Sensex, Nifty end with losses amid geo-political tensions

The market ended the volatile session with modest losses on Wednesday. Rising geopolitical tension between India and China resulted in market weakness. Investors were also worried about the rising number of coronavirus cases and deaths in India.

As per provisional closing, the barometer S&P BSE Sensex declined 97.3 points or 0.29% at 33,507.89. The Nifty 50 index fell 40.7 points or 0.41% at 9,873.40.

The Nifty opened lower at 9,876.70 and hit an intraday low of 9833.80 in early trade. Buying support emerged at lower levels, which helped the index reclaim 9950 level in morning trade. The 50-unit index hovered near the flat line for most part of the day before touching the 10,000 mark in mid-afternoon trade. The Nifty reversed gains and slipped below 9900 mark in late trade as ongoing India-China tensions continued to worry investors.

The broader market settled higher. The S&P BSE Mid-Cap index rose 0.29% while the S&P BSE Small-Cap index added 0.69%.

The market breadth was positive. On the BSE, shares 1,433 rose and 1,125 shares fell. A total of 162 shares were unchanged. In Nifty 50 index, the breadth was negative with 20 stocks advancing and 30 stocks declining.

India-China Faceoff:

Prime Minister Narendra Modi has called for an all-party meeting this Friday at 5 pm to in order to discuss the situation in the India-China border areas. Presidents of various political parties would take part in this virtual meeting.

Twenty Indian soldiers, including a Colonel, were killed and several others grievously injured in a violent physical skirmish with Chinese troops in the Galwan Valley region of eastern Ladakh on Monday. China blamed India for the violent LAC scuffle saying Indian troops crossed the border twice illegally and launched "provocative attacks". There were casualties on the Chinese side as well.

Loan moratorium case:

The Supreme Court (SC) on Wednesday, while hearing the plea challenging the levy of interest on loan repayments during the moratorium, said there is no merit in burdening customers, who have opted for the RBI-approved loan moratorium, with additional interest. The SC bench said the government cannot leave everything to be decided by banks. In conclusion, the bench asked the government to interfere in the matter soon and find a way to waive off additional interest during the moratorium. The matter will be heard next in the first week of August.

The Reserve Bank of India (RBI) granted a moratorium on loans installments due between March 1 and May 31, which was later extended till August 31. The Supreme Court on 4 June 2020 hearing criticised the RBI's response, saying that the economic aspect is not higher than health of the people. The judgement in the case will also have implications for non-banking finance companies (NBFCs), whose borrowers are covered under the moratorium. On 12 June 2020, the top court had indicated that it was not considering a complete waiver of interest but was only concerned that postponement of interest should not accrue further interest on it.

COVID-19 Update:

Total COVID-19 confirmed cases worldwide stood at 81,75,482 far with 4,43,730 deaths. India reported 1,55,237 active cases of COVID-19 infection and 11,903 deaths, according to the data from the Ministry of Health and Family Welfare, Government of India.

Meanwhile, the World Health Organization (WHO) has hailed dexamethasone as a lifesaving scientific breakthrough to treat severely ill coronavirus patients. Results of trials announced on Tuesday showed dexamethasone, which is used to reduce inflammation in other diseases, reduced death rates by around a third among the most severely ill Covid-19 patients admitted to hospital. The results suggest the drug should immediately become standard care in patients with severe cases of the pandemic disease, said the researchers who led the trials.

Q4 Results Today:

Cummins India (up 0.88%), Indraprastha Gas (up 0.05%), JK Lakshmi Cement (up 5.22%), Pidilite Industries (up 0.21%), REC (down 1.07%), Muthoot Finance (up 1.76%), HEG (up 1.65%), Fortis Healthcare (down 0.77%), Prataap Snacks (down 0.35%), Indostar Capital Finance (up 0.02%), Gulf Oil Lubricants India (up 1.44%), Navneet Education (up 0.44%), Wheels India (down 0.41%) and FDC (down 0.12%) are some of the companies that will announce their quarterly earnings today.

