Indices end 2-day winning run

Key domestic benchmarks snapped two-day winning streak amid negative global cues. Global stock markets were under pressure as investors appeared to be wary about the fast-spreading coronavirus, which started in the China's Wuhan city. Investors also turned cautious ahead of the Union Budget on Saturday, 1 February 2020.

The barometer BSE S&P Sensex slumped 473.41 points or 1.14% to 41,139.78, as per the provisional closing data. The Nifty 50 index fell 136.45 points or 1.11% to 12,111.80, as per the provisional closing data.

In the broader market, the S&P BSE Mid-Cap index fell 0.5% while the S&P BSE Small-Cap index ended almost flat.

The market breadth favored the sellers. On the BSE, 1031 shares rose and 1495 shares fell. A total of 178 shares were unchanged. In Nifty 50 index, 11 stocks advanced while 39 stocks declined.

Economy:

The divestment of Air India restarted on Monday (27 January) with the government seeking to sell 100% of its equity share capital in the state-owned airline, including Air India's shareholding interest of 100% in AI Express and 50% in Air India SATS Airport Services. The sale will be implemented through the open bidding route, with 17 March being set as the deadline for interested parties to submit their bids. Those interested in bidding for Air India must have a net worth of Rs 3,500 crore. Management control of the airline would also be transferred to the successful bidder. Bidders must agree to assume the debt apart from other liabilities, and that debt worth Rs 23,286.5 crore would remain with Air India and Air India Express at the time of the disinvestment. The remaining debt would be allocated to Air India Assets Holding.

Buzzing Index:

Metal stocks came under selling pressure amid a decline in industrial metal prices. The Nifty Metal index snapped two days winning run and tumbled 2.07% to 2,738.25.

Jindal Steel & Power (down 5.08%), Vedanta (down 4.24%), Steel Authority of India (down 4.11%), Hindustan Copper (down 3.64%), Hindalco Industries (down 3.14%), NMDC (down 3.07%), Tata Steel (down 2.96%) and National Aluminium Company (down 1.72%) were top losers in metal segment.

JSW Steel slumped 4.39%. The company reported an 87.01% fall in consolidated net profit to Rs 211 crore on 10.68% fall in total income to Rs 18,182.00 crore in Q3 December 2019 over Q3 December 2018. Crude steel production was impacted due to extended monsoon which impacted operations at its both Dolvi and Vijaynagar plants.

Q3 Results:

ICICI Bank rose 0.78%. ICICI Bank reported 158.36% rise in net profit to Rs 4146.46 crore on 17.23% rise in total income to Rs 23,638.26 crore in Q3 December 2019 over Q3 December 2018. Net interest margin stood at 3.77%. Net non-performing asset (NPA) ratio decreased from 2.58% at 31 December 2018 to 1.49% at 31 December 2019.

Dr Reddy's Laboratories jumped 5.18% after the company posted Rs 569.70 crore loss in Q3 December 2019 on impairment of generic Nuvaring. Consolidated revenues rose 14% to 4383.80 crore in Q3 December 2019 over Q3 December 2018. EBITDA rose 24% to Rs 1074 crore year-on-year (YoY). EBITDA margin stood at 24.5% in Q3 December 2019, higher than 22.5% in Q3 December 2018. The company reported pre-tax loss of Rs 527.40 crore in Q3 December 2019 compared with pre-tax profit of Rs 580.50 crore in Q3 December 2018, primarily on account of impairment of intangible assets. Excluding impairment, profit before tax was at Rs 790 crore. In total, the firm took an impairment of Rs 1320 crore on the intangible assets for this quarter. In Q2 September 2019, the company had an impairment charge on Rs 360 crore.

