Volatile session ends with decent gains

Key equity benchmarks settled with decent gains on Friday, reversing steep losses in morning trade. Indices opened lower and hit fresh intraday low in morning trade amid negative global cues. Global shares were under pressure on US President Donald Trump's decision to impose new tariffs on Chinese goods.

Domestic barometers bounced back in afternoon trade, with the Nifty briefly regaining 11,000 mark, after media reports suggested that Prime Minister Office (PMO) and finance ministry's top bureaucrats were in talks over foreign portfolio investor (FPI) surcharge issue. The PMO took stock of tax surcharge and its impact of the stock market and FPIs, reports added.

 

Further, media reports also suggested that the government is likely to put a plan to raise the minimum public shareholding in listed companies to 35% from 25% on hold.

The Sensex rose 99.90 points or 0.27% to settle at 37,118.22. The index rose 356.84 points, or 0.96% at the day's high of 37,375.16. The index fell 410.91 points, or 1.11% at the day's low of 36,607.41.

The Nifty 50 index rose 17.35 points or 0.16% to settle at 10,997.35. The index rose 100.15 points, or 0.91% at the day's high of 11,080.15. The index fell 236.45 points, or 2.13% at the day's low of 10,848.95.

In broader market, the S&P BSE Mid-Cap index rose 0.15%. The S&P BSE Small-Cap index fell 0.44%.

The market breadth was negative. On the BSE, 1097 shares rose and 1362 shares fell. A total of 138 shares were unchanged.

Among the sectoral indices on the BSE, the S&P BSE Telecom index (up 3.63%), the S&P BSE Auto index (up 1.07%) and the S&P BSE Teck index (up 0.91%) outperformed the S&P BSE Sensex. Meanwhile, the S&P BSE Metal index (down 1.95%), the S&P BSE Power index (down 1.30%) and the S&P BSE Utilities index (down 1.03%) underperformed the S&P BSE Sensex.

Foreign investors have been selling extensively in the Indian equity market after the government announced levy of surcharge on super rich in the Union Budget. Finance minister Nirmala Sitharaman in her maiden Budget speech on 5 July 2019, proposed to enhance surcharge on individuals having taxable income from Rs 2 crore to Rs 5 crore and Rs 5 crore and above so that effective tax rates for these two categories will increase by around 3% and 7% respectively. The effective tax rate on the highest tax bracket goes up to 42.7% after the hike.

There are concerns that the increased surcharge on super-rich could also affect foreign funds investing in India since a same tax structures apply for individuals, Hindu Undivided Family (HUF) and Associations of Persons (AOPs). FPIs, including pension and retirement funds, educational endowment fund, etc, come in through trusts or AOPs route because it has been the most tax-efficient structure.

In the Budget, finance minister had urged Sebi to consider increasing the minimum public shareholding in listed firms to 35% from 25%. The proposal is potential negative for MNCs and companies with high promoter holding. This proposal could also increase the supply of paper in the market, which would suck money out of secondary market.

This proposal could force as many as 1,037 companies to dillute promoter holding to bring public shareholding to 35%. As many as 320 companies belonged to the finance, textiles, chemicals, auto ancillaries and pharmaceuticals sectors.

In the equity market today, ITC fell 1.12% to Rs 264.60 ahead of its Q1 June 2019 result today.

Housing finance major HDFC rose 1.75% after net profit rose 46.26% to Rs 3203.10 crore on 30.59% increase in total income to Rs 12996.11 crore in Q1 June 2019 over Q1 June 2018. The result was announced during trading hours today, 2 August 2019.

State Bank of India (SBI) fell 2.76% after the bank reported net profit of Rs 2312.20 crore in Q1 June 2019 compared with net loss of Rs 4875.85 crore in Q1 June 2018. Total income rose 7.88% to Rs 70653.23 crore in Q1 June 2019 over Q1 June 2018.

The bank's gross non-performing assets (NPAs) stood at Rs 168493.94 crore as on 30 June 2019 as against Rs 172750.36 crore as on 31 March 2019 and Rs 212839.92 crore as on 30 June 2018. The ratio of gross NPAs to gross advances stood at 7.53% as on 30 June 2019 as against 7.53% as on 31 March 2019 and 10.69% as on 30 June 2018. The ratio of net NPAs to net advances stood at 3.07% as on 30 June 2019 as against 3.01% as on 31 March 2019 and 5.29% as on 30 June 2018.

The bank's provisions and contingencies fell 52.24% to Rs 9182.94 crore in Q1 June 2019 over Q1 June 2018. Of this, provisions for NPAs fell 10.66% to Rs 11648.45 crore in Q1 June 2019 over Q1 June 2018. Provision coverage ratio of the bank was at 79.34% as on 30 June 2019.

