Market snaps 4-day winning run

Domestic shares ended with steep losses on Monday, snapping its four-day rising streak. Selling was broad based with banks and metal stocks correcting the most. Liquor stocks spurted after the government allowed reopening of wine shops with strict social distancing norms.

According to provisional closing data, the barometer S&P BSE Sensex tumbled 1952.22 points or 5.79% at 31,765.40. The Nifty 50 index lost 558.40 points or 5.66% at 9,301.50.

Global cues were weak following the latest flare up in US-China tensions. Extension of the nationwide lock-down in India for another two-weeks also weighed on the investor sentiment.

The Nifty opened the day with a huge gap-down opening tracking negative sentiment from global market, slipping below its 50 days simple moving average placed at 9,777.81. The Nifty 50 index gave up the crucial 9500 mark in morning trade and 9400 level in afternoon trade. It hit the day's low of 9266.95 in mid-afternoon trade.

In the broader market, the S&P BSE Mid-Cap index fell 4.18% while the S&P BSE Small-Cap index declined 3.07%.

The market breadth was extremely weak. On the BSE, 574 shares rose and 1841 shares fell. A total of 182 shares were unchanged. In Nifty 50 index, 3 stocks advanced while 47 stocks declined.

Economy:

The output of eight Core Industries comprise 40.27% of the weight of items included in the Index of Industrial Production (IIP) dipped by 6.5% in March 2020. The cumulative output rose marginally by 0.6% in April-March FY2020.

The seasonally adjusted IHS Markit India Manufacturing PMI slumped to 27.4 in April from 51.8 in March. The latest reading pointed to the sharpest deterioration in business conditions across the sector since data collection began over 15 years ago.

Commenting on the latest survey results, Eliot Kerr, Economist at IHS Markit, said: "After making it through March relatively unscathed, the Indian manufacturing sector felt the full force of the coronavirus pandemic in April."In the latest survey period, record contractions in output, new orders and employment pointed to a severe deterioration in demand conditions. Meanwhile, there was evidence of unprecedented supply-side disruption, with input delivery times lengthening to the greatest extent since data collection began in March 2005."There was a hint of positivity when looking at firms' 12-month outlooks, with sentiment towards future activity rebounding from March's record low. That said, the degree of optimism remained well below the historical average."

Buzzing Segment:

Shares of liquor makers jumped after the Centre's lockdown 3.0 that came into effect from Monday allows opening of liquor shops with strict social distancing norms. Associated Alcohols & Breweries (up 17.59%), G.M. Breweries (up 13.47%), Radico Khaitan (up 6.48%), United Breweries (up 5.95%), Globus Spirits (up 4.98%) and United Spirits (up 2.33%) spurted.

The Maharashtra government on Sunday allowed the functioning of standalone liquor shops even in Covid-19 affected Mumbai and Pune - both in red zones. Shops selling liquor as well as non-essential goods will have to ensure six-feet distance between two people and not allow more than five people at a time.

Stocks in Spotlight:

Reliance Industries lost 2.27%. RIL's consolidated net profit fell 38.74% to Rs 6,348 crore on 2.5% decline in revenue to Rs 151,209 crore in Q4 March 2020 over Q4 March 2019. EBITDA increased 7.6% to Rs 25,886 crore in Q4 March 2020 over Q4 March 2019. Decrease in Q4 revenue is primarily on account of 10.1% decline in refining and petrochemicals business revenues. Sharp fall of 20.5% Y-o-Y in average Brent oil price led to lower product price realization across the hydrocarbon chain. This was partially offset by continuing growth in consumer businesses, even amidst the operational issues posed by the pandemic. RIL's telecom arm Reliance Jio Infocomm reported a 177.50% YoY and 72.70% QoQ growth in net profit at Rs 2,331 crore in Q4 quarter. Its subscriber base grew 26.30% YoY to 387.50 million, with each user spending an average of Rs 130.60 a month during the quarter, the company said in a statement.

