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Market snaps four-day gaining streak

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Capital Market
Last Updated : Aug 06 2021 | 6:50 PM IST
Benchmark indices snapped four-day gaining streak to close with modest losses on Friday. The Nifty closed below the 16,250 level after trading above that range for most part of the day. The Reserve Bank of India kept repo rate unchanged at 4%.

As per the provisional closing data, the barometer index, the S&P BSE Sensex, dropped 215.12 points or 0.39% at 54,227.24. The Nifty 50 index fell 56.4 points or 0.35% at 16,238.75.

Broader markets outperformed the benchmark indices. The S&P BSE Mid-Cap index rose 0.23% while the S&P BSE Small-Cap index gained 0.28%.

Buyers outnumbered the sellers. On the BSE, 1,827 shares rose and 1,388 shares fell. A total of 114 shares were unchanged.

COVID-19 Update:

Total COVID-19 confirmed cases worldwide stood at 20,09,26,244 with 42,67,726 deaths. India reported 4,14,159 active cases of COVID-19 infection and 4,26,754 deaths while 3,10,15,844 patients have been discharged, according to the data from the Ministry of Health and Family Welfare, Government of India.

Economy:

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The Reserve Bank of India (RBI) kept the policy repo rate unchanged at 4% while maintaining its accommodative stance after the conclusion of the Monetary Policy Committee (MPC) meeting today, 6 August 2021.

RBI's MPC began its bi-monthly monetary policy deliberations on Wednesday, 4 August 2021. Following the meet, RBI on Friday (6 August 2021) kept the benchmark interest rate unchanged amid COVID-19 uncertainty. Repo rate (lending rate) will continue at 4% and reverse repo rate (RBI's borrowing rate) at 3.35%.

MPC sees CPI inflation at 5.7% in 2021-22 as against 5.1% projected earlier. The CPI inflation is expected to be 5.9% in Q2 FY22, 5.3% in Q3 FY22, 5.8% in Q4 FY22. The CPI inflation is projected to be at 5.1% in Q1 FY23. GDP growth is projected at 9.5% in Financial Year 2021-22.

Supreme Court rules in favour of Amazon:

Shares of RIL and Future Group companies tumbled on Friday after the Supreme Court reportedly upheld the Singapore-based emergency arbitrator's award which stalled the proposed deal between Future Retail and Reliance Group.

Future Enterprises (down 10%), Future Lifestyle Fashions (down 10%), Future Retail (down 10%), Future Supply Chain Solutions (down 10%), Future Consumer (down 8.82%) and Future Market Networks (down 5%) all declined.

Meanwhile, shares of Reliance Industries slipped 1.94% to Rs 2091.90 on BSE.

According to media reports, the Supreme Court of India on Friday allowed the appeal filed by the firm against a Delhi High Court order staying attachment of properties of Future Group companies and Kishore Biyani in relation to the Rs 24,713-crore Future-Reliance deal. The Bench of Justices Rohinton Fali Nariman and BR Gavai reportedly held that the order of an emergency arbitrator is enforceable in India, under Section 17(2) of the Arbitration Act.

As per media reports, a division bench of the Delhi High Court had stayed an order passed by the single judge. They had reportedly directed the attachment of properties of Future Group companies and Kishore Biyani in relation to the Future-Reliance deal. The single judge order of the high court had upheld the award of an emergency arbitrator, directed attachment of the properties and restrained Future Retail Limited from going ahead with the Rs 24,713 crore merger with Reliance Retail, media reports said.

New Listing:

Shares of Glenmark Life Sciences were trading at Rs 747.85 apiece, at a premium of 3.87% as compared to the issue price of Rs 720 per share. The stock listed at price of Rs 751.10 per share, representing 4.32% premium to the issue price. So far, the stock has hit a high of Rs 795 and a low of 737.35. Over 12.53 lakh shares of the company were traded in the counter on the BSE. The initial public offer received bids for 66.33 crore shares as against 1.50 crore shares on offer, according to stock exchange data. The issue was subscribed 44.17 times. The issue opened for bidding on Tuesday (27 July 2021) and closed on Thursday (29 July 2021). The price band of the IPO was fixed at Rs 695-720 per share.

