The main stock indices pared early gains and ended with small losses on Tuesday. Selling in IT pivotals, Bharti Airtel and Reliance Industries put pressure on bourses. The barometer S&P BSE Sensex fell 63.29 points or 0.21% at 30,609.30. The Nifty 50 index fell 10.20 points or 0.11% at 9,029.05.
The Nifty opened higher at 9,099.75 and hit an intraday high of 9,161.65 in early trade. The index pared gains as profit selling emerged at higher levels. The Nifty turned negative and hit an intraday low of 8,996.65 in mid-afternoon trade. It regained the 9,000 mark in late trade.
The broader market ended higher. The BSE Mid-Cap index rose 1.21% and the BSE Small-Cap index gained 0.63%.
The market breadth was positive. On the BSE, 1225 shares rose and 1123 shares fell. A total of 186 shares were unchanged.
Numbers to Watch:
The yield on 10-year benchmark federal paper rose to 5.975% as compared with 5.961% at close in the previous trading session.
In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 75.66, compared with its close of 75.95 during the previous trading session.
In the commodities market, Brent crude for July 2020 settlement rose 97 cents at $36.10 a barrel. The contract fell 93 cents, or 2.58% to settle at $35.13 a barrel in the previous trading session.
Foreign Markets:
European markets were trading with decent gains while Asian markets closed higher on Tuesday as investors looked to a re-opening world economy.
Japanese shares led gains after the Japanese Prime Minister Shinzo Abe on Monday announced the lifting of the state of emergency for the entire nation, as the coronavirus outbreak there eases. As per reports, Abe has said that he would work to increase the government's stimulus packages to more than 200 trillion yen ($1.9 trillion), or about 40% of Japan's annual output.
Investor sentiment received a boost after American biotech firm Novavax said Monday it started the first human study of its experimental coronavirus vaccine. The firm said it expects initial results on safety and immune responses in July.
In Hong Kong, investors are moving on from last week's sharp losses. On Friday, the Hang Seng reportedly had its worst day in nearly five years after Beijing moved to pass a controversial national security law, a blow to the financial hub's autonomy. China's foreign ministry commissioner in Hong Kong, Xie Fang, moved to reassure rattled investors on Monday evening. The legislation won't affect freedoms of speech, press, publication and assembly, Xie said, according to state-run news agency reports. He reportedly added that the controversial legislation will protect the law-based operation of international businesses in Hong Kong.
In economic news, Singapore cut its 2020 economic forecasts for the third time this year. The Singapore economy is now expected to shrink by between 4.0% and 7.0% this year, according to the country's Ministry of Trade and Industry.
In US, markets were closed on Monday for Memorial Day.
Buzzing Indian Index:
The Nifty IT index fell 1.93% to 13,574.95 on profit selling. The index jumped 4.90% in the past five trading sessions.
TCS (down 3.74%), Tech Mahindra (down 1.83%), Infosys (down 1.75%), HCL Technologies (down 1.17%), Mindtree (down 0.78%), Persistent Systems (down 0.28%) and Hexaware Technologies (down 0.04%) declined.
The Nifty Pharma index declined 1.22% to 9,483.50, snapping its three-day winning run. The index gained 5.68% in the past three trading sessions.
Alkem Laboratories (down 3.45%), Cadila Healthcare (down 2.71%), Aurobindo Pharma (down 2.16%), Sun Pharmaceutical Industries (down 2.16%), Cipla (down 1.74%), Strides Pharma (down 1.34%), Wockhardt (down 1.33%), Divi's Laboratories (down 1.32%), Dr. Reddy's Laboratories (down 0.79%) and GlaxoSmithKline Pharmaceuticals (down 0.43%) declined.
Glenmark Pharmaceuticals fell 1.07%. The drug maker announced a new randomized, open-label study to test the combined efficacy of two antiviral drugs Favipiravir and Umifenovir as a potential COVID-19 treatment strategy.
Indoco Remedies fell 1.12% after the pharmaceutical company announced receiving approval for its abbreviated new drug application (ANDA) for Succinylcholine Chloride injection USP 200 mg/ 10 ml (20 mg/ml) multi‐dose vial, therapeutically equivalent to the reference listed drug (RLD) Quelicin Injection of Hospira, Inc. Succinylcholine Chloride injection is indicated as an adjunct to general anesthesia, to facilitate tracheal intubation, and to provide skeletal muscle relaxation during surgery or mechanical ventilation. The product is being used for some patients infected with Corona virus (COVID‐19).
Stocks in Spotlight:
Telecom major Bharti Airtel fell 5.71% to Rs 559.15. On the BSE, the counter clocked a volume of 17.26 crore shares as against its average trading volume of 6.06 lakh shares in the past one quarter. On the NSE, the counter clocked a volume of 7.64 crore shares compared with its average trading volume of 1.75 crore shares in the past one quarter.
Bharti Telecom, the promoter company of Bharti Airtel, have today (26 May) sold 2.75% stake in Bharti Airtel to institutional investors through an accelerated book building rocess in the secondary market. The total sale proceeds of over Rs 8433 crore was over-subscribed multiple times. Bharti Group and Singtel (collectively the promoter group), will continue to own a majority stake in Bharti Airtel at 56.23% after the transaction.
The sale proceeds will be utilized to fully repay debt at Bharti Telecom, which was raised primarily to finance the acquisition of Bharti Airtel equity shares in the past.
Index major Reliance Industries (RIL) fell 0.55% to 1,423.70. The stock hit a high of Rs 1449 and a low of Rs 1416.30 in the intraday.
ITC rose 2.76%. The company on Saturday, 23 May 2020, entered into a share purchase agreement (SPA) to acquire 100% stake of Sunrise Foods (SFPL), which is engaged in the business of spices under the trademark 'Sunrise'.
