crore through debt securities.
IRB Infra up 2%
The company has secured a ₹2,193-crore highway project in West Bengal under the Bhartmala Pariyojna. IRB Infrastructure said the project for widening of 63.83 km stretch on National Highways-19 is its first project in eastern India and marks its entry in the ninth state in the country. The section is part of the Golden Quadrilateral Project.
Escorts up as much as 6%
The Competition Commission on Friday said it has given nod to acquisition of a little over 9% stake in Escorts Ltd by Kubota Corporation, and 40% stake acquisition in Kubota Agricultural Machinery India by Escorts Ltd.
Dmart profit nearly vanishes post covid; stock puts up brave front
If Avenue Supermarts Ltd’s June quarter results are an indication of what’s to come for smaller retailers, then investors should prepare themselves for some very nasty surprises.
Avenue Supermarts runs the DMart chain of retail stores. (Full report)
Q1 results a washout; all markets want is hope
Indian markets have been riding on hopes of a better future for a while now, ignoring the reality of pain in the present. Excluding stocks of financials, the Nifty 50 index is back at its pre-covid highs of February, giving the impression that the pandemic will have almost no major impact on corporate earnings.
But now that Indian companies have begun reporting results for the June quarter, a moot question is if investors will finally wake up and smell the coffee. (Full report)
PVR up 0.3%
India’s biggest multiplex chain, PVR Cinemas is looking at diversifying its portfolio beyond screening theatrical movies to launch a range of food and beverage products that can be sold at both online and offline stores.
Keshav Lahoti, Associate Equity Analyst, Angel Broking on outlook and valuation of Rossari Biotech IPO
“At the upper end of the price band, Rossari demands PE multiple of 32.1x F.Y.20 fully diluted EPS. None of the listed chemical companies has the same business as Rossari. Its specialty chemical peers such as Galaxy Surfactants, Fine Organics, Aarti industries, Atul and Vinati Organics are currently trading at F.Y.2020 P/E multiples of 24.0x, 36.6x, 30.5x, 20.6x and 30.9x respectively. We believe Rossari will command a premium over most of its chemical peers as it is net debt free as well as it has better asset turnover, working capital days, ROE and ROCE better than most of its peers. In the last three years Rossari have reported 32% and 66% revenue and PAT CAGR due to the strong promoter and management team. As we are positive on the future outlook for the industry as well as the company, we would recommend to “Subscribe" to the issue."
Amarjeet Maurya, AVP - Mid Caps, Angel Broking on Avenue Supermarts
“For 1QFY21, ASL’s (Avenue Supermarts Ltd) top-line de-grew by ~33% yoy to Rs3,883cr. Top-line was negatively impacted mainly due COVID-19 lockdown. Currently, the company’s most of the stores operate at 80% of pre-covid sales level. However, discretionary consumption continues to be under pressure, especially in the Non-FMCG categories. On the operating front, the company reported margin contraction (down by 738bp YoY to 2.9%), primarily on account of lower sales. The reported net profit de-grew by ~88% YoY to Rs40cr due to lower sales and poor operating performance."
HDFC Bank down 0.6%
The bank has conducted a probe into allegations of improper lending practices and conflicts of interests in its vehicle-financing operation involving the unit’s former head, according to a Bloomberg report.
Most sectoral indices in the green on NSE
Shriram EPC up 5%
Engineering services provider Shriram EPC is raising ₹250 crore from Markab Capital, a Middle East focused multi-family office and merchant bank. The fund-raising will be in the form of allotment of equity shares by way of a preferential issue.
Avenue Supermarts drops 2.5%
Avenue Supermarts which owns and operates retail chain D-Mart, on Saturday reported an 87.59% decline in consolidated net profit at ₹40.08 crore for the June quarter, impacted by the covid-19 crisis. The company had posted a net profit of ₹323.06 crore in the April-June period a year ago.
Biocon opens nearly 10% higher
Biocon Biologics has received an emergency use authorisation (EUA) for its monoclonal antibody Itoliuzumab from the Drug Controller General of India (DCGI) to treat cytokine storms - one of the leading causes of death among patients with severe covid-19.
As per the DCGI, the novel drug can be used only in a hospital set-up, and requires informed consent of patients and a risk management plan.
RIL crosses ₹12 trillion market cap first time
Reliance Industries Ltd (RIL) on Monday became the first Indian company to reach a market capitalisation of ₹12 trillion as its shares doubled since mid-March. The company will also hold its annual general meeting this week.
The stock rallied to hit a record high of Rs1,908 on the BSE, up about 1.6% from Friday's close with a market cap of ₹12.09 trillion. Since Mid march, its shares have risen over 120% while so far this year it gained 25%.
Earlier on Sunday, Qualcomm Ventures, the investment arm of Qualcomm Inc., said it will invest Rs730 crore for a 0.15% stake in Jio Platforms Ltd, becoming the 12th entity to invest in the digital services subsidiary of Reliance Industries (RIL) in over three months.
Indian benchmark indices opened nearly 1% higher on Monday tracking firm cues from global peers. Sensex opened 286 points higher at 36,880.66, while Nifty added about 80 points at 10,851.85.
IndusInd, up over 2%, was the top Sensex gainers followed by RIL, Tata Steel, Infosys, TechM and SBI. Bharti Airtel, and Bajaj Auto were among the laggards on the other hand.
Shares of Reliance Industries opened nearly 2% higher, led by which, it crossed ₹12 trillion market capitalisation.
Of 30 Sensex shares, 28 were in the green at open.
Stocks to Watch
RIL, Bharti Airtel, Vodafone Idea, Biocon, HDFC Bank and PVR are among the top stocks that may be in news on Monday.
Indian stocks traded higher in the pre-opening session on Monday. At 9:06 am, Sensex climbed 294 points or 0.8% to 36,888.36, while Nifty advanced 83 points or 0.8% to 10,851.
Market at close on Friday
Indian stocks closed lower on Friday amid selling pressure as a spike in the domestic coronavirus cases threatened to derail the economic recovery. Sensex settled at 36,594.33, down 0.39% or 143.36 points, while Nifty closed 40.85 points or 0.38% lower at 10,772.60.
Asian shares firm
Asian shares got off to a firm start on Monday as investors wagered US earnings season would see most companies beat forecasts given expectations had been lowered so far by coronavirus lockdowns.
Australia's ASX All Ordinaries gained 0.85%
China's Shanghai SE Composite Index added 0.73%
Hong Kong's Hang Seng advanced 0.50%
Singapore's SGX Nifty rose 0.6%, suggesting a firm opening for Indian benchmark indices.
Wall Street ends higher
US stocks rose on Friday as a positive analysis on Gilead Sciences Inc's antiviral drug to treat covid-19 helped to soothe investor worries over a record rise in coronavirus cases in the United States, and as financial shares surged.
The Dow Jones Industrial Average rose 369.21 points, or 1.44%, to 26,075.3, the S&P 500 gained 32.99 points, or 1.05%, to 3,185.04 and the Nasdaq Composite added 69.69 points, or 0.66%, to 10,617.44.