Key benchmark indices ended near flat line after a volatile session on Wednesday. Weak domestic macroeconomic data spoiled investors sentiment. Investors were also cautious ahead of the outcome of the RBI's monetary policy meeting on Thursday, 6 August 2020.
The barometer index, the S&P BSE Sensex fell 24.58 points or 0.07% at 37,663.33. The Nifty 50 index rose 6.40 points or 0.06% at 11,101.65. Both these indices reversed trend after rising as much as 1.2% in morning trade.
Reliance Industries (down 1.14%), HDFC Bank (down 1.3%), Infosys (down 0.58%) and ITC (down 0.44%) were major index shakers.
In the broader market, the BSE Mid-Cap index rose 0.39% and the BSE Small-Cap index gained 0.85%. Both these indices outperformed the Sensex.
The market breadth was strong. On the BSE, 1618 shares rose and 1017 shares fell. A total of 159 shares were unchanged.
The Reserve Bank of India's three-day monetary policy meeting commenced on 4 August 2020. RBI will announce its policy stance on Thursday, 6 August 2020. Investors will keep an eye on whether RBI extends moratorium beyond August 2020.
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COVID-19 update:
Total COVID-19 confirmed cases worldwide stood at 18,480,000 with 700,647 deaths. India reported 5,86,244 active cases of COVID-19 infection and 39,795 deaths while 12,82,215 patients have been discharged, according to the data from the Ministry of Health and Family Welfare, Government of India.
Economy:
The IHS Markit India Services Business Activity Index registered 34.2 in July, and despite rising slightly from 33.7 in June, signalled a further rapid reduction in service sector output. Moreover, the latest reading was among the lowest recorded in nearly 15 years of data collection, surpassed only by the unprecedented falls in the previous three months. With overall demand conditions severely muted, service providers made further job cuts in July.
The Composite PMI Output Index, which measures combined services and manufacturing output, signalled a further rapid contraction in private sector business activity in July. Falling from 37.8 in June 2020 to 37.2 in July 2020.
Numbers to Watch:
The yield on 10-year benchmark federal paper fell to 5.827% as compared with 5.833% at close in the previous trading session.
In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 74.94, compared with its close of 75.0450 during the previous trading session.
In the commodities market, Brent crude for October 2020 settlement rose $1.01 at $45.44 a barrel. The contract rose 28 cents, or 0.63% to settle at $44.43 a barrel in the previous trading session.
Foreign Markets:
The Dow Jones 30 Futures were up 184 points, indicating a strong start in US markets today.
European markets traded with decent gains while Asian markets closed higher on Wednesday. Growth in China's services sector slowed in July from a decade high the previous month. The Caixin/Markit services Purchasing Managers' Index (PMI) fell to 54.1 from June's 58.4, which was the highest reading since April 2010. The 50-mark separates growth from contraction on a monthly basis.
US stock market ended higher after a choppy session on Tuesday, lifted by Apple and energy stocks but limited by declines in AIG and Microsoft.
White House negotiators late Tuesday vowed to work around the clock to reach a spending deal by the end of the week, but the Treasury Secretary warned they were not going anywhere close to the $3.4 trillion Democratic leaders sought.
Meanwhile, senior US and Chinese officials will reportedly review the implementation of their Phase 1 trade deal and likely air mutual grievances in an increasingly tense relationship during an August 15 videoconference. US Trade Representative Robert Lighthizer and Chinese Vice Premier Liu He, the principal negotiators for the two countries, will participate in the meeting, an initial six-month review of the pact activated on February 15.
Buzzing Indian Segment:
The Nifty Metal index jumped 3.97% to 2,263.80. The index is up 6.03% in four sessions.
Hindalco Industries (up 8.32%), Tata Steel (up 6.33%), Hindustan Zinc (up 5.89%), NALCO (up 5.02%) and JSW Steel (up 3.05%) advanced.
Steel Authority of India (SAIL) rose 6.37% after the steel major's sales volume grew about 50% to 15.83 lakh tonnes in July 2020 over July 2019. The company sold 12.73 lakh tonnes in the domestic market while exporting 3.10 lakh tonnes of steel during July 2020, attaining a growth of 29% and 349%, respectively over the corresponding period last year (CPLY).
