Key equity barometers ended a volatile session with minor cuts on Tuesday. The barometer index, the S&P BSE Sensex, lost 51.88 points or 0.14% at 38,365.35. The Nifty 50 index slipped 37.70 points or 0.33% at 11,317.35.
Index major Reliance Industries and IT pivotals bucked broader selling pressure. Positive Asian shares supported buying, but rising COVID-19 cases and tensions at Indo-China border restricted gains. After opening lower, the key indices gained momentum and hit the day's high in early afternoon trade. However, profit taking emerged at higher levels, dragging the benchmarks lower in late trade.
Bharti Airtel (down 3.36%), Axis Bank (down 3.13%), HDFC (down 0.73%) put pressure on the indices. Index heavyweight Reliance Industries, however, rose 1.18% to 2107.05.
The broader market witnessed a steep decline. The BSE Mid-Cap index fell 1.49% and the BSE Small-Cap index lost 0.93%. Both these indices underperformed the Sensex.
The market breadth was weak. On the BSE, 955 shares rose and 1754 shares fell. A total of 157 shares were unchanged.
COVID-19 Update:
Total COVID-19 confirmed cases worldwide stood at 27,342,332 with 892,714 deaths. India reported 8,83,697 active cases of COVID-19 infection and 72,775 deaths while 33,23,950 patients have been discharged, according to the data from the Ministry of Health and Family Welfare, Government of India.
India-China Standoff:
India today denied firing of shots at the Line of Actual Control where the Indian and Chinese troops have been engaged in stand-off for over three months, the Defence Ministry said in a statement, hours after the People's Liberation Army accused the Indian troops of illegally crossing the border at the shore of the God Pao Mountain area and firing warning shots. In the statement, India accused China of trying to close in on Indian positions and firing in the air.
Economy:
A foreign brokerage firm has reportedly estimated that India's GDP will contract by 14.8% in FY21 and by 11.1% in CY20. It forecast a GDP contraction of 13.7% in Q2 FY21 and 9.8% in Q3 FY21.
Meanwhile, the Reserve Bank of India (RBI) constituted KV Kamath committee has selected 26 sectors which will require restructuring based on its analyses of financial parameters hit due to the economic crash caused by the coronavirus pandemic.
In its report the five member committee reportedly said power, construction, iron and steel, roads, real estate, wholesale trading, textiles, consumer durables, aviation, logistics, hotels, restaurants and tourism, mining are among the sectors that will need restructuring.
The committee selected five financial parameters related to leverage, liquidity & debt serviceability viz. total outside liability to adjusted tangible net worth, debt to EBIDTA, current ratio, debt service coverage ratio (DSCR) and average debt service coverage ratio (ADSCR).
"Time is of essence at the present juncture. Considering the large volume and the fact that only standard assets are eligible under the proposed scheme, a segmented approach of bucketing these accounts under mild, moderate and severe stress, may ensure quick turnaround. To complete this task simplified restructuring for mild and moderate stress may be prescribed. Severe stress cases would require comprehensive restructuring," the committee reportedly added.
The RBI had formed a five member committee under the chairmanship of former ICICI Bank CEO KV Kamath to make recommendations on the financial parameters to be considered in the restructuring of loans impacted by the COVID-19 pandemic.
Numbers to Watch:
The yield on 10-year benchmark federal paper rose to 6.056% as compared with 5.993% 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 73.60, compared with its close of 73.35 during the previous trading session.
In the commodities market, Brent crude for November 2020 settlement fell $1.53 at $41.13 a barrel. Oil prices dropped to five-week lows after Saudi Arabia made its deepest monthly price cuts to supply for Asia in five months and as uncertainty over Chinese demand clouds the market's recovery.
Foreign Markets:
US Dow Jones index futures were down 145 points, indicating a negative start in US stocks today.
European markets declined while Asia shares rose across the board on Tuesday.
Japan's Nikkei 225 index rose 0.8%. The island nation revised GDP figures for the April-June quarter showed the country's economy shrinking an annualized 28.1%, according to second preliminary estimates released by the Cabinet Office. It was worse than preliminary estimates released in mid-August, which had shown the country's economy shrinking 27.8% on an annualized basis in April-June.
