KEY HIGHLIGHTS
Closing Bell: Up For Day Five
Indian equity markets continued to rally, extending their gains to the fifth straight day after another strong day of trade.
The S&P BSE Sensex ended 1.4% higher at 37,930 while the NSE Nifty 50 index ended 1.27% higher at 11,162. Benchmark indices remained at their highest level since March 5 this year.
The Nifty 50 index has gained in 12 out of the last 17 trading sessions.
PSUs led gains on the Nifty 50 in today's session. Power Grid ended as the top gainer, up 6.4%, followed by BPCL and Indian Oil, which ended with gains of over 5.5%.
Bajaj Finance was the top laggard on the Nifty 50 index, ending 4% lower after its first quarter earnings.
Banking stocks outperformed for the second straight day. The Nifty Bank and the PSU Bank index ended with gains of 2.1% each. Realty and auto stocks also ended with strong gains. The Realty index ended 2% higher while the Auto index ended with gains of 1.6%.
Pharma underperformed for the second straight day, ending 1.3% lower. The index snapped an eight-day gaining streak on Monday.
Broader markets underperformed in today's session. The midcap index ended little changed while the smallcap index ended with gains of 0.4%.
India Volatility Index ended off the day's low, down 0.5% to 24.58.
Market breadth ended in favour of the gainers despite broader markets underperforming. 1,022 stocks on the NSE ended with gains while 798 declined.
How Did The Sectoral Indices Fare
Buzzing Stock: Piramal Enterprises
- Only gainer on the Nifty Pharma index
- Locked in a 10% upper circuit at Rs 1,546.9
- Gains the most in a month
- Trades at the highest level in five months
- Up for the third straight day
- Has gained 12.7% in the last three sessions
- Today's volumes are more than double its 20-day average
- Has gained more than two and a half times from its 52-week low of Rs 606 on March 24, 2020
- All three analysts tracking the stock have a buy recommendation
- Return potential of the stock as per Bloomberg data is 1.3%
Active Stock Options
- Bajaj Finance's 3,500 Call: Premium down 56.9% to Rs 69.1. The contract has added 3.7 lakh shares in Open Interest.
- Reliance Industries' 2,000 Call: Premium up 27% to Rs 42.25. The contract has shed 3.6 lakh shares in Open Interest.
- ICICI Bank's 380 Call: Premium up 58.5% to Rs 13.5. The contract has shed 6.4 lakh shares in Open Interest.
Earnings Reaction: Hindustan Zinc Q1FY21
- Revenue down 20% to Rs 3,989 crore
- Net profit down 23% to Rs 1,359 crore
- Ebitda down 36% to Rs 1,576 crore
- Ebitda margin at 39.5% from 49.7%
- Higher finance costs impact Ebitda margin
- Finance costs up 79% to Rs 52 crore
- Zinc, Lead and others business revenue down 25% to Rs 3,207 crore
- Silver metal business up 12% to Rs 645 crore
- Zinc CoP without royalty down 3% to Rs 72,004 per MT
Management Commentary:
- Mined metal and finished metal production in FY21 to be higher than last year
- Saleable silver production in FY21 estimated at 650 MT
- Zinc cost of production in FY21 likely to remain below $1,000 per MT
- Project capex for the year to range between $100-140 million
Shares ended 2.6% lower at Rs 182.90, down for the third straight day.
Earnings Reaction: ICICI Prudential Q1FY21
- Net profit flat at Rs 288 crore
- New business premium down 32.6% to Rs 1,499 crore
- Value of New Business down 35% to Rs 201 crore
- VNB Margins at 24.4% from 21.7%
- Increase in protection mix aids VNB Margin
- 13th month persistency at 84.1%
- 49th month persistency at 66.2%
- Assets Under Management up 3.6% at Rs 1.7 lakh crore
Shares ended 2% higher at Rs 445 and have now gained in three out of the last four trading sessions.
