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Shares trade firm; IT shares correct

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Capital Market
Last Updated : Aug 04 2020 | 11:50 AM IST
Key barometers hovered near the day's high in mid-morning trade, mirroring positive Asian cues. The Nifty hovered around the crucial 11,000 mark. IT stocks lagged the firmness in the broader market.

At 11:24 IST, the barometer index, the S&P BSE Sensex, rallied 537 points or 1.45% at 37,476.31. The Nifty 50 index added 133.85 points or 1.23% at 11,025.60.

In broader market, the S&P BSE Mid-Cap index added 0.72% while the S&P BSE Small-Cap index was added 1.1%.

The market breadth, indicating the overall health of the market, was strong. On the BSE, 1449 shares rose and 775 shares fell. A total of 129 shares were unchanged.

Foreign portfolio investors (FPIs) bought shares worth Rs 7,818.49 crore, while domestic institutional investors (DIIs), were net sellers to the tune of Rs 135.55 crore in the Indian equity market on 3 August, provisional data showed.

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.

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RBI's Monetary Policy Meet:

The three-day monetary policy meet headed by the Governor, Shaktikanta Das will commence 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.

Buzzing Index:

The Nifty IT index fell 1.03% to 17,780.80, declining for second day. The index has lost 1.6% in two sessions.

Tech Mahindra (down 2.34%), HCL Technologies (down 1.75%), MindTree (down 1.68%), Larsen & Toubro Infotech (down 1.67%), Infosys (down 1.09%), Wipro (down 1.05%), NIIT Technologies (down 0.81%), Info Edge India (down 0.67%) and TCS (down 0.33%) were top losers in IT pack.

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.

Earnings Impact:

Exide Industries reported a consolidated net loss of Rs 13.56 crore in Q1 June 2020 as against net profit of Rs 161.58 crore in Q1 June 2019. Revenue from operations tumbled 31% to Rs 2,526.11 crore in Q1 June 2020 over Q1 June 2019. Profit before tax (PBT) stood at Rs 3.99 crore in Q1 June 2020, dropping 98.6% over the same period last year. Total tax expense tumbled 85% to Rs 17.55 crore in Q1 June 2020 over Q1 June 2019. The result was announced after market hours yesterday, 3 August 2020.

KPIT Technologies was locked in an upper circuit of 5% at Rs 67.65. The company's net profit dropped 36.43% to Rs 24.22 crore on 11.41% fall in revenue from operations to Rs 492.71 crore in Q1 June 2020 over Q4 March 2020. Consolidated profit before tax (PBT) skid 38.01% to Rs 29.29 crore in Q1 June 2020 as against Rs 47.25 crore in Q4 March 2020. Total tax expenses for the quarter tanked 44.59% at Rs 5.07 crore during the period under review. EBITDA for Q1 FY21 stood at 13.4% as against 14.6% in Q1 FY20 and 13.5% in Q4 FY20. Cash and cash equivalents stood at Rs 431.90 crore while net cash was at Rs 393.90 crore during Q1 FY21.

BSE slipped 2.85% to Rs 496.80 after the company's consolidated net profit fell 21.3% to Rs 32.5 crore on a 2.3% decline in total income to Rs 162.1 crore in Q1 FY21 over Q1 FY20. EBITDA fell 3.7% to Rs 57.2 crore in Q1 June 2020 from Rs 59.4 crore in Q1 June 2019. EBITDA margin stood at 35% as on 30 June 2020 as against 36% as on 30 June 2019. Profit before tax in the first quarter stood at Rs 39.8 crore, down by 20.6% from Rs 50.1 crore in the same period last year.

Global Markets:

Asian stocks were trading higher on Tuesday, after strong manufacturing data and gains in tech stocks boosted global equities.

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.

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First Published: Aug 04 2020 | 11:23 AM IST

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