Key benchmark indices continued to trade near the day's high in afternoon trade. The Nifty held above 9900 mark. Sentiment got a boost following the government's decision to start a phased reopening of the economy. Strong global cues and better than expected GDP numbers also supported buying.
At 13:15 IST, the barometer index, the S&P BSE Sensex soared 1,164.56 points or 3.59% at 33,588.66. The Nifty 50 index rallied 328.80 points or 3.43% at 9,909.10.
The broader market soared. The S&P BSE Mid-Cap index rose 2.66%. The S&P BSE Small-Cap index gained 3.33%.
Buyers outpaced the sellers. On the BSE, shares 1,837 rose and 482 shares fell. A total of 128 shares were unchanged. In Nifty 50 index, 45 stocks advanced while 5 stocks declined.
Economy Reopening:
Union Ministry of Home Affairs (MHA) issued guidelines for a phased-wise reopening of the economy from 1 June 2020. The new rules allow religious places, shopping malls, hotels and restaurants to open from June 8. The government has decided to allow all activities prohibited earlier in areas outside containment zones in a phased manner.
Domestic macroeconomic data:
India's economy grew at 3.1% in Q4 March 2020. The gross domestic product (GDP) had expanded by 5.7% in the corresponding quarter of 2018-19, according to data released by the National Statistical Office (NSO). In 2019-20, the Indian economy grew by 4.2% against 6.1% expansion recorded in 2018-19. The government has also revised down the GDP growth in Q1, Q2, and Q3 to 5.2%, 4.4%, and 4.1% respectively.
Estimates will undergo revision as statutory data submission deadlines were extended by government in view of Covid-19 outbreak, Ministry of Statistics and Programme Implementation (MOSPI) said in a press note. Meanwhile, the growth rate of Index of Eight Core Industries for April 2020 declined by 38.1% (provisional) compared to decline of 9% (provisional) in March 2020.
Meanwhile, the seasonally adjusted IHS Markit India Manufacturing PMI rose to 30.8 in May from 27.4 in April. The latest reading pointed to another substantial decline in the health of the Indian manufacturing sector, albeit one that was slightly softer than recorded in April.
Commenting on the latest survey results, Eliot Kerr, Economist at IHS Markit, said: "The latest PMI data suggested that Indian manufacturing output fell further in May. This result is particularly poignant given the record contraction in April which was driven by widespread business closures. The further reduction in May highlights the challenges that businesses might face in the recovery from this crisis, with demand remaining subdued while the longevity of the pandemic remains uncertain."
COVID-19 Update:
Total COVID-19 confirmed cases worldwide stood at 61,71,182 far with 3,72,116 deaths. India reported 93,322 active cases of COVID-19 infection and 5,394 deaths, according to the data from the Ministry of Health and Family Welfare, Government of India.
Q4 Results Today:
V-Guard Industries (up 4.18%), Orient Electric (up 5.26%) and Welspun Enterprises (up 3.58%) are some of the companies that will announce their quarterly earnings today.
Gainers & Losers:
Bajaj Finance (up 11.03%), Titan Company (up 9.33%), Bajaj Finserv (up 9.17%), Tata Steel (up 7.16%) and Mahindra & Mahindra (up 6.52%) were top gainers in Nifty 50 index.
Dr Reddy's Laboratories (down 1.82%), Cipla (down 1.10%), Ultratech Cement (down 0.50%), Bharti Infratel (down 0.43%) and Nestle India (down 0.10%) were top losers in Nifty 50 index.
Earnings Impact:
Jubilant Life Sciences hit an upper circuit of 5% at Rs 464.35 after consolidated net profit stood at Rs 260.49 crore in Q4 March 2020 compared with net loss of Rs 100.65 crore in Q4 March 2019. Consolidated net sales slipped 1.9% to Rs 2,307.32 crore in Q4 March 2020 over Q4 March 2019. The EBITDA grew 58% to Rs 556 crore in Q4 FY20 from Q4 FY19. EBITDA margin improved to 23.3% in Q4 FY20 as against 14.7% in Q4 FY19.
During the quarter, Jubilant Life Sciences signed a licensing agreement with Gilead Sciences to register, manufacture and sell Gilead's investigational drug, Remdesivir, a potential therapy for COVID-19 in 127 countries including India, and is working towards launching the drug in July 2020.
