Key domestic benchmarks surged on Tuesday, snapping their four-day losing streak. Rally in Reliance Industries and private banks pushed the indices higher. Firmness in other Asian indices boosted sentiment.
The barometer index, the S&P BSE Sensex jumped 748.31 points or 2.03% at 37,687.91. The Nifty 50 index rallied 203.65 points or 1.87% at 11,095.25. The Nifty declined 3.55% in the previous four sessions.
Index heavyweight Reliance Industries (RIL) surged 7.10% to 2151.15. The stock hit a low of Rs 2001.25 and a high of Rs 2167 in intraday. The stock slipped 4.7% in the past two sessions.
HDFC Bank surged 3.94% to Rs 1041.40 after the Reserve Bank of India approved the appointment of Sashidhar Jagdishan as managing director (MD) & CEO of the bank for three years. Jagdishan will replace Aditya Puri who will retire as managing director of the bank on 26 October 2020. The stock tumbled 7.76% in the past four sessions.
HDFC (up 2.25%), ICICI Bank (up 2.23%) and Axis Bank (up 2.77%) were other major index movers.
The broader market lagged the benchmarks. The BSE Mid-Cap index rose 1.02% and the BSE Small-Cap index gained 1.23%.
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The market breadth was strong. On the BSE, 1706 shares rose and 933 shares fell. A total of 143 shares were unchanged.
COVID-19 update:
Total COVID-19 confirmed cases worldwide stood at 18,224,253 with 692,679 deaths. India reported 5,86,298 active cases of COVID-19 infection and 38,938 deaths while 12,30,509 patients have been discharged, according to the data from the Ministry of Health and Family Welfare, Government of India.
Economy:
The Reserve Bank of India's three-day monetary policy meet headed by the Governor, Shaktikanta Das commenced today, 4 August 2020. The MPC will announce its policy stance on Thursday, 6 August 2020. Investors and traders will also keep an eye on whether RBI extends moratorium beyond August 2020.
Numbers to Watch:
The yield on 10-year benchmark federal paper fell to 5.833% as compared with 5.837% 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 75.0450, compared with its close of 75.01 during the previous trading session.
In the commodities market, Brent crude for October 2020 settlement fell 71 cents at $43.44 a barrel. The contract rose 63 cents, or 1.45% to settle at $44.15 a barrel in the previous trading session.
Foreign Markets:
Most European indices were trading lower while Asian stocks rose across the board on Tuesday, reacting to a slew of corporate earnings and latest manufacturing data from several countries.
US stocks rose on Monday, the first trading day of August, as Wall Street tried to build on its four-month winning streak. The Nasdaq surged to a record high close on Monday as a rebound in multibillion-dollar deals, including Microsoft's pursuit of TikTok's U.S. operations, lifted sentiment, and efforts to hammer out a coronavirus relief bill resumed.
US stocks received an additional lift from Microsoft, which jumped 5.6% after it formally declared interest in TikTok's US operations on Sunday. President Donald Trump reversed course earlier on a planned ban of the short-video app. Apple Inc climbed 2.5%, expanding its rally following stunning quarterly results and announcing a four-for-one stock split.
After wrapping up talks on Monday over another round of coronavirus economic stimulus, US House Speaker Nancy Pelosi said she will meet with Treasury Secretary Steven Mnuchin and White House Chief of Staff Mark Meadows the following day to continue the discussion. The US economy, battered by a resurgence in the spread of COVID-19, needs increased government spending to tide over households and businesses and broader use of masks to better control the virus, US central bankers said on Monday.
US manufacturing activity accelerated to its highest level in nearly 1-1/2 years in July as orders increased despite a resurgence in new COVID-19 infections, which is raising fears about the sustainability of a budding economic recovery.
The ISM said its index of national factory activity raced to a reading of 54.2 last month from 52.6 in June. That was the strongest since March 2019 and marked two straight months of expansion.