DCB Bank rose 0.22%. The bank reported a 12.3% rise in net profit to Rs 96.70 crore on a 13.7% increase in total income to Rs 990.89 crore in Q3 December 2019 over Q3 December 2018. The bank's gross non-performing assets (NPAs) stood at Rs 552.03 crore as on 31 December 2019 as against Rs 523.24 crore as on 30 September 2019 and Rs 445.12 crore as on 31 December 2018. The ratio of gross NPAs to gross advances stood at 2.15% as on 31 December 2019 as against 2.09% as on 30 September 2019 and 1.92% as on 31 December 2018. The ratio of net NPAs to net advances stood at 1.03% as on 31 December 2019 as against 0.96% as on 30 September 2019 and 0.71% as on 31 December 2018.

Prestige Estates Projects rose 2.62% to Rs 391.25 after consolidated net profit rose 178.49% to Rs 161.80 crore on 154.48% surge in net sales to Rs 2680.90 crore in Q3 December 2019 over Q3 December 2018. Consolidated profit before tax (PBT) surged 185.09% to Rs 311.6 crore year-on-year (YoY). Tax expense jumped 71.53% to Rs 70.50 crore during the period under review.

Wockhardt soared 18.24% after the company announced a turnaround in Q3 2019 numbers. On consolidated basis, the pharmaceutical company reported a net profit of Rs 19.21 crore in Q3 December 2019 as against a net loss of Rs 76.86 crore in Q3 December 2018. Total income declined 15.42% YoY to Rs 886.95 crore in Q3 December 2019. During the nine-months ended 31 December 2019, the company repaid Rs 768 crore (previous year Rs 750 crore) towards various long term debt obligations as per schedule. Debt repayment during the quarter was Rs 359 crore (previous year Rs 347 crore). Gross Debt- Equity ratio as on 31 December 2019 stood at 0.95.

Wendt (India) tumbled 5.97% after consolidated net profit declined 59.56% to Rs 2.20 crore on 22.61% decline in net sales to Rs 33.16 crore in Q3 December 2019 over Q3 December 2018. Consolidated profit before tax (PBT) fell 58.44% to Rs 2.98 crore year-on-year (YoY). Tax expense fell 47.73% to Rs 0.92 crore during the period under review. The result was announced after market hours on Friday, 24 January 2020. The result was affected due to sluggish demand from almost all major user industries like automobile, steel, engineering, cutting tools and refractories on the domestic front and also lower offtake from global customers due to continued industrial slow down.

Ion Exchange (India) advanced 5.57%. The firm reported 215.75% jump in consolidated net profit to Rs 26.46 crore on 54.02% rise in total income to Rs 406.10 crore in Q3 December 2019 over Q3 December 2018.

Stocks in Spotlight:

Biocon declined 2.11% to Rs 288.25 after the US drug regulator issued a Form 483 with five observations for the company's API manufacturing facility. At the conclusion of the inspection of the Bengaluru facility, which took place between 20 and 24 January 2020, the agency issued a Form 483, with five observations.

Vodafone Idea shed 3.97%. Vodafone Idea said CRISIL downgraded its rating on Non-Convertible Debentures of Rs 3,500 crore from CRISIL BBB- to CRISIL BB (rating watch with negative implications) on account of expectation of a significant deterioration in company's financial risk profile on account of the potential payout against the adjusted gross revenue (AGR) related liability, post the dismissal of the review petition by the Supreme Court. India Ratings also downgraded Vodafone Ideas Rs 3500-crore debt from BBB to BBB minus on account of crystallisation of adjusted gross revenue (AGR) related liabilities, post the dismissal of the review petition by the Supreme Court.

Siemens fell 4.4%. The company entered into definitive agreements for the acquisition of 99.22% (approximately) of the paid-up equity share capital of C&S Electric from its promoters for Rs 2120 crore, subject to receipt of requisite regulatory approvals and fulfillment of condition precedents as agreed between the parties.

Foreign Markets:

European markets traded lower while most Asian markets were shut for the Lunar New Year holidays. Japan's Nikkei 225 dropped over 2% after the Chinese authorities warned of Coronavirus spreading further with contagion like threat internally in China.

US stocks skid on Friday on concern the spread of China's coronavirus may disrupt travel & trade and slow global economic growth.

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