Amara Raja Batteries jumped 5.39% after consolidated net profit rose 15.3% to Rs 137.30 crore on 0.9% rise in net sales to Rs 1,581.39 crore in Q4 March 2020 over Q4 March 2019. Consolidated profit before tax stood at Rs 178.93 crore in Q4 March 2020, rising 0.5% from Rs 177.99 crore in the same period last year. Total tax expenses declined 17.4% to Rs 48.63 crore in Q4 March 2020 from Rs 58.91 crore in Q4 March 2019. The result was announced on Saturday, 30 May 2020.
IDBI Bank hit an upper circuit of 20% at Rs 24.35 after the bank reported a net profit of Rs 135 crore as against net loss of Rs 4,918.44 crore in Q4 March 2019. The bank returned to profit after reporting net loss for last 13 quarters. Total income rose 4.7% to Rs 6,924.94 crore in Q4 March 2020 from Rs 6,616.06 crore in Q4 March 2019. Profit before tax (PBT) stood at Rs 289.66 crore in Q4 March 2020 as against a pre-tax loss of Rs 7,136.90 crore in Q4 March 2019. IDBI Bank posted net interest income of Rs 2,356 crore in Q4 March 2020, rising 46% year-on-year from Rs 1,609 crore posted in the same period last year. Net interest margin stood at 3.8% in Q4 March 2020, rising 154 basis points from 2.26% in Q4 March 2019.
Gross non-performing assets (NPAs) stood at Rs 47,272.37 crore as on 31 March 2020 as against Rs 49,502.68 crore as on 31 December 2019 and Rs 50,027.94 crore as on 31 March 2019. The ratio of gross NPAs to gross advances stood at 27.53% as on 31 March 2020 as against 28.72% as on 31 December 2019 and 27.47% as on 31 March 2019. The ratio of net NPAs to net advances stood at 4.19% as on 31 March 2020 as against 5.25% as on 31 December 2019 and 10.11% as on 31 March 2019. Provisions and contingencies declined 81.4% to Rs 1,584.14 crore in Q4 March 2020 from Rs 8,532.78 crore in Q4 March 2019. Provision coverage ratio (including technical write-offs) is 93.74% as on 31 March 2020.
As on 31 March 2020, the bank said it made COVID-19 related provisions of Rs 247 crore in Q4 March 2020 against standard assets. As a result of increased recovery from resolution of bad loans, there was write back of Rs 1,511 crore as against provision of Rs 7,233 crore in the same period last year. Meanwhile the media reported that sale of government's stake in IDBI Bank may be delayed beyond March 2021, due to depressed valuation amid COVID-19 pandemic.
Global Markets:
European markets opened higher while Asian shares neared their three-month highs on Monday as economies continued to progress on the reopening front. The gains were led by Chinese stocks after the data released over the weekend showed the country's factory activity expanding for third straight month.
China's National Bureau of Statistics said that the manufacturing activity in the country eased slightly, reporting official manufacturing PMI of 50.6 for the month of May, as compared to 50.8 in April. PMI readings above 50 indicate expansion, while those below that level signal contraction.
Meanwhile, the Caixin/Markit manufacturing PMI for May came in at 50.7 as compared to the April reading of 49.4.
Caixin and IHS Markit said, "May data signalled a further increase in output following February's record decline, with firms widely mentioning the resumption of works due to an easing of COVID-19 related measures."
The US equity market finished volatile session mostly higher on Friday, 29 May 2020, as traders seems relief after newly announced US policies to punish China did not threaten a trade detente between Washington and Beijing.
President Donald Trump lashed out at China in his brief remarks, but traders seemed relieved that he did not announce new tariffs or a withdrawal from the phase one trade agreement. Following China's recent move to approve a controversial security law for Hong Kong, Trump said he is directing his administration to remove special exemptions for the city. Trump argued Hong Kong is "no longer sufficiently autonomous" to warrant preferential treatment by the U.S., claiming China has abandoned the idea of "one country, two systems."
The president also announced that he is suspending the entry of certain foreign nationals from China into the U.S. as well as instructing a presidential working group on financial markets to study Chinese companies listed on U.S. exchanges.
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