MindTree rose 1.74%. The company announced during market hours today, 2 July 2019, that it has appointed Debashis Chatterjee as the CEO and managing director of the company from 2 August 2019 to 1 August 2024.

Power Grid Corporation of India fell 1.73%. Its consolidated net profit rose 9.75% to Rs 2489.39 crore on 11.26% rise in net sales to Rs 9179.63 crore in Q1 June 2019 over Q1 June 2018. The announcement was made during market hours today, 2 August 2019.

Further, Power Grid said that it was declared as the successful bidder under tariff-based competitive bidding to establish transmission system for two projects at Bhuj in Gujarat and Rajasthan SEZ. The announcement was made during market hours yesterday, 1 August 2019.

Bharti Airtel jumped 6.02%. The telecom major reported a consolidated net loss of Rs 2866 crore in Q1 June 2019 compared to a consolidated net profit of Rs 97.3 crore in Q1 June 2018. Net sales rose 4.7% to Rs 20,737.90 crore in Q1 June 2019 over Q1 June 2018. The result was announced after market hours yesterday, 1 August 2019.

Consolidated earnings before interest tax depreciation and amortization (EBITDA) increased 24.21% to Rs 8492.6 crore in Q1 June 2019 from 6837 crore in Q1 June 2018. The EBITDA margin grew to 41% in Q1 June 2019 from 34.5% Q1 June 2018. The average revenue per user (ARPU) grew 22.6% to Rs 129 in Q1 June 2019 from Rs 105 in Q1 June 2018. ARPU grew 5.1% from Rs 123 in Q4 March 2019.

Coal India fell 2.57% after the company published its provisional production and off-take performance for the month of July 2019. The company's coal production declined 5.1% to 38.50 Mill Te while the off-take of coal dropped by 2.9% to 46.82 Mill Te in July 2019 over July 2018.

As per reports, Coal India has decided to procure rail wagons under general purpose wagon investment scheme at an estimated cost of Rs 700 crore.

Marico rose 2.74%. The consumer goods company consolidated net profit rose 26.3% to Rs 322.15 crore on 6.9% increase in net sales to Rs 2166 crore in Q1 June 2019 over Q1 June 2018. The result was announced during market hours yesterday, 1 August 2019.

The company delivered strong earnings growth on the back of resilient volume growth, amidst moderation in the overall demand environment in the domestic market. Consolidated earnings before interest tax depreciation and amortization (EBITDA) increased 26% to Rs 462 crore in Q1 June 2019. The company's EBITDA margin rose 324 bps to 21.3% in Q1 June 2019.

The company reported its flagship coconut oil product Parachute Rigids posted volume growth of 9% in Q1 June 2019. During the quarter, the average market price of domestic copra was down 25% Y-o-Y. With deflation in copra prices setting in, the low margin non-focused coconut oil brands posted a double-digit decline in volumes.

KRBL jumped 3.37%. On a consolidated basis, the integrated rice company's net profit rose 36.1% to Rs 136.12 crore on a 63.8% rise in the net sales to Rs 1217.70 crore in Q1 June 2019 over Q1 June 2018. The result was announced after market hours yesterday, 1 August 2019.

Raymond fell 1.63% after the company reported a consolidated net loss of Rs 14.83 crore in Q1 June 2019 compared with a net profit of Rs 0.73 crore in Q1 June 2018.The result was announced after market hours yesterday, 1 August 2019.

Consolidated net sales jumped 14.7% to Rs 1,435.12 crore in Q1 June 2019 over Q1 June 2018. Consolidated EBITDA fell 2% to Rs 105 crore in Q1 June 2019 over Q1 June 2018. The consolidated EBITDA margin slipped by 118 bps to 7.1% in Q1 June 2019 from 8.3% in Q1 June 2018.

Most auto shares advanced. TVS Motor Company (up 3.84%), Bajaj Auto (up 2.49%), Maruti Suzuki India (up 2.12%), Mahindra & Mahindra (up 1.83%) and Escorts (up 0.51%) edged higher.

Tata Motors rose 0.85%. The company's Commercial and Passenger Vehicles Business sales in the domestic market dropped 34% at 32,938 units in July 2019 over July 2018 on subdued demand. The announcement was made after market hours yesterday, 1 August 2019.

Hero MotoCorp rose 1.42%. The company sold 535,810 units of motorcycles and scooters in July 2019. The announcement was made after market hours yesterday, 1 August 2019.

