Domestic shares corrected on Friday, tracking negative cues from global stock markets. The Nifty ended below the 9,200 mark. Financial stocks witnessed major selling while pharma stocks bucked trend.
The barometer S&P BSE Sensex, tumbled 535.86 points or 1.68% at 31,327.22. The Nifty 50 index slipped 159.50 points or 1.71% at 9,154.40.
In the broader market, the S&P BSE Mid-Cap index fell 1.77% while the S&P BSE Small-Cap index lost 1.40%.
The market breadth was weak. On the BSE, 775 shares rose and 1579 shares fell. A total of 164 shares were unchanged.
Investors locked profits after the Nifty rose 3.70% and the Sensex climbed 4% in the previous two sessions.
The Covid-19 pandemic continued to spook investors. Total Covid-19 confirmed cases worldwide stood at 27,16,917 so far with 190,985 deaths. India reported over 17,610 cases of COVID-19 infection and over 718 deaths, according to the data from the Ministry of Health and Family Welfare, Government of India.
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The trading sentiment was also impacted by Franklin Templeton Mutual Fund deciding to close six debt schemes citing lack of liquidity in the debt market and unprecedented redemptions in these yield-oriented schemes.
Association of Mutual Funds in India (AMFI), the mutual fund industry body, on Friday (24 April) assured investors that majority of fixed income mutual funds AUM is invested in superior credit quality securities and schemes have appropriate liquidity to ensure normal operations.
The action taken by the particular AMC is limited to the six specific credit risk fixed income schemes managed by the said AMC due to the illiquidity of their portfolios. The assets under management (AUM) of these six schemes constitute less than 1.4% of the Indian Mutual Fund Industry's aggregate AUM as on 31 March 2020. Fixed income schemes of most mutual funds have superior credit quality as confirmed by ratings of independent credit rating agencies and continue to remain fairly liquid even in these challenging times.
Sebi regulations allow mutual funds schemes to borrow up to 20% of their assets to meet liquidity needs for redemption/dividend pay-out. While AMFI is in the process of collecting the data, many Mutual funds have informed that they don't have any outstanding borrowing. Liquidity, maturity profile and credit quality for debt funds is appropriate for day to day operations to continue uninterruptedly. AMFI expects fixed income funds across entire Mutual Fund Industry to continue their normal operation without any material impact.
SEBI Relaxation:
The market regulator, the Securities and Exchange Board of India (Sebi), on 23 April 2020, eased the 12-month cooling-off period that companies have to observe between buybacks and equity fundraising. The current one-year cooling-off period has been reduced to six months to enable quicker access to capital. This relaxation will be applicable till 31 December 2020, Sebi said in a circular. Currently, buyback regulation restrict companies from raising further capital for a period of one year from the expiry of buyback period, except in discharge of their subsisting obligations.
On 21 April 2020, Sebi notified further changes to rights issues guidelines in order to make such share sales easier for listed companies. Based on the new norms, a company that has been listed on the stock exchanges for 18 months can raise funds via a rights issue, as opposed to the earlier norms that allowed firms that were listed for at least three years to undertake a rights offer. Further, the eligibility criteria of average market capitalization of public shareholding of the issuer has been relaxed to Rs 100 crore from the earlier Rs 250 crore. The minimum subscription required for a rights issue to be considered successful has also been relaxed to 75% from the previous 90%, if out of the total funds raised at least 75% of the issue size is utilized for the objects of the issue other than general corporate purposes.
Numbers to Track:
In the foreign exchange market, the partially convertible rupee edged lower to 76.46 compared with its previous closing of 76.0625.
The yield on 10-year benchmark federal paper rose to 6.172% as compared with 6.060% in the previous trading session.
MCX Gold futures for 5 June 2020 settlement rose 0.98% to Rs 46,880.
In the commodities market, Brent crude for June 2020 settlement was up 75 cents to $22.08 a barrel. The contract rose 96 cents or 4.71% to settle at $21.33 a barrel in the previous trading session.
Global Markets:
Stocks in Europe and Asia fell across the board on Friday after an overnight report raised doubt regarding Gilead drug as a potential coronavirus treatment. Media reports cited documents suggesting that Gilead Sciences' drug remdesivir did not improve coronavirus patients' condition.
Meanwhile, retail sales across the UK have fallen at a record pace under the lockdown, but demand for alcohol has soared. The latest retail sales figures, just released, show that monthly retail sales volume fell by 5.1% in March. That's the largest monthly fall since the series began, and shows the impact of shutting non-essential stores last month.
In US, markets ended near flat line on Thursday after a report that an experimental antiviral drug for the coronavirus flopped in its first randomized clinical trial.
