Nifty hovers below 11200; Europe opens lower

Key benchmark indices traded with minor losses in afternoon trade, dragged by HDFC twins and ICICI Bank. Rising COVID-19 cases and escalating Sino-US trade relations impacted investor's sentiments.

The barometer index, the S&P BSE Sensex dropped 296.18 points or 0.78% at 37,844.29. The Nifty 50 index lost 99.45 points or 0.89% at 11,116.

The broader market traded lower. The S&P BSE Mid-Cap index declined 0.79%. The S&P BSE Small-Cap index edged lower by 0.42%.

Sellers outnumbered buyers. On the BSE, 823 shares rose and 1,627 shares fell. A total of 136 shares were unchanged. In Nifty 50 index, 7 stocks advanced while 43 stocks declined.

Foreign portfolio investors (FPIs) bought shares worth Rs 1,740.50 crore, while domestic institutional investors (DIIs), were net sellers to the tune of Rs 931.91 crore in the Indian equity market on 23 July, provisional data showed.

COVID-19 Update:

Total COVID-19 confirmed cases worldwide stood at 1,55,12,282 far with 6,33,425 deaths. India reported 4,40,135 active cases of COVID-19 infection and 30,601 deaths, according to the data from the Ministry of Health and Family Welfare, Government of India.

Gainers & Losers:

Reliance Industries (up 3.58%), IndusInd Bank (up 2.55%), Tech Mahindra (up 2.25%), HCL Technologies (up 1.48%) and Wipro (up 0.32%) were major gainers in Nifty 50 index.

ICICI Bank (down 4.03%), Hindalco Industries (down 3.86%), State Bank of India (down 3.71%) and Vedanta (down 3.47%), HDFC (down 2.29%), HDFC Bank (down 2.20%) were major losers.

Asian Paints (down 2.30%), ITC (down 0.95%), Zee Entertainment Enterprises (down 4.12%), Ambuja Cements (up 0.20%), Atul (up 0.69%), JSW Steel (down 2.01%) will announce their quarterly earnings today.

Sun Pharmaceutical Industries gained 1.64% after the pharma major's subsidiary Taro Pharmaceutical Industries resolved all cases related to the multi-year investigations by the US Department of Justice. Taro Pharmaceutical Industries announced on Thursday that its wholly-owned subsidiary, Taro Pharmaceuticals U.S.A., Inc. has resolved all cases involving the company in connection with the multi-year investigations by the Department of Justice, Antitrust Division and Civil Division (DOJ) into the U.S. generic pharmaceutical industry.

The US Department of Justice (DOJ) had launched investigations against the company over generic drug pricing. Under a deferred prosecution agreement reached with the DOJ, the department will file an information for conduct that took place between 2013 and 2015. If Taro adheres to the terms of the agreement, including the payment of $205.7 million, the DOJ will dismiss the information at the end of a three-year period.

Earnings Impact:

Biocon declined 3.38%. The bio-pharma company's consolidated net profit fell 28% to Rs 149 crore on a 15% rise in revenue from operations to Rs 1,671 crore in Q1 FY21 over Q1 FY20. EBITDA margin was at 26% as on 30 June 2020 as against 31% as on 30 June 2019. Income from generics business increased 16% Y-o-Y to Rs 599 crore while that of the biosimilars business jumped 19% Y-o-Y to Rs 692 crore in Q1 June 2020. However, the income from research services remained flat at Rs 422 crore during the quarter due to slowdown of operations impacted by the COVID-19 crisis. R&D expenses rose 35% to Rs 107 crore in Q1 June 2020 over Q1 June 2019.

ABB India dropped 3.02% after the heavy electrical equipment firm reported 76.66% drop in net profit to Rs 16.28 crore on 42.88% fall in net sales to Rs 985.78 crore in Q2 June 2020 over Q2 June 2019. Profit before tax (PBT) stood at Rs 21.41 crore in Q2 June 2020, falling 81% from Rs 112.66 crore in Q2 June 2019. Total tax expense stood at Rs 6.66 crore in Q2 June 2020, down 85% compared with Rs 42.92 crore in Q2 June 2019. ABB said profitability was impacted due to lower revenues during the quarter was offset to a reasonable extent by various cost saving initiatives that were implemented by the company as well as favorable forex valuations.

The company received orders worth Rs 1,200 crore in Q2 June 2020 as against Rs 1,989 crore in Q2 June 2019. During the quarter, the company succeeded in securing orders in varied sectors, including power distribution equipment, automation projects for process industries, food and beverage and electronics. Sectors with continued investment include, rail infrastructure, industrial buildings as well as water and waste-water.

Mphasis surged 11.89%. The IT major's consolidated net profit dropped 22.11% to Rs 275.11 crore on 2.46% decrease in revenue from operations to Rs 2,288.21 crore in Q1 June 2020 over Q4 March 2020. Consolidated profit before tax (PBT) declined 9.26% to Rs 376.56 crore in Q1 June 2020 as against Rs 414.99 crore in Q4 March 2020. Total tax expense for the quarter surged 64.26% at Rs 101.45 crore as against Rs 61.76 crore in Q4 March 2019.

Zensar Technologies advanced 2.89% after the company's consolidated net profit rose 5.5% to Rs 73.30 crore on 2.60% decrease in revenue from operations to Rs 991.24 crore in Q1 June 2020 over Q4 March 2020. Profit before tax (PBT) gained 2.45% to Rs 101.44 crore in Q1 June 2020 as against Rs 99.01 crore in Q4 March 2020. EBITDA rose 1% quarter-on-quarter (Q-o-Q) to Rs 143 crore. EBITDA margin stood at 14.4% in Q1 June 2020 compared with 13.9% in Q4 March 2020.

Global Markets:

European markets opened with losses while Asian markets declined on Friday following the selloff on Wall Street on account of rising US-China tensions.

The US stock market finished session lower on Thursday, 23 July 2020, as investors opted to book recent gains due to unexpected rise in U.S. jobless claims and mixed earnings reports. Meanwhile, simmering Sino-U.S. tensions and growing signs of a worsening coronavirus pandemic also fueled selloff.

The Labor Department data showed 1.416 million Americans filed for first-time benefits for the week ending July 18, a rise of 109,000. It was the 18th straight week in which initial claims totaled more than 1 million, and it snapped a 15-week streak of declining initial claims.

The weekly employment report has become one of the key measures of the state of the COVID-19 pandemic that has been resurgent in many US states recently, forcing the reimposition of restrictions to curtail the spread of the deadly illness.

In the latest deterioration in Sino-U.S. ties, Beijing vowed to close the U.S. consulate in the southwestern city of Chengdu. The move comes after the U.S. ordered the closure of a Chinese consulate in Houston, citing fraud and espionage, highlighting rising tensions between the global superpowers.

Investors await the outcome of negotiations by lawmakers over further fiscal stimulus. Senate Republicans and the White House struck an agreement on a $1 trillion coronavirus relief package, as a $600 weekly supplement to unemployment benefits is set to expire at the end of this month. The proposal sets the stage for further talks between Senate Republicans and Democrats, who have coalesced around a $3.5 trillion bill that was passed in the House in May.

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