Stocks in Spotlight:
Axis Bank rose 1.39% after the private lender on Tuesday launched its qualified institutional placement with a floor price of Rs 442.19 per share. The bank is reportedly targeting a base deal size of Rs 8,000 crore, with an option to up size the deal by Rs 2,000 crore. A committee of board will consider the issue price at its meeting on Monday, 10 August 2020.
Yes Bank hit an upper circuit of 5% at Rs 12.83 after Life Insurance Corporation of India (LIC) increased its stake in the bank to 4.989% from 0.759% earlier. In a regulatory filing made after trading hours on Tuesday, Yes Bank said that LIC acquired 105.98 crore shares of the bank (equivalent to 4.23% stake) via open market purchase.
Info Edge (India) rose 4.82% after the company on Tuesday (4 August) launched a qualified institutional placement (QIP) of shares and set the floor price for the offering at Rs 3,177.18 a share.
Tata Consumer Products fell 0.46%. The company reported an 82% jump in consolidated net profit to Rs 346 crore on 13% rise in revenue to Rs 2,714 crore in Q1 FY21 over Q1 FY20. EBITDA increased by 37% to Rs 486 crore in the June quarter (from Rs 354 crore reported in the corresponding period last year) as a result of higher sales, gross margin improvement and rationalization of discretionary expenditure. EBITDA margin stood at 17.9% as on 30 June 2020 as against 14.8% as on 30 June 2019. The company recorded an exceptional income of Rs 63 crore during the quarter. "Exceptional item for the current quarter represent gain of Rs 84 crore on conversion of a joint venture into a subsidiary and costs relating to the business integration of foods business Rs 21 crore", the company said.
Sun Pharma Advanced Research Company (SPARC) jumped 6.78% after the company reported a net profit of Rs 56.69 crore in Q1 FY21 as compared to a net loss of Rs 94.19 crore in Q1 FY20. SPARC has returned to profitability after reporting losses in the past eight quarters. Net sales in the June quarter surged to Rs 185.45 crore from Rs 17.32 crore reported in the same period last year.
Godrej Properties shed 2.93% after the company reported consolidated net loss of Rs 20.23 crore in Q1 June 2020 compared with net profit of Rs 90 crore in Q1 June 2019. Consolidated net sales slumped 88.63% to Rs 72.29 crore in Q1 June 2020 over Rs 635.88 crore in Q1 June 2019. Pre-tax loss stood at Rs 14.69 crore in Q1 June 2020 as compared to a pre-tax profit of Rs 140.13 crore in Q1 June 2019. EBITDA stood at Rs 40 crore as compared to Rs 195 crore, registering a 79.48% Y-o-Y (year-on-year) drop.
Cadila Healthcare declined 1.71%. The company's net profit surged 49.53% to Rs 454 crore on 4.20% rise in revenue from operations to Rs 3,549.30 crore in Q1 June 2020 over Q1 June 2019. EBIDTA for the quarter stood at Rs 815 crore. EBIDTA margin was at 22.4%, registering an improvement of 360 basis points over the corresponding quarter of the previous financial year.
PI Industries rose 3.53% after consolidated net profit jumped 43.2% to Rs 145.50 crore on 40.60% rise in net sales to Rs 1,060.10 crore in Q1 June 2020 over Q1 June 2019. EBITDA surged 55% to Rs 236 crore in Q1 FY21 as against Rs 153 crore in Q1 FY20. EBITDA margin improved to 22% in Q1 FY21 as compared to 20% in Q1 FY20. Exports sales grew 23% to Rs 614 crore in Q1 June 2020 as against Rs 501 crore in Q1 June 2019 driven mainly by proactive raw material inventory management and capacity planning. Demand for key commercialised molecules remained strong. Shipments have also gained momentum. Domestic sales surged 76% to Rs 446 crore in Q1 FY21 as compared to Rs 253 crore in Q1 FY20 contributed by carryover demand from Q4 FY2020, Isagro brand sales and robust momentum in the domestic segment on planned brand positioning to avail advantage of early sowing.
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