Key indices traded sideways with modest losses in mid morning trade. The Nifty 50 index held above the crucial 11,100 mark. Banks shares corrected after RBI in its Financial Stability report warned that bad-loan ratio is set to worsen to 12.5%.
At 11:26 IST, the barometer index, the S&P BSE Sensex, fell 221.87 points or 0.58% at 37,907.03. The Nifty 50 index lost 71.25 points or 0.61% at 11,125.80.
The selling was broad based. The S&P BSE Mid-Cap index was down 0.95% while the S&P BSE Small-Cap index declined 0.83%.
The market breadth was weak. On the BSE, 716 shares rose and 1601 shares fell. A total of 120 shares were unchanged. In Nifty 50 index, 18 stocks advanced while 32 stocks declined.
Total COVID-19 confirmed cases worldwide stood at 16,261,995 with 648,937 deaths. India reported 4,85,114 active cases of COVID-19 infection and 32,771 deaths, according to the data from the Ministry of Health and Family Welfare, Government of India.
Ministry of Health and Family Welfare noted in latest update that on 25 July, India recorded the highest ever COVID-19 recoveries in a single day. 36,145 COVID-19 patients were cured and discharged in the last 24 hours. This has taken the total number of recovered cases to 8,85,576. The recovery rate has achieved another high of fast approaching 64%. It stands at 63.92% today. This means more patients are recovering thus maintaining the steadily widening difference between recovered and active COVID-19 patients. This gap has crossed 4 lakh and currently stands at 4,17,694. Recovered cases are 1.89 times the active cases (4,67,882).
RBI's Financial Stability Report:
The Reserve Bank of India (RBI) released its 21st Financial Stability Report on Friday, which reflects the collective assessment of the Sub-Committee of the Financial Stability and Development Council (FSDC) on risks to financial stability.
RBI said that the capital to risk-weighted assets ratio (CRAR) of Scheduled Commercial Banks (SCBs) edged down to 14.8% in March 2020 from 15% in September 2019 while their gross non-performing asset (GNPA) ratio declined to 8.5% from 9.3% and the provision coverage ratio (PCR) improved to 65.4% from 61.6% over this period.
Macro stress tests for credit risk indicate that the GNPA ratio of all SCBs may increase from 8.5% in March 2020 to 12.5% by March 2021 under the baseline scenario; the ratio may escalate to 14.7% under a very severely stressed scenario.
The Nifty Bank index slipped 569 points or 2.51% to 22,092.85, extending losses to second trading session. The bank index has lost 4.29% in two days.
Bandhan Bank (down 3.25%), Axis Bank (down 3.05%), HDFC Bank (down 2.9%), IDFC First Bank (down 2.81%), IndusInd Bank (down 2.5%), Bank of Baroda (down 2.37%), Federal Bank (down 2%), RBL Bank (down 1.86%) and SBI (down 1.4%) declined.
ICICI Bank was down 4.65%. The private sector lender reported a 36.2% rise in net profit to Rs 2599.15 crore on a 21.8% jump in total income to Rs 26069.95 crore in Q1 June 2020 over Q1 June 2019. Net profit was aided after the bank sold equity shares representing 3.96% in ICICI Lombard General Insurance Company and 1.50% in ICICI Prudential Life Insurance Company for a total consideration of Rs 3,092.93 crore. Gross non-performing assets (NPAs) stood at Rs 40,386.24 crore as on 30 June 2020 as against Rs 41,409.16 crore as on 31 March 2020 and Rs 45,763.08 crore as on 30 June 2019. The ratio of gross NPAs to gross advances stood at 5.46% as on 30 June 2020 as against 5.53% as on 31 March 2020 and 6.49% as on 30 June 2019.
Stocks in Spotlight:
Ten stocks were barred from trading in NSE's F&O segment. Adani Enterprises (down 2.16%), BHEL (down 1.76%), Glenmark Pharmaceuticals (down 0.92%), GMR Infrastructure (down 2.02%), Indiabulls Housing Finance (down 1.46%), Vodafone Idea (down 3.09%), National Aluminium (down 1.65%), RBL Bank (down 1.75%), SAIL (down 0.44%) and SUN TV (up 0.2%) were banned from trading in NSE's F&O segment after the securities crossed 95% of market wide position limit.
