Key benchmark indices ended with small gains after a roller-coaster session on Monday. Strength in HDFC and private banks made up for the losses incurred by index major Reliance Industries (RIL).
As per provisional closing data, the barometer index, the S&P BSE Sensex, gained 143.51 points or 0.36% at 39,757.58. The Nifty 50 index added 10.60 points or 0.09% at 11,653.
The trading was steeply volatile as investors braced themselves for the U.S. presidential election on Tuesday.
The broader market was mixed. The S&P BSE Mid-Cap index rose 0.36% while the S&P BSE Small-Cap index lost 0.71%.
Sellers outnumbered buyers. On the BSE, 1099 shares rose and 1562 shares fell. A total of 150 shares were unchanged.
Economy:
The headline seasonally adjusted IHS Markit India Manufacturing Purchasing Managers' Index (PMI) rose to 58.9 in October, from 56.8 in September. The data pointed to the strongest improvement in the health of the sector in over a decade. Growth was led by the intermediate goods category, but there were also robust expansions in the consumer and investment goods sub-sectors.
Meanwhile, the Goods and Services Tax (GST) collections in October stood at over Rs 1.05 lakh crore, crossing for the first time Rs 1 lakh crore mark since February this year. The gross GST revenue collected in the month of October 2020 is Rs 1,05,155 crore, showing an increase of 10% over Rs 95,379 crore in October 2019. The GST revenues for October 2020 consists of CGST of Rs 19,193 crore, SGST Rs 25,411 crore, IGST Rs 53,540 crore (including Rs 23,375 crore collected on import of goods) and Cess Rs 8,011 crore (including Rs 932 crore collected on import of goods). The total number of GSTR-3B Returns filed for the month of October upto 31 October 2020 is 80 lakh.
New Listing:
Shares of Equitas Small Finance Bank ended at Rs 32.85 on the BSE, a discount of 0.45% over the initial public offer (IPO) price of Rs 33.
The stock was listed at Rs 31, a discount of 6.06% to IPO price. So far the stock hit a high of Rs 33.05 and low of Rs 30.10. On the BSE, 37.18 lakh shares were traded on the counter so far.
The IPO of Equitas Small Finance Bank was subscribed 1.95 times. The issue opened for bidding on 20 October 2020 and closed on 22 October 2020. The price band for the IPO was set at Rs 32-33 per share.
The bank proposes to utilize the net proceeds from the offer towards augmenting bank's Tier I capital base to meet bank's future capital requirements such as organic growth and expansion and to comply with the regulatory requirements for enhanced capital base, as may be prescribed in the future.
October Auto Sales:
Maruti Suzuki India shed 1.45% to Rs 6864. The car major's total auto sales jumped 18.9% to 182,448 units in October 2020 from 153,435 units sold in October 2019.
Mahindra & Mahindra (M&M) added 0.24% to Rs 595.45. M&M announced that its overall auto sales (passenger vehicles+ commercial vehicles+ exports) for October 2020 stood at 44,359 vehicles, compared to 51,896 in October 2019.
Mahindra & Mahindra's Farm Equipment Sector (FES), announced its tractor sales numbers for October 2020. Total tractor sales (Domestic + Exports) during October 2020 were at 46,558 units, as against 45,433 units for the same period last year.
Escorts gained 2.16% to Rs 1227.25. The company's Agri Machinery Segment (EAM) in October 2020 sold 13,664 tractors, the company's highest ever October sales and registered a growth of 2.3% from 13,353 tractors sold in October 2019.
Hero MotoCorp rose 1.19% to Rs 2833 after the two-wheeler maker's total sales jumped 34.6% to 8,06,848 units in October 2020 from 5,99,248 units in October 2019.
Bajaj Auto fell 1.62% to Rs 2840.25. The company's total auto sales increased by 11% to 512,038 units in October 2020 from 463,208 units in October 2019. While total commercial vehicle sales declined by 35% YoY to 41,746 units, total two-wheeler sales improved by 18% to 470,290 units during the month.
TVS Motor Company gained 0.52% to Rs 457.85. The company's auto sales grew by 22% registering 394,724 units in October 2020 as against 323,368 units in the month of October 2019.
Eicher Motors fell 2.51% to Rs 2,033.25 after the company said that its total motorcycles sales slipped 7% to 66,891 units in October 2020 from 71,964 units in October 2019.
VE Commercial Vehicles, an unlisted subsidiary of Eicher Motors, said that its total commercial vehicles (CV) sales jumped 11.9% to 4,200 units in October 2020 from 3,755 units in October 2019.
Ashok Leyland added 4.12% to Rs 82.20. The company's total vehicle sales rose by 1% to 9,989 units in October 2020 from 9,862 units in October 2019.
Earnings Impact:
HDFC surged 6.62% at Rs 2050. The housing finance major's net profit declined 27.55% to Rs 2,870.12 crore in Q2 September 2020 from Rs 3,961.53 crore in Q2 September 2019. Total income stood at Rs 11,732.70 crore in Q2 September 2020, falling 13% from Rs 13,494.12 crore in Q2 September 2019.
