Benchmark indices ended with modest gains on Tuesday, rebounding from previous session's selloff. The barometer index, the S&P BSE Sensex, gained 272.51 points or 0.71% at 38,900.80. The Nifty 50 index rose 82.75 points or 0.73% at 11,470.25. It slumped 2.23% yesterday after rising 3% in the previous six sessions.
Telecom stocks were in action after the Supreme Court pronounced its verdict on adjusted gross revenue (AGR) case. Recovery in monthly auto sales also supported sentiment.
In the broader market, the BSE Mid-Cap index rose 1.16% and the BSE Small-Cap index gained 0.54%.
Sellers outpaced buyers. On the BSE, 1199 shares rose and 1458 shares fell. A total of 162 shares were unchanged.
COVID-19 Update:
Total COVID-19 confirmed cases worldwide stood at 2,54,88,239 with 8,50,596 deaths. India reported 7,85,996 active cases of COVID-19 infection and 65,288 deaths while 28,39,882 patients have been discharged, according to the data from the Ministry of Health and Family Welfare, Government of India.
Economy:
The headline seasonally adjusted IHS Markit India Manufacturing Purchasing Managers' Index stood at 52 in August 2020 from 46.0 in July signalling an improvement in operating conditions across the manufacturing sector following four consecutive months of contraction.
Commenting on the latest survey results, Shreeya Patel, Economist at IHS Markit said, "August data highlighted positive developments in the health of the Indian manufacturing sector, signalling moves towards a recovery from the second quarter downturn. The pick-up in demand from domestic markets gave rise to upturns in production and input buying. However, not all was positive in August, delivery times lengthened to another marked rate amid ongoing COVID-19 disruption. Meanwhile, employment continued to fall despite signs of capacity pressures, as firms struggled to find suitable workers. The rate of input price inflation was solid, following four monthly declines in cost burdens. Firms, however, continued in their efforts to drive sales amid greater competitive pressure and reduced their selling prices further."
Meanwhile, India's GDP contracted 23.9% in Q1 June 2020 compared to the same period last year, showed official data released by the National Statistics Office (NSO) on Monday. This was mainly on account of limited economic activity in the country during the quarter amid lockdowns to control the spread of the coronavirus pandemic. The economy expanded 3.1% year-on-year in the quarter ended March 2020.
India's fiscal deficit stood at Rs 8.21 lakh crore, or 103.1% of the budgeted target for the current fiscal year up to the end of July 2020 exceeding its target in first four months of FY21. The Government of India has received Rs 2,32,860 crore (10.4% of corresponding BE 2020-21 of Total Receipts) up to July, 2020 comprising Rs 2,02,788 crore Tax Revenue (Net to Centre), Rs 24,614 crore of Non-Tax Revenue and Rs 5,458 crore of Non-Debt Capital Receipts.
Numbers to Watch:
The yield on 10-year benchmark federal paper fell to 5.943% as compared with 6.078% at close in the previous trading session.
The rupee surges past 73 per USD mark. In the foreign exchange market, the partially convertible rupee was hovering at 72.87, compared with its close of 73.60 during the previous trading session.
In the commodities market, Brent crude for November 2020 settlement rose 53 cents at $45.81 a barrel. The contract fell 53 cents, or 1.16% to settle at $45.28 a barrel in the previous trading session.
Foreign Markets:
Most shares in Europe and Asia advanced on Tuesday after the latest data from China showed manufacturing activity in the world's second-largest economy expanded at its fastest rate in nearly 10 years.
The Caixin/Markit manufacturing Purchasing Managers' Index (PMI) came in at 53.1 for August, compared to 52.8 in July. PMI readings above 50 indicate expansion, while those below that signal contraction.
Japan's factory activity contracted at the slowest pace in six months in August. Tuesday's final au Jibun Bank Manufacturing Purchasing Managers' Index (PMI) rose to a seasonally adjusted 47.2 in August from 45.2 in July. It marked the slowest contraction since February, and also eclipsed a preliminary reading of 46.6.
South Korea's manufacturing activity shrank at the slowest pace in six months in August. The IHS Markit purchasing managers' index (PMI) rose to 48.5 in August from 46.9 in July.
In US, stocks were mixed on Monday. Declines in bank stocks pressured both the Dow and S&P 500. The Dow slid 223.82 points, or 0.8%, to 28,430.05 and the S&P 500 dipped 0.2% to close at 3,500.31. JPMorgan Chase, Citigroup, Bank of America and Wells Fargo were all down more than 2%, following Treasury yields lower.
The Nasdaq Composite outperformed with a 0.7% gain and ended the day at 11,775.46. The Nasdaq got a lift after two big stock splits took effect Monday. Apple shares gained 3.4% as a 4-for-1 split took effect. Tesla shares added 12.6% following its 5-for-1 split.
Buzzing Indian Segment:
Shares of telecom companies turned volatile after the Supreme Court on Tuesday (1 September) allowed telecom operators 10 years to pay up dues related to adjusted gross revenue (AGR).
Vodafone Idea slumped 12.76% and Tata Teleservices (Maharashtra) shed 1.98% while Bharti Airtel jumped 6.38%. Reliance Industries, which controls Reliance Jio Infocomm, rose 0.43%.
A three-judge apex court bench, headed by Justice Arun Mishra, directed telecom operators to make 10% upfront payment of their AGR dues, with the rest of the payments to begin from 1 April 2021.
