Domestic shares ended with decent gains on Monday, after a sharp fall on Saturday, which was triggered due to lack of sufficient stimulus measures in the Union Budget. The Nifty managed to close above 11,700 mark. Gains were capped due to weak cues from other Asian stock markets.
The barometer BSE S&P Sensex rose 136.78 points or 0.34% to 39,872.31. The Nifty 50 index added 46.05 points or 0.39% to 11,707.90.
In the wider market, the BSE Mid-Cap index rose 1.12% and the BSE Small-Cap index rose 0.11%.
The market breadth was weak. On the BSE, 966 shares rose and 1495 shares fell. A total of 184 shares were unchanged.
The domestic equity market crashed after the Union Budget speech on Saturday (1 February). Investors had banked upon the Finance Minster to take an objective outlook towards long term capital gains tax (LTCG) by scrapping it or increasing the investment period for qualifying for LTCG and abolish the dividend distribution tax (DDT) to avoid double taxation. The outcome of the budget fell short of market expectations on both counts. LTCG continues, which is a big disappointment for capital markets, while DDT has been abolished for companies. The dividend income would now be taxed at the hands of the investors at their respective applicable income tax rates.
Further, the Finance Minister presented an all new tax structure with an option to decide between the old and the new regime. The new tax regime has lowered the tax rates but excludes most deductions and exemptions. Overall, most taxpayers are disappointed with the budget as expectation of tax breaks was very high.
Economy:
The headline seasonally adjusted IHS Markit India Manufacturing PMI rose from 52.7 in December to 55.3 in January, its highest level in just under eight years. The consumer goods sub-sector remained the brightest spot, although growth was sustained in intermediate goods and capital goods moved back into expansion.
"The PMI results show that a notable rebound in demand boosted growth of sales, input buying, production and employment as firms focused on rebuilding their inventories and expanding their capacities in anticipation of further increases in new business. Companies also benefited from subdued cost pressures, which enabled them to restrict increases in their fees to some extent. There was also an uptick in business confidence as survey participants expect buoyant demand, new client wins, advertising and product diversification to boost output in the year ahead," said Pollyanna de Lima, Principal Economist at IHS Markit.
Numbers to Watch:
The yield on 10-year benchmark federal paper fell to 6.503% at 16:55 IST compared with 6.599% at close in the previous trading session.
In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 71.33, compared with its close of 71.32 during the previous trading session.
In the commodities market, Brent crude for April 2020 settlement fell 14 cents to $56.48 a barrel. The contract fell 71 cents, or 1.24% to settle at $56.62 a barrel in the previous trading session.
Foreign Markets:
European markets traded higher while Asian stocks ended lower on Monday. This followed the sell-off on Wall Street on Friday amid concerns about the rapid spread of the coronavirus outbreak and its impact on the global economy.
China's Shanghai Composite plummeted almost 8% on their first day of trading after an extended Lunar New Year holiday. The markets were closed since 24 January 2020. China's health officials said the death toll related to the coronavirus has risen to 361, while there are 17,205 confirmed cases.
The People's Bank of China (PBOC) said Sunday it would launch a 1.2 trillion yuan ($173 bln) reverse repurchase operation on Monday to maintain "reasonable and abundant liquidity" in the banking system, as well as a stable currency market, during the epidemic.
Buzzing Indian Segment:
The Nifty Auto index rose 1.53% to 8,000.85. The index fell 4.14% in the previous three trading sessions.
The Budget 2020 disappointed the auto industry. The industry had sought GST reduction to compensate for the price hike bound to happen during BS6 transition.
The Budget proposals focused more on localisation. Effective from 1 April 2020, custom duty on completely built units (CBUs) of commercial electric vehicles (EVs) will be increased to 40% as against the current custom duty of 25%. The finance minister has proposed to surge customs duty on semi knocked down (SKD) units of passenger vehicles and three wheelers to 30% as against the currently applicable 15%. Additionally, the government has also proposed hiking the duty on SKD forms of electric buses, two-wheelers and trucks to 25% as against the current custom duty of 15%.
Eicher Motors fell 0.63%. The company's unlisted subsidiary VE Commercial Vehicles (VECV) reported 6.1% decline in total sales to 5,544 units in January 2020 from 5,906 units in January 2019. Total exports slipped 18.1% to 517 units in January 2020 as against 631 units in January 2019. Total domestic sales dropped 5.9% to 4,871 units in January 2020 compared with 5,177 units in January 2020.
