The barometer BSE S&P Sensex rose 165.86 points or 0.40% to 41,308.52, as per the provisional closing data. The Nifty 50 index added 43.20 points or 0.36% to 12,132.35, as per the provisional closing data. Trading was volatile due to weekly expiry of index option on the NSE.
In the broader market, the S&P BSE Mid-Cap index rose 0.80% while the S&P BSE Small-Cap index gained 0.53%. Both these indices outperformed the Sensex.
The market breadth was tilted towards buyers. On the BSE, 1388 shares rose and 1064 shares fell. A total of 168 shares were unchanged. In Nifty 50 index, 29 stocks advanced while 21 stocks declined.
RBI Policy:
On the basis of an assessment of the current and evolving macroeconomic situation, MPC at its meeting today (6 February 2020) decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 5.15%. Consequently, the reverse repo rate under the LAF remains unchanged at 4.90% and the marginal standing facility (MSF) rate and the Bank Rate at 5.40%. The MPC also decided to continue with the accommodative stance as long as it is necessary to revive growth, while ensuring that inflation remains within the target.
These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/- 2%, while supporting growth.
The CPI inflation projection is revised upwards to 6.5% for Q4 March 2020; 5.4-5.0% for first half of fiscal year ending March 2021 (H1:2020-21); and 3.2% for Q3 December 2020, with risks broadly balanced.
GDP growth for 2020-21 is projected at 6%; in the range of 5.5-6% in H1:2020-21 and 6.2% in Q3 December 2020.
The next meeting of the MPC is scheduled during March 31, April 1 and 3, 2020.
Addressing the press conference, RBI Governor Shaktikanta Das on Thursday said the central bank has no plans to monetise the rising fiscal deficit. FM Sitharaman informed Parliament during Budget presentation that India's fiscal deficit is pegged at 3.8% for FY20 and 3.5% in 2021. This is the third consecutive year that the government has revised its fiscal deficit target.
Buzzing Index:
The Nifty Bank index added 0.92% to 31,288.45 after the RBI announced changes in certain regulatory policies along with the outcome of the policy meet.
Among the public sector banks, UCO Bank (up 6.31%), Bank of Baroda (up 3.91%), State Bank of India (up 3.44%), Andhra Bank (up 3.12%), Punjab National Bank (up 3.08%), Canara Bank (up 3.01%), United Bank of India (up 2.83%), Corporation Bank (up 2.43%), IDBI Bank (up 1.9%), Indian Bank (up 1.47%), Central Bank of India (up 1.12%), Punjab & Sind Bank (up 0.82%), Syndicate Bank (up 0.63%) and Union Bank of India (up 0.62%) advanced.
Among the private sector banks, IndusInd Bank (up 5.19%), RBL Bank (up 4.75%), Yes Bank (up 2.79%), Federal Bank (up 2.04%), Axis Bank (up 1.91%), City Union Bank (up 1.35%) and ICICI Bank (up 0.73%) edged higher.
The RBI said that scheduled commercial banks will be allowed to deduct the equivalent of incremental credit disbursed by them as retail loans for automobiles, residential housing and loans to micro, small and medium enterprises (MSMEs), over and above the outstanding level of credit to these segments as at the end of the fortnight ended 31 January 2020 from their net demand and time liabilities (NDTL) for maintenance of cash reserve ratio (CRR). This exemption will be available for incremental credit extended up to the fortnight ending 31 July 2020.
Further, RBI also announced long term repo operations (LTROs) for improving monetary transmission. From the fortnight beginning on 15 February 2020, RBI shall conduct term repos of one-year and three-year tenors of appropriate sizes for up to a total amount of Rs 1,00,000 crore at the policy repo rate. Details about the LTRO facility are being issued separately.
"It is an effort to ensure better monetary policy transmission. It will enable banks to reduce their lending rates," RBI Governor Das told the media in the post policy conference.
Stocks in Spotlight:
Eicher Motors soared 4.40% to Rs 20,340 on BSE. Consolidated net profit declined 6.42% to Rs 498.70 crore in Q3 December 2019 (Q3 FY20) as against Rs 532.95 crore reported in Q3 December 2018 (Q3 FY19) while net sales rose 0.95% year-on-year (Y-o-Y) to Rs 2,350.45 crore in Q3 FY20. Consolidated profit before tax slumped 18.40% to Rs 644.09 crore Y-o-Y. Consolidated total tax expenses dropped 43.30% to Rs 145.39 crore during the period under review. The fall in current tax expense reduced the impact of consolidated loss before tax during the quarter. The Q3 figures were declared during trading hours today, 6 February 2020.