The company's net interest income (NII) for the quarter ended 30 September 2020 stood at Rs 3,647 crore, rising 21% from Rs 3,021 crore posted in the same period last year. Net Interest Margin stood at 3.3% in Q2 September 2020.
HDFC said that September and October 2020 saw the strongest recovery since the outbreak of the pandemic. During the quarter ended 30 September 2020, individual loan application receipts grew 12% and approvals grew by 9% compared to the corresponding quarter of the previous year. Individual disbursements during the quarter ended 30 September 2020 were at 95% levels of the previous year.
The gross non-performing loans as at September 30, 2020 stood at Rs 8,511 crore. HDFC said it is equivalent to 1.81% of the loan portfolio.
On an AUM basis, the growth in the individual loan book was 9% while the growth in the non-individual loan book was 13%. HDFC said total loan growth on an AUM basis was 10%. As at 30 September 2020, the assets under management stood at Rs 5,40,270 crore as against Rs 4,90,072 crore in the previous year. The average size of individual loans stood at Rs 26.7 lakh compared with Rs 27 lakh in the previous year.
Bandhan Bank advanced 3.94% to Rs 300.65. The bank's net profit slipped 5.32% to Rs 920.01 crore on 17.33% increase in total income to Rs 3,579.39 crore in Q2 September 2020 over Q2 September 2019.
Net Interest Income (NII) for the quarter grew by 25.8% to Rs 1,923.10 crore as against Rs 1,529 crore in the corresponding quarter of the previous year. Net Interest Margin (annualised) for the quarter ending 30 September 2020 stood at 8% against 8.2% in 30 September 2019.
On the asset quality front, the ratio of gross NPAs to gross advances stood at 1.18% as on 30 September 2020 as against 1.43% as on 30 June 2020 and 1.76% as on 30 September 2019. The ratio of net NPAs to net advances stood at 0.36% as on 30 September 2020 as against 0.48% as on 30 June 2020 and 0.56% as on 30 September 2019.
Provision and contingencies spurted 171.05% to Rs 394.50 crore in Q2 FY21 from Rs 145.54 crore in Q2 FY20. During the quarter, Bandhan Bank has taken accelerated additional provision on standard advances amounting to Rs 300 crore. With this provision and additional Standard Assets provision that bank is carrying in micro banking portfolio with total additional provision in books of Rs 2,096 crore.
ICICI Bank soared 6.37% to Rs 417.55 after the private bank reported a 549% jump in net profit to Rs 4,251.33 crore on 3.9% rise in total income to Rs 23,650.77 crore in Q2 September 2020 over Q2 September 2019. The bank's core operating profit (profit before provisions and tax, excluding treasury income) increased by 18% year-on-year (Y-o-Y) to Rs 7,719 crore in Q2 September 2020 from Rs 6,533 crore Q2 September 2019.
Profit before tax in Q2 September 2020 stood at Rs 5,265 crore, up by 20.6% from Rs 4,367.23 crore in Q2 September 2019. Tax expense during the quarter fell by 72.67% to Rs 1,014 crore in Q2 September 2020 over Q2 September 2019. The bank's provisions and contingencies increased by 19.5% to Rs 2,996.27 crore in Q2 FY21 from Rs 2,506.87 crore in Q2 FY20. This includes provision of Rs 497 crore made on a prudent basis on loans aggregating to Rs 1,410 crore that were not classified as non-performing pursuant to the Supreme Court's interim order. As of 30 September 2020, the bank held COVID-19 related provision of Rs 8,772 crore.
Reliance Industries (RIL) slumped 8.74% to Rs 1874.75 after the index heavyweight's consolidated net profit fell 15.05% to Rs 9,567 crore on 25.50% decline in net sales to Rs 111,236 crore in Q2 September 2020 over Q2 September 2019. The Group's operations and revenue during the quarter were impacted due to COVID-19, RIL said in a statement.
On a standalone basis, Reliance Jio Infocomm posted 187% year-on-year (Y-o-Y) growth in net profit at Rs 2,844 crore in Q2 September 2020. On a quarter-on-quarter (Q-o-Q) basis, the profit figure grew by 12.86%. The telco had posted a Rs 2,520 crore profit in Q1 June 2020. Revenue from operations increased 33% Y-o-Y and 5.6% Q-o-Q to Rs 17,481 crore. ARPU during the quarter was at Rs 145 per subscriber per month as against Rs 140.30 per subscriber per month in Q1 June 2020.
On a consolidated basis, Reliance Retail's revenue from operations for Q2 FY21 increased by 29.7% Q-o-Q to Rs 36,566 crore, and at the same level as the last year despite restricted store operations and lower footfalls. The retail arm's net profit for Q2 September 2020 was at Rs 973 crore, higher by 125.8% Q-o-Q. O2C-Petrochemicals' segment revenue increased by 17.8% quarter on quarter (Q-o-Q) to Rs 29,665 crore with higher prices across product portfolio and higher volumes.