The top court also announced that the issue of sale of the spectrum by those telecom companies which are facing insolvency proceedings shall be decided by National Company Law Tribunal (NCLT).
In October 2019, the Supreme Court delivered the verdict on the AGR issue for calculating government dues of telecom companies as licence fee and spectrum usage charges.
Later in March 2020, the department of telecommunications (DoT) appealed to the apex court seeking 20 years for paying AGR dues. However, SC expressed reservations about granting 20-year time, voicing doubt about recovery of dues.
August Auto Sales:
Eicher Motors gained 1.83%. The company said that total motorcycles sales jumped 24.3% to 50,144 units in August 2020 from 40,334 units sold in July 2020. However, the total sales are down by 5% compared with 52,904 units sold in August 2019. Total motorcycle exports tumbled 38% to 2,573 units in August 2020 from 4,152 units in August 2019. Sequentially, the total exports have risen by 6.8% in August 2020 from 2,409 units in July 2020.
Ashok Leyland rose 1.92%. The commercial vehicles maker reported a 31% decline in total sales at 6,325 units in August 2020 as against 9,230 units in the same month last year. On a month-on-month (M-o-M) basis, total sales surged 32.46% in August 2020 from 4,775 units in July 2020 Sale of its medium and heavy commercial vehicles (M&HCV) slumped 52% at 2,589 units in August 2020 as against 5,348 units in the year-ago period, the company said in a filing. Light commercial vehicles (LCV) sales slipped 4% at 3,736 units as against 3,882 units in August last year.
Mahindra & Mahindra (M&M) rose 0.23% after the company said its total tractor sales jumped 65% to 24,458 units in August 2020 over August 2019. Sequentially, the tractor sales declined 3.7% in August 2020 compared with 25,402 units in July 2020. Domestic sales in August 2020 were at 23,503 units, as against 13,871 units during August 2019, a spurt of 69%. Export for August 2020 stood at 955 units, marginally higher than 946 units exported in the same month last year. Meanwhile, M&M also announced its auto sales performance for the month of August 2020. The company's total automobile sales declined 16% to 30,426 units in August 2020 from 36,085 units in August 2019. M&M's total auto sales jumped 18.5% in August 2020 from 25,678 units sold in July 2020.
Maruti Suzuki India rose 1.04% after the company's total vehicles sales rose 17.1% to 124,624 units in August 2020 from 106,413 units in August 2019. While the total domestic sales jumped 20.2% to 116,704 units, total export sales declined by 15.3% to 7,920 units in August 2020 over August 2019. Sequentially, the total sales have increased 15.3% from 1,08,064 units sold in July 2020.
Escorts jumped 2.24% after the company said its total tractor sales surged 80% to 7,268 units in August 2020 over August 2019. Sequentially, the company's total tractor sales jumped 37% in August 2020 from 5,322 units sold in July 2020. Total domestic tractor sales stood at 6,750 units (up 79.4% YoY) and total exports were at 518 units (up 90.4% YoY) in August 2020.
Stocks in Spotlight:
Biocon jumped 7.81% announced the US launch of Semglee in vial and pre-filled pen presentations for patients living with diabetes. Semglee (insulin glargine injection), which received final approval from the US Food and Drug Administration (FDA), helps in controling high blood sugar in adult and pediatric patients with type 1 diabetes and adults with type 2 diabetes. It is not recommended for the treatment of diabetic ketoacidosis. Semglee has an identical amino acid sequence to Sanofi's Lantus and is approved for the same indications. Sanofi's total IQVIA sales for the 12 months ending 30 June 2020 were approximately $1.64 billion for Lantus 100 Units/mL Vial and approximately $4.36 billion for Lantus SoloSTAR Pen.
Spandana Sphoorty Financial fell 4.87% after the microfinance company reported a 36.9% decline in consolidated net profit to Rs 59 crore in Q1 June 2020 from Rs 93.4 crore in Q1 June 2019. Provision and write-off related to Covid-19 and others was Rs 89.30 crore in Q1 June 2020. The company's total income grew by 7.2% to Rs 327 crore in quarter ended 30 June 2020 from Rs 304.90 crore posted in quarter ended 30 June 2019. Consolidated profit before tax came at Rs 78 crore in Q1 June 2020, lower than Rs 143 crore in Q1 June 2019. The result was announced after market hours yesterday, 31 August 2020. The company's net interest income came at Rs 264 crore in Q1 June 2020 which is 37% higher than Rs 193 crore posted in Q1 June 2019. Net interest margin declined to 15.5% in Q1 June 2020 from 16.5% reported in the same period last year.
BEML gained 3.52%. The company bagged a order from Ministry of Defence for supply of 330 high mobility vehicles, for Pinaka project at a value of Rs 842 crore. Pinaka is a multi-barrel rocket launcher developed indigenously for the Indian Army and produced in India by involving public sector and private sector defence industries. The equipment will be manufactured by BEML at its Palakkad plant in Kerala and would supply the vehicle platform to MoD in a span of 3 years. The multi-barrel launcher system is mounted on the highly rugged BEML truck, much acclaimed for its off-road mobility and would provide the Indian Army with vital manoeuvrability on the battlefield.
MOIL jumped 3.86% after the company increased prices of different grades of manganese ore and other products, effective 1 September 2020. MOIL said that the prices of all grades of ferro, SMGR grades (Mn30% & Mn25%), fines and chemical grades have been increased by about 10% from 1 September 2020 on the prices prevailing since 1 August 2020. The announcement was made post trading hours yesterday, 31 August 2020.
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