The domestic equity barometers ended with solid gains on Friday with the Nifty closing above the 16,500 mark. Investors sentiment improved after India's retail inflation fell below the Reserve bank of India (RBI)'s threshold of 6% in July 2021. IT, FMCG, metal and banks shares advanced while pharma shares declined for the fourth session.
The barometer index, the S&P BSE Sensex, advanced 593.31 points or 1.08% to 55,437.29. The Nifty 50 index added 164.70 points or 1.01% to 16,529.10. Both the indices attained record closing levels.
The Sensex hit a record high of 55,487.79 and the Nifty hit a record high of 16,543.60 in mid-afternoon trade. The Nifty has risen 1.79% in five consecutive sessions while the Sensex has risen 1.67% in two straight sessions.
Tata Steel (up 1.83%), Reliance Industries (up 1.63%), HDFC Bank (up 1.58%) and HDFC (up 1.29%) boosted the indices.
The broader market lagged the benchmark indices. The S&P BSE Mid-Cap index fell 0.06% and the S&P BSE Small-Cap index fell 0.01%.
The market breadth was negative. On the BSE, 1,565 shares rose and 1,651 shares fell. A total of 124 shares were unchanged.
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COVID-19 Update:
Total COVID-19 confirmed cases worldwide stood at 20,54,26,299 with 43,34,808 deaths. India reported 3,85,227 active cases of COVID-19 infection and 4,30,254 deaths while 3,13,02,345 patients have been discharged, according to the data from the Ministry of Health and Family Welfare, Government of India.
Economy:
India's retail inflation eased to a three-month low in July 2021 on the back of softening food prices. The consumer price index (CPI) based inflation cooled to 5.59% in the last month from 6.26% in June 2021, government data released on Thursday showed. Food inflation fell substantially to 3.96% in July 2021 from 5.15% in June 2021.
Meanwhile, India's industrial activity was affected due to the nationwide COVID-19 lockdown last year in April 2021 and May 2021 but had picked up June 2021 onwards. Industrial output for the month of June 2021 rose 13.6%. Factory output, measured by the Index of Industrial Production (IIP) had contracted 16.6% in the same month of last year and rose by 29.3% in May 2021.
Vehicle Scrappage Policy:
Prime Minister Narendra Modi launched the much-awaited vehicle scrappage policy while virtually addressing the Investor Summit in Gujarat on Friday.
In a series of tweet, the Prime Minister said, "The launch of Vehicle Scrappage Policy today is a significant milestone in India's development journey. The Investor Summit in Gujarat for setting up vehicle scrapping infrastructure opens a new range of possibilities. I would request our youth & start-ups to join this programme.
Vehicle scrapping will help phase out unfit & polluting vehicles in an environment friendly manner. Our aim is to create a viable #circulareconomy & bring value for all stakeholders while being environmentally responsible."
In another tweet, PM Modi said the vehicle scrappage policy will bring in investments of around Rs 10,000 crore. He also urged the youth and start-ups to join this programme.
Numbers to Track:
In the foreign exchange market, the partially convertible rupee rose to 74.2475 from its previous closing of 74.2550.
MCX Gold futures for 5 October 2021 settlement rose 0.47% to Rs 46,580.
The US Dollar index (DXY), which tracks the greenback's value against a basket of currencies, was down 0.13% to 92.91.
The yield on 10-year benchmark federal paper rose to 6.243% from its previous close of 6.226%.
In the commodities market, Brent crude for October 2021 settlement declined 16 cents or 0.22% to $71.15 a barrel.
Global Markets:
European shares rose across the board while most Asian markets ended lower on Friday.
Investors assessed global economic indicators and rising COVID-19 cases in the search for direction. The spread of the delta COVID-19 variant and China's regulatory curbs dampened sentiment despite another record high close on Wall Street.
The focus in China remains on Beijing's push to exert more control over a range of industries. In real estate, the nation is suspending private equity funds from raising money to invest in residential property development. Separately, a partial shutdown of a major Chinese port due to a virus outbreak stoked concerns about a repeat of last year's pandemic shipping woes.
In US, the Dow and S&P 500 jumped to record closes for a third straight day on Thursday, with mega-cap technology stocks driving the market higher as investors warmed to jobs data showing a steady U.S. economic recovery.