Earnings Reaction: HDFC Life Q1FY21
- Net profit up 6% to Rs 451 crore
- Total premium down 10% to Rs 5,863 crore
- Assets Under Management up 8% to Rs 1.39 lakh crore
- Value of New Business down 43% to Rs 291 crore
- VNB Margins at 24.3% from 29.8%
- Solvency Ratio at 190% from 193%
- 13th month persistency at 87% from 85%
- 61st month persistency unchanged at 53%
Shares ended 1.7% higher at Rs 627, up for the fourth straight day.
Earnings Reaction: SBI Life Q1FY21
- Net profit up 5% to Rs 390 crore
- Value of New Business down 29% to Rs 240 crore
- VNB Margins at 18.7% from 17.9% in Q1FY20
- 13th month persistency of 81.55% from 84.46% in Q1FY20
- 61st month persistency at 63.14% from 56.27% last year
- Assets Under Management up 19% to Rs 17.5 lakh crore
- Solvency ratio at 2.39 from 2.17
Shares ended at the highest point of the day, up 4.4% at Rs 892. The stock has gained in three out of the last four trading sessions.
Stock Reaction: IRB Infra
The company has informed the exchanges that the National Highways Authority of India (NHAI) has annulled the bid received by the company.
IRB Infra on July 10 had emerged as the preferred bidder for the six-laning project of NH-19 from Palsit to Dankuni's 63.8 kilometre stretch.
The project, under the Bharatmala Pariyojana, was supposed to be executed on the BoT basis at a cost of Rs 2,193.23 crore.
Shares fell as much as 5.1% to Rs 112.55, post the announcement and are declining for the second straight day.
Large Trade Alerts
- HDFC Bank: 15.1 lakh shares exchanged hands in a single large trade.
- NTPC: 30 lakh shares exchanged hands in a single large trade.
- Buyers and sellers of the trade remain unknown.
Shares of HDFC Bank are off the day's high; up 0.5% at Rs 1,138.
Shares of NTPC are trading 1% higher at Rs 88.
Money Market Update
The rupee ended with gains for the third straight day, its longest winning streak in nearly a month.
The currency ended at a two-week high of 74.74 against the U.S. Dollar as compared to Monday's close of 74.92.
Today's gains meant that the rupee ended as the fourth best performing currency in Asia, behind the South Korean Won, Thai Baht and the Indonesian Rupiah.
Yield on the 10-year government bond ended at 5.833% as compared to Monday's close of 5.799%.
Vehicle Registrations In June Fall 42%, Says FADA
- Two-wheeler sales see de-growth of 41% in June
- Three-wheeler sales down 75.4%
- Commercial vehicle sales down 83.8%
- Passenger vehicle sales down 38.4%
Commentary From FADA:
- Ease in nationwide lockdown boosts number of vehicles registered as compared to May
- Robust demand recovery observed in rural market is leading to a rise in sales volumes of tractors, two-wheelers and small commercial vehicles.
- M&HCV and PV sales in urban pockets are lagging as lockdown persists in many cities.
- Attractive vehicle scrappage policy is a dire need for reviving the CV market
- Vehicle registrations will see similar trends and will mostly be better than June
Earnings Reaction: Tata Elxsi Q1FY21
- Revenue down 9% to Rs 400.5 crore
- Net profit down 16% to Rs 68.9 crore
- Ebitda down 15% to Rs 92.7 crore
- Ebitda margin at 23.1% from 24.8%
- All numbers are compared on a quarter-on-quarter basis
Shares gained as much as 3.3% to Rs 952.6, before cooling off. The stock is up for the fifth day in a row.
European Markets Open Higher
Benchmark indices in Europe gained for the third straight day as investors pin hopes on the passage of an EU virus recovery fund.
The Stoxx 600 index opened 0.7% higher with tech and auto stocks leading the gains. Healthcare and travel stocks are underperforming.
Benchmark indices in Asia have ended higher while futures on the Dow Jones are trading with gains of 125 points.
Brent crude trades 0.7% higher at $43.6 while gold is up 0.3% at $1,823/Oz.
