Shares extend gains; PSU banks tumble

The market barometers further extended gain in mid-morning trade. At 11:29 IST, the barometer index, the S&P BSE Sensex, was up 361.54 points or 1.15% at 31,815.05. The Nifty 50 index was up 91.05 points or 0.99% at 9,296.65.

Positive cues from other Asian markets boosted sentiment. Bargain hunting also emerged after the benchmark Nifty declined 6.64% in the past two consecutive sessions.

In the broader market today, the S&P BSE Mid-Cap index added 0.60% while the S&P BSE Small-Cap index rose 0.58%. Both these indices trailed the Sensex.

The market breadth was almost even. On the BSE, 946 shares rose and 987 shares fell. A total of 133 shares were unchanged. In Nifty 50 index, 41 stocks advanced while 9 stocks declined.

Economy:

The IHS Markit India Services Business Activity Index posted 5.4 in April, an extreme decline from 49.3 in March, and indicative of the most severe contraction in services output since records began in December 2005. Activity fell severely as a result of the nationwide lockdown, leading businesses to shut down their operations as demand collapsed.

Data released on Monday showed that the IHS Markit India Manufacturing PMI slumped to 27.4 in April from 51.8 in March.

The Composite PMI Output Index, which measures combined services and manufacturing output, sank to a new record low in April. At 7.2, the index fell from 50.6 in March and was indicative of an unprecedented decline in private sector business activity. The downturn was severe across both sectors in April, although the contraction in services output was slightly stronger, HIS Markit said in a statement.

Buzzing Index:

The Nifty PSU Bank index slipped 0.81% to 1,195.55, extending losses for third day. The index has fallen 9.84% in three sessions.

Union Bank of India (down 2.73%), Bank of Baroda (down 2.61%), Punjab & Sind Bank (down 2.05%), Andhra Bank (down 1.42%), Central Bank of India (down 1.36%), Indian Bank (down 0.64%), Bank of Maharashtra (down 0.55%), Bank of India (down 0.46%) and UCO Bank (down 0.33%) declined.

United Bank of India (up 1.56%), State Bank of India (up 1%), Canara Bank (up 0.25%), Punjab National Bank (up 0.17%) and Allahabad Bank (up 0.13%) advanced.

Earnings Impact:

Adani Ports and Special Economic Zone added 2.22% to Rs 269. The company's consolidated net profit slumped 74.11% to Rs 340.21 crore on a 5.23% decline in net net sales to Rs 2,921.19 crore in Q4 March 2020 over Q4 March 2019. Consolidated profit before tax dropped 83.78% to Rs 256.73 crore in Q4 March 2020 as against Rs 1,583.39 crore in Q4 March 2019. The result was declared after market hours yesterday, 5 May 2020.

NIIT Technologies surged 12.38% to Rs 1335.60. The IT solutions provider's consolidated net profit fell 7.9% to Rs 113.60 crore on a 3.3% increase in revenue to Rs 1109.3 crore in Q4 March 2020 over Q3 December 2019. Consolidated EBITDA stood at Rs 198.8 crore in Q4 March 2020, rising by 2.5% quarter on quarter (QoQ) from Rs 194 crore reported in Q3 December 2019. EBITDA margin dropped to 17.9% in Q4 March 2020 from 18.1% in Q3 December 2019.

Global Markets:

Overseas, Asian stocks were trading higher as investors weigh opening up of economies from the lockdown with caution. Markets in Japan and Thailand are closed on Wednesday for holidays.

In US, stocks ended slightly higher Tuesday for a second straight day, but finished well off session highs, as investors watched business restrictions begin to ease in the U.S. and Europe and progress toward an early vaccine to prevent the further spread of the COVID-19 pandemic.

The US economy could start to recover in the second half of the year after what is shaping up to be the worst recession in decades, but growth is likely to be slow and uneven, several top Federal Reserve policymakers indicated on Tuesday.

On the economic front, the U.S. trade deficit widened by almost 12% in March as the coronavirus pandemic grounded international flights, froze the global tourism industry and caused massive disruptions in the exchange of goods such as new cars and iPhones. Imports fell 6.2%, but U.S. exports tumbled an even deeper 9.6% to cause the trade gap to rise. The U.S. deficit rose to $44.4 billion in March from $39.8 billion in February, the government said Tuesday.

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