Meanwhile, the company approved the issuance of equity shares of Rs 10 each of the company on rights basis to eligible equity shareholders of the company as on the record date (to be notified later), of an issue size of Rs 53,125 crore. Shareholders can subscribe to one equity share for every 15 equity shares held as on the record date. The issue is priced at Rs 1,257, a discount of 14.32% to Thursday's closing price of Rs 1,467.05.

RIL during market hours today announced that Silver Lake will invest Rs 5,655.75 crore into Jio Platforms. This investment values Jio Platforms at an equity value of Rs 4.90 lakh crore and an enterprise value of Rs 5.15 lakh crore and represents a 12.5% premium to the equity valuation of the Facebook investment announced on 22 April 2020. Silver Lake is the global leader in large-scale technology investing.

Hindustan Unilever (HUL) tumbled 5.41% after the FMCG major reported lacklustre result for quarter ending March 2020. On a standalone basis, HUL's net profit declined 1.24% to Rs 1519 crore on a 9.4% decline in net sales to Rs 8,885 crore in Q4 March 2020 over Q4 March 2019. EBITDA for Q4 March 2020 stood at Rs 2065 crore, declining 11% year on year from Rs 2321 crore in Q4 March 2019. Reported EBITDA margin reduced by 40 bps (160 bps reduction on comparable basis after adjusting for accounting impact of Ind AS 116).

Mahindra & Mahindra fell 3.11%. The company posted zero domestic sales in April 2020. M&M sold 733 vehicles in the export market during April 2020 as against 2118 units sold in the corresponding period last year, falling 65% on a year-on-year (YoY) basis. M&M's Farm Equipment Sector (FES) recorded total tractor sales (domestic + exports) of 4,772 units during April 2020, registering an 83% YoY decline from 28,552 units sold in the same period last year. While the company's domestic tractor sales also contracted by 83% to 4716 units, tractor exports witnessed an even greater fall of 95% as it stood at 56 units in April 2020 over April 2019.

Bajaj Auto tumbled 6.86%. The company posted recorded zero domestic sales in April 2020. It however, exported 32,009 units of 2-wheelers and 5,869 units of commercial vehicles during the month.

TVS Motor Company lost 5.33%. The company posted recorded zero domestic sales in April 2020. The company, however, shipped 8,134 units of two-wheelers and 1,506 three-wheelers during the month following resumption of operations at Chennai Port.

Escorts fell 4.47%. The company's Agri Machinery Segment (EAM) in April 2020 sold 705 tractors, down by 86.6% from 5,264 tractors sold in April 2019. While domestic tractor sales tumbled 87.7% to 613 units, exports contracted by 66.9% to 92 units in April 2020 over April 2019.

Coal India fell 4.64% to Rs 141.70. The company's provisional coal production dropped 10.9% to 40.38 million tonnes (MT) in April 2020 compared with 45.30 Million Tonne in April 2019. Provisional coal offtake slipped 25.5% to 39.06 MT in April 2020 as against 52.41 Million Tonne in April 2019.

Global Markets:

European Markets were trading lower post truncated week while Asian stocks declined as US-China tensions rise over Coronavirus. Markets in China, Japan and Thailand were closed on Monday for holidays.

In the US, Wall Street sold off sharply on Friday after President Donald Trump revived a threat of new tariffs against China in response to the COVID-19 pandemic, which has brought global economies to a grinding halt.

The US President announced that his administration was crafting retaliatory measures against China as punishment for the coronavirus outbreak, giving rise to tariff fears that rattled markets through much of the last two years. Trump has reportedly blamed the Asian major for what he says is misinformation when the virus emerged from the Chinese city of Wuhan and then quickly spread around the world.

A mixed bag of earnings, particularly a disappointing report from Amazon.com, along with a fresh round of dismal economic data, also weighed on sentiment.

U.S. manufacturing activity skidded to an 11-year low last month as lockdowns shuttered factories, according to the Institute for Supply Management's purchasing managers index.

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