Let's take a look at how benchmark indices across Europe are trading:
- Euro Stoxx 50 up 1.3% at 3,432
- DAX up 1.5% at 13,242
- CAC up 1% at 5,145
- FTSE 100 up 0.5% at 6,296
- IBEX 35 up 1.4% at 7,581
How Are The Sectoral Indices Faring
Earnings Reaction: Bajaj Finance Q1FY21
- Net profit down 19% to Rs 962.32 crore
- Net Interest Income up 12% to Rs 4,152 crore
- Loan losses and provisions at Rs 1,686 crore
- Gross NPA at 1.4% from 1.61% (QoQ)
- Net NPA at 0.5% from 0.65% (QoQ)
- Additional contingency provision for Covid-19 at Rs 1,450 crore
- Overall contingency provision for Covid-19 at Rs 2,350 crore
- Consolidated Moratorium book down to 15.7% of AUM from 27% of AUM last quarter
- Overall liquidity surplus of Rs 17,700 crore as on June 30, 2020.
- Provision Coverage Ratio of 65% as compared to 60% in Q4FY20.
- All numbers are consolidated and compared on a year-on-year basis
Shares ended 4% lower at Rs 3,304 and were the top laggards on the Nifty 50 index.
Markets At Noon
- Benchmark indices hold on to gains
- Nifty up 1.1% at 11,138
- Sensex up 1.1% at 37,834
- Nifty Bank up 1.8% at 22,731
- Nifty Midcap Index up 0.5%
- Nifty Smallcap Index up 0.7%
- India Volatility Index down 2.2% to 24.16
- Nifty Realty is the top sectoral gainer; up 3.1%
- Nifty Auto, Nifty Media index up over 1.5% each
- Nifty PSU Bank holds gains; up 2.1%
- Nifty Pharma, Nifty Metal, Nifty I.T. and Nifty FMCG are the sectoral laggards; down between 0.1 to 0.8%
- BPCL remains the top Nifty gainer; up 7%
- Britannia is the top Nifty laggard; down 1.8%
- 1,052 stocks on the NSE trade with gains while 688 decline
Buzzing Stock: CDSL
- Trading at the highest level since February 2018
- Gains as much as 3.2% to Rs 324.85
- Up for the third straight day
- Longest winning streak in two weeks
- Has gained 11.1% in the last three trading sessions
- Today's volumes are more than double its 20-day average
- Stock trading in overbought territory with Relative Strength Index (RSI) at 72
- Has recovered 81% from its 52-week low of Rs 179 on March 23, 2020
- Four out of the five analysts tracking the stock have a buy recommendation; 1 sell call
- The stock trades 14.5% above its 12-month consensus price target of Rs 275, implying a negative return potential
Auto Stocks In Top Gear
Stock Reaction: Info Edge India
The company, through its wholly-owned subsidiary has entered into an agreement to invest up to Rs 10.6 crore in Bizcrum Infotech.
The investment falls under the related party transaction as Bijnis is an associate company of Info Edge. The transaction is done at arm's length basis, the company said in an exchange filing.
The Rs 10.6 crore investment will result in Info Edge acquiring 28.22% stake on fully converted and diluted basis.
Bijinis is in the business of building a B2B platform primarily focused on fashion and lifestyle verticals, solving the problem of discovery, payments and logistics by bridging the gap between suppliers and retailers.
Shares recovered from the day's low, gaining as much as 1.33% to Rs 3,298. The stock is up for the sixth straight day - its longest winning streak since November 2019 and is trading at an all-time high.
Earnings Reaction: Bombay Dyeing Q1FY21
- Revenue down 85.9% to Rs 91.2 crore
- Net loss of Rs 129.3 crore from net profit of Rs 27.7 crore
- Ebitda loss of Rs 22.3 crore from Ebitda gain of Rs 133.6 crore
- Real Estate segment revenue down 95% to Rs 12.3 crore
- Polyester segment revenue down 77% to Rs 77.21 crore
- Retail / Textile segment revenue down 97% to Rs 1.6 crore
- All numbers are consolidated and compared on a year-on-year basis
Shares fell as much as 5.1% to Rs 68, snapping a two-day gaining streak.