Earnings Impact:

Hindustan Petroleum Corporation (HPCL) rose 2.31%. The PSU OMC's standalone net profit dropped 99.1% to Rs 26.80 crore on 2.6% decline in net sales to Rs 65,868.51 crore in Q4 March 2020 over Q4 March 2019. Q4 profit was impacted mainly because of inventory losses of Rs 1,002.93 crore due to drastic fall in oil prices accompanied with reduced movement in inventory (net impact Rs 750.51 crore). The company also suffered losses amounting to Rs 873.50 crore on account of foreign currency transactions and translations. Average Gross Refining Margin (GRM) during the year ended 31 March 2020 stood at $1.02 per barrel, declining 80% from $5.01 per barrel reported in the same period last year. The PSU OMC major recorded domestic sales volume of 9.25 Million Metric Tonne (MMT) in Q4 March 2020 as against 10.03 MMT in Q4 March 2019.

NMDC gained 0.71%. The PSU miner consolidated net profit slumped 76.1% to Rs 347 crore on 12.5% fall in net sales to Rs 3,187.34 crore in Q4 March 2020 over Q4 March 2019. EBITDA margin stood at 48% in Q4 FY20 as compared to 63% in Q4 FY19. The iron ore production dropped 11% to 94.74 lakh tonnes (LT) in Q4 FY20 as against 105.87 LT in Q4 FY19. The iron ore sales skid 15% to 86.19 LT in Q4 March 2020 as compared to 101.69 LT in Q4 March 2019. The COVID-19 had a marginal effect on the operations of the company due to the lock down in the country in March 20. There has been a loss of around 10.01 LMT of production and 5.50 LMT of sale of iron ore during FY 2019-20 (in March 20). This has resulted in a loss in sale revenue around Rs 219 crore and PBT of Rs 120 crore.

Natco Pharma lost 1.96% to Rs 626.70 after consolidated net profit declined 22.1% to Rs 94.10 crore in Q4 March 2020 as against Rs 120.80 crore in Q4 March 2019. Profit before tax stood at Rs 116.7 crore in Q4 FY20, down by 23.4% from Rs 152.4 crore in Q4 FY19. Total tax expense fell 26.56% to Rs 23.50 crore in Q4 March 2020 over Q4 March 2019. Revenue from operations in the fourth remained almost flat at Rs 454.80 crore compared with the corresponding period last fiscal. With respect to the impact of COVID-19 pandemic on its business operations, the company said that since pharma products are categorised under essential goods, there has been a minimal disruption with respect to operations including production and distribution activities. The actual impact of the global health pandemic may be different from that which has been estimated, as the situation evolves in India and globally, it added.

Navin Fluorine International spurted 2.72% after consolidated net profit surged 705.5% to Rs 270.09 crore on 9.5% increase in net sales to Rs 276.57 crore in Q4 March 2020 over Q4 March 2019. Profit was aided by a minimum alternate tax (MAT) credit reversal of Rs 88.2 crore during the quarter. The company had contested receipts on account of Certified Emission Reduction (CER) as capital receipts not chargeable to tax from financial year 2007-08 to financial year 2012-13. During the year, it received favourable appellate orders for some of the aforesaid years. Accordingly, the company has now recognized MAT credit entitlement of Rs 73.55 crore under section 115JAA of the Act, for which claims have been made. The company has recomputed the tax liabilities for these years and written back excess tax provisions amounting to Rs 141.25 crore for earlier years. Consolidated profit before tax (PBT) jumped 12.6% to Rs 62.88 crore in Q4 March 2020 as against Rs 55.82 crore in Q4 March 2019. Operating EBITDA jumped 33% to Rs 68.80 crore in Q4 March 2020 over Rs 51.60 crore in Q4 March 2019. While, EBITDA margin improved to 24.9% in Q4 FY20 as against 20.4% in Q4 FY19. The board has recommended a final dividend of Rs 3 per share.

Bank of Maharashtra declined 4.24% after the bank's net profit declined 20.5% to Rs 57.57 crore on a 1.2% increase in total income to Rs 3,198.30 crore in Q4 March 2020 over Q4 March 2019. Pre-tax loss stood at Rs 315.04 crore in Q4 March 2020 as against pre-tax profit of Rs 86.39 crore in Q4 March 2019. Gross non-performing assets (NPAs) stood at Rs 12,152.15 crore as on 31 March 2020 as against Rs 15,745.54 crore as on 31 December 2019 and Rs 15,324.49 crore as on 31 March 2019. The ratio of gross NPAs to gross advances stood at 12.81% as on 31 March 2020 as against 16.77% as on 31 December 2019 and 16.40% as on 31 March 2019. The ratio of net NPAs to net advances stood at 4.77% as on 31 March 2020 as against 5.46% as on 31 December 2019 and 5.52% as on 31 March 2019. Provisions and contingencies surged 119.41% to Rs 910.11 crore in Q4 March 2020 over Q4 March 2019. The provision coverage ratio of the bank was at 83.97% as on 31 March 2020.