Elsewhere, the pound extended its drop to the longest since June as the prospects of a trade accord with the European Union looked increasingly remote. U.K. Prime Minister Boris Johnson said Monday he's willing to walk away from talks rather than compromise on what he sees as the core principles of Brexit, and set an Oct. 15 deadline to reach an agreement.
In US, financial markets were shut on Monday for the U.S. Labor Day holiday.
Buzzing Indian Segments:
The Nifty IT index added 1.20% to 18,395.75. It was the only sectoral index on the NSE to end in the green. The index has added 1.78% in two sessions.
HCL Technologies (up 2.26%), Infosys (up 1.67%), Wipro (up 1.29%), Persistent Systems (up 1.08%), TCS (up 0.93%) and Tech Mahindra (up 0.7%) advanced.
The Nifty Metal index fell 2.99%to 2,376.85. The index has fallen 6.47% in four sessions.
JSPL (down 4.84%), SAIL (down 4.33%), Tata Steel (down 4.13%), NMDC (down 3.96%), Hindalco Industries (down 3.89%), JSW Steel (down 2.72%), Hindustan Zinc (down 2.64%) and Vedanta (down 2.23%) declined.
Earning Impact:
General Insurance Corporation of India (GIC Re) tumbled 4.18% after the company reported a consolidated net loss of Rs 497.03 crore in Q1 June 2020 as against a net profit of Rs 192.07 crore in Q1 June 2019.
Total income fell 18% year-on-year (YoY) to Rs 15,013.47 crore during the quarter. Consolidated gross premium income of the company was Rs 15,982.75 crore in the quarter ended 30 June 2020 as compared to Rs 21,110.36 crore in the quarter ended 30 June 2019. Incurred claims ratio increased to 94.9% in Q1 FY21 from 87.6% in Q1 FY20.
"Global scenario for Insurance Industry for the FY 2020-21 has shown weak trends due to COVID19 situation. GIC Re although has maintained its prominent position in Indian Insurance Sector, there has been reduction in business for the Q1 2020-21 partially due to strategic reduction of risk acceptance and partially due to reduction of overall Direct Premium in India. GIC Re however expects to see rebound in business during the rest of the year, the general insurer said in a statement.
Info Edge (India) gained 0.66%. On a standalone basis, the company's net profit rose 15.8% to Rs 83.22 crore on a 10.4% fall in net sales to Rs 280.14 crore in Q1 June 2020 over Q1 June 2019. It recorded billing of Rs188.6 crore for the quarter ended 30 June 2020, lower by 43.9% as compared to Rs 336.3 crore recorded in quarter ended 30 June 2019. The deferred sales revenue (amount collected in advance) in Q1 FY21 is Rs 371.7 crore, down by 25% over the quarter ended 30 June 2019. Operating EBITDA has increased by 3.5% to Rs 104.6 crore in Q1 FY21 from Rs 101.0 crore in Q1 FY20.
Stocks in Spotlight:
Ashoka Buildcon jumped 4.47% after the company emerged as the lowest bidder (L-1) for two road construction projects from NHAI. Both projects come under Bharatmala Pariyojana Phase-1.
Motherson Sumi Systems fell 1.80%. The automotive component maker on Tuesday said its board has approved raising up to Rs 1500 crore through issuance of non-convertible debentures (NCDs) on private placement basis.
Bharat Dynamics slumped 13.88% to Rs 331.15. The Government of India has offered to sell 1,83,28,125 equity shares, constituting 10% paid-up share capital of the company through offer for sale (OFS). It has an option to sell an additional 91,64,063 equity shares or 5% stake (oversubscription option). The OFS opened on Tuesday (8 September) for non-retail investors, while both retail as well as non-retail investors will be able to subscribe on Wednesday (9 September). The floor price for the OFS was set at Rs 330 each, a 14.17% discount to Bharat Dynamics' closing price of Rs 384.50 on Monday, 7 September 2020.
As on 15:30 IST, the OFS received subscription for 2.18 crore shares or 140.18% against the base non-retail offer size of 1.55 crore shares.
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