Domestic shares slumped on Thursday, tracking weak global cues. Trading was volatile due expiry of weekly index options. The barometer S&P BSE Sensex tumbled 885.72 points or 2.77% at 31,122.89. The Nifty 50 index lost 240.80 points or 2.57% at 9,142.75.
The Nifty saw a gap down opening at 9,213.95. The index traded sideways with steep losses till afternoon session. Selling pressure intensified in afternoon which dragged the index below 9200 level.
A weak economic outlook by the US Fed and worries about a second wave of coronavirus infections weighed on domestic and global markets. Domestic investors shrugged off a number of measures announced by the Indian government to support MSMEs and NBFCs.
In the broader market, the S&P BSE Mid-Cap index fell 0.39% while the S&P BSE Small-Cap index declined 0.63%.
The market breadth was negative. On the BSE, 968 shares rose and 1360 shares fell. A total of 152 shares were unchanged.
COVID-19 Update:
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Total COVID-19 confirmed cases worldwide stood at 43,64,172 far with 2,97,491 deaths. India reported 49,219 active cases of COVID-19 infection and 2,549 deaths, according to the data from the Ministry of Health and Family Welfare.
Economy:
The government on Thursday released truncated data for April wholesale price-based inflation saying there was limited transaction of products in the market due to the outbreak of COVID-19. As per the data released by the Commerce and Industry Ministry, wholesale price index (WPI) deflation in primary articles was 0.79% in April, as against an inflation of 3.72% in March. The fuel and power basket saw a deflation of 10.12% in April, against 1.76% deflation in the previous month. All commodities WPI could not be computed for April-2020 due to non- availability of manufactured product group index, it added.
Finance Minister Nirmala Sitharaman on Wednesday unveiled measures entailing a series of initiatives for micro, small and medium enterprises, including Rs 3 lakh crore worth of collateral-free automatic loans for businesses. A subordinate debt of Rs 20,000 crore for stressed units, a Fund of Funds for equity infusion of Rs 50,000 crore, and revision in the definition of MSMEs are among the steps announced by the government to help MSMEs recover from disruptions caused by the coronavirus-related lockdown.
Further, the scheme introduced as part of PM Garib Kalyan Package (PMGKP) under which Government of India contributes 12% of salary each on behalf of both employer and employee to employees provident fund (EPF) will be extended by another 3 months for salary months of June, July and August 2020, the FinMin said. Total benefits accrued is about Rs 2500 crores to 72.22 lakh employees.
She further added that the statutory PF contribution of both employer and employee reduced to 10% each from existing 12% each for all establishments covered by EPFO for next 3 months. This will provide liquidity of about Rs.2250 Crore per month.
FinMin announced a Rs 30,000 crore special liquidity scheme for non-banking financial companies, microfinance companies, housing finance companies. Under this scheme investment will be made in both primary and secondary market transactions in investment grade debt paper of NBFCs/HFCs/MFIs.
Sitharaman also unveiled liquidity injection for power distribution companies. With demand reduction, DISCOMs are facing an unprecedented cash flow problem. PFC/REC will infuse liquidity of Rs 90,000 crore to DISCOMs against receivables.
The government announced extension of up to six months for all government contractors for completion of contractual obligations, including in respect of EPC and concession agreements.
It also offered relief to Real Estate Projects with repect to the registration and completion date for all registered projects will be extended up to six months.
On the tax front, the government announced immediate release of pending income tax refunds to charitable trusts and non-corporate businesses and professions. It also announced reduction in rates of 'Tax Deduction at Source (TDS)' and 'Tax Collected at Source (TCS)' by 25% for the remaining period of FY 20-21 and extended the due dates for various tax related compliances.
Numbers to Track:
The yield on 10-year benchmark federal paper fell to 6.059% compared with previous closing of 6.095% in the previous trading session.
In the foreign exchange market, the partially convertible rupee edged lower to 75.5625 compared with its previous closing of 75.46.
In the commodities market, Brent crude for July 2020 settlement was up $1.27 to $30.46 a barrel. The contract lost 2.64% to settle at $ 29.19 a barrel in the previous trading session.
MCX Gold futures for 5 June 2020 settlement rose 0.51% to Rs 46,215.
Global Markets:
European shares were trading lower while Asian markets ended in the red as fresh worries about a second wave of coronavirus infections dented sentiment.
On the economic data front, seasonally adjusted employment in Australia fell by 594,300 people in April as compared to March, according to data released by the country's Bureau of Statistics on Thursday.
In US, stock benchmarks closed sharply lower Wednesday as Wall Street digested a grim near-term economic outlook from Federal Reserve Chairman Jerome Powell, amid attempts by state and federal officials to restart businesses from a coronavirus-induced lockdown.
Powell gave a solemn assessment of the US economy and called for more government spending if that is what it takes to avoid "long-term economic damage" from the coronavirus pandemic.
Meanwhile, President Donald Trump on Wednesday said that top coronavirus health expert Dr. Anthony Fauci's recent warning about the potentially dire consequences of reopening states.
Buzzing Indian Segments:
The Nifty IT index slumped 3.51% to 13,293.70. The index jumped 3.64% in past four days.
Mindtree (down 5.58%), Tech Mahindra (down 5.24%), Infosys (down 5.16%), Persistent Systems (down 2.88%), TCS (down 2.5%), Hexaware Technologies (down 2.49%), HCL Technologies (down 2.2%) and Wipro (down 1.92%) declined.