Maruti Suzuki India (MSIL) gained 2.20%. The company has received intimation from Suzuki Motor Gujarat that they would re-start production of vehicles from 25 May 2020, strictly in accordance with the Government regulations and guidelines and by observing the company's own concern for the highest standards of safety. SMG manufactures cars on a contract basis for MSIL.
Eicher Motors jumped 6.32%. The auto maker's board will consider stock split and Q4 results on 12 June 2020.
Earnings Impact:
HDFC fell 0.95% after the housing finance major's standalone net profit declined 22% to Rs 2232.53 on 3.41% rise in total income to Rs 11,981.66 crore in Q4 March 2020 over Q4 March 2019. Dividend income slumped to Rs 2.08 crore in Q4 FY20 from Rs 536.88 crore in Q4 FY19. “ With dividend distribution tax being abolished, some of the subsidiary company did not pay interim dividend, the firm said. Profit on sale of investment was Rs 2 crore in Q4 FY20 as against Rs 321 crore in Q4 FY19. Fair value changes charged to the statement of profit and loss - largely on account of the fall in the stock markets, was Rs 428 crore in Q4 FY20, higher than Rs 167 crore in the previous year.
On the asset quality front, the gross non-performing loans as at 31 March 2020 stood at Rs 8,908 crore. This is equivalent to 1.99% of the loan portfolio. Increase in provisioning, including impact for COVID-19, was Rs 1,274 crore in Q4 FY20, higher than Rs 398 crore in the previous year.
Inclusive of fees and income from assigned loans, the Net Interest Income (NII) for the quarter ended 31 March 2020 stood at Rs 3,780 crore compared to Rs 3,238 crore in the previous year, representing a growth of 17%. The board of HDFC approved a dividend of Rs 21 per share for the year ended March 2020.
Avenue Supermarts tumbled 4.67% after the company warned that the challenges are likely to continue in the current financial year as the economy gradually opens after the lockdown.
The supermarket chain operator announced Q4 results on Saturday (23 May 2020). The firm's consolidated net profit jumped 41.61% to Rs 271 crore on 23.6% increase in to Rs 6,256 crore in Q4 March 2020 over Q4 March 2019. EBITDA rose 12.1% to Rs 417 crore in Q4 FY20 from Rs 372 crore in Q4 FY19. EBITDA margin stood at 6.7% in Q4 March 2020, lower than 7.4% in Q4 March 2019.
The company said its overall revenue during the month of March 2020 grew by just 11% over March 2019 due to the lockdown effect of the last 9 days of March this year. The trend rapidly deteriorated in April during which more than half of its stores remaining closed for operations or operating for extremely restricted hours.
IDFC First Bank jumped 5.04% after the bank reported a net profit of Rs 71.54 crore in Q4 March 2020 as against net loss of Rs 218.03 crore reported in Q4 March 2019. Total income rose 13.8% to Rs 4439.63 crore in Q4 March 2020 from Rs 3902.11 crore reported in Q4 March 2019. The result was announced after market hours on 22 March 2020.
The bank posted reported a strong growth in core earnings. Net Interest Income (NII) grew by 40% to Rs 1,563 crore in Q4 March 2020 from Rs 1,113 crore in Q4 March 2019. Net interest margin improved to 4.24% in Q4 March 2020 from 3.03% in Q4 March 2019. On asset quality front, the bank's gross non-performing assets (NPAs) stood at Rs 2279.56 crore as on 31 March 2020 as against Rs 2511.36 crore as on 31 December 2019 and Rs 2136.04 crore as on 31 March 2019. The ratio of gross NPAs to gross advances stood at 2.6% as on 31 March 2020 as against 2.83% as on 31 December 2019 and 2.43% as on 31 March 2019.
Bata India rose 0.79%. The footwear maker's consolidated net profit tumbled 56.7% to Rs 38.41 crore on 8.77% decline in net sales to Rs 620.57 crore in Q4 March 2020 over Q4 March 2019. Profit before tax (PBT) fell 45% to Rs 58.18 crore during the period under review. The result was impacted due to loss of revenue resulting from COVID-19 outbreak and due the impact of adopting Ind-AS 116. The footwear maker reported a good growth of 8% (January & February 2020) before the pandemic forced closure of stores in mid-March resulting in a decline for the quarter. Bata said, This year's growth can be credited to company's continuous focus on strengthening its product portfolio, innovation and design, new store openings and renovation, enhancing customer experience as well as new marketing campaigns.
Aarti Industries slipped 1.71% after consolidated net profit fell 11.90% to Rs 110.35 crore on a 5.69% decline in net sales to Rs 1076.15 crore in Q4 March 2020 over Q4 March 2019. Consolidated revenue of specialty chemicals segment was marginally lower, by 0.44%, as it stood at Rs 983.54 crore while the earnings of the pharmaceuticals segment contracted by 3.01% to Rs 206.36 in the fourth quarter as compared to the corresponding period last year.
GMM Pfaudler slumped 4.95% The firm's net profit declined 13% to Rs 11.60 crore on 5.28% decline in net sales to Rs 131.78 crore in Q4 March 2020 over Q4 March 2019. EBITDA improved 14% to Rs 22.5 crore in Q4 FY20 from Rs 19.8 crore in Q4 FY19. EBITDA margin stood at 17% in Q4 FY20, higher than 14% in Q4 FY19. COVID-19 began impacting our normal business operations on 14th March 2020 by affecting our supply chain and our ability to ship ready equipment to our customers, our production eventually shut down completely on March 23rd, 2020. All in all, additional revenue that could have been recognized in the last quarter in a normal business environment is estimated to be Rs 300 million, the company said in a statement.
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