Cipla fell 1.63% to Rs 439.50. On a consolidated basis, The company's net profit gained 5.66% to Rs 351.03 crore in Q3 December 2019 (Q3 FY20) as against Rs 332.20 crore reported in Q3 December 2018 (Q3 FY19). Net sales advanced 8.40% year-on-year (YoY) to Rs 4,234.55 crore in Q3 FY20. Profit before Tax jumped 12.81% to Rs 506.40 crore in Q3 FY20 as compared to Rs 448.88 crore posted in Q3 FY19. Total tax expenses, for the quarter, jumped 21.59% to Rs 152.82 crore YoY. EBITDA grew 5.27% to Rs 758 crore in Q3 FY20 from Rs 720 crore in Q3 FY19. The EBITDA margin stood at 17.3% in Q3 FY20 as against 18% in Q3 FY19. The profit margin was at 8% in Q3 FY20 as compared to 8.3% in Q3 FY19.
V-Mart Retail soared 13.18% to Rs 2385.90 after net profit jumped 39.7% to Rs 58.22 crore in Q3 December 2019 (Q3 FY20) as against Rs 41.68 crore reported in Q3 December 2018 (Q3 FY19). Net sales soared 20.7% year-on-year (Y-o-Y) to Rs 562.16 crore in Q3 FY20. Profit before tax climbed 14.8% to Rs 76.97 crore Y-o-Y. Current tax expenses declined 21% to Rs 20.46 crore during the period under review.
Adani Green (AGEL) hit 5% upper circuit at Rs 202.20 after the company, in an exchange filing made during market hours today, said that it has entered into a binding agreement with Total Gas & Power Business Services SAS for investment of approximately $510 million for acquisition of 50% stake in a Joint Venture Company (JVCo).
Shares of Avenue Supermarts rose 3.05% higher at Rs 2317.90. The firm informed that its operations committee has authorized the opening of the qualified institutional placement (QIP) of equity shares from February 5 onwards. The company intends to issue 2 crore shares at the floor price of Rs. 1999.04 per equity share, offering a discount of not more than 5% on the floor price as permitted under SEBI norms.
ITI jumped 7.31% to Rs 90.30 after the PSU company said it has withdrawn its follow-on-public offer (FPO), citing market condition. The FPO was supposed to close on Wednesday, 5 February 2020. ITI launched its FPO on 24 January 2020. The FPO was earlier slated to close on 28 January 2020, but the company later extended FPO closing date to 31 January and readjusted its price band. Price band was revised from Rs 72-77 to Rs 71-77 per share.
Schneider Electric Infrastructure were locked in an upper circuit of 20% at Rs 94.35 after turnaround in Q3 2019 earnings. The company reported a net profit of Rs 30.03 crore in Q3 December 2019 as compared to a net loss of Rs 6.30 crore in Q3 December 2018. Net sales rose 9.9% to Rs 480.69 crore in Q3 December 2019 from Rs 437.35 crore in Q3 December 2018.
Engineers India fell 1.59% to Rs 93. On a consolidated basis, the company's net profit rose 19.5% to Rs 111.82 crore in Q3 December 2019 as against Rs 93.57 crore reported in Q3 December 2018. Net sales jumped 53.7% to Rs 899.17 crore in Q3 December 2019 over Q3 December 2018.
Global Markets:
European shares extended gains while Asian stocks ended higher on Thursday after US S&P 500 hit a record peak following encouraging economic data, while investors keep a wary eye on the impact of the coronavirus outbreak.
China announced on Thursday that it will halve tariffs on hundreds of U.S. goods worth about $75 billion. Tariffs on some US goods will be cut from 10% to 5%, and from 5% to 2.5% on others. The adjustments will take effect from February 14.
In US, stocks closed sharply higher on Wednesday for the third consecutive session as Wall Street continued its rebound from a selloff sparked in part by the outbreak of an Asian virus that has killed hundreds and infected tens of thousands.
Bullish sentiment was seen driven by hopes that stepped up containment efforts and work toward new vaccines could blunt the economic impact of the coronavirus.
On economic front, the services sector of the US economy, which accounts for most activity, grew at the fastest pace in six months in January, according to ISM's purchasing manager survey.
Earlier, a government report showed that the US trade deficit fell in 2019 for the first time in six years, reflecting tariff-reduced imports from China, with a 1.7% decline to $616.8 billion in December.
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