As per the provisional closing data, the barometer index, the S&P BSE Sensex slumped 667.29 points or 1.77% at 36,939.56. The Nifty 50 index lost 176.70 points or 1.6% at 10,896.75.
Index heavyweights RIL (down 2.85%), HDFC Bank (down 2.63%) and TCS (down 1.48%) were major drags.
Weak domestic economic data and negative global cues weighed on sentiment. A surge in fresh coronavirus cases and intensifying US-China tensions also put pressure on stocks.
The broader market finished on a mixed note. The S&P BSE Mid-Cap index declined 0.24% while the S&P BSE Small-Cap index advanced 1.14%.
The market breadth was positive. On the BSE, 1346 shares rose and 1215 shares fell. A total of 183 shares were unchanged.
COVID-19 Update:
Total COVID-19 confirmed cases worldwide stood at 18,093,891 with 689,428 deaths. India reported 5,79,357 active cases of COVID-19 infection and 38,135 deaths while 11,86,203 patients have been discharged, according to the data from the Ministry of Health and Family Welfare, Government of India.
Economy:
The seasonally adjusted IHS Markit India Manufacturing PMI fell to 46 in July, from 47.2 in June, and pointed to a marked deterioration in business conditions across the Indian manufacturing sector.
Commenting on the latest survey results, Eliot Kerr, Economist at IHS Markit, said: "Latest PMI data from Indian manufacturers shed more light on the state of economic conditions in one of the countries worst affected by the COVID-19 pandemic. The survey results showed a re-acceleration of declines in the key indices of output and new orders, undermining the trend towards stabilisation seen over the past two months. Anecdotal evidence indicated that firms were struggling to obtain work, with some of their clients remaining in lockdown, suggesting that we won't see a pick-up in activity until infection rates are quelled and restrictions can be further removed."However, on a more positive note, firms remained optimistic, with confidence towards future activity continuing to strengthen during July."
India's fiscal deficit reached Rs 6.62 lakh crore, or 83.2% of the budgeted estimate in the quarter ended June. The gap between the revenue and expenditure during the same period in 2019-20 stood at 61.4% of the budgeted target.
GST collections in July fell to Rs 87,422 crore from Rs 90,917 crore in June, according to a Finance Ministry statement. However, July collections are higher than Rs 62,009 crore in May and Rs 32,294 crore in April.
India's infrastructure output contracted 15% in June from a year earlier, government data released on Friday showed, as a lockdown in response to COVID-19 weighed on economic activities. Infrastructure output, which comprises eight sectors including coal, crude oil and electricity and accounts for nearly 40% of industrial output, contracted 24.6% in the three months through June - the first quarter of the fiscal year - from a year earlier, the data showed.
July Auto Sales:
Escorts fell 2.98%. The tractor maker on Saturday (1 August) said it sold 5,322 tractors, registering a growth of 9.5% against 4,860 tractors sold in July 2019. Sequentially, however, tractor sales slumped 51% as against 10,851 units sold in June 2020.
Hero MotoCorp declined 1.48%. The company said its month-on-month sales growth saw rapid recovery for the third consecutive month in July 2020 since operations resumed. Hero MotoCorp sold 514,509 units of motorcycles and scooters in July 2020, registering a sequential growth of 14% over 450,744 sold in June 2020. Sales fell 4% in July 2020 compared with 535,810 units sold in July 2019. The two-wheeler manufacturer said sales figures reached more than 95% of wholesale dispatch numbers of the corresponding month in the previous year (July 2019). More than 95% of Hero MotoCorp customer touch-points are currently operational.
Maruti Suzuki declined 1.45%. The car major reported total sales of 108,064 units in July 2020, up 88.2% as against 57,428 units sold in June 2020. Annually, the total sales have fallen 1.1% from 109,264 units sold in July 2019. While total domestic sales rose 1.3% to 101,307 units, total exports sales have fallen 27% to 6,757 units in July 2020 over July 2019.