Meanwhile, US President Donald Trump reportedly said after the market close that a "permanent lockdown" policy is not a "viable path forward" to combating the coronavirus pandemic.
Buzzing Indian Segment:
The Nifty IT index fell 0.70% to 17,840.15. The index fell 1.28% in two days.
Tech Mahindra (down 2.75%), HCL Technologies (down 1.96%), Infosys (down 0.76%), TCS (down 0.1%) and Wipro (down 0.07%) declined.
The media reported that US President Trump has signed an executive order restricting federal agencies from contracting or subcontracting foreign workers. The would adversely impact Indian IT professionals who work in the US on the H-1B visa.
Stocks in Spotlight:
Yes Bank added 2% after the global credit ratings agency Moody's Investors Service upgraded the bank's long-term foreign currency issuer rating to B3 from Caa1. The outlook on Yes Bank's ratings where applicable is changed to stable from positive.
Moody's said that Yes Bank's successful equity capital raise of Rs 15000 crore (about $2 billion) has bolstered its solvency and is the main driver of the ratings upgrade. The successful equity raising showcases Yes Bank's regained access to external market funds, which is a result of its improving financial strength and will support depositor confidence.
Jindal Steel & Power (JSPL) rose 1.76% after the steel major's consolidated production jumped 13% to 7.40 lakh metric tons (MT) in July 2020 over July 2019. Consolidated steel sales grew 25% (y-o-y) to 7.62 lakh MT in July 2020. The company reported a rise of 29% in standalone steel sales in July 2020 to 6,37,000 tonnes as compared to standalone sales of 4,93,000 tonnes in the previous year during the same period. JSPL export sales contributed to 39% of the total standalone sales in July 2020 to 2,50,000 tonnes. Standalone steel production rose 13% (y-o-y) to 6,03,000 tonnes in July 2020. The figure was disclosed before market hours today, 4 August 2020.
Dixon Technologies (India) fell 0.24%. The company's consolidated net profit slumped 93% to Rs 1.60 crore on a 55% decline in revenue from operations to Rs 516.94 crore in Q1 FY21 over Q1 FY20. EBITDA fell 68% to Rs 17.10 crore in Q1 June 2020 from Rs 53.15 crore in Q1 June 2019. EBITDA margin was at 3.3% as on 30 June 2020 as against 4.6% as on 30 June 2019.
Varun Beverages gained 4.57%. The company's consolidated net profit slumped 64.69% to Rs 142.97 crore on 41.58% drop in revenue from operations to Rs 1,665.69 crore in Q2 June 2020 over Q2 June 2019. Post lockdown restriction imposed by the Government of India due to the COVID-19 pandemic, sales volumes got severely impacted in the last 10 days of March 2020 and through-out the second quarter. EBITDA tumbled 52.1% to Rs 377.70 crore in Q2 June 2020 from Rs 787.90 crore in Q2 June 2019. While, gross margins improved by 300 bps during Q2 2020 primarily due to favorable PET chips prices and higher mix of CSD. EBITDA margin fell 501 bps in Q2 FY2020 compared with Q2 FY2019.
VST Industries jumped 7.69% after standalone net profit rose 0.03% to Rs 75.71 crore on 19.4% decline in net sales to Rs 245.39 crore in Q1 June 2020 over Q1 June 2019. Profit before tax (PBT) dropped 13.2% to Rs 102.02 crore in Q1 June 2020 as against Rs 117.54 crore in Q1 June 2019. Current tax expense for the quarter tumbled 35.4% at Rs 27.11 crore as against Rs 41.99 crore in Q1 June 2019. The company said that despite the challenging context of COVID-19 disrupting markets, the firm delivered a resilient performance which is a reflection of its intrinsic strength.
Hikal slumped 15.70% after the company's consolidated net profit tumbled 40.5% to Rs 15 crore on a 12.6% decline in net sales to Rs 347.13 crore in Q1 FY21 over Q1 FY20.
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