Key domestic barometers ended near the day's high on Monday, extending gains for the fourth straight session. The Nifty managed to close above the psychological 11,000 mark. HDFC Bank, ICICI Bank and Infosys were the top index movers. Encouraging Q1 earnings from index pivotals countered the impact of the surge in domestic coronavirus cases.
The barometer S&P BSE Sensex rose 398.85 points or 1.08% at 37,418.99. The Nifty 50 index gained 120.50 points or 1.11% at 11,022.20. Both these indices jumped about 3.9% in four sessions.
The broader market trailed the benchmarks. The BSE Mid-Cap index rose 0.91% and the BSE Small-Cap index gained 1.04%.
The market breadth was positive. On the BSE, 1520 shares rose and 1167 shares fell. A total of 187 shares were unchanged.
COVID-19 update:
India reported 3,90,459 active cases of COVID-19 infection and 27,497 deaths while 7,00,086 patients have been cured, according to the data from the Ministry of Health and Family Welfare, Government of India. Total coronavirus cases worldwide stood at 14,508,352 with 606,195 deaths so far, according to data from Johns Hopkins University.
Numbers to Watch:
The yield on 10-year benchmark federal paper fell to 5.801% as compared with 5.805% at close in the previous trading session.
In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 74.91, compared with its close of 75.02 during the previous trading session.
In the commodities market, Brent crude for September 2020 settlement fell 39 cents at $42.75 a barrel. The contract fell 23 cents, or 0.53% to settle at $43.14 a barrel in the previous trading session.
Foreign Markets:
Most shares in Europe and Asia declined on Monday. Japan's exports dived 26.2% in June from a year earlier. Imports fell 14.4%, compared with expectations of a 16.8% decline.
China kept its benchmark lending rate steady for the third straight month on Monday. The one-year loan prime rate was kept unchanged at 3.85%, while the five-year remained at 4.65%.
European Union leaders on Friday reportedly kicked off a two-day summit aimed at reaching an agreement on a 750 billion euros recovery fund. However, the leaders have failed to agree on a massive stimulus fund, but have extended their summit for another day to try and overcome their differences.
US stocks closed Friday mostly along the flatline as investors reacted to disappointing consumer sentiment data and gauged the potential for additional fiscal stimulus in the U.S. and Europe while COVID-19 cases continue to climb.
Stocks gave up early gains to turn mixed after a US consumer sentiment index fell to 73.20 from 78.10 last month and down from 98.40 one year ago.
The continued rise in COVID-19 cases in the U.S. has been partly offset by optimism over scope for additional fiscal stimulus. The White House and lawmakers face increasing pressure to come up with an additional fiscal stimulus plan ahead of the expiration of supplemental unemployment benefits at the end of July.
The Federal Reserve on Friday announced it had expanded its Main Street Lending Program to include nonprofit organizations.
Buzzing Indian Index:
The Nifty Bank index rose 1.62% to 22,321.85. The index has risen 4.60% in three sessions.
ICICI Bank (up 2.54%), IndusInd Bank (up 1.48%), State Bank of India (up 1.25%) and Axis Bank (up 0.10%) advanced.
HDFC Bank rose 3.06% to Rs 1132.80. It has risen 7.61% in three sessions.
HDFC Bank's net profit rose 19.58% to Rs 6,658.62 crore on 6.46% increase in total income to Rs 34,453.28 crore in Q1 June 2020 over Q1 June 2019. Profit was aided by lower tax expense, which declined 23.14% to Rs 2,279.13 crore in Q1 FY21 compared with Rs 2,965.42 crore in Q1 FY20.
Net interest income (NII) for the quarter ended 30 June 2020 jumped 17.8% to Rs 15,665.4 crore as compared to Rs 13,294.3 crore for the quarter ended 30 June 2019.
"The continued slowdown in economic activity due to COVID-19 outbreak has led to a decrease in retail loan origination, sale of third-party products, use of credit and debit cards by customers, efficiency in collection efforts and waivers of certain fees. As a result, fees/other income were lower by approximately Rs 2,000 crore", the bank said in an exchange filing on Saturday, 18 July 2020.
The cost-to-income ratio for the quarter was at 35.0% as against 39.0% for the corresponding quarter ended June 30, 2019. Operating expenses were lower primarily due to lower loan origination and sales volumes.
The bank's provisions and contingencies jumped 48.89% to Rs 3,891.52 crore in Q1 June 2020 over Rs 2,613.66 crore in Q1 June 2019.
The ratio of gross NPAs to gross advances stood at 1.36% as on 30 June 2020 as against 1.26% as on 31 March 2020 and 1.40% as on 30 June 2019. The ratio of net NPAs to net advances stood at 0.33% in Q1 FY21 as against 0.36% in Q4 FY20 and 0.43% in Q1 FY20.