Mahindra & Mahindra (M&M) declined 1.37%. M&M's total tractor sales during July 2020 were at 25,402 units, up by 27% from 19,992 units sold in the same period last year. It reported 36% decline in total automobile sales to 25,678 units in July 2020 from 40,142 units in July 2019. Sequentially, the total auto sales have jumped 32.6% as compared to 19,358 units sold in June 2020.
Bajaj Auto fell 2.84%. The auto maker's total vehicle sales tanked 33% to 2.55 lakh units in July 2020 from 3.81 lakh units in July 2019. Total two-wheeler sales declined 26% to 2.38 lakh units in July 2020 over July 2019. Total commercial vehicles sales slumped 71% YoY to 17,276 units in July 2020. On a month-on-month (M-o-M) basis, total vehicles sales declined 8.27% in July 2020 from 2.78 lakh units in June 2020.
TVS Motor Company gained 2%. The two-wheeler manufacturer registered a sales growth of 27% in July 2020 at 252,744 units compared with 198,387 units in June 2020. The total sales are, however, lower by 9.6% compared with 2,79,465 units sold in July 2019.
Ashok Leyland was up 1.03%. The commercial vehicles maker reported a 56% decline in total sales at 4,775 units for July 2020 as against 10,926 units in the same month last year. On a month-on-month (M-o-M) basis, total sales surged 123.96% in July 2020 from 2,132 units in June 2020. Sales for its medium and heavy commercial vehicles (M&HCV) dropped 75% at 1,705 units in July 2020 as against 6,721 units in the year-ago period, the company said in a filing. Light commercial vehicles (LCV) sales tanked 27% at 3,070 units as against 4,205 units in July last year.
Earnings Impact:
Tata Motors surged 8.6%. The auto major reported a consolidated net loss of Rs 8438 crore in Q1 June 2020, higher than net loss of Rs 3,698.34 crore in Q1 June 2019. Net sales in Q1 June 2020 stood at Rs 31,481.86 crore, falling 48% from Rs 60,830.16 posted in Q1 June 2019. The auto maker said that the nationwide lockdown resulted in the production and retailer shutdowns for major part of the quarter and heavily impacted the volumes. Negative operating leverage impacted the performance significantly.
Bank of India rose 1.49% after the bank's net profit jumped 247.7% to Rs 843.60 crore in Q1 FY21 from Rs 242.62 crore in Q1 FY20. Total income during the quarter rose 3.6% on a year-on-year (YoY) basis to Rs 11,941.52 crore in the June quarter. The bank's provisions and contingencies fell 20.9% to Rs 1,512.07 crore in Q1 FY21 from Rs 1,911.98 crore in Q1FY20. Of this, the provision for non-performing assets declined by 59.1% YoY to Rs 766.62 crore in the June quarter. Provision Coverage Ratio as on 30 June 2020 was at 84.87% as against 77.18% as on 30 June 2019.
During Q1 FY21, Bank of India made an additional provision of Rs 620.30 crore on account of Covid related accounts. The provision of Rs 1034.78 crore is held by the bank on Covid related accounts as on 30 June 2020. This additional provision made by the bank is more than requirement as per the RBl guideline dated 17 April 2020. Gross non-performing assets (NPAs) stood at Rs 57,787.78 crore as on 30 June 2020 as against Rs 61,549.93 crore as on 31 March 2020 and Rs 62,068.40 crore as on 30 June 2019. The ratio of gross NPAs to gross advances stood at 13.91% as on 30 June 2020 as against 14.78% as on 31 March 2020 and 16.50% as on 30 June 2019.
UPL lost 5.47%. The company's consolidated net profit surged 93.3% to Rs 551 crore in Q1 June 2020 compared with Rs 285 crore in Q1 June 2019. Consolidated revenue from operations stood at Rs 7833 crore in Q1 June 2020, declining 1% compared with Rs 7906 crore in Q1 June 2019. Consolidated EBITDA jumped 29% year on year to Rs 1,704 crore in Q1 June 2020 as against Rs 1,319 crore in Q1 June 2019. UPL said it reported robust revenue performance almost at prior year level and EBITDA margin expansion in a turbulent environment driven by COVID-19.