Mphasis rose 0.14%. Consolidated net profit jumped 20.30% to Rs 353.23 crore on a 3.05% increase in net sales to Rs 2,346.15 crore in Q4 March 2020 over Q3 December 2019. Profit before tax soared 7.37% to Rs 414.99 crore in Q4 March 2020 as against Rs 386.50 crore in Q3 December 2019.
The Nifty FMCG index rose 0.70% to 26,933.65. The index fell 0.41% in the previous session.
Marico (up 3.73%), Dabur India (up 3.37%), Colgate-Palmolive (India) (up 2.48%), Tata Consumer (up 2.22%), Britannia Industries (up 0.96%), Procter & Gamble Hygiene & Health Care (up 0.73%) and Hindustan Unilever (up 0.56%) advanced.
Godrej Consumer Products added 5.42%. On a consolidated basis, Godrej Consumer Products reported a 75.42% drop in net profit to Rs 229.90 crore on a 12.2% drop in net sales to Rs 2132.69 crore in Q4 March 2020 over Q4 March 2019. Consolidated profit before tax (PBT) fell 32.54% to Rs 337.30 crore in Q4 March 2020 over Q4 March 2019. Consolidated business EBITDA declined 18% year on year (YoY) in Q4 March 2020 while consolidated constant currency EBITDA declined by 15% year-on-year in the same period. The company said consolidated EBIDTA margins declined to 22.3%. The company said it has temporarily deferred its outlook for FY21 driven by progression of COVID-19 and related uncertainties. The company said complete pause on sales due to disruption of both back end and front end supply chain took a hit.
Earnings Impact:
Escorts fell 1.95% to Rs 796.40. The company reported 9.71% rise in consolidated net profit to Rs 127.73 crore on a 15.97% fall in revenue from operations to Rs 1385.65 crore in Q4 March 2020 over Q4 March 2019. Tractor sales fell 20% 20,108 units in quarter ended March 2020 as against 25,136 units in the corresponding period last fiscal. Construction equipment sales were down 32.2% to 986 units in Q4 FY20 as against 1,455 units in Q4 FY19. Accordingly, revenue from agri-machinery products stood at Rs 1060.51 crore (down 14.80% YoY) and construction equipments revenue was at Rs 210.02 (down 28.32% YoY). Income from sale of railway equipments rose 4.33% YoY to Rs 107.97 crore during the quarter. Order book for the company's railway division stood at more than Rs 500 crore as at end of March 2020, that will get executed in the next 12 to 15 months.
Schaeffler India rose 0.05% after net profit fell 26.4% to Rs 78.35 crore on 20.8% decline in net sales to Rs 928.54 crore in Q1 March 2020 over Q1 March 2019. Profit before tax (PBT) fell 32.2% to Rs 110.07 crore in Q1 CY2020 from Rs 162.26 crore reported in Q1 CY2019. Current tax expenses stood at Rs 32 crore in Q1 March 2020, down by 39.1% from Rs 52.55 crore in Q1 March 2019.
Siemens gained 0.12% after consolidated net profit tumbled 38.17% to Rs 175.70 crore on 21% decrease in net sales to Rs 2,756.90 crore in Q2 March 2020 over Q2 March 2019. The decline in revenues across the businesses is primarily due to deferred offtake by customers and slow-down in short-cycle business related to COVID-19 pandemic as well as continued weaker demand in large infrastructure projects. Siemens' order backlog for Q2 March 2020 stood at Rs 12,547 crore.
ABB India slipped 2.44% after it reported 25.84% fall in profit after tax to Rs 66 crore on a 17.73% decline in revenues to Rs 1,522 crore in Q1 March 2020 over Q1 March 2019. Orders rose 9.72% to Rs 1,953 in Q1 CY2020 from Rs 1,780 in Q1 CY2019. Operational EBITA contracted by 65.87% to Rs 43 crore in Q1 March 2020 from Rs 126 crore in Q1 March 2019. Operational EBITA margin stood at 2.8% in Q1 CY2020 as compared to 6.8% in Q1 CY2019. Profit before tax in the first quarter of CY2020 fell to Rs 87 crore, down by 37.41% from Rs 139 crore reported in the corresponding period last year.
Stocks in Spotlight:
Lupin gained 2.76% after the company said its active pharmaceutical ingredient facility in Visakhapatnam received establishment inspection report from the US drug regulator. The US Food and Drug Administration (USFDA) conducted the inspection of the Visakhapatnam (Vizag) facility between 13 and 17 January 2020.
CSB Bank slipped 2.63%. The bank said its total deposits rose 4.41% to Rs 15,790.66 crore (provisional) in Q4 March 2020 over Q4 March 2019. Out of the total deposits, CASA deposits grew 9.40% to Rs 4606.58 crore and term deposits rose 4.30% to Rs 11,184.08 crore year-on-year (YoY) during the quarter. Advances against gold & gold jewellery jumped 28.54% to Rs 3790.11 crore in Q4 March 2020 over Q4 March 2019. Gross advances were up 6% to Rs 11,558.9 crore. Liquidity coverage ratio stood at 245% as compared to 214.80% during the same period last year.
HUDCO ended flat at Rs 23.70. The company on Thursday (14 May) said it achieved loan sanctions of Rs 19942.04 crore and loan releases of Rs 10121.83 crore as on 31 March 2020 for the financial year 2019-2020.
PNC Infratech rose 2.27% after the company said that NHAI has declared the company as lowest bidder for a highway project in Uttar Pradesh under Bharatmala Pariyojana on Hybrid Annuity Mode (HAM) for Rs 1,412 crore.
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