The Labor Department reported Thursday morning that initial jobless claims declined slightly last week as the U.S. labor market continues its recovery from last year's recession. There were 375,000 claims last week. The prior reading came in at 385,000 claims, but was revised to 387,000.
Buzzing Index:
The Nifty IT index rose 1.35% to 32,678.80. The index has risen 3.19% in two sessions.
TCS (up 3.11%), HCL Technologies (up 2.5%), Wipro (up 1.68%) and Infosys (up 1.44%) advanced.
Mindtree (down 0.19%), Tech Mahindra (down 0.23%), Larsen & Toubro Infotech (down 0.25%), Mphasis (down 0.67%), Coforge (down 0.84%) and Oracle Financial Services Software (down 1.31%) declined.
Stocks in Spotlight:
Grasim Industries advanced 0.35%. On a consolidated basis, the company's net profit jumped 612% to Rs 1,667 crore on a 53% rise in revenue to Rs 19,919 crore in Q1 FY22 over Q1 FY21.
In Grasim's Viscose business, the VSF sale volume registered sequential degrowth in Q1FY22. To cushion the impact of the slowdown in the domestic textile sector, Grasim proactively increased the share of exports to 31% in Q1FY22 from 11% in Q4FY21. The share of value-added products in the overall sales mix also improved to 26% in Q1FY22 from an average of 22% in FY21. Due to the lockdown-led drop in domestic volume, the company advanced the Harihar plant maintenance shutdown to May 2021.
Grasim' chemical business had a marginal impact on the operational performance. International caustic soda prices maintained the upsurge in Q1FY22 driven by supply outages due to maintenance shutdown and demand improvement. The rise in domestic caustic soda prices was subdued owing to weak demand from textile, organic chemicals and excess supply situation. The caustic soda capacity utilisation stood at 85% in Q1FY22, higher than the industry average. The Advanced Materials business reported its best-ever performance in Q1FY22, driven by strong demand scenario and better pricing environment globally and in India. The company said demand continues to be driven by the wind and auto segments.
The company said its Paint business is making progress in line with the plans. Land acquisition for setting up plants at different states is in process, and simultaneously project engineering plans are also progressing.
Larsen & Toubro (L&T) rose 2.78%. The heavy engineering arm of L&T won all order for oxidation reactor from Technip Energies-India. This order for the technologically critical Titanium Clad reactor is for a Public Sector Petrochemical project for Purified Terephthalic Acid plant. The scope of supply involves design, material procurement, fabrication, inspection and testing of reactor to meet the licensors stringent quality requirements.
Gujarat Fluorochemicals rose 2.37%. The company's consolidated net profit jumped 115.36% to Rs 151.16 crore on 63.27% rise in revenue from operations to Rs 911.94 crore in Q1 FY22 over Q1 FY21. On a sequential basis, net profit increased by 37% while revenue from operations grew by 8.53% in Q1 FY22 over Q4 FY21.
Wockhardt jumped 4.66%. The company entered into agreement with Dubai-based Enso Healthcare and Human Vaccine LLC for the manufacture and supply of the Sputnik V/ Sputnik Light vaccine against COVID-19. Enso Healthcare DMCC, is a company incorporated in Dubai, UAE while Human Vaccine LLC is a wholly owned subsidiary of the Management Company of Russian Direct Investment Fund, the sovereign wealth fund of the Russian Federation.
Bharti Airtel added 2.21%. The telecom major announced the closure of its agreement with Reliance Jio Infocomm to transfer the 'right to use' of 800 MHz spectrum in three circles to Jio. As per the agreement, Airtel has received Rs 1,004.8 crore (net of tax) from Jio for the proposed transfer. In addition, Jio will assume future liabilities of Rs 469.3 crore relating to the spectrum.
Aurobindo Pharma slumped 7.82%. The company posted an 8.9% rise in consolidated net profit to Rs 770 crore on 2.9% rise in net sales to Rs 5,702 crore in Q1 FY22 over Q1 FY21. The company's Research & Development (R&D) spend stood at Rs 358 crore, representing 6.3% of revenue.
The drug company's US formulations revenue declined by 1.5% to year on year to Rs 2,681.2 crore Q1 FY22. Europe formulation revenue stood at Rs 1,582.9 crore, growing by 19.7% over corresponding previous quarter. Revenue from Growth Markets rose 13.7% year on year to Rs 329.30 crore. ARV revenue declined by 30.3% year on year to Rs 296.4 crore. API revenue for the quarter was at Rs 812 crore versus Rs 780.1 crore in the corresponding previous period.