F&O Snapshot: Active Options Contracts
- Nifty July futures add 8% and 8.7 lakh shares in Open Interest.
- Nifty Bank July futures add 12.5% and 1.9 lakh shares in Open Interest.
Nifty: July 23 Expiry
- 11,200 Call: Premium up 71% to Rs 45.4. The contract has added 4.51 lakh shares in Open Interest.
- 11,000 Put: Premium down 55.3% to Rs 41.3. The contract has added 16.96 lakh shares in Open Interest.
- 11,100 Call: Premium up 71.5% to Rs 91.7. The contract has added 5.91 lakh shares in Open Interest.
Nifty Bank: July 23 Expiry
- 23,000 Call: Premium up 29.7% to Rs 151.6. The contract has added 2.2 lakh shares in Open Interest.
- 22,000 Put: Premium down 62.2% to Rs 86.3. The contract has added 4.3 lakh shares in Open Interest.
- 22,500 Put: Premium down 50.4% to Rs 232. The contract has added 3.3 lakh shares in Open Interest.
Indian Funds Halve Shadow Bank Debt Holdings
Indian Mutual Funds have halved their holdings of debt sold by shadow lenders in the two-year period to June after defaults by some major financiers, Bloomberg News reports citing SEBI data.
Policymakers have rolled out measures to support the financiers in recent months, helping to bring down their borrowing costs.
However, asset managers remain wary of their bonds and Covid-19 continues to remain a threat to a rise in their bad loans.
Buzzing Stock: Sterlite Technologies
- Worst performing stock on the Nifty Smallcap index
- Falls as much as 13% to Rs 138.1
- Biggest single-day fall in four months
- Snaps two-day gaining streak
- Today's volumes are nearly five-times higher than its 20-day average
- Trading 28% below its 52-week high of Rs 180 on September 23, 2019
- Seven out of the 11 analysts tracking the stock have a buy recommendation; 2 sell calls
- The stock trades 12.7% above its 12-month consensus price target of Rs 122, implying a negative return potential
Stock Reaction: Gateway Distriparks
The board approved a raising funds not exceeding Rs 150 crore on a rights basis, QIP and preferential allotment or any other combination thereof.
Out of which, the board will issue 16.1 crore shares worth Rs 116 crore for its rights issue at a price of Rs 72 per share.
The rights entitlement ratio has been fixed at 4 rights equity shares for every 27 equity shares held by the eligible shareholders.
The record date for the same has been fixed at July 24. The issue opens on July 30 and closes August 13.
The rights issue price is a 20% discount to Monday's closing price.
Shares fell as much as 2.1% to Rs 88.3, snapping a two-day losing streak.
All But Two Stocks On The PSU Bank Index Gain
Earnings Reaction: DEN Networks
The cable television company reported a 3.8% decline in its net profit for the quarter ended June while net profit grew nearly five-fold as compared to last year. Higher taxes in the base quarter had impacted profitability.
Operating performance of the company was strong with Ebitda rising 55.1% while margins rose to 21.2% from 13.2% as compared to the same period last year.
Revenue from the cable distribution network fell 3% to Rs 284.4 crore while that from the Broadband business fell 6% to Rs 16.84 crore.
Shares are locked in an upper circuit of 10% at Rs 109.6, up for the third straight day. The stock has quadrupled from its 52-week low of Rs 25.5 on March 25, 2020.
Markets At 10:10 A.M.
- Benchmark indices gain for fifth straight day
- Nifty up 0.9% at 11,120
- Sensex up 0.9% at 37,763
- Nifty Bank up 1.3% to Rs 22,612
- Nifty Midcap and Smallcap index up 0.7% each
- India Volatility Index down 2.3% to 24.14
- Nifty PSU Bank is the top sectoral gainer; up 2%
- Nifty Auto and Nifty Realty gain 1.8% each
- Nifty Pharma and Nifty FMCG are the only laggards; down 0.2% each
- BPCL is the top Nifty gainer; up 3.7%
- Bharti Infratel is the top Nifty laggard; down 1.65%
- 1,152 stocks on the NSE trade with gains while 496 decline
Money Market Update
The rupee opened higher for the third straight day, adding to gains made on Friday and Monday.
