KEY HIGHLIGHTS
Closing Bell: A Swift Recovery
Indian equity markets ended higher for the second day, ending the weekly options expiry session on a strong note, led by a last hour recovery in banking and pharma stocks.
The S&P BSE Sensex ended 1.16% higher at 36,471 while the NSE Nifty 50 index ended at 1.15% higher at 10,739.
Gains were mostly led by Infosys - which ended 9.5% higher for its biggest single-day gain in four months. BPCL, Cipla also contributed to the recovery, ending 7% and 5.5% higher respectively.
Among the sectoral indices, the Nifty Bank recovered nearly 600 points from the day's low to end with gains of 1.2%, courtesy a reversal in private lenders like Axis Bank, Kotak Mahindra Bank and IndusInd Bank.
Although off the day's high, the I.T. index ended as the top performer for the second day in a row, ending with gains of 2.8%.
The media index was the only sectoral laggard, ending 1.65% lower. Broader markets underperformed in today's trade. The Midcap index ended 0.5% higher while the Smallcap index ended 0.1% lower.
Market breadth ended in favour of the declines. 1,072 stocks on the NSE ended with losses while 743 stocks gained.
How Did The Sectoral Indices Fare
Top Nifty Laggard: Bharti Infratel
- Biggest single-day decline in a month
- Falls as much as 7.3% to Rs 189
- Trades at the lowest level in two months
- Down for the third straight day
- Has declined in eight out of the last nine trading sessions
- Down 17% in the last nine trading sessions
- Today's volumes are 1.3 times higher than its 30-day average
- Breaks below its 100-Day Moving Average of 197.8
- Has declined 30% from its 52-week high of Rs 296.5 on December 2, 2019
- 10 out of the 25 analysts tracking the stock have a buy recommendation; 6 sell calls
- Return potential of the stock as per Bloomberg data is 5.3%
Stock Reaction: NTPC
The power generation company has signed an MoU with the National Investment and Infrastructure Fund (NIIF) to explore opportunities for investments in areas like renewable energy, power distribution among others.
The company targets to have nearly 30 GW of its overall power generation capacity from renewable energy sources by 2032, it said in an exchange filing.
Share are off the day's low, after falling as much as 2.5% to Rs 85.85.
Nifty Bank Surges Towards The Day's High
Buzzing Stock: L&T Finance Holdings
- Falls as much as 4.1% to Rs 58.3
- Trades at the lowest level in over a month
- Down for the seventh straight day
- Longest losing streak since February 2016
- Has declined 16% in the last seven trading sessions
- To report first quarter earnings today
- Today's volumes are at its 20-day average
- Has more than halved from its 52-week high of Rs 134 on February 11, 2020
- 11 out of the 17 analysts tracking the stock have a buy recommendation; 3 sell calls
- Return potential of the stock as per Bloomberg data is 24.5%
Active Stock Options
- Infosys' 900 Put: Premium down 62.3% to Rs 27.7. The contract has added 19.23 lakh shares in Open Interest.
- TCS' 2,300 Call: Premium down 3.7% to Rs 27.3. The contract has shed 1.23 lakh shares in Open Interest.
- Reliance Industries' 2,000 Call: Premium down 37% to Rs 18. The contract has added 50,500 shares in Open Interest.
Outcome of Board Meeting: Marico
The company has approved the scheme of amalgamation between a wholly-owned subsidiary Marico Consumer Care and itself.
The company has also accepted the resignation of CFO Vivek Karve, effective from September 10, 2020.
The board has appointed Pawan Agarwal as the company's new CFO.
Shares recovered from the day's low and now trade 0.2% higher at Rs 344.95.
Stock Reaction: Dilip Buildcon
The company has informed the exchanges that it its joint venture with HCC has received a Letter of Acceptance (LoA) for a new EPC project in Jharkhand.
The 21 km project was awarded at a bid project cost of Rs 1,900 crore and has to be completed within 48 months, the company said in an exchange filing.
Shares recovered from the day's low, gained as much as 2.2% and then cooled off. The stock now trades 0.3% higher at Rs 279.25.
Markets At 2:10 P.M.
- Benchmark indices consolidate
- Nifty up 0.3% at 10,654
- Sensex up 0.4% at 36,185
- Nifty Bank little changed at 21,321
- Nifty Midcap Index up 0.1%
- Nifty Smallcap index down 0.6%
- India Volatility Index down 2.7% at 25.58
- Nifty I.T. significantly off the day's high; now up 1.8%
- Nifty Pharma turns positive; up 1.55%
- Nifty Auto holds on to gains of 0.8%
- Nifty Media remains 2% lower
- Infosys remains the top Nifty gainer; up 8.4%
- Bharti Infratel extends losses as the top Nifty laggard; down 5.9%
- 582 stocks on the NSE trade with gains while 1,209 decline
Money Market Update
The rupee ended little changed in today's session despite weakness in the U.S. Dollar overnight.
