Global stock markets rallied as the US Federal Reserve's plans to purchase corporate bonds boosted investors' risk appetite. The US Federal Reserve said it will start purchasing corporate bonds on Tuesday through the secondary market corporate credit facility, one of several emergency facilities recently launched by the US central bank to improve market functioning in the wake of the COVID-19 pandemic.
Meanwhile, three Indian army personnel, including a commanding officer, have been killed in a violent face-off with Chinese soldiers on Monday night in the Himalayan region of Ladakh. The Chinese military also suffered casualties in the clash.
After opening above 10,000 mark on strong global cues, the Nifty witnessed profit booking in morning trade. Selling intensified in afternoon trade as reports of India-China faceoff emerged. After hitting the day's low of 9,728.50 in afternoon session, the Nifty bounced back and managed to end near the 9900 mark.
The broader market ended with small gains. The S&P BSE Mid-Cap index rose 0.32% while the S&P BSE Small-Cap index added 0.08%.
The market breadth was negative. On the BSE, shares 1202 rose and 1,372 shares fell. A total of 154 shares were unchanged. In Nifty 50 index, the breadth was negative with 24 stocks advancing and 26 stocks declining.
COVID-19 Update:
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Total COVID-19 confirmed cases worldwide stood at 80,35,364 far with 4,36,918 deaths. India reported 1,53,178 active cases of COVID-19 infection and 9,900 deaths, according to the data from the Ministry of Health and Family Welfare, Government of India.
Economy:
India's merchandise exports dipped 36.5% to $19.05 billion in May 2020 over a year ago. Meanwhile, merchandise imports also declined 51% to $22.20 billion. The trade deficit fell 79.5% to $3.15 billion in May 2020 from $15.36 billion in May 2019. Merchandise exports in rupees plunged 31.1% to Rs 1,44,166 crore, while imports rose declined 46.9% to Rs 1,67,978 crore in May 2020 over May 2019. The trade deficit eased to Rs 23,812 crore in May 2020 compared with Rs 1,07,168 crore in May 2019.
As per the data released by the Reserve Bank of India, India's services exports declined 8.9% to $16.45 billion in April 2020 over April 2019. Meanwhile, India's services imports dipped 18.4% to $9.30 billion in April 2020. India's services trade surplus improved 7.3% to $7.15 billion in April 2020 from $6.66 billion in April 2019.
Q4 Results Today:
Hindustan Petroleum Corporation (up 1.48%), NMDC (down 1.17%), Bank of Maharashtra (up 0.18%), Globus Spirits (down 0.51%), Navin Fluorine International (down 0.23%), Schneider Electric Infrastructure (down 2.66%), Ratnamani Metals & Tubes (down 0.04%) and Bliss GVS Pharma (down 4%) are some of the companies that will announce their quarterly earnings today.
Earnings Impact:
Tata Motors tumbled 5.77% after the automaker posted a consolidated net loss of Rs 9,894.25 crore in the Q4 March 2020 as compared to a consolidated net profit of Rs 1,117.48 crore in Q4 March 2019. Net sales during the quarter fell 27.7% year-on-year (Y-o-Y) to Rs 61,949.39 crore. Jaguar Land Rover's (JLR) retail sales declined 12% Y-o-Y to 508.70 thousand units in FY20. Tata Motors' (TML) commercial vehicle sales contracted by 22% to 360.80 thousand units while the passenger vehicle sales fell 25% to 148.80 thousand units in FY20 over FY19. With respect to future outlook, the company said that Q1 FY21 is expected to be significantly weaker in both JLR and TML with the full impact of lockdowns being reflected in the results. Actions are underway to significantly deleverage the Tata Motors Group with JLR to become sustainably cash positive from FY22.
CSB Bank rallied 6%. The private lender reported a net loss of Rs 59.68 crore in Q4 FY20, which is significantly lower as compared to the net loss of Rs 150.64 crore reported in Q4 FY19. Total income rose 18.9% to Rs 475.49 crore after net interest income jumped 31% to Rs 157.54 crore in Q4 March 2020 over Q4 March 2019. On the asset quality front, the ratio of gross NPAs to gross advances stood at 3.54% as on 31 March 2020 as against 3.22% as on 31 December 2019 and 4.87% as on 31 March 2019. The ratio of net NPAs to net advances stood at 1.91% as on 31 March 2020 as against 1.98% as on 31 December 2019 and 2.27% as on 31 March 2019. The bank's deposit increased 4.4% to Rs 15,791 crore as on 31 March 2020 from Rs 15,124 crore as on 31 March 2019. Net advances rose 7.1% to Rs 11,366 crore in FY20 from Rs 10,615 crore in FY19.
