Shares trade with decent gains; PSU banks rally

Domestic equity benchmarks traded with decent gains in morning trade, starting the September F&O series on a positive note. At 10:27 IST, the barometer index, the S&P BSE Sensex, was up 182.32 points or 0.47% at 39,295.79. The Nifty 50 index was up 59.50 points or 0.51% at 11,618.75.

In the broader market, the S&P BSE Mid-Cap index rose 0.84% while the S&P BSE Small-Cap index gained 0.46%.

The market breadth was positive. On the BSE, 1338 shares rose and 998 shares fell. A total of 136 shares were unchanged.

GST Council Meeting Outcome:

At the 41st GST Council meet on Thursday, Finance Minister Nirmala Sitharaman gave states two options to bridge the funding gap created due to economic losses caused by COVID-19. States have been demanding compensation from the government to meet the shortfall in revenue caused by lockdowns to curb spread of COVID-19. The compensation gap of Rs 2.35 lakh crore this year is due to COVID-19 as well and the shortfall in compensation due to the implementation of GST has been estimated to be Rs 97,000 crores.

In a big push for 'Make in India' for the defence sector, Finance Minister Nirmala Sitharaman yesterday announced raising the Foreign Direct Investment (FDI) limit in the defence sector under the automatic route from 49% to 74%. She also said that the import of some weapons and platforms will not be allowed.

Buzzing Index:

The Nifty PSU Bank index gained 3.85% to 1,586.40, advancing for the sixth straight session, led by gains in segment heavyweight State Bank of India (SBI).

SBI, currently trading 1.88% higher at Rs 219.70, has added 12.8% in six sessions while the Nifty PSU Bank index has gained 8.9% during the same period.

Among the index constituents, Canara Bank (up 8.05%), Jammu and Kashmir Bank (up 6.65%) and Bank Of Baroda (up 6.47%) were the top gainers of the day.

Earnings Today:

Apex Frozen Foods (up 1.75%), Filatex (down 0.52%), Khadim (up 1.78%), and SJVN (down 0.77%) will announce their quarterly earnings today.

Earnings Impact:

Edelweiss Financial Services was up 0.18% to Rs 84. The company reported consolidated net loss of Rs 263.67 crore in Q1 June 2020 as against net profit of Rs 134.49 crore in Q1 June 2019. Total income slumped 25.7% to Rs 1,919.68 crore in Q1 FY21 over Q1 FY20.

Separately, Edelweiss said that its board has approved sale of 51% stake in its wealth management business to Pacific Alliance Group (PAG). The deal will be completed at a post-money valuation of Rs 4,400 crore. The transaction is expected to close in the next 4 to 6 months.

ICRA fell 1.62% to Rs 2758.55 after the rating agency's net profit tumbled 17.1% to Rs 16.82 crore on a 9.6% decline in net sales to Rs 69.62 crore in Q1 FY21 over Q1 FY20. The ratings agency said that the de-growth in consolidated revenue for the quarter ended June 30, 2020 was mainly due to decline in revenue from rating business. The outsourcing & information services business, shown a traction due to growth in the global business.

PNC Infratech gained 0.50% to Rs 170.25. The construction company posted a 46% drop in consolidated net profit to Rs 95 crore on 28% decline in net sales to Rs 1092 crore in Q1 June 2020 over Q1 June 2019. While EBITDA during the quarter tumbled 18% YoY to Rs 287 crore, EBITDA margin improved by 325 bps as it stood at 26.25% as on 30 June 2020 as compared to 23% as on 30 June 2019.

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