The currency ended at 75.19 against the greenback as compared to Wednesday's close of 75.15. It made an intraday low of 75.29 in today's session, before recovering some lost ground.
Today's performance meant the rupee ended as the second best performing currency in Asia behind the Hong Kong Dollar.
Yield on the 10-year government bond ended at 5.812% as compared to Wednesday's close of 5.813%.
Covid-19 Impact: RCF
- Production of major fertilisers like Urea and Suphala have normalised at its Trombay unit.
- Delay in installation and commissioning of repaired gas generators as originally envisaged at its Thal unit. The same will now be commissioned in August 2020.
- Commissioning of Gas turbine plant at the Trombay unit now stands revised to March 2021 as compared to the original period of May-June 2020.
- Reduction in short-term borrowings post settlement of imported urea claims by the Government.
- Positive liquidity position with sufficient credit lines available.
- Owing to rationalisation of expenditure from the government, there has been delays in settlement of subsidy by the Government. Any further delay would stress working capital and borrowing costs.
Shares are trading 1.9% lower at Rs 46.85, after falling as much as 4.4%. The stock is down for the fifth straight day.
Earnings Reaction: Bajaj Consumer Care
- Revenue down 18% to Rs 197.6 crore
- Net profit down 4% to Rs 54.2 crore
- Ebitda down 17% to Rs 57.1 crore
- Ebitda margin at 28.9% from 28.5%
- Volume de-growth of 17.6% during the quarter
- Gross margins at 63.6%
- E-commerce channels leveraged to drive sales
- Hair oil market sees volume de-growth of 32.7% in April and May
- All numbers are consolidated and compared on a year-on-year basis
Shares ended locked in a 20% upper circuit at Rs 180.45.
Buzzing Stock: Avenue Supermarts
- Among the worst performers on the Nifty Smallcap index
- Falls as much as 7.7% to Rs 1,980
- Biggest single-day fall since January 2019
- Trades at the lowest level in four months
- Down for the fourth straight day
- Has declined 14% in the last four sessions
- Falls below its 200-Day Moving Average of 2,097
- 8 out of the 27 analysts tracking the stock have a buy recommendation; 12 sell calls
- Return potential of the stock as per Bloomberg data is 5.9%
F&O Snapshot: Active Options Contracts
- Nifty July futures add 13.5% and 12.94 lakh shares in Open Interest.
- Nifty Bank July futures add 17% and 2.7 lakh shares in Open Interest.
Nifty: Today's Expiry
- 10,700 Call: Premium down 70% to Rs 8. The contract has added 53.6 lakh shares in Open Interest.
- 10,600 Put: Premium down 72.8% to Rs 10.65. The contract has added 41 lakh shares in Open Interest.
- 10,800 Call: Premium down 93% to Rs 0.6. The contract has added 43.8 lakh shares in Open Interest.
Nifty Bank: Today's Expiry
- 21,500 Call: Premium down 78.2% to Rs 25.9. The contract has added 17.7 lakh shares in Open Interest.
- 21,000 Put: Premium down 75.7% to Rs 17.8. The contract has added 16 lakh shares in Open Interest.
- 22,500 Call: Premium down 91% to Rs 0.7. The contract has added 7.45 lakh shares in Open Interest.
European Markets Open Lower
Benchmark indices in Europe have followed their Asian peers lower, after China's economic data showed a modest and uneven recovery.
Investors are awaiting the ECB policy decision later today and any potential indications on future asset purchases.
The Stoxx 600 index has opened 0.3% lower. All sectors, led by mining and food & beverage are declining.
Asian markets have ended lower, while futures on the Dow Jones now trade 150 points lower.
Brent Crude trades 0.7% lower at $43.48 per barrel while Gold is little changed at $1,807.1/Oz.
Let's take a look at how benchmarks across Europe have opened:
- Euro Stoxx 50 down 0.75% at 3,352
- DAX down 0.75% at 12,833
- CAC down 0.8% at 5,066
- FTSE 100 down 0.5% at 6,263
- IBEX 35 down 0.75% at 7,431
How Are The Sectoral Indices Faring
Stock Reaction: Tata Power
The company's wholly-owned subsidiary Tata Power Green Energy Ltd. has received a Letter of Award from Tata Power Mumbai Distribution to develop at 225 MW hybrid renewable project.
The energy will be supplied to TPMD under a Power Purchase Agreement (PPA), which will be valid for a period of 25 years from the scheduled commercial operation date.