Globus Spirits was locked in an upper circuit of 10% at Rs 118.85 after consolidated net profit surged 285.5% to Rs 19.35 crore in Q4 March 2020 over Q4 March 2019. Net sales were flat at Rs 271.51 crore as in Q4 March 2020 compared with the same period last year. Profit before tax (PBT) stood at Rs 22.22 crore in Q4 March 2020, surging 326% from Rs 5.21 crore in Q4 March 2019. The result was announced after market hours yesterday, 16 June 2020. Meanwhile, the company has recommended a final dividend of Re 1 per equity share.

Stocks in Spotlight:

HDFC Asset Management Company (HDFC AMC) fell 4.95% as its offer for sale (OFS) opened for non-retail investors today. Promoter Standard Life Investment offered to sell a total of 60 lakh shares, or 2.82% stake, through the OFS. The floor price for the OFS was set at Rs 2,362 each, a 6.92% discount to the closing price of Rs 2537.65 on Tuesday. In the event the oversubscription, Standard Life proposes to sell another 60 lakh equity shares. In total, Standard Life plans to sell 1.2 crore equity shares of HDFC AMC representing 5.64% of total paid-up equity capital of the company. The OFS opened on Wednesday (17 June) for non-retail investors, while both retail as well as non-retail investors will be able to subscribe on Thursday (18 June). As on 15:25 IST, the OFS received subscription for 1,41,03,421 shares or 261.17% against the base non-retail offer size of 54 lakh shares.

Titagarh Wagons hit an upper circuit of 5% at Rs 32.75 after it entered into an exclusive cooperation agreement with ABB, a global engineering company based in Switzerland. The agreement aims to address the large and growing business of propulsion equipment (traction converters) for the Indian railway EMU ( electric multiple unit)/ MEMU (mainline electric multiple unit) market. According to the agreement, Titagarh and ABB will work together to design, develop and manufacture IGBT based 3-phase propulsion systems for EMU/MEMU which would be manufactured in Titagarh's plant at Uttarpara, Kolkata with certain components being supplied by ABB. This agreement goes into effect immediately with the first units to be put into revenue service in less than 2 years.

Global Markets:

European markets were trading with minor gains while Asian stocks closed higher on Wednesday. Japan's Nikkei 225 index fell 0.56% after the country's exports plunged 28.3% year-on-year in May. The World Health Organization has warned that while the virus has slowed in parts of Europe it is gaining speed in other parts of the world, including parts of Africa and the Americas. A new cluster of cases in Beijing is also being watched closely.

The International Monetary Fund said the global economy is set to see a more significant contraction than it previously forecast. IMF Chief Economist Gita Gopinath said in a Tuesday blog post that the forthcoming June World Economic Outlook Update is expected to show negative growth rates even worse than previously estimated. The fund also said the current crisis, which it dubbed the Great Lockdown, is unlike anything the world has seen before.

Investors continue to watch for developments on the geopolitical front regionally, as tensions escalate along the Korean peninsula after North Korea reportedly destroyed a liaison office with the South.

In US, Wall Street advanced on Tuesday as the prospect of additional stimulus and a record jump in retail sales suggested the US economy could bounce back sooner than expected. U.S. retail sales jumped by 17.7% in May, the government said Tuesday. U.S. industrial production for May rose by 1.4%, as many factories resumed operations after shutdowns spurred by the coronavirus crisis, the Federal Reserve said Tuesday.

A full US economic recovery will not occur until the American people are sure that the novel coronavirus epidemic has been brought under control, Federal Reserve Chair Jerome Powell said on Tuesday, as he began the first of two days of hearings before US lawmakers. The longer the downturn lasts, the greater the potential for longer-term damage from permanent job loss and business closures, Powell added.

Powered by Capital Market - Live News