GMM Pfaudler tumbled 5.28%. The company reported a consolidated net loss of Rs 18.4 crore in Q1 FY22 as against a net profit of Rs 19.19 crore in Q1 FY21. Net sales soared 257% to Rs 551.68 crore in Q1 FY22 over Q1 FY21.
Cadila Healthcare rose 2.63%. The drug major on Friday announced that it has received final approval from the US drug regulator to market mesalamine extended-release capsules in the strength of 0.375 g. Mesalamine extended-release capsules are indicated for the maintenance of remission of ulcerative colitis in adults. The drug will be manufactured at the group's formulation manufacturing facility at the SEZ, Ahmedabad.
Tata Steel rose 1.83%. The steel major's consolidated net profit stood at Rs 9,768.34 crore in Q1 June 2021 (Q1 FY22) compared with net loss of Rs 4,648.13 crore in Q1 June 2020 (Q1 FY21). Consolidated revenue from operations surged 109.51% to Rs 53,371.81 crore in Q1 FY22 as against Rs 25,474.52 crore in Q1 FY21.
On a consolidated basis, production grew 42.23% to 7.88 million tonnes in Q1 FY22 from 5.54 million tonnes in Q1 FY21. Deliveries climbed 33.14% to 7.11 million tonnes in Q1 FY22 from 5.34 million tonnes in Q1 FY21.
Consolidated EBITDA increased 13.3% QoQ and 25.7x YoY to Rs 16,185 crore with improved realization across key entities. Consolidated free cash flow stood at Rs 3,553 crore during Q1 FY22 despite working capital absorption of Rs 8,272 crore. The company spent Rs 2,011 crore on capex during the quarter, spending on Pellet plant, the Cold Roll Mill complex and the ongoing 5 million tonnes per annum (MTPA) expansion at Kalinganagar. Gross debt decreased to Rs 84,237 crore with a debt repayment of Rs 5,894 crore. Net debt declined to Rs 73,973 crore.
Eicher Motors fell 2.63%. The company posted a consolidated net profit of Rs 237 crore in Q1 FY22 compared with net loss of Rs 55.18 crore in Q1 FY21. Total revenue from operations was recorded at Rs 1,974 crore, up 141% compared with Rs 818 crore in the corresponding quarter of FY 2020-21.
Royal Enfield sold 122,170 motorcycles in the quarter, an increase of 109% from 58,383 motorcycles sold over the same period in FY 2020-21. VE Commercial Vehicles (VECV), the unlisted subsidiary of Eicher Motors, sold 5,806 trucks and buses in the quarter, a notable increase of 173% from 2,129 trucks and buses sold over the same period in the last financial year.
Ashok Leyland slipped 2.40%. The company reported a standalone net loss of Rs 282.29 crore in Q1 FY22 as against a net loss of Rs 388.80 crore in Q1 FY21. Net sales during the quarter surged to Rs 2934.59 crore. The company had recorded a net profit of Rs 241.17 crore and net sales of Rs 6972.04 crore in Q4 FY21.
Ashok Leyland said that going forward, last-mile connectivity demand propelled by e-commerce is likely to continue supporting ICV and LCV truck volumes. Other businesses like defence, power solutions and after-market continue to contribute strongly to the top line of the company.
The company further said that the supply of electronic control units (ECUs), continues to be a concern, owing to the limited availability of semi-conductors. The industry is also feeling the impact of high raw material prices, especially steel. The management continues to monitor the situation very closely and expects it to soften going forward.
Hero MotoCorp shed 0.27%. The two-wheeler major reported a 496% jump in net profit to Rs 365.44 crore on 84.7% rise in net sales to Rs 5,487 crore in Q1 FY22 over Q1 FY21. The company sold 10.25 lakh units of motorcycles and scooters in Q1 FY22, registering a growth of 81% over the corresponding quarter in the previous fiscal.
Page Industries tumbled 3.86%. The company's standalone net profit stood at Rs 10.94 crore in Q1 June 2021 compared with net loss of Rs 39.55 crore in Q1 June 2020. Revenue from operations surged 76.08% to Rs 501.53 crore in Q1 FY22 from Rs 284.82 crore in Q1 FY21.
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