Key barometers witnessed a blockbuster rally on Wednesday, led by a surge in banks shares. The Nifty Bank index soared over 7% ahead of monthly F&O expiry on Thursday (28 May).
The barometer S&P BSE Sensex jumped 995.92 points or 3.25% at 31,605.22. The Nifty 50 index surged 285.90 points or 3.17% at 9,314.95.
The Nifty opened higher at 9,082.20, but soon pared gains in early trade. The index took the support at 9,004.25 mark and bounced back in mid-morning session. Strong buying in banks shares pushed the index above 9,300 mark in mid-afternoon trade.
The sentiment was boosted after China on Wednesday said that the situation at the border with India is overall stable and controllable, and both the countries have proper mechanisms and communication channels to resolve the issues through a dialogue and consultation.
The comment from Foreign Ministry spokesman Zhao Lijian came as a big relief amid continuing standoff between the militaries of India and China at the Line of Actual Control (LAC). Several areas along the nearly 3,500-km-long LAC in Ladakh and North Sikkim have witnessed major military build-up by both the Indian and Chinese armies recently.
The market breadth was positive. On the BSE, 1,378 shares rose and 948 shares fell. A total of 171 shares were unchanged.
The broader market lagged the benchmarks. The BSE Mid-Cap index rose 0.54% and the BSE Small-Cap index gained 0.27%.
Numbers to Watch:
The yield on 10-year benchmark federal paper rose to 5.987% as compared with 5.975% 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 75.7125, compared with its close of 75.66 during the previous trading session.
In the commodities market, Brent crude for July 2020 settlement fell 62 cents at $35.55 a barrel. The contract rose $1.04, or 2.96% to settle at $36.17 a barrel in the previous trading session.
Foreign Markets:
European markets were trading with strong gains as the region prepares itself to unleash a new coronavirus stimulus package. European Commission President Ursula von der Leyen is set to present her own proposal on Wednesday, 27 May 2020, building on the Franco-German plan for an economic stimulus.
Asian markets closed on a mixed note as investor concerns about rising tensions between the United States and China over Hong Kong tempered optimism about a re-opening of the world economy. The White House reportedly said a proposed national security law might jeopardize the Chinese territory's status as a global financial center. The law being considered for Hong Kong by the Chinese legislature has prompted warnings it might erode the independence of courts and other elements that help to make the former British colony a business center.
As per reports, the US was considering sanctions on Chinese firms and officials over the situation in Hong Kong. US President Donald Trump will reportedly make an announcement about the administration's response to China's actions by the end of this week.
US stock market finished sharply higher on Tuesday, 26 May 2020, as investors were emboldened by fresh coronavirus vaccine news from Novavax and Merck and signs that global economies are crawling back from the pandemic shutdown. The S&P 500 exceeded its 200-day moving average (DMA) for the first time since 5 March, but failed to close above the key level. Rising above 200 DMA could signal a change in long-term trend from bearish to bullish.
Buzzing Indian Segments:
The Nifty Bank index surged 7.28% to 18,710.55, extending gains for second day. The index rose 8.29% in two days.
ICICI Bank (up 8.97%), Bandhan Bank (up 8.44%), RBL Bank (up 6.88%), Federal Bank (up 6.63%), HDFC Bank (up 5.91%), IndusInd Bank (up 5.84%), State Bank of India (up 4.76%), Bank of Baroda (up 3.64%), IDFC First Bank (up 3.03%) and Punjab National Bank (up 3%) advanced.
Axis Bank jumped 13.46%. The media reported that private equity major Carlyle has started talks with Axis Bank to pump in around a billion dollars as growing systemic level stress and the economic slump are pushing banks and shadow lenders to create provision cushions to deal with future asset slippages. The deal is likely to be in the form of primary issuance of shares via a preferential allotment route that may result in Carlyle owning up to 8% stake in Axis Bank.
However, Axis Bank clarified to the bourses today that the news item is speculative and it has not taken any decision in this regard. As such no disclosure is required to be made under regulation 30 of the listing regulations and the Bank shall keep the exchange duly informed as and when any decision is taken by it in this matter”, it said in the BSE filing.
Kotak Mahindra Bank gained 5.58% after the bank announced the commencement of its fund-raising exercise via qualified institutions placement (QIP) issue of equity shares on Tuesday, 26 May 2020. The bank has set a floor price of Rs 1,147.75 per equity share for the QIP issue. The bank may offer a discount of not more than 5% on the floor price. The bank intends to use the net proceeds of the issue to augment its capital base and to strengthen its balance sheet.
