Market trims gains on negative global cues

Key equity indices trimmed gains in afternoon trade with the Nifty slipping below 9400 mark. Weak opening in European markets put pressure on domestic bourses. The sentiment, however, continued to be bullish following Prime Minister Narendra Modi's Rs 20 lakh crore stimulus package to revive the coronavirus-hit economy.

At 13:25 IST, the barometer index, the S&P BSE Sensex, was up 676.16 points or 2.16% at 32,047.92. The Nifty 50 index was up 196 points or 2.19% at 9,392.55.

In the broader market, the S&P BSE Mid-Cap index added 1.46% while the S&P BSE Small-Cap index gained 1.73%.

The market breadth was strong. On the BSE, 1563 shares rose and 636 shares fell. A total of 175 shares were unchanged. In the Nifty 50 index, 44 shares advanced while 6 stocks declined.

Gainers & Losers:

Larsen & Toubro (up 5.95%), UltraTech Cement (up 5.84%), M&M (up 5.44%), Bajaj Finance (up 5.3%) and ICICI Bank (up 5%) were top gainers in Nifty 50 index.

Sun Pharmaceutical Industries (down 2.45%), Bharti Airtel (down 0.87%) and TCS (down 0.47%) were top loses in Nifty 50 index.

Special Economic Package:

Prime Minister Narendra Modi in his address to the nation on Tuesday (12 May) announced a special economic relief package in light of the ongoing situation due to the COVID-19 outbreak. He said the economic measures earlier announced by the government to tackle the COVID-19 pandemic, steps taken by the Reserve Bank of India (RBI), and this latest package will come up to a total of Rs 20 lakh crore, nearly 10% of India's gross domestic product (GDP). The package will focus on land, labour, liquidity and laws.

PM Modi also said Lockdown 4.0 will be a new one, with new rules. It will be implemented based on suggestions from the states and details of the same will be announced before May 18.

Economy:

India's industrial output contracted to 16.7% in March against a growth of 4.5% in February, as per the Index of Industrial Production (IIP) data released by the government on May 12. The manufacturing sector contracted 20.6% in March, against a growth of 3.2% a month ago. Mining showed no movement in March while electricity production contracted 6.8% against a growth of 8.1% in February.

India's retail inflation rate in April eased to 5.84%, according to data released by the Ministry of Statistics and Programme Implementation on May 12. Retail inflation was at 5.91% in March. Food prices remained unchanged at 8.76% in April.

Q4 Results Today:

Maruti Suzuki India (up 3.89%), ABB India (up 0.77%), Godrej Consumer Products (up 3.21%), MphasiS (down 0.63%), Schaeffler India (up 1.2%) and Siemens (up 2.79%) are some of the companies that will announce their quarterly results today.

Earnings Impact:

Nestle India fell 4.16%. the FMCG major's net profit rose 13.5% to Rs 525.43 crore on a 10.8% rise in net sales to Rs 3305.78 crore in Q1 March 2020 over Q1 March 2019. The net profit was boosted by lower tax rates. Tax expenses declined 24.1% to Rs 184.96 crore in Q1 March 2020 from Rs 243.84 crore posted in Q1 March 2019. Profit before tax (PBT) grew 0.5% to Rs 703.85 crore in Q1 March 2020 over Q1 March 2019. Nestle said total sales increased by 10.8% while domestic sales increased by 10.7% driven by volume & mix in Q1 March 2020 over Q1 March 2019. Meanwhile, export surged by 12.9% year on year.

IndiaMART InterMESH gained 1.27% after consolidated net profit jumped 57.1% to Rs 44.30 crore on 23.3% rise in net sales to Rs 170.1 crore in Q4 March 2020 over Q4 March 2019. The company said revenues advanced on the back of an increase in the number of paying subscribers as well as higher realization from existing customers. Consolidated deferred revenue grew 17% to Rs 685 crore in Q4 March 2020 from Rs 586 crore in Q4 March 2019 leading to a much better visibility for future revenues. Consolidated EBITDA stood at Rs 52 crore in Q4 March 2020, soaring 160% from Rs 20 crore posted in the same period last year. EBITDA margin expanded to 31% in Q4 March 2020 from 15% in Q4 March 2019 partly due to increase in revenues and adoption of IndAS 116.

Havells India rose 3.9%. On a standalone basis, the company reported a 11.7% decline in net profit to Rs 177.62 crore on a 19.5% fall in net sales to Rs 2216.13 crore in Q4 March 2020 over Q4 March 2019. The company said it faced a challenging year with unfavorable macros, slowdown in infrastructure activities, weak market liquidity and then the outbreak of Covid-19. Havells said Q4 commenced on a healthy note with Jan-Feb witnessing revival in consumer products. But Covid-19 disrupted supply chain from China and its contagion impacted the demand side with signs of fear and uncertainty among the trade channel since 15 March 2020. The complete lockdown crippled the revenue streams, company added. Standalone EBITDA for Q4 March 2020 stood at Rs 246 crore, declining 22% from Rs 315 crore posted in Q4 March 2019. EBITDA as percentage of net revenue declined to 11.1% in Q4 March 2020 from 11.4% reported in the same period last year.

Global Markets:

European markets opened lower while Asian markets were trading lower as risk of new infections after economies reopen surfaced. Developments on the coronavirus front likely continued to weigh on investor sentiment. In Asia, where the coronavirus first hit, several countries including China and South Korea have experienced an uptick in cases after restrictions were eased.

In US, stocks dropped on Tuesday as investors took profits following a warning from the top US infectious disease expert that premature moves to reopen the nation's economy could lead to novel coronavirus outbreaks and set back economic recovery.

Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said Tuesday a vaccine will be essential in stopping the coronavirus spread, but warned it will be a while before a usable one is available. He also cautioned that the U.S. could risk additional outbreaks if states start to reopen too quickly.

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