Earnings Impact:

Mahindra & Mahindra (M&M) fell 0.38%. The company's net profit before exceptional items surged to Rs 934 crore in Q1 FY22 from Rs 39 crore in Q1 FY21. The company's net profit after adjusting for exceptional items was Rs 856 crore in Q1 FY22 as against Rs 68 crore in Q1 FY21. Revenue rose by 110% to Rs 11,763 crore in Q1 FY22 from Rs 5,589 crore in Q1 FY21. EBITDA increased by 185% to Rs 1,632 crore in the first quarter from Rs 573 crore reported in the same period last year. Total vehicles sold aggregated to 85,858 units in Q1 FY22, up by 190% from 29,619 units sold in Q1 FY21. Total tractors sold rose by 52% to 99,127 units in Q1 FY22 from 65,195 units in Q1 FY21. The company's operating margin was at 13.9% despite COVID-19 challenges and commodity price increases. The company continued to focus on cost optimization and operating leverage helped maintain margins.

Strides Pharma Science slumped 6.59% after the company reported a consolidated net loss of Rs 205.2 crore in Q1 FY22 as against a net profit of Rs 103.56 crore in Q1 FY21. Revenue from operations declined by 12% YoY to Rs 688.36 crore during the quarter. Total expenses increased by 17.1% to Rs 834.93 crore in Q1 FY22 over Q1 FY21, due to higher raw material costs (up 14.5% YoY) and higher other expenses (up 17.4% YoY). The company posted a pre-tax loss of Rs 244.10 crore in Q1 FY22 as compared with a pre-tax profit of Rs 105.12 crore in Q1 FY21.

Quess Corp rose 2%. The company's net profit soared 22.4% to Rs 44.63 crore on a 24% jump in net sales to Rs 2,986.91 crore in Q1 FY22 over Q1 FY21. Increase in revenues were mainly driven by General Staffing (26%), Conneqt (36%) and Industrials (32%). Consolidated profit before tax surged 47.8% to Rs 80.20 crore in Q1 FY22 as against Rs 54.26 crore in Q1 FY21.

Adani Power was locked in an upper circuit of 5%. The company reported a consolidated net profit of Rs 278 crore in Q1 FY22 as against a net loss of Rs 682 crore in Q1 FY21. Consolidated total revenue for Q1 FY22 stood at Rs 7,213 crore, up by 34.7% from Rs 5,356 crore in Q1 FY21. The consolidated revenue for Q1 FY22 includes recognition of prior period net revenue from operations of Rs 125 crore and prior period other income of Rs 532 crore, primarily on account of various regulatory orders and delayed payments by DISCOMs. In comparison, prior period recognition amounted to Rs 8 crore as revenue from operations and a negative other income of Rs 5 crore as in Q1 FY21. Consolidated EBITDA for Q1 FY22 grew higher by 49% to Rs 2,292 crore as compared to Rs 1,541 crore for Q1 FY21. EBITDA for the quarter improved mainly due to higher volumes, improved merchant tariffs, and higher prior period income recognition, which was partially offset by higher import coal prices.

Thermax fell 0.02%. The company reported a consolidated net profit of Rs 42.40 crore in Q1 FY22 as against a net loss of Rs 15.27 crore in Q1 FY21. Net sales during the quarter increased by 58.3% YoY to Rs 1,052.36 crore. The company reported a pre-tax profit of Rs 56.26 crore in Q1 FY22 as compared with a pre-tax loss of Rs 22.49 crore in Q1 FY21. As on 30 June 2021, order booking for the quarter was 179 % higher at Rs 1,696 crore as compared with Rs 608 crore in the corresponding quarter last year.

Global Markets:

European markets were muted across the board on Friday as investors monitored a fresh round of corporate earnings and the global spread of the delta COVID-19 variant. The German industrial output fell unexpectedly by 1.3% in June 2021, its second consecutive monthly decline, according to the Federal Statistics Office. The Bank of England on Thursday left its monetary policy unchanged, but warned of a more pronounced period of above-target inflation in the near term.

Asian stocks traded mixed on Friday as investors await the release of a closely watched US jobs report.

The major U.S. equity indexes rose Thursday and the S&P 500 set a new record closing high as energy and travel stocks bounced back ahead of a key labor market report.

The number of Americans filing new claims for unemployment benefits declined further last week. Initial claims for state unemployment benefits fell 14,000 to a seasonally adjusted 385,000 for the week ended July 31. The claims data was the last reading before the key July jobs report, which will be released on Friday morning. The jobs report is expected to be a key data point for the Federal Reserve as it considers when to tighten monetary policy.

A surge in imports of industrial supplies drove the US trade deficit to a record in June. The trade gap widened by $4.6 billion to $75.7 billion, a nearly 7% increase compared to May, the Commerce Department reported. Imports of goods and services jumped $6 billion, most of which was accounted for by the rise in industrial materials and supplies such as iron, steel and chemicals, as well as a $1.2 billion increase in non-monetary gold.

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First Published: Aug 06 2021 | 3:35 PM IST

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