Key domestic benchmarks rallied on Wednesday, supported by firmness in HDFC twins and Reliance Industries. The Nifty Bank index snapped its four-day losing streak and ended with strong gains.
The barometer S&P BSE Sensex jumped 622.44 points or 2.06% at 30,818.61. The Nifty 50 index gained 187.45 points or 2.11% at 9,066.55.
The Nifty opened higher at 8,889.15. The index pared gains and hit the day's low of 8,875.35 in mid-morning trade. The index trade sideways for most part of the day. Sudden buying support in mid-afternoon trade catapulted the index to the day's high of 9,093.80.
The broader market ended higher. The BSE Mid-Cap index rose 1.49% and the BSE Small-Cap index gained 1.13%. Both these indices underperformed the Sensex.
The market breadth was positive. On the BSE, 1262 shares rose and 1060 shares fell. A total of 164 shares were unchanged.
Sentiment got a boost after the country's finance minister Nirmala Sitharaman reportedly said the government remains open to more economic measures as and when needed.
Sitharaman on Sunday (17 May) announced the fifth and final tranche of economic stimulus package to deal with the economic fallout of the COVID-19 pandemic. The booster measures announced on Sunday related to MGNREGS, healthcare and education, businesses, de-criminalisation of the Companies Act, ease of doing business, public sector enterprises, and resources related to state governments. The government, in its first four tranches of the stimulus package, focussed on addressing the land, labour, liquidity, and laws.
Numbers to Watch:
The yield on 10-year benchmark federal paper rose to 6.041% as compared with 6.035% at close in the previous trading session.
In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 75.80, compared with its close of 75.66 during the previous trading session.
In the commodities market, Brent crude for July 2020 settlement rose 42 cents at $35.07 a barrel. The contract fell 16 cents, or 0.46% to settle at $34.65 a barrel in the previous trading session.
Foreign Markets:
Most shares in Europe and Asia advanced. The US Dow index futures were up by 281 points, indicating a strong opening in the US stock market on Wednesday.
China held its benchmark lending rate steady on Wednesday, mirroring the central bank's decision last week to keep borrowing costs on medium-term funding for financial institutions unchanged. The one-year loan prime rate (LPR) remained at 3.85% from last month's fixing, while the five-year LPR was also steady at 4.65% from previously.
Investors also watched for market reaction to a media report released overnight that raised concerns about the trial results for a potential coronavirus vaccine from Moderna. That initial positive development had sent global markets rallying earlier in the week.
The US equity market finished volatile session lower for the first time in four sessions on Tuesday, 19 May 2020, as investors elected to book profit after a strong rally in the prior session, due to mixed batch of corporate results from major retailers and reports that Moderna Inc.'s coronavirus vaccine study didn't produce enough critical data to assess its success.
However, market losses were capped after Federal Reserve Chairman Jerome Powell, in a statement, said that the central bank is ready to use all the weapons in its arsenal to help the U.S. economy endure the coronavirus pandemic.
Stocks in Spotlight:
Index major Reliance Industries (RIL) rose 1.88% to Rs 1434.65 as the company's rights issue opened today, 20 May 2020. The rights issue valued at Rs 53,125 crore, will be open for subscription today and it will close on 3 June. All eligible shareholders as per record date of 14 May are entitled to subscribe to the fresh issue. RIL will issue 42,26,26,894 equity shares as part of the rights issue. The company will offer existing shareholders one new share for 15 held at a discounted price of Rs 1,257.
HDFC (up 5.61%), HDFC Bank (up 3.19%), Larsen & Toubro (up 4.85%) and ITC (up 2.96%) were other index movers.
Buzzing Index:
The Nifty Bank index rose 2.02% to 17,840.20. The index rebounded after falling as much as 0.45% at the day's low of 17,407.70. The index slumped 11% in the past four trading session.
HDFC Bank (up 3.19%), Kotak Mahindra Bank (up 2.88%), Federal Bank (up 2.36%), RBL Bank (up 2.32%), Axis Bank (up 2.31%), ICICI Bank (up 1.90%), Bank of Baroda (up 0.55%), Bandhan Bank (up 0.52%) and State Bank of India (up 0.39%) advanced.
Earnings Impact:
UltraTech Cement rose 2.63%. The company's consolidated net profit surged 204.79% to Rs 3,243 crore on 13.07% decline in net sales to Rs 10,579 crore in Q4 March 2020 over Q4 March 2019. Profit before tax (PBT) fell 4.21% YoY to Rs 1,461.97 crore during the quarter. Current tax expense fell 22.10% to Rs 246.61 crore during the period under review. The result was announced during market hours today, 20 May 2020.