Tata Chemicals fell 2.52% after the company reported a 67.2% drop in consolidated net profit to Rs 74.15 crore in Q1 June 2020 from Rs 226.33 crore posted in Q1 June 2019. Consolidated net sales for Q1 June 2020 stood at Rs 2,348.16 crore, falling 9% from Rs 2584.03 crore in Q1 June 2019. Tata Chemicals said globally, the sales volumes of soda ash declined by 25% with sodium bicarbonate relatively flat. During the quarter, the export market in the US witnessed a steep drop of 45% as compared to previous year. Demand from export market was significantly low in the flat glass segment across the globe.
Relaxo Footwears declined 0.76%.The footwear maker reported 51% decline in net profit to Rs 24 crore in Q1 June 2020 from Rs 50 crore in Q1 June 2019. Revenue from operations declined 44% on year-n-year (YoY) basis to Rs 364 crore during the quarter. The revenue was adversely affected due to complete nationwide lockdown till first week of May and significant disturbances during remaining period along with slowdown of economic activities. EBITDA fell 46% to Rs 57 crore during the period under review. EBITDA margin stood at 15.7% in Q1 FY21 as against 16.4% in Q1 FY20.
CreditAccess Grameen rose 2%. The microfinance player reported 24.9% drop in consolidated net profit to Rs 72 crore on 64.6% rise in total income to Rs 619.87 crore in Q1 June 2020 over Q1 June 2019. Net Interest Income (NII) jumped 55.2% to Rs 383.2 crore in Q1 FY21 from Rs 246.9 crore crore in Q1 FY20. Net Interest Margin (NIM) stood at 12.6% as on 30 June 2020. Gross loan portfolio grew by 53.9% YoY to Rs 11,724 crore in Q1 FY21. The microfinance institution's total expected credit loss (ECL) provisions were at Rs 476.8 crore (4.21% of loan portfolio). This includes additional provisions of Rs 152.5 crore during the quarter, on account of COVID-19 impact. The total COVID-19 additional provisioning buffer was at Rs 245.6 crore (2.17% of loan portfolio). The ratio of gross NPAs to gross advances stood at 1.63% as on 30 June 2020.
Global Markets:
European markets were trading with mild gains while Asian shares closed mixed on Monday as US lawmakers struggled to hammer out a new stimulus plan and a global surge of new coronavirus cases showed no sign of abating.
A private survey released Monday showed China's manufacturing activity expanded in July. The Caixin/Markit manufacturing Purchasing Manager's Index came in at 52.8 for July as compared to 51.2 for June.
Japan's economy shrank an annualised 2.2% in January-March, unchanged after a second revision, data from the Cabinet Office showed on Monday. On a quarter-on-quarter basis GDP shrank 0.6%, unchanged from the second preliminary reading.
South Korea's manufacturing activity shrank at a much slower pace in July, signalling that a gradual recovery in demand is gaining momentum on easing lockdowns, although the resurgence in infections remained a risk. The IHS Markit purchasing managers' index (PMI) rose to 46.9 in July from 43.4 in June, marking the highest reading since January. But that was still below the 50 threshold that separates growth from contraction.
On Friday, Fitch Ratings cut the outlook on the United States' triple-A rating to negative from stable, citing eroding credit strength and a ballooning deficit. The credit rating agency also said the future direction of U.S. fiscal policy depends in part on the November election and the resulting makeup of Congress, cautioning there is a risk policy gridlock could continue.
In US, stocks wiped out earlier losses and closed higher on Friday as the biggest tech companies and market leaders soared after posting stellar quarterly results. Inspired by blowout earnings from tech heavyweights Apple, Amazon, Facebook and Google parent Alphabet, stocks rallied at the open, slipped into mostly negative territory during the session, and then recovered in the final hour.
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