O2C Refining & Marketing segment's revenue for Q2 FY21 increased by 33.3% quarter on quarter basis to Rs 62,154 crore primarily due to higher crude oil price. RIL earned $5.70 per barrel on turning every barrel of crude oil into fuel in the second quarter of the current fiscal as compared to a gross refining margin (GRM) of $6.30 per barrel in the previous quarter.
Revenue from the Oil and Gas (Exploration & Production) business for Q2 FY21 declined by 29.8% Q-o-Q to Rs 355 crore primarily due to lower price realisation and decline in production. Revenue from the Media business for Q2 FY21 rose by 31.5% Q-o-Q as COVID-19 linked impact on ad-revenues receded over the quarter.
Shares of Reliance Industries Partly Paid Up (RELIANCEPP) hit a lower circuit of 10% at Rs 1066.30.
IndusInd Bank jumped 7.15% to Rs 627.45. The bank reported 53.2% decline in net profit to Rs 647.04 crore on 1.6% fall in total income to Rs 8,731.05 crore in Q2 FY21 over Q2 FY20. The bank's provisions and contingencies increased by 166.3% to Rs 1,964.44 crore in Q2 FY21 from Rs 737.71 crore in Q2 FY20.
"The extent to which COVID-19 pandemic will impact the bank's operations and financial results is dependent on the future developments, which are highly uncertain. In view of the same, the bank has made incremental regulatory, floating, counter cyclical and or contingent provisions amounting to Rs 952 crore during the quarter ended 30 September 2020, taking the total amount of such provisions to Rs 2,155 crore as of 30 September 2020, IndusInd Bank said.
As of 30 September 2020, the bank's advances in special mention accounts (SMA)/overdue categories, where the moratorium/deferment was extended aggregated to Rs 17,617.22 crore (8.75% of total advances). The bank has made a provision of Rs 430 crore on the same.
The ratio of gross NPAs to gross advances stood at 2.21% as on 30 September 2020 as against 2.53% as on 30 June 2020 and 2.19% as on 30 September 2019. The ratio of net NPAs to net advances stood at 0.52% as on 30 September 2020 as against 0.86% as on 30 June 2020 and 1.12% as on 30 September 2019.
While the bank's total deposits rose 10.2% to Rs 2,28,279.27 crore, total advances increased 2.1% to Rs 2,01,246.83 crore in Q2 September 2020 over Q2 September 2019.
UPL shed 1.98% to Rs 444.20. The company posted a 166% jump in consolidated net profit to Rs 537 crore in Q2 September 2020 from Rs 202 crore in Q2 September 2019. Consolidated revenue from operations came at Rs 8,939 crore in Q2 September 2020, 14.35% higher than Rs 7,817 crore in the same quarter last year.
In India, UPL saw robust growth in key products including pre-emergent herbicides and sustainable solutions. Despite the COVID-19 lock down, India continued to deliver record collections.
Rest of the World growth is attributed to the strengthening of the company's B2C model in China with higher focus on value brands. Additionally, new product launches in Vietnam and other SE Asian countries yielded positive results. Normalisation of weather patterns contributed to the strong performance in South Africa, Australia and New Zealand.
UPL maintained its guidance of 6-8% growth in revenue and 10-12% in EBITDA. The growth will be driven by a focus on differentiated solutions as well as new product launches. Price increases in local currencies and cost savings will support margins.
Global Markets:
The US Dow Jones 30 Futures were currently trading 336 points higher, indicating a strong start to equities on Wall Street today.
Shares in Europe and Asia rose across the board on Monday. Market focus is widely centered on the U.S. election uncertainty and the latest coronavirus developments.
The British government on Saturday announced a national lockdown for England, making it the latest country to return to a nationwide shutdown, which begins on Thursday, to try to stem the rapid rise in cases and hospitalizations due to the virus.
China's Caixin/Markit Purchasing Managers' Index (PMI) came in at 53.6 for October, as China's factory activity expanded for the sixth straight month in October as business confidence grew to its strongest in years.
The Monday data release came after China's official manufacturing PMI for October came in at 51.4, according to the country's National Bureau of Statistics. That was slightly lower than the 51.5 reading in September. PMI readings above 50 signify expansion, while those below that indicate contraction. PMI readings are sequential and represent on-month expansion or contraction.
US stocks extended losses Friday, with investors waving off strong quarterly results from technology heavyweights to focus on the uncertain outlook amid a surge in COVID-19 cases in the U.S. and Europe. Nervousness over Tuesday's U.S. elections also continued to hang over the market.
On the U.S. data front, personal income rose 0.9% in September, while consumer spending increased 1.4%. The final October reading of the University of Michigan's consumer sentiment index edged up to 81.8 in October from an initial 81.2.
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