The currency opened at 74.79 against the U.S. Dollar as compared to Monday's close of 74.92.
Risk sentiment was boosted after a Covid-19 vaccine showed promising results in early testing, prompting the U.S. Dollar to fall to a six-week low.
Yield on the 10-year government bond opened at 5.802% as compared to Monday's close of 5.805%.
DCB Bank believes that yields are likely to remain in a tight range between 5.78% and 5.82% this week due to the absence of fresh triggers.
Within the bond market today, Indian states will sell bonds worth Rs 9,000 crore.
Earnings Reaction: ACC
The cement major reported a 37.3% decline in its revenue for the June quarter of 2020. Net profit fell 40.5% while Ebitda declined 33% compared to the previous year.
Volumes fell 33% to 4.8 MT while realisations and Ebitda per tonne remained flat. The decline in volumes was offset by better pricing and lesser discounts.
Other costs for the company declined by Rs 200 crore on a quarter-on-quarter basis.
Brokerage house CLSA has raised its price target on the stock to Rs 1,675 from Rs 1,575 and reiterated its buy rating.
The stock is better positioned in the current environment due to renewed focus on costs and visibility on medium-term growth, as per CLSA.
Shares gained as much as 7.1% to Rs 1,423, up for the fourth straight day. The stock now trades at the highest level in five months.
Coronavirus India Updates
- 37,148 new cases reported in the last 24 hours; a decline from Monday
- Total confirmed cases now at 11,55,191
- Active cases now at 4,02,529
- Patients cured / discharged / migrated at 7,24,578
- Death toll rises to 28,084
- 587 deaths reported in the last 24 hours
- Total recovers in the last 24 hours at 24,491
Stock Reaction: Mastek & Majesco
Majesco on Monday announced that it has decided to sell its U.S. business to a PE firm Thoma Bravo at $13 per share - representing a valuation of $594 million.
The offer price is a 72% premium to the last closing price of Majesco U.S.
The Indian entity holds a 74% stake in the company and will hence get $421 million cash for its stake. The cash consideration is a 198% premium to Majesco's current market capitalisation.
The cash accrual for Majesco post taxation will be Rs 2,550 crore - a sum that the promoters intend to distribute to the shareholders in the form or buybacks and dividends.
Shares of Majesco are locked in an upper circuit of 5% at Rs 405.55 and are up for the sixth straight day.
Shares of Mastek, who’s U.K. business holds stake in Majesco’s U.S. business, gained as much as 20% to Rs 509.
Opening Bell: Fifth Day Of Gains
Indian equity markets opened higher for the fifth straight day, as the rally continues to reach pre-Covid levels.
The S&P BSE Sensex opened 1.1% higher at 37,823 while the NSE Nifty 50 index opened 0.9% higher at 11,126. The Nifty 50 ended above the mark of 11,000 on Monday for the first time after March 5 this year.
Among sectoral indices, the Nifty Bank opened 1.4% higher while the PSU Bank index outperformed, opening with gains of 2.6%. The I.T. index gained another 1% while others traded with gains between 0.5-1%.
Broader markets have opened in-line with benchmarks. The Midcap index opened 0.9% higher while the smallcap index opened with gains of 0.7%.
Market breadth has opened in favour of the advances. 1,147 stocks on the NSE opened with gains while 325 declined.
Latest On The Coronavirus
- Global cases cross 14.6 million
- Death toll rises to 6.08 lakh
- A vaccine developed by University of Oxford and AstraZeneca showed promising results in early human testing
- Japan sees no need for emergency declaration even as cases in Tokyo climb past 200 with 230 new cases reported.