IPCA Laboratories fell 2.21% to Rs 1563 after consolidated net profit fell 14% to Rs 83.05 crore on 22% rise in total income to Rs 1087.49 crore in Q4 March 2020 over Q4 March 2019. The company recorded a forex loss of Rs 23.62 in Q4 FY20 as against forex gain of Rs 4 lakh in Q4 FY19. Finance costs fell 43% year-on-year (YoY) to Rs 3.67 during the quarter. Depreciation and amortisation costs surged 43% YoY to Rs 63.94 in the fourth quarter. The company provided for impairment of intangible assets to the tune of Rs 27.64 crore during the quarter. Total formulations revenue jumped 17% to Rs 713.43 crore during the quarter. Revenue from domestic fomulations business rose 21% to Rs 430.96 crore in Q4 FY20 over Q4 FY19. Total APIs revenue rose 30% to Rs 275.07 crore in Q4 FY20 over Q4 FY19. Revenue from domestic APIs (up 41%) and APIs exports (up 27%).
Can Fin Homes jumped 4.5% after the housing finance company reported a 37.5% jump in net profit to Rs 90.91 crore on a 14.2% rise in total income to Rs 528.86 crore in Q4 March 2020 over Q4 March 2019. Net interest margin improved to 3.52% in Q4 March 2020 from 3.29% in the same period last year. Provisions & contingencies for expected credit loss and write offs stood at Rs 40.84 crore in Q4 March 2020, steeply higher than Rs 1.09 crore in Q4 March 2019. The company said it holds provision of Rs 36.54 crore in line with RBI's guidance against the impact of COVID-19. The GNPAs of the company has been contained at 0.76% in Q4 2020 as compared to 0.80% in Q3 2019. Loan book increased 13% with an outstanding of Rs 20708 crore on 31 March 2020 as against Rs 18381 crore on 31 March 2019.
Ashoka Buildcon jumped 6.4% after the construction firm reported consolidated net profit of Rs 134.56 crore in Q4 March 2020 compared with net loss of Rs 10.24 crore in Q4 March 2019. Net sales of Q4 March 2020 stood at Rs 1,584.22 crore, declining 0.79% from Rs 1,596.81 crore in the same period last year. Consolidated profit before tax stood at Rs 179.84 crore in Q4 March 2020, up 228.10% from Rs 54.81 crore in Q4 March 2019. Total tax expense declined 50.37% to Rs 33.15 crore in Q4 March 2020 from Rs 66.8 crore in Q4 March 2019. On a standalone basis, net profit surged 68% to Rs 164.25 crore on 4% decline in net sales to Rs 1,254.75 crore in Q4 March 2020 over Q4 March 2019. Standalone EBITDA jumped 20% to Rs 263.50 in Q4 March 2020 from Rs 219.50 crore in Q4 March 2019. EBITDA margin improved to 20.4% in Q4 March 2020 from 16.3% in Q4 March 2019.
Shoppers Stop dropped 5.7% after it reported consolidated net loss of Rs 127.22 crore in Q4 March 2020 as against a net profit of Rs 6.47 crore in Q4 March 2019. Total income fell 10.63% to Rs 731.76 crore in Q4 March 2020 over Q4 March 2019. Shoppers Stop said that the retail industry as a whole has been adversely impacted by the spread of COVID-19. The company faces significant challenges due to COVID-19, which has impacted the operations of the company adversely starting from the month of March 2020 onwards, particularly by way of store closures due to complete lockdown.
Stocks in Spotlight:
Maruti Suzuki India rose 0.59% to Rs 5,509.30. The company said it has collaborated with IndusInd Bank to arrange finance schemes to help customers purchase automobiles.
Alembic Pharmaceuticals gained 2.43%. The drug maker announced on Tuesday (16 June) that it has received final approval from the US Food & Drug Administration (USFDA) for its Abbreviated New Drug Application (ANDA) Deferasirox tablets, 180 mg. Deferasirox tablets are indicated for treatment of chronic iron overload due to blood transfusions (transfusional iron overload) and for treatment of chronic iron overload in non-transfusion-dependent thalassemia syndromes.
Global Markets:
Shares in Europe and Asia rallied on Tuesday after the U.S. Federal Reserve launched corporate bond buying programme and concerns about a second wave of global coronavirus infections eased.
The Bank of Japan (BoJ), while announcing its monetary policy decision, said that it will closely monitor the impact of COVID-19 and will not hesitate to take additional easing measures if necessary. BoJ expects short- and long-term policy interest rates to remain at their present or lower levels.
In Europe, British Prime Minister Boris Johnson signaled on Monday that a Brexit deal with the European Union is possible in July 2020, as both sides promised to ramp up the pace of talks in the hope of securing a new trade agreement.
In US, stocks benchmarks closed higher Monday, booking a sharp turnaround after the Federal Reserve took further steps to keep credit flowing to big businesses during the pandemic, amid signs of a resurgence of the deadly COVID-19 pandemic in parts of the world.
The US Fed said it will start purchasing corporate bonds on Tuesday through the secondary market corporate credit facility (SMCCF). The Fed will use an indexing approach when making purchases, aiming to create a portfolio that is based on a broad, diversified market index of US corporate bonds.
"This index is made up of all the bonds in the secondary market that have been issued by US companies that satisfy the facility's minimum rating, maximum maturity and other criteria," the Fed said in a statement Monday. "This indexing approach will complement the facility's current purchases of exchange-traded funds."
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