Domestic equity benchmarks extended losses for the sixth straight session on Friday. Both barometer indices fluctuated between gains and losses in a highly volatile session. Weak global cues triggered selling pressure. Investors were also cautious ahead of the Union Budget on Monday.
The barometer index, the S&P BSE Sensex, tumbled 588.59 points or 1.26% to 46,285.77. The Nifty 50 index lost 182.95 points or 1.32% to 13,634.60. Both the indices have corrected about 7% each in the past six trading sessions.
Maruti Suzuki India (down 4.99%), Infosys (down 2.87%), TCS (down 2.71%), HDFC (down 1.98%) and Reliance Industries (down 1.78%) dragged.
In the broader market, the S&P BSE Mid-Cap index slipped 0.69%. The S&P BSE Small-Cap index shed 0.25%.
The market breadth was negative. On the BSE, 1382 shares rose and 1529 shares fell. A total of 152 shares were unchanged.
Economy Survey 2021-22:
The Economic Survey 2020-21, tabled by Finance Minister Nirmala Sitharaman in the parliament on Friday, forecast robust economic growth of 11% for the fiscal year beginning on 1 April 2021. The Indian economy is set to contract 7.7% in this fiscal year, to 31 March 2021, the deepest contraction in four decades, the government said in the survey. But the rollout of vaccines against COVID-19 will re-energise Asia's third-largest economy with 11% growth next year.
While the survey forecast a "V-shaped" economic recovery, it also cautioned that it would take at least two years to revert to pre-pandemic gross domestic levels. The Indian government may need to continue with an expansionary fiscal stance in order to sustain the recovery in aggregate demand, said the Economic Survey for 2020-21.
The survey added that the soon-to-conclude financial year is likely to see a fiscal slippage and added that the expenditure support provided during the year will impart the required momentum to mid-term growth.
Economic Survey has recommended an increase in public spend from 1% to 2.5-3% of GDP to reduce the out of the pocket (OOP) healthcare expenditure from the current level of 60% to 30%.
The Budget 2020-21 had envisaged to mobilize Rs 2.1 lakh crore from disinvestment proceeds during current fiscal year, of which Rs 90,000 crore was envisaged for disinvestment in financial institutions. As on 20th January 2021, the government has been able to raise Rs 15,220 crore.
The survey calls for fresh asset quality review of banks after COVID related forbearances are removed. The clean-up exercise must be followed by a mandatory recapitalisation of banks after reviewing capital needs of banks.
Numbers to Track:
In the foreign exchange market, the partially convertible rupee appreciated to 72.96 compared with its previous closing of 73.05.
The yield on 10-year benchmark federal paper fell to 5.949% from its previous closing of 5.933%.
MCX Gold futures for 5 February 2021 settlement rose 0.81% to Rs 49,016.
The US Dollar index (DXY), which tracks the greenback's value against a basket of currencies, rose 0.21% to 90.65.
In the commodities market, Brent crude for March 2021 settlement added 27 cents to $55.80 a barrel. The contract slipped 0.51% or 28 cents to settle at $55.53 in the previous trading session.
Global Markets:
Shares in Asia and Europe tumbled on Friday. Tensions between vaccine maker AstraZeneca and the European Union continued on Thursday, with the bloc warning drug companies that it would wield all possible legal power to prevent exports unless they committed to supplying inoculations as promised.
Japan's industrial output extended declines in December as factories struggled with a hit to demand from expanded COVID-19 lockdown measures globally. Official data released on Friday showed factory output declined 1.6% in December.
U.S. stocks closed higher on Thursday, bouncing from sharp losses in the prior session, thanks to a broad rally as earnings season got off to a strong start.
On the data front, gross domestic product in the U.S. grew at a 4% annualized pace in the fourth quarter. The annualized pace closed out a 2020 that saw GDP overall decline 3.5% for the full year and by 2.5% from the fourth quarter of 2019.
The number of Americans applying for unemployment benefits fell but remained at a historically high 847,000 last week, a sign that layoffs keep coming as the coronavirus pandemic continues to rage. Last week's claims fell by 67,000, from 914,000 the week before, the Labor Department said Thursday.
On the coronavirus front, biotech firm Novavax said that its vaccine was more than 89% effective in protecting against COVID-19. A study found that the vaccine appeared to be 85.6% effective against the U.K. variant. A separate phase two study in South Africa, however, showed the vaccine isn't nearly as effective against a new strain ravaging that country.
Earnings Impact:
Dabur India fell 2.34%. On a consolidated basis, Dabur India reported a 23.72% jump in net profit to Rs 492.02 crore on a 16% rise in revenue from operations to Rs 2,728.84 crore in Q3 FY21 over Q3 FY20. Profit before tax rose 22.5% year on year to Rs 591 crore in Q3 FY21 from Rs 482.34 crore in Q3 FY20. Current tax expense spiked 15.55% to Rs 99.13 crore in Q3 FY21 over Q3 FY20. Dabur said consolidated operating profit saw a growth of 16.5% year on year and stood at Rs 574 crore in Q3 FY21. The company's operating margin saw an improvement of 10 basis points, reaching 21% in Q3 FY21. EBITDA grew 15.5% to Rs 655.1 crore in Q3 FY21 over Q3 FY20.