Stocks in Spotlight:
IT major Infosys jumped 3.27% to Rs 933.55. It fell 0.76% in the previous session.
Bajaj Finance jumped 4.23% to Rs 3441.35. The stock has risen 9.32% in three sessions.
Bajaj Finserv jumped 4.06% to Rs 6618.55. The stock has risen 6.96% in three sessions.
Mahindra & Mahindra Financial Services surged 10.44%. The NBFC posted a 298.41% surge in consolidated net profit to Rs 432.12 crore in Q1 June 2020 from Rs 108.46 crore in Q1 June 2019. Total income rose 16% year on year to Rs 3310.65 crore in Q1 June 2020.
The earnings includes an exceptional item in the nature of capital gain of Rs 229 crore on the basis of fair valuation of retained interest of 51% post stake dilution of 49% in its subsidiaries, Mahindra Asset Management Company (MAMCPL) and Mahindra Trustee Company (MTCPL), vide joint venture agreement with Manulife Asset Management (Singapore).
Meanwhile, the company's board has approved the rights issue instrument for a total number of equity shares and issue size of 61,77,64,960 equity shares for an aggregate amount not exceeding Rs 3,089 crore. The issue has been fixed as Rs 50 per equity share, which is at a discount of 75.95% as compared to the stock's Friday close of 207.90. The board has fixed 23 July 2020 as the record date for the same.
ICICI Lombard General Insurance Company gained 2.53% after the company reported 28.5% increase in net profit to Rs 398.1 crore in Q1 June 2020 compared with Rs 309.81 crore in Q1 June 2019. Total income rose nearly 2% to Rs 2844.17 crore in Q1 FY21 compared with Rs 2791.08 crore in Q1 FY20.
Gross Direct Premium Income (GDPI) of the company stood at Rs 3302 crore in Q1 June 2021 compared to Rs 3487 crore in Q1 June 2019, a de-growth of 5.3%. Excluding crop segment, GDPI of the company decreased to Rs 3274 crore in Q1 June 2020 compared to Rs 3488 crore in Q1 June 2019, registering a de-growth of 6.2%. The degrowth across industry was mainly due to Covid-19 pandemic.
Info Edge (India) jumped 4.37% after the media reported that online insurance platform Policybazaar is planning to have an initial public offering (IPO) with valuation worth $3.5 billion.
Info Edge (India) is one of the investors in Policybazaar. The insurance aggregator reportedly aims to go public in 2021 at a valuation north of $3.5 billion. Further, Policybazaar reportedly plans to raise $150 million (about Rs 1,100 crore) as buffer capital during the third quarter of current fiscal as a buffer for unforeseen events.
Glenmark Pharmaceuticals fell 2.59% to Rs 418.80. The stock tumbled 5.11% to hit the day's low at 408 in intraday trade today. According to media reports, the Drug Controller General of India (DCGI), the apex body to approve and regulate drugs in India, has sent a letter to Glenmark Pharmaceuticals, accusing the company of selling its newly-approved Covid-19 drug, favipiravir, at an unreasonable price through false claims.
SBI Cards and Payment Services fell 0.48% to Rs 751.80. Its net profit rose 14% to Rs 393.29 crore in Q1 June 2020 compared with Rs 345.59 crore in Q1 June 2019. Total income stood at Rs 2,195.60 crore in Q1 June 2020, sliding 4.72% from Rs 2,304.27 crore in Q1 June 2019. Interest income increased 34.6% to Rs 1,412 crore in Q1 June 2020 from Rs 1,049 crore in Q1 June 2019. Income from fees and services declined 27% to Rs 668 crore in Q1 June 2020 from Rs 916 crore in Q1 June 2019. Other income tumbled 81% year-on-year to Rs 43 crore in Q1 June 2020.
Total operating costs decreased 15.4% to Rs 907 crore in Q1 June 2020 from Rs 1073 crore in Q1 June 2019. Finance costs stood at Rs 275 crore in Q1 June 2020, falling 9% from year ago period. Impairment losses & bad debts expenses for the quarter rose 22.17% to Rs 485 crore compared with Rs 397 crore for Q1 June 2019.
The company's card-in-force grew by 20% to 1.06 crore in Q1 June 2020 from 0.88 crore as of Q1 June 2019. Spends were at Rs 19,085 crore in Q1 June 2020 versus Rs 30,174 crore in Q1 June 2019. Daily average spends improved to 76.5% of pre-COVID level for June 2020 versus 54% in May 2020. Accounts in moratorium went down to 1.5 lakh in June 2020 over 12.5 lakh in May 2020.
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