- 374 new infections detected in Australia's Victoria over the last 24 hours
- 8 more cases reported from Xinjiang province
- Texas reported 7,404 new cases and 62 deaths, below the seven-day average
- California reports 1.8% rise in new cases, slower than the seven-day average of 2.7%
Top Reads On Bloombergquint.com
Also Read: India’s Tribe Of Women Borrowers Is Growing
How Did The Fund Flows Fare On Monday
Key Stocks In Focus
- Majesco: The company's U.S. subsidiary has signed a definitive agreement to be acquired by Thoma Bravo LP, a PE firm focused on software and technology-enabled services. The transaction s the company at $594 million. It will now operate as a privately held company. Shareholders will receive $13.1 in cash for each share of the company common stock upon closing of the transaction. The price is a 74% premium to the average closing price during the 30-day period ended July 17. The gross to be received by the company for its stake in the U.S. subsidiary in the merger is $420.66 million, as compared to the total investments of $68.67 million made by the company in its U.S. subsidiary till date.
- InterGlobe Aviation: IndiGo, impacted by the pandemic, is flying only a small percentage of its fleet of 250 airplanes and will cut 10% of its workforce, CEO Ronojoy Dutta said in a statement. Impacted employees will be given a severance pay while medical insurance has been extended till December.
- Gateway Distriparks: The board approved a raising funds not exceeding Rs 150 crore on a rights basis, QIP and preferential allotment or any other combination thereof. Out of which, the board will issue 16.1 crore shares worth Rs 116 crore for its rights issue at a price of Rs 72 per share. The rights entitlement ratio has been fixed at 4 rights equity shares for every 27 equity shares held by the eligible shareholders. The record date for the same has been fixed at July 24. The issue opens on July 30 and closes August 13. The rights issue price is a 20% discount to Monday's closing price.
- ACC: Consolidated revenue fell 37.3% during the second quarter of calender year 2020. Net profit fell 40.5% while Ebitda declined 33% compared to last year. Volumes declined 33.3% while realisations and Ebitda per tonne remained flat. Other costs declined by Rs 200 crore on a sequential basis.
- Nifty Earnings Today: Hindustan Unilever, Bajaj Finance, Bajaj Finserv, Axis Bank
- Non-Nifty Earnings Today: HDFC Life, ICICI Prudential, SBI Life, Syngene, Tata Elxsi, Polycab, IndiaMART InterMESH, Hindustan Copper, Hindustan Zinc, Mahindra CIE, Somany Home Innovation.
For all that you need to know going into trade today, click here.
Your Trade Setup For The Day
A Check On Indian ADRs
U.S. Markets On Monday
- Stocks advance to the highest since February
- S&P 500 turns positive for the year
- Nasdaq jumped to a record high aided by Amazon, Zoom
- U.S. Dollar falls to a six-week low
- Bloomberg survey says unemployment can hit almost 10% by the end of the year
- New York governor Andrew Coumo threatened to close down all bars and restaurants if large street gatherings continue
- Yield on the 10-year treasury stood at 0.61%
- West Texas Intermediate crude rose 0.2% to $40.68 per barrel
Get your daily fix of the global markets here.
Fifth Day Of Gains Likely
Good Morning!
Indian equity markets ended with gains on Monday, led by information technology stocks, Britannia Industries Ltd. and private banks.
On Tuesday, the Singapore-traded SGX Nifty, an early indicator of the Nifty 50 Index’s performance in India, rose 0.8% to 11,110 as of 7:40 a.m.
Earnings will take centre stage in this session. Four Nifty 50 companies — Hindustan Unilever Ltd., Axis Bank, Bajaj Finance Ltd. and Bajaj Finserv Ltd. will report their results for the quarter ended June. Private insurers HDFC Life and ICICI Prudential, too, will be reporting numbers on Tuesday.
Asian markets have opened higher in this session, after technology stocks fueled yet another day of gains on Wall Street. Markets in Australia, Japan, South Korea were up over 1%, while those in Japan and China saw modest gains.
Futures on the Dow Jones are flat. Nasdaq hit a record high, aided by gains in Amazon and Zoom.
West Texas Intermediate crude was little changed at $40.83 per barrel.
Short on time? Well, then listen to this podcast for a quick summary of All You Need To Know before the opening bell.
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