Total Eicher trucks & buses sales fell 7.2% to 5,388 units in January 2020 as against 5,808 units in January 2019. Sales of Volvo Trucks surged 59.2% to 156 units in January 2020 compared with 98 units in January 2019.
Hero MotoCorp fell 2.84%. The company's total auto sales stood at 5,01,622 units in January 2020, down 13.91% from 5,82,660 units in January 2019. Domestic sales fell 14.35% to 488,069 units while the total exports witnessed a 5.93% rise to 13,553 units in January 2020 over January 2020.
Ashok Leyland rose 1.30%. The total vehicle sales fell 40% in January 2020 to 11,850 units from 19,741 units in January 2019. Domestic sales declined 41% to 10,850 units in January 2020 from 18,533 units in January 2019.
Tata Motors fell 1.15% The company's auto sales in the domestic & international market, in January 2020 stood at 47,862 vehicles as against 58,185 units during January 2019, down 17.74% year-on-year (YoY).
TVS Motor Company rose 1.80%. The firm posted sales of 2,34,920 units in January 2020 as against sales of 2,82,630 units in the month of January 2019, registering a drop of 17% year-on-year (YoY). Domestic two-wheeler declined dropped 29% to 1,63,007 units in January 2020 as against January 2019. Total exports grew by 34% from 52,650 units registered in the month of January 2019 to 70,784 units in January 2020.
Maruti Suzuki India rose 2.99%. The company's total sales rose 1.6% to 154,123 units in January 2020 from 151,721 units in January 2019. Total domestic sales stood at 144,499 in January 2020, up 1.7% from 142,150 units in January 2019. Exports rose 0.6% to 9,624 units in January 2020 from 9,571 units in January 2019.
Stocks in Spotlight:
Coal India rose 2.85%. The coal major said its total coal production in January 2020 stood at 63.11 million tonnes as against 57.21 million tonnes in January 2019, recording a rise of 10.3%. Coal offtake rose 6.9% to 56.05 million tonnes in January 2020 as against 52.44 million in January 2019.
Amara Raja Batteries surged 5.75% after consolidated net profit jumped 25.42% to Rs 164.16 crore in Q3 December 2019 from Rs 130.89 crore in Q3 December 2018. The company's net revenue from operations in the December quarter stood at Rs 1747.81 crore, up 3.14% from Rs 1694.66 crore in the same period last year. The result was announced after market hours on Saturday, 1 February 2020.
Relaxo Footwear slipped 1.53% . On a standalone basis, Relaxo's net profit jumped 52% to Rs 54.16 crore in Q3 December 2019 as against Rs 35.62 crore reported in Q3 December 2018. Net sales for the quarter ending December 2019 stood at Rs 599.83 crore, rising 8.8% on YoY basis.
Sobha rose 2.12%. The realtor reported 4.9% rise in consolidated net profit to Rs 73.20 crore in Q3 December 2019 from Rs 69.80 crore in Q3 December 2018. Profit before tax (PBT) in the December quarter stood at Rs 116.40 crore, up 6.2% from Rs 109.60 crore in Q3 December 2018. Net sales witnessed 12.1% rise to Rs 883.20 crore in Q3 December 2019 from Rs 787.90 crore in Q3 December 2018.
Godrej Properties rose 8.29%. On a consolidated basis, the realtor's net profit rose 9% to Rs 45 crore and total income rose 4% to Rs 491 crore in Q3 December 2019 as compared to Q3 December 2018. Profit before tax (PBT) for Q3 December 2019 stood at Rs 88 crore, jumping 145% from Rs 36 crore reported in Q3 December 2018. Consolidated EBITDA jumped 60% to Rs 151 crore year-on-year.
Info Edge (India) jumped 5.13% after the company's IE Venture Fund I entered into an agreement to invest about Rs 25.20 crore ($3.5 million) in Qyuki Digital Media.
Qyuki which was incorporated on 11 June 2010 is a data-driven new media company which discovers & invests in india's most influential KOLs (Key Opinion Leaders) to help them rapidly grow their audience, create content and launch scalable D2C brands.
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