Eicher Motors gained 2.29%. Total Royal Enfield sales fell 22% to 54185 units in July 2019 over July 2018. Sale of models with engine capacity upto 350cc fell 29% to 45041 units while sale of models with engine capacity exceeding 350cc jumped 71% to 9144 units in July 2019 over July 2018. Total two-wheeler exports spurted 143% to 5003 units in July 2019 over July 2018. The announcement was made after market hours yesterday, 1 August 2019.

Ashok Leyland slumped 6.60% to end at Rs 64.40. Media reports suggested that the company will cut production to ease stress on dealers who are grappling with an inventory pile-up as sales have not picked up since the festival season last year.

Ashok Leyland's total sales fell 28% to 10,927 units in July 2019 over July 2018. The company's domestic sales of light commercial vehicles (LCV) rose 1% to 4,083 units, while sales of medium & heavy commercial vehicles (M&HCV) declined 41% to 6,018 units in July 2019 over July 2018. The announcement was made during the market hours yesterday, 1 August 2019.

Metal shares fell across the board. Jindal Steel & Power (down 7%), Steel Authority of India (down 2.85%), Tata Steel (down 2.5%), NMDC (down 2.25%), Vedanta (down 1.68%), Hindalco Industries (down 1.26%), Hindustan Zinc (down 0.19%) and JSW Steel (down 0.11%) tumbled.

National Aluminium Company (Nalco) fell 2.23% while Hindustan Copper lost 0.62%. Nalco said that a joint venture agreement was signed with Hindustan Copper and Mineral Exploration Corporation (MECL) to incorporate a joint venture company (JVC) with an objective to identify, explore, acquire, develop, process primarily strategic minerals overseas for supply to India for meeting domestic requirements and for sale to any other countries for commercial use.

Hindustan Construction Company (HCC) jumped 8.15% after the company reported a consolidated net loss of Rs 17.44 crore in Q1 June 2019 lower than net loss of Rs 60.86 crore in Q1 June 2018. The result was announced after trading hours yesterday, 1 August 2019. Consolidated net sales rose 6% to Rs 2,455.89 crore in Q1 June 2019 over Q1 June 2018. Order book was at Rs 17,721 crore compared with Rs 18,554 crore as of 31 March 2019. Gross debt reduced to Rs 3,614 crore from Rs 3,748 crore as of 31 March 2019.

Indian economy slipped to the seventh place in the global GDP rankings of 2018, according to the latest data compiled by the World Bank. Indian economy, with a Gross Domestic Product (GDP) of $2.7 trillion in 2018, trailed behind the UK and France which were at $2.8 trillion. As per the data compiled by the World Bank, in 2017, India was the fifth-largest economy. The bank noted that in 2018, the US continued to top the global list with a GDP of $20.5 trillion, while China was second at $13.6 trillion and while Japan third with $5 trillion.

On the economic front, the total gross GST revenue collected in the month of July, 2019 is Rs 1,02,083 crore of which CGST is Rs 17,912 crore, SGST is Rs 25,008 crore, IGST is Rs 50,612 crore (including Rs 24,246 crore collected on imports) and Cess is Rs 8,551 crore (including Rs 797 crore collected on imports). The total number of GSTR 3B Returns filed for the month of June up to 31 July 2019 is 75.79 lakh.

The revenue in July, 2018 was Rs 96,483 crore and the revenue during July, 2019 is a growth of 5.80% over the revenue in the same month last year. During April-July 2019 vis-vis 2018, the domestic component has grown by 9.2% while the GST on imports has come down by 0.2% and the total collection has grown by 6.83%. Rs 17,789 crore has been released to the states as GST compensation for the months of April-May, 2019.

In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 69.5850, compared with its close of 69.06 during the previous trading session.

In the commodities market, Brent crude for October 2019 settlement was up $1.64 at $62.14 a barrel.

Overseas, shares in Europe and Asia edged lower Friday after a surprise tariff announcement from the United States escalated trade tensions between Washington and Beijing.

Japan's cabinet on Friday approved a plan to remove South Korea from a so-called white list of countries that enjoy trade privileges with Tokyo. The moves followed after Japan last month placed restrictions on exports of three important high-tech materials to South Korea that are used by tech companies to make memory chips and display panels.

US stocks fell Thursday after President Donald Trump announced plans to impose additional tariffs Chinese imports to the US. Trump said the US would impose 10% tariffs on $300 billion of Chinese goods beginning September 1. The president said trade talks with Beijing are continuing after US officials returned from negotiations in China. The 10% levies will apply to $300 billion of Chinese goods coming into the US. It doesn't include $250 billion of goods already subject to tariffs, the president said.

In the US, the Institute for Supply Management said its manufacturing index slipped to 51.2% in July, the lowest reading since August 2016. Meanwhile the IHS Markit US manufacturing index fell to its lowest since September 2009 at 50.4%.

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