Drug major Dr Reddy's Laboratories jumped 5.71% after consolidated net profit jumped 76% to Rs 764.20 crore on a 10% rise in revenues to Rs 4431.80 crore in Q4 March 2020 over Q4 March 2019. EBITDA jumped 13.54% to Rs 1,001.3 crore in Q4 FY20 from Rs 881.90 crore in Q4 FY19. EBITDA margins stood at 22.6% in Q4 March 2020 as compared to 22% in Q4 March 2019. Profit before income tax stood at Rs 714.2 crore in Q4 FY20, up by 22% from Rs 585.1 crore in Q4 FY20. Consolidated net profit rose 4% to Rs 1,949.80 crore on a 13% rise in revenues to Rs 17,460 crore in in the year ended March 2020 (FY20) as against the year ended March 2020 (FY19). Profit before income tax stood at Rs 1,803.20 crore in FY20, down by 20% from Rs 2,244.3 crore reported in FY19.
Bajaj Finance gained 3.85%. The NBFC major's consolidated net profit declined 19% to Rs 948 crore on 36% increase in total income to Rs 7,231 crore in Q4 March 2020 over Q4 March 2019. On a consolidated basis, profit before tax (PBT) stood at Rs 1,278 crore in Q4 FY20, down by 29% from Rs 1,812 crore reported in Q4 FY19. Net interest income jumped 38% to Rs 4,684 crore in Q4 FY20 over Q4 FY19. New loans booked during Q4 FY20 increased by 3% to 6.03 million from 5.83 million in Q4 FY19.
Loan losses and provisions for Q4 FY20 was Rs 1,954 crore as against Rs 409 crore in Q4 FY19. During the quarter, the company has taken an accelerated charge of Rs 390 crore for two identified large accounts, an additional provision of Rs 129 crore on account of recalibration of its ECL model and a contingency provision of Rs 900 crore for COVID-19. Adjusted for these additional provisions of Rs 1,419 crore, loan losses and provisions for Q4 FY20 was Rs 535 crore.
JSW Energy rose 3.30% after the company's consolidated net profit soared to Rs 108.44 crore in Q4 March 2020 compared with Rs 3.87 crore in Q4 March 2019. Total income declined 8.44% to Rs 1,847.65 crore in Q4 FY20 from Rs 2,018.16 crore in Q4 FY19 due to lower long-term sales and decline in fuel cost. The fuel cost decreased by 16.32% to Rs 996.32 crore in Q4 FY20 over Q4 FY19, due to moderation in the imported coal prices and lower generation.
Ujjivan Small Finance Bank surged 3.95% after net profit rose 14.7% to Rs 73.15 crore on 34.4% rise in total income to Rs 809.65 crore in Q4 March 2020 over Q4 March 2019. Net interest income (NII) jumped 46% to Rs 466 crore in Q4 FY20 over Q4 FY19. Net interest margin (NIM) stood at 11.2% in Q4 March 2020 as compared to 10.8% in Q4 March 2019. The bank's gross non-performing assets (NPAs) stood at Rs 137.14 crore as on 31 March 2020 as against Rs 129.45 crore as on 31 December 2019 and Rs 97.85 crore as on 31 March 2019. The ratio of gross NPAs to gross advances stood at 0.97% as on 31 March 2020 as against 0.95% as on 31 December 2019 and 0.92% as on 31 March 2019. The bank's provisions and contingencies stood at Rs 96.88 crore in Q4 March 2020, almost seven times compared to Rs 12.37 crore in Q4 March 2019. The bank has made total provision of Rs 70 crore for COVID-19 as on 31 March 2020, out of which Rs 48.97 crore is in respect of accounts in default but standard against the potential impact of COVID-19. The bank clarified that provisions held are in excess of the RBI prescribed norms.
Larsen & Toubro Infotech rallied 6.86% after consolidated net profit jumped 13.49% to Rs 427.50 crore on a 7.14% increase in net sales to Rs 3,011.90 crore in Q4 March 2020 over Q3 December 2019. Consolidated profit before tax rose 10.32% to Rs 551.40 crore in Q4 March 2020 as against Rs 499.80 crore in Q3 December 2019. EBITDA margin improved to 19.2% in Q4 March 2020 as compared to 18.8% in Q3 December 2019 and 19.2% in Q4 March 2019.
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