The US House of Representatives overwhelmingly approved a $484 billion coronavirus relief bill on Thursday, funding small businesses and hospitals and pushing the total spending response to the crisis to an unprecedented near $3 trillion. The measure passed the Democratic-led House by a vote of 388-5, with one member voting present. House members were meeting for the first time in weeks because of the coronavirus pandemic.
The IHS Market flash purchasing managers index for the service sector fell to a record low in April, while the manufacturing PMI weakened to the lowest level in 11 years, as business activity has slumped due to the lockdowns to combat the coronavirus pandemic.
The flash services PMI fell to 27 from 39.8 in March while the manufacturing PMI dropped to 36.9 from 48.5.
Buzzing Indian Segments:
The Nifty Pharma index rose 1.38% to 9,518.45. The index rose 1.51% in two sessions.
Alkem Laboratories (up 8.76%), Strides Pharma (up 7.98%), Lupin (up 6.73%), Ipca Laboratories (up 5.39%), Cipla (up 2.21%), Sun Pharmaceutical Industries (up 1.67%), Cadila Healthcare (up 1.57%), Glenmark Pharmaceuticals (up 1.44%), GlaxoSmithKline Pharmaceuticals (up 0.74%) and Divis Laboratories (up 0.06%) advanced.
Shares of asset management companies (AMC) declined on fears of increased redemption pressure after Franklin Templeton Mutual Fund announced the winding up of six of its debt schemes. HDFC Asset Management Company (down 6.38%) and Nippon Life India Asset Management (down 17.82%) tumbled.
"There has been a dramatic and sustained fall in liquidity in certain segments of the corporate bonds market on account of the Covid-19 crisis and the resultant lock-down of the Indian economy which was necessary to address the same. At the same time, mutual funds, especially in the fixed income segment, are facing continuous and heightened redemptions," Franklin Templeton Mutual Fund said in statement issued late on Thursday.
Shares of life insurance companies tumbled after their new business premiums declined in March. SBI Life Insurance Company (down 5.12%), HDFC Life Insurance Company (down 7.06%) and ICICI Prudential Life Insurance Company (down 6.84%) declined.
The private life insurers reported an aggregated 34.22% decline in premiums in March 2020 over March 2019. In total, their new premiums rose 11.64% year-on-year (YoY) for the year ended on 31 March 2020 (FY20) to Rs 80919.40 crore. They ended FY20 with a 31.26% market share of first-year premiums.
LIC of India reported 31.12% decline in first year premiums in March 2020 over March 2019. The company posted 25.17% YoY rise in new premiums for the full year to Rs 177977.08 crore. It ended FY20 with a 68.74% market share of first-year premiums.
In the listed space, SBI Life reported 41.36% decline in first year premiums in March 2020 over March 2019. The company posted 20.30% YoY rise in new premiums for the full year to Rs 16591.82 crore. It ended FY20 with a 6.41% market share of first-year premiums.
HDFC Life reported 19.26% decline in first year premiums in March 2020 over March 2019. The company posted 16.20% YoY rise in new premiums for the full year to Rs 17396.25 crore. It ended FY20 with a 6.72% market share of first-year premiums.
ICICI Prudential Life reported 32.26% decline in first year premiums in March 2020 over March 2019. The company posted 20.45% YoY rise in new premiums for the full year to Rs 12348.11 crore. It ended FY20 with a 4.77% market share of first-year premiums.
Stocks in Spotlight:
ICICI Bank (down 5.09%), HDFC (down 5%), Infosys (down 2.97%), TCS (down 3.12%) and HDFC Bank (down 1.79%) tumbled, putting pressure on the benchmarks.
Index major Reliance Industries rose 3.34% to Rs 1417.35, supporting indices at lower levels. RIL extended recent gains triggered by the $5.7 billion (Rs 43,574 crore) investment by Facebook in Reliance Jio Platforms on 22 April 2020.
Larsen & Toubro (L&T) rose 1.18%. The infra major major bagged a significant contract from Kyosan Electric Manufacturing Co. (Japan) and Eastern Dedicated Freight Corridor (EDFC). As per the L&T's classification, the valuation of the 'significant' order stands between Rs 1,000 crore and 2,500 crore. The news was disclosed during market hours today, 24 April 2020.
Bharti Infratel tumbled 8.46%. The company's consolidated net profit rose 7% to Rs 649.50 crore on a 1% increase in revenue to Rs 3624.40 crore in Q4 March 2020 over Q4 March 2019. Consolidated profit before tax fell 14% to 866.20 crore during the period under review. EBITDA rose 12% to Rs 1,721 crore in Q4 March 2020 over Q4 March 2019.
The company added 1,128 towers and 431 co-locations during the last quarter of FY20. It now operates 95,372 towers and 1,74,581 co-locations.
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