Domestic equity barometers ended with significant losses on Friday, tracking weak global cues. After trading in a narrow range for most part of the session, the key indices faced steep selling pressure in mid-afternoon trade. Banks and auto shares corrected while metal and pharma shares bucked trend.
As per provisional closing data, the barometer index, the S&P BSE Sensex slumped 433.15 points or 1.13% at 37,877.34. The Nifty 50 index lost 122.05 points or 1.08% at 11,178.40.
Investors were cautious ahead of the Supreme Court (SC) hearing in the adjusted gross revenue (AGR) case, which is currently under way in the apex court. The SC may also give clarity on staggered payment schedule in its hearing.
Tata Teleservices (Maharashtra) (down 1.64%), Vodafone Idea (down 1.22%) and Bharti Airtel (down 1.05%) edged lower.
In its last hearing on 10 August, SC had adjourned its hearing in the AGR matter and had asked the Centre to prepare a plan for recovering AGR dues from bankrupt telecom operators, Reliance Communications, Aircel and Videocon Telecommunications.
Selling was broad based. The S&P BSE Mid-Cap index fell 1.02%. The S&P BSE Small-Cap index lost 0.61%.
Sellers outnumbered buyers. On the BSE, 1101 shares rose and 1620 shares fell. A total of 142 shares were unchanged.
The NSE's India VIX, a gauge of market's expectation of volatility over the near term, jumped 5.19% to 21.64.
The Nifty August 2020 futures ended at 11,186.15, at a premium of 7.75 points compared with the spot at 11,178.40.
COVID-19 Update:
Total COVID-19 confirmed cases worldwide stood at 2,09,19,243 with 7,59,582 deaths. India reported 6,61,595 active cases of COVID-19 infection and 48,040 deaths while 17,51,555 patients have been discharged, according to the data from the Ministry of Health and Family Welfare, Government of India.
Economy:
India's inflation, based on the Wholesale Price Index (WPI), declined 0.58% in July, against 1.81% drop in June, according to the government data.
India's retail inflation stood at 6.93% for the month of July as against 6.23% in the month-ago period, data released yesterday showed. The consumer price index (CPI)-based inflation rate for June has been revised from 6.09% to 6.23%.
Buzzing Segment:
The Nifty Pharma index rose 1.58% to 11,658.75, amid value buying. The index fell 3.9% in the past three sessions.
Among the index constituents, Lupin (up 9.48%), Cadila Healthcare (up 2.56%), Sun Pharma (up 2.22%), Cipla (up 1.95%), Torrent Pharma (up 1.31%) and Alkem Laboratories (up 1.03%) were the top index gainers.
Earnings Impact:
Hindalco Industries added 0.57% to Rs 184.55. The company posted a standalone net loss of Rs 40 crore in Q1 June 2020 as against a net profit of Rs 23 crore in Q1 June 2019. Revenue from operations stood at Rs 7,420 crore in Q1 June 2020, declining 26% from Rs 10,055 crore in Q1 June 2019.
NTPC rose 1.20% to Rs 88.25. The power generation company's consolidated net profit declined nearly 6% to Rs 2948.94 crore in Q1 June 2020 from Rs 3132.73 crore reported in Q1 June 2019. The company's consolidated revenue from operations stood at Rs 26,194.76 crore in Q1 June 2020, falling just 2.5% from Rs 26,886.22 crore posted in Q1 June 2019.
The PSU reported exceptional cost of Rs 836.76 crore in Q1 June 2020. The PSU enterprise said that in accordance with the announcement of Government, to allow a rebate of 20%-25% on the capacity charges, the company has approved Rs 1510.47 crore for the 2020-21. During the quarter, the company has accounted a rebate of Rs 836.76 crore in respect of beneficiaries fulling conditions.
Shriram Transport Finance slipped 2.14% to Rs 685.70. On a standalone basis, the company's net profit tanked 49.5% to Rs 320.06 crore on 2.8% increase in total income to Rs 4,144.70 crore in Q1 June 2020 over Q1 June 2019.
Net interest income (NII) for the first quarter ended 30 June 2020 declined 6.51% to Rs 1,820.35 crore as against Rs 1,947.02 crore in the same period of the previous year. Total Asset under Management as on 30 June 2020 stands at Rs 1,11,756.37 crore as compared to Rs 1,06,343.48 crore as on 30 June 2019 and Rs 1,09,749.24 crore for the year ended 31 March 2020.
The NBFC has considered an additional Expected Credit Loss (ECL) provision on account of COVID-19 of Rs 956.15 crore during the quarter ended 30 June 2020 and the company's overall provision of ECL on account of COVID-19 as on 30 June 2020 stands at Rs 1,865.79 crore.
Voltas shed 0.53% to Rs 615.20. The company's net profit tumbled 50.6% to Rs 82 crore on a 49.4% decline in total income to Rs 1364 crore in Q1 FY21 over Q1 FY20.
The Group's operations and financial results for the quarter ended 30 June 2020 have been impacted due to outbreak of COVID-19 pandemic and consequent lockdown. Nevertheless, the business activities were resumed gradually based on the relaxations and directives issued by various Government as well as local authorities in India and other countries where the Group has business operations, albeit constraints of workforce and availability of project sites.
MRF fell 3.86% to Rs 61,523.15. The tyre maker's consolidated net profit slumped 95.1% to Rs 13.46 crore on a 45% decline in revenue from operations to Rs 2,460.70 crore in Q1 June 2020 over Q1 June 2019.
Trent lost 1.80% at Rs 564.85. The company reported a consolidated net loss of Rs 184.04 crore in Q1 June 2020 as against net profit of Rs 36.32 crore posted in Q1 June 2019.