The Nifty IT index gained 2.78% to 13,952.90, reversing yesterday's 1.93% fall. Depreciation of rupee against the dollar aided the rally in IT shares.
Wipro (up 6.77%), Infosys (up 3.70%), TCS (up 3.18%), Oracle Financial Services Software (up 1.94%), Mindtree (up 1.89%), Persistent Systems (up 0.77%), HCL Technologies (up 0.65%), Tech Mahindra (up 0.64%) and Hexaware Technologies (up 0.63%) advanced.
Earnings Impact:
Sun Pharmaceutical Industries fell 1.85%. The drug major reported 37.1% decline in consolidated net profit to Rs 399.84 crore on 14.3% rise in total revenue from operations to Rs 8,184.94 crore in Q4 March 2020 over Q4 March 2019. The company recorded a one-time expenditure of Rs 260.64 crore as an exceptional item in the March 2020 quarter.
Consolidated R&D investment fell 5.6% to Rs 536 crore in Q4 FY20, from Rs 567.49 crore reported in Q4 last year. EBITDA stood at Rs 1,256 crore, with resulting EBITDA margin of 15.5%. Approximately 50% of the EBITDA margin decline versus Q3 FY20 is due to the adverse impact of forex loss in Q4 FY20.
Dabur India slipped 1.04%. The FMCG major's consolidated net profit dropped 24.19% to Rs 281.60 crore on a 12.34% decrease in net sales to Rs 1,865.36 crore in Q4 March 2020 over Q4 March 2019. Profit before tax skid 12.59% to Rs 340.25 crore in Q4 March 2020 as against Rs 389.27 crore in Q4 March 2019. Current tax expenses jumped 53.78% to Rs 223.09 crore in Q4 March 2020 as compared to Rs 145.07 crore paid in Q4 March 2019. The Q4 result was declared during trading hours today, 27 May 2020.
Deepak Nitrite fell 0.11%. The chemical maker's standalone net profit soared 105.6% to Rs 116.26 crore on an 8.1% rise in net sales to Rs 525.24 crore in Q4 March 2020 over Q4 March 2019. PBT surged 83.5% to Rs 159.71 crore in Q4 March 2020 over Q4 March 2019. Total tax expenses rose 42.6% to Rs 43.45 crore in Q4 March 2020. EBITDA margin improved to 35.2% in Q4 March 2020 from 22.7% reported in Q4 March 2019. Performance was led by realisation gains in both fine & speciality chemicals (FSC) and performance products (PP) segment.
Torrent Pharmaceuticals tumbled 6.88%. The company reported consolidated net profit of Rs 314 crore in Q4 March 2020 as against net loss of Rs 152 crore in Q4 March 2019. Net sales rose 4.9% to Rs 1,912 crore in Q4 March 2020 over Q4 March 2019. The research & development (R&D) spend gained 7% to Rs 118 crore in Q4 March 2020 as against Rs 139 crore in Q4 March 2019. Pre-tax profit stood at Rs 293 crore in Q4 March 2020 as against pre-tax loss of Rs 150 crore in Q4 March 2019. Current tax expenses fell 22.2% to Rs 49 crore in Q4 March 2020 compared with Rs 63 crore in Q4 March 2019.
Bayer Cropscience jumped 6.97%, rising for second straight session after reporting turnaround Q4 numbers. The stock is up 17.33% in two trading sessions from its previous closing low of Rs 4449.65 on 22 May 2020. The counter hit a record high of Rs 5,245 on BSE during intraday trade today. Bayer Cropscience reported a net profit of Rs 31.50 crore in Q4 March 2020 as against a net loss of Rs 57.1 crore in Q4 March 2019. Net sales for quarter ending March 2020 stood at Rs 459 crore, up 82% from Rs 252.20 crore in the same period last year. The company reported pre-tax profit of Rs 25.7 crore in Q4 March 2020 as against a pre-tax loss of Rs 95 crore in Q4 March 2019. The result was announced after market hours on Friday, 22 May 2020.
Coromandel International rose 1.30% after after consolidated net profit surged 112.2% to Rs 234.20 crore on 8.8% increase in net sales to Rs 2,869.32 crore in Q4 March 2020 over Q4 March 2019. Profit before tax (PBT) soared 91.9% to Rs 314.16 crore in Q4 March 2020 as against Rs 163.71 crore in Q4 March 2019. Current tax expenses jumped 61.70% to Rs 91.64 crore in Q4 March 2020 as against Rs 56.68 crore in Q4 March 2019.
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