JSW Steel was up 0.17%. The steel major's consolidated net loss stood at Rs 582 crore in Q1 June 2020 compared with net profit of Rs 1,008 crore in Q1 June 2019. Consolidated net sales slumped 41% to Rs 11,454 crore in Q1 June 2020 over Rs 19,407 crore in Q1 June 2019. Pre-tax loss stood at Rs 643 crore in Q1 June 2020 compared with pre-tax profit of Rs 1,770 crore in Q1 June 2019. Current tax rebate was at Rs 33 crore in Q1 June 2020 as against a tax expense of Rs 483 crore paid in Q1 June 2019. The result was announced post trading hours on Friday, 24 July 2020.
Since the commencement of lockdown from March 2020, JSW Steel has faced significant supply chain constraints and shortage of worforce. The company adhered to the operating protocols to comply with all the safety and social distancing requirements, secured necessary approvals from local authorities to resume operations towards the end of April 2020. Since then, operations have gradually ramped up, and for the months of May and June, the facilities operated at an average capacity utilisation of 80%. Consolidated operating EBITDA stood at Rs 1,341 crores with EBITDA margin at 11.4% during the quarter. The company's consolidated net gearing (Net Debt to Equity) stood at l.54x at the end of the quarter (as against 1.48x at the end of 4Q FY2020) and Net Debt to EBITDA stood at 5.74x (as against 4.50x at the end of 4Q FY2020).
Persistent Systems soared 10.46% to Rs 854 after consolidated net profit rose 7.37% to Rs 90 crore on 7.01% increase in revenue from operations to Rs 991.38 crore in Q1 June 2020 over Q4 March 2020. EBITDA grew 14.7% M-o-M (month-on-month) and surged 21.8% Y-o-Y (year-on-year) to Rs 146.43 crore in Q1 June 2020. In terms of US$, revenue rose 3.1% Q-o-Q and 9.5% Y-o-Y to $131.02 million during the quarter. Commenting on the Q1 earnings, Christopher O'Connor, the chief executive officer (CEO) and executive director of Persistent Systems, has said that: "In this quarter of the pandemic Persistent achieved 3.1% growth, cumulatively achieved by both business units. Client curiosity on digital solutions has never been higher, which enabled us to share our solutions broadly. The growth came on top of improved business operations."
Cipla down 1.39%. The drug major announced that it has been granted regulatory approval by the Drug Controller General of India (DCGI) for the launch of Favipiravir in the country under the brand name Ciplenza. Favipiravir is an off patent, oral anti-viral drug that has been shown to hasten clinical recovery in COVID -19 patients with mild to moderate symptoms. The accelerated approval for manufacturing and marketing of the drug is aimed at meeting the urgent and unmet medical need for COVID-19 treatment options in the country through restricted emergency use.
Adani Power rose 1.57% to Rs 35.55 after the company received approval from its shareholders for its delisting proposal. the company said that the votes casted by the members in favour of the resolution were more than 75% of the total votes casted. The facility of e-voting remained open from 24 June 2020 to 23 July 2020. It further added that the votes casted by the Public Shareholders in favour of the resolution is more than the two times of the number of votes casted as against by the Public shareholders. Therefore, the proposed resolution may be declared as passed as Special Resolution under the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009. On 29 May 2020, Adani Power had received a proposal from Adani Properties (APPL), a member of the promoter and promoter group of the company, for voluntary delisting the equity shares of the company from BSE and NSE. Adani Power's board at its meeting held on 22 June 2020 approved voluntary delisting of shares of the company from the stock exchanges. The company has worked out the floor price of Rs 33.82 per share. The promoter group collectively held 289.16 crore equity shares or 74.97% stake while the public shareholders owned 96.53 crore shares or 25.03% stake in the company as on 30 June 2020.
Asian stocks were trading mixed on Monday as investors continued to watch for developments on issues such as the coronavirus pandemic. On the economic data front, China's industrial profits for June soared 11.5% year-on-year, according to the country's National Bureau of Statistics.
The Bank of Japan's Summary of Opinions for its mid-July meeting, released Monday, said the country's economy is expected to "pick up moderately" from the second half of 2020. The central bank warned, however, that the economy is "unlikely to return to the level reached before the outbreak of COVID-19" even in fiscal 2022.
In US, Wall Street retreated on Friday as shares of major tech companies struggled and US-China tensions rose. Investor attention was likely be on lawmakers stateside as they attempt to push forward on another coronavirus stimulus package. U. S. Treasury Secretary Steven Mnuchin reportedly said Sunday that Republicans have finalized a bill worth about $1 trillion in coronavirus relief funds.
On the economic front, the IHS Markit flash manufacturing PMI rose to 51.3 in July from 49.8 in the prior month, while the flash service PMI rose to 49.6 in the month from 47.9 in the prior month.
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