Shares trade firm; metal shares in demand

The market firmed up once again in mid-morning trade. At 11:28 IST, the barometer index, the S&P BSE Sensex, was up 264.84 points or 0.88% at 30,461.01. The Nifty 50 index added 85.95 points or 0.97% at 8,965.05.

The firmness was backed by gains in Reliance Industries and ITC. Sentiment got a boost after the country's finance minister Nirmala Sitharaman reportedly said the government remains open to more economic measures as and when needed.

Sitharaman on Sunday (17 May) announced the fifth and final tranche of economic stimulus package to deal with the economic fallout of the COVID-19 pandemic. The booster measures announced on Sunday related to MGNREGS, healthcare and education, businesses, de-criminalisation of the Companies Act, ease of doing business, public sector enterprises, and resources related to state governments.

 

In the broader market, the S&P BSE Mid-Cap index rose 0.64% while the S&P BSE Small-Cap index advanced 0.40%.

Buyers outpaced the sellers. On the BSE, 1005 shares rose and 842 shares fell. A total of 124 shares were unchanged. In the Nifty 50 index, 41 shares advanced while 9 shares declined.

Reliance Industries (RIL) rose 1.96% to Rs 1435.30 as the company's rights issue opens today, 20 May 2020. The rights issue valued at Rs 53,125 crore, will be open for subscription today and it will close on 3 June. All eligible shareholders as per record date of 14 May are entitled to subscribe to the fresh issue. RIL will issue 42,26,26,894 equity shares as part of the rights issue. The company will offer existing shareholders one new share for 15 held at a discounted price of Rs 1,257.

Meanwhile, ITC (up 2.78%), HDFC (up 1.02%), Larsen & Toubro (up 3.04%) and HDFC Bank (up 1.14%) were the top index contributors.

Buzzing Index:

The Nifty Metal index advanced 0.28% to 1,698.30, extending gains for second day. The index has risen 1.90% in the past one month while the benchmarks Nifty 50 index has lost 0.34% during the same period.

Tata Steel (up 2.19%), Steel Authority of India (up 2.04%), Hindalco Industries (up 1.02%), Jindal Steel & Power (up 0.76%), Hindustan Copper (up 0.59%), NMDC (up 0.35%) and JSW Steel (up 0.27%) advanced.

Hindustan Zinc (down 2.07%), Vedanta (down 0.94%) and National Aluminium Company (down 0.36%) declined.

Earnings impact:

Ujjivan Small Finance Bank rose 3.39% to Rs 27.45 after net profit rose 14.7% to Rs 73.15 crore on 34.4% rise in total income to Rs 809.65 crore in Q4 March 2020 over Q4 March 2019. Net interest income (NII) jumped 46% to Rs 466 crore in Q4 FY20 over Q4 FY19. Net interest margin (NIM) stood at 11.2% in Q4 March 2020 as compared to 10.8% in Q4 March 2019.

The bank's gross non-performing assets (NPAs) stood at Rs 137.14 crore as on 31 March 2020 as against Rs 129.45 crore as on 31 December 2019 and Rs 97.85 crore as on 31 March 2019. The ratio of gross NPAs to gross advances stood at 0.97% as on 31 March 2020 as against 0.95% as on 31 December 2019 and 0.92% as on 31 March 2019. The ratio of net NPAs to net advances stood at 0.20% as on 31 March 2020 as against 0.38% as on 31 December 2019 and 0.26% as on 31 March 2019.

The bank's provisions and contingencies stood at Rs 96.88 crore in Q4 March 2020, almost seven times compared to Rs 12.37 crore in Q4 March 2019. The bank has made total provision of Rs 70 crore for COVID-19 as on 31 March 2020, out of which Rs 48.97 crore is in respect of accounts in default but standard against the potential impact of COVID-19. The provisions held by the bank are in excess of the RBI prescribed norms.

The bank's deposits rose by 46.08% to Rs 10,780.48 crore as on 31 March 2020 from Rs 7,379.44 crore as on 31 March 2019. CASA ratio stood at 14% during the quarter compared with 11% in March 2019. Total advances jumped 33.08% to Rs 14,043.64 crore as on 31 March 2020 from Rs 10,552.45 crore as on 31 March 2019.

Larsen & Toubro Infotech rallied 6.94% to Rs 1,785 after consolidated net profit jumped 13.49% to Rs 427.50 crore on a 7.14% increase in net sales to Rs 3,011.90 crore in Q4 March 2020 over Q3 December 2019. Consolidated profit before tax rose 10.32% to Rs 551.40 crore in Q4 March 2020 as against Rs 499.80 crore in Q3 December 2019.

Current tax expenses fell 28.05% at Rs 96.20 crore in Q4 March 2020 as compared to Rs 133.70 crore in Q3 December 2019. EBITDA margin improved to 19.2% in Q4 March 2020 as compared to 18.8% in Q3 December 2019 and 19.2% in Q4 March 2019.

Global Markets:

Asian markets were currently trading mixed after China kept its benchmark lending rate unchanged.

China held its benchmark lending rate steady on Wednesday, mirroring the central bank's decision last week to keep borrowing costs on medium-term funding for financial institutions unchanged. The one-year loan prime rate (LPR) remained at 3.85% from last month's fixing, while the five-year LPR was also steady at 4.65% from previously.

Investors also watched for market reaction to a media report released overnight that raised concerns about the trial results for a potential coronavirus vaccine from Moderna. That initial positive development had sent global markets rallying earlier in the week.

The US equity market finished volatile session lower for the first time in four sessions on Tuesday, 19 May 2020, as investors elected to book profit after a strong rally in the prior session, due to mixed batch of corporate results from major retailers and reports that Moderna Inc.'s coronavirus vaccine study didn't produce enough critical data to assess its success.

However, market losses were capped after Federal Reserve Chairman Jerome Powell, in a statement, said that the central bank is ready to use all the weapons in its arsenal to help the U.S. economy endure the coronavirus pandemic.

Meanwhile, President Trump told reporters on Tuesday that the World Health Organization must clean up its act or the U.S. won't be involved with them anymore. Trump threatened to pull support from the agency permanently Monday and started a 30-day clock for the WHO to commit to changes.

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