Sun Pharmaceutical Industries gained 3.91% after the drug major reported an 102.78% jump in consolidated net profit to Rs 1,852.48 crore on 8.3% rise in revenue from operations to Rs 8,836.78 crore in Q3 FY21 over Q3 FY20. EBITDA was reported at Rs 2,351 crore, up by 36.3% over Q3 last year, with resulting EBITDA margin of 26.8%. India sales stood at Rs 2,753 crore, a growth of 9.4% compared to Q3 last year.
Indian Oil Corporation added 0.70% after the PSU's company standalone net profit jumped 110% to Rs 4,916.59 crore on a 1.22% rise in revenue from operations to Rs 1,46,598.83 crore in Q3 FY21 over Q3 FY20. The company said the average gross refining margin (GRM) for the period April- December 2020 fell 11.38% to $ 2.96 per barrel against $ 3.34 per barrel for the same period of the previous year.
Bharat Electronics slipped 0.72% after the PSU company posted a 25% rise in consolidated net profit to Rs 278 crore on a 4% rise in net sales to Rs 2269.93 crore in Q3 FY21 over Q3 FY20.
Dr. Reddy's Laboratories tumbled 5.69%. On a consolidated basis, Dr. Reddy's Laboratories posted a net profit of Rs 19.80 crore in Q3 FY21 as against a net loss of Rs 569.7 crore in Q3 FY20. The drug maker's consolidated revenue increased 12% year on year to Rs 4930 crore in Q3 FY21. R&D expenses were at Rs 410 crore, representing 8.3% to revenues.
The company reported impairment charge of about Rs 600 crore during the quarter. In January 2021 there had been an additional generic launch for the product Nuvaring, which led to considerable erosion in the value of this product for the company, and accordingly the firm took an impairment charge of Rs 320 crore. In addition, considering the current market dynamics, the firm took an additional impairment charge of Rs 280 crore on the intangibles pertaining to other products. The firm had an impairment charge of Rs 1320 crore in Q3 FY20 and Rs 78.1 crore in Q2 FY21.
Lupin fell 4.05%. On a consolidated basis, the drug major reported net profit of Rs 438.25 crore in Q3 FY21 as against a net loss of Rs 835 crore reported in Q3 FY20. Net sales increased by 5.4% to Rs 3,917.30 crore in Q3 FY21 from Rs 3,716.09 crore in Q3 FY20. Profit before tax stood at Rs 524.84 crore in Q3 FY21 compared with pre-tax loss of Rs 106.82 crore in the same period last year.
Total tax expense tumbled 89% to Rs 83.49 crore in Q3 FY21 over Q3 FY20. EBITDA jumped 53% to Rs 799.90 crore in Q3 FY21 from Rs 522.70 crore in Q3 FY20. On the segmental front, revenue from the formulations business was at Rs 3,573.50 crore (up 5.1% Y-o-Y) and revenue from the API business was at Rs 343.80 crore (up 8.4% Y-o-Y) in Q2 FY21.
Tata Chemicals slipped 2.93%. On a consolidated basis, the chemical maker's net profit rose 0.2% to Rs 200.72 crore on 0.7% decline in net sales to Rs 2,606.08 crore in Q3 December 2020 over Q3 December 2019.
Income from operations on consolidated basis for basic chemistry products segment stood at Rs 1,987 crore, falling 1% Y-o-Y (year-on-year) and specialty products segment at Rs 618 crore, rising 2% Y-o-Y (year-on-year) as compared to the corresponding quarter of last year.
Interglobe Aviation (Indigo) lost 2.71%. On a consolidated basis, Indigo reported net loss of Rs 620.14 crore in Q3 December 2020 compared with net profit of Rs 495.97 crore in Q3 December 2019. Revenue from operations tumbled 50.56% to Rs 4,909.98 in Q3 FY21 compared to Rs 9,931.68 crore in Q3 FY20.
The airline company posted a 49.7% drop in EBITDAR to Rs 987.10 crore in Q3 December 2020 from Rs 1,960.70 in Q3 December 2019. EBITDAR margin improved to 20.1% in Q3 December 2020, from 19.7% registered in the same period last year.
Pidilite Industries shed 2.74%. On a consolidated basis, the company reported a 29% jump in net profit to Rs 446.43 crore on 19.3% rise in net sales to Rs 2299 crore in Q3 FY21 over Q3 FY20.
Pidilite said robust growth was registered across all verticals driven by continued demand momentum in rural areas and strong recovery in urban including metros. Overseas subsidiaries have also performed strongly, reporting double-digit constant currency revenue growth as well as strong earnings growth. While domestic subsidiaries in the Consumer and Bazaar (C&B) segment have shown healthy growth, subsidiaries in the Business to Business (B2B) segment have shown signs of recovery in the later part of the quarter.
TVS Motor Company jumped 5.97% after the company's standalone net profit surged 119.4% to Rs 265.62 crore on 30.7% rise in net sales to Rs Rs 5391.39 crore in Q3 FY21 over Q3 FY20. EBITDA stood at Rs 511 crore in Q3 FY21, recording a growth of 41% from Rs 363 crore posted in the same period last year.
In Q3 FY21, the overall two-wheeler sales of the company including exports grew by 23% to 9.52 lakh units from 7.73 lakh units in the quarter ended December 2019. Total three wheelers sales registered sale of 0.38 Lakh units in the quarter ended December 2020 as against sales of 0.48 Lakh units in the quarter ended December 2019.
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