Consolidated net sales for Q1 June 2020 stood at Rs 248.41 crore, nearly 69% lower than Rs 799.88 crore in Q1 June 2019. Revenues were impacted due to the Covid 19 related store closures for a major part of the quarter.
This led to loss from operations of Rs 171 crore as the firm continued to incur certain costs notwithstanding the temporary store closures. The company's food & grocery stores (other than for their home & fashion offerings) continued to operate during the first quarter with significant measures to ensure safety of customers and employees.
Balkrishna Industries tumbled 4.92% at Rs 1316.70. The tyre manufacturing company's consolidated net profit skid 25.6% to Rs 131.56 crore on 21.4% decrease in net sales to Rs 942.61 crore in Q1 June 2020 over Q1 June 2019.
The company said that Q1 FY21 has been a good quarter inspite of the impact of COVID-19. The pick up in sales volumes in May and June led to a total sales volume of 38,096 MT in Q1 FY21. EBITDA margin improved to 26.7% in Q1 June 2020 as compared to 24.3% in Q1 June 2019. The company's cash & cash equivalents stood at Rs 1,175 crore as on 30 June 2020.
Bharat Petroleum Corporation (BPCL) fell 2.14% to Rs 412.20. The PSU OMC reported a 93% jump in standalone net profit to Rs 2076.17 crore on 41% decline in revenue from operations to Rs 50,616.92 crore in Q1 June 2020 over Q1 June 2019.
BPCL's profit before tax came 2,926.17 crore in Q1 June 2020, a rise of 116% over Rs 1,351.78 crore in Q1 June 2019. Total tax expense for quarter ending June 2020 stood at Rs 850 crore, a 207% rise against Rs 276.66 crore in quarter ending June 2019.
The average Gross Refining Margin (GRM) of BPCL during the quarter ended June 2020 fell 86% to $0.39 per barrel from $2.81 per barrel posted in April - June 2019.
Tata Steel rose 1.19% at Rs 418.15. The steel major reported consolidated net loss of Rs 4,648.13 crore in Q1 June 2020 as against net profit of Rs 714.03 crore in Q1 June 2019. Net sales slumped 32.7% to Rs 23,812.50 crore in Q1 FY21 over Rs 35,382.16 crore in Q1 FY20.
Tata Steel's operating level has recovered to 90% by end June 2020 and has since then increased further to 95%, catering to both domestic and export customers. With the improvement in the domestic market, Tata Steel has been reducing its exports ratio. The price outlook in both export and domestic market continues to improve on month on month basis and the current quarter demand has been much better than a typically slow monsoon quarter in the past.
Hero MotoCorp shed 0.33% to Rs 2802.05. The two-wheeler major's standalone net profit slumped 92% to Rs 61.31 crore on a 63% decline in net sales to Rs 2971.54 crore in Q1 FY21 over Q1 FY20.
The company sold 5.65 lakh units in Q1 June 2020, which were lower by 69.3% as compared to 18.42 lakh units sold in Q1 June 2019. EBITDA margin was at 3.6% as on 30 June 2020 as compared to 14.4% as on 30 June 2019.
Niranjan Gupta, chief financial officer (CFO), Hero MotoCorp, said, "We are already seeing green shoots, and expect them to sustain and get stronger as we move towards the festive season. Our July month sales were more than 95% of pre-covid sales and we do see positive trend moving forward."
Eicher Motors slumped 6.95% to Rs 20,165.60 after the company posted a consolidated net loss of Rs 55.18 crore in Q1 June 2020 as compared to a consolidated net profit of Rs 451.77 crore in Q1 June 2019. Net sales for Q1 FY21 stood at Rs 809.16 crore, falling 65.7% from Rs 2361.24 crore reported in the same period last year.
Eicher's Royal Enfield sold 58,383 motorcycles in Q1 June 2020, a decline of 68% from 181,966 motorcycles sold over the same period last year. The company sold 2,129 units of commercial vehicles in Q1 June 2020 as compared to 13,331 units sold in the corresponding quarter last year.
Vinod K. Dasari, CEO, Royal Enfield said, "From a business point of view the initial consumer sentiment over the last two months has been very encouraging. Demand from semi-urban and rural towns have picked up well, and our network of studio stores across the country have been able to cater to this demand. There is pent up demand and we are optimistic about stronger recovery once supply chain stabilizes."
Global Markets:
The Dow Jones 30 Futures were down 134 points indicating a week start in the US markets.
European markets fell across the board while Asian stocks ended mostly higher on Friday. Investors monitored concerns over a second wave of coronavirus cases, which caused the UK to implement new quarantine measures.
The UK has imposed a new 14-day quarantine period on all arrivals from France from Saturday due to the rising rate of coronavirus cases in the country.
China's factory output rose just under 5% last month from a year earlier while retail sales fell slightly. Industrial output grew 4.8% in July from a year earlier, in line with June's growth. Retail sales dropped 1.1% on year, following June's 1.8% fall.
The US stock market finished session lower on Thursday, 13 August 2020, as investors elected to book profit after hitting 6-month highs yesterday. Meanwhile, selloff fueled further on concern over a stalled US economic relief deal and as weekly jobless claims dipped below 1 million for the first time in four months, though they remain at historically high levels.
Initial claims for state unemployment benefits decreased to 963,000 for the week ended Aug. 8, the lowest level since mid-March but the expiration of a $600 weekly jobless supplement at the end of July likely contributed to the decline. Data last week showed the economy has regained only 9.3 million jobs of the 22 million jobs lost between February and April, indicating that it faces a long road to reach pre-pandemic levels.
Meanwhile, lawmakers in the United States appear to be at an impasse over the next round of coronavirus aid and an agreement on legislation and passage of a bill looks to be weeks away.
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