The project is required to be commissioned within 18 months from the date of execution of the PPA, the exchange filing said.
The plant expects to generate about 700 MUs of energy per year.
Shares are off the day's low, now down 1% at Rs 46.65, down for the fifth straight day.
Only Two Gainers On The Nifty Media Index
Stock Reaction: SBI Cards & Payment Services
State Bank of India's cards business has informed the exchanges regarding the resignation of its MD & CEO, Hardyal Prasad.
Prasad has resigned from the directorship of the company owing to his voluntary retirement from State Bank of India.
Effective July 31, 2020, Prasad will also cease to be the MD & CEO of the company.
SBI has nominated Ashwini Kumar Tewari as the new MD & CEO, starting August 1, for a period of two years.
Shares are off the day's high, after gaining as much as 4% to Rs 720. The stock now trades 1.9% higher at Rs 705.6.
Markets At Noon
- Benchmark indices hold gains but remain volatile
- Nifty up 0.5% at 10,671
- Sensex up 0.7% at 36,299
- Nifty Bank off day's low; up 0.1% at 21,367
- Nifty Midcap Index down 0.1%
- Nifty Smallcap Index down 0.8%
- India Volatility Index down 2.5% to 25.62
- Nifty I.T. off day's high; up 3.6%
- Nifty Auto is the other sectoral gainer; up 0.8%
- Nifty Media down 2%
- Nifty FMCG and Nifty Metal trade 1% lower each
- Infosys remains the top Nifty gainer; up 10.6%
- Bharti Infratel is the top Nifty laggard; down 4.5%
- 530 stocks on the NSE trade with gains while 1,210 decline
Buzzing Stock: Mphasis
- Second best performing stock on the Nifty 500 index
- Trades at the highest level since October 2018
- Gains as much as 10.5% to Rs 1,099
- Biggest single-day gain since October 2015
- Up for the fifth straight day
- Has gained in eight out of the last 10 trading sessions
- Up 24% in the last 10 trading sessions
- Today's volumes are 11.9 times higher than its 30-day average
- Stock in overbought territory with Relative Strength Index (RSI) at 82
- Has gained 74% from its 52-week low of Rs 630 on March 23, 2020
- 24 out of the 34 analysts tracking the stock have a buy recommendation; 2 sell calls
- The stock trades 11.7% higher than its 12-month consensus price target of Rs 948.5, implying a negative return potential
Stock Reaction: Cadila Healthcare
Zydus Cadila has received an approval for its supplemental Abbreviated New Drug Application (sANDA) for Doxycycline Injection, 100 mg/Vial from the U.S. FDA.
The injection will be manufactured at the company's injectable facility in Vadodara, it said in an exchange filing.
The facility already has five of the company's injectable portfolio ANDAs approved from the U.S. FDA and another six await approval.
The company now has 293 ANDA approvals and has filed over 390 ANDAs, the statement said.
Shares are off the day's low, gaining as much as 1% to Rs 357.85.
Embassy Office Park REIT: Annual Report Takeaways
- Completed area of 26.2 million square feet
- Occupancy rate of 92.8% as of March 2020
- Near-term outlook may be cloudy and occupier needs may vary
- Foundations for Indian office demand remains strong for the years to come
- 80% of the occupier base is international
- Rental collections are encouraging and healthy, remain at 90%
- Office market will witness significant reduction in densities of the workplace
- See demand shifting to higher quality, lower density workspaces in the coming years
Shares gained as much as 2.55% to Rs 344.3, up for the second straight day.
Scope For Muthoot Finance To Rally Further?
Earnings Reaction: L&T Infotech
- U.S. Dollar revenue down 4.8% to $390.3 million
- Revenue down 2.1% to Rs 2,949.2 crore
- Ebitda up 2.4% to Rs 592 crore
- Ebitda margin at 20.1% from 19.2%
- BFSI revenue flat at Rs 1,324 crore
- Manufacturing revenue down 14% to Rs 466.6 crore
- Energy & Utilities revenue down 8% to Rs 317.6 crore
- Hi-Tech revenue up 3% to Rs 341.6 crore
- CPG, retail and pharma revenue up 9% to Rs 499.1 crore
- All numbers are consolidated and compared on a quarter-on-quarter basis
Shares gained as much as 6.8% to Rs 2,340.
Buzzing Stock: Prestige Estates
- Worst performer on the Realty as well as the Nifty Midcap index
- Falls as much as 8.5% to Rs 167
- Biggest single-day drop in two months
- Trades at the lowest level in over a month
- Down for the eighth straight day
- Longest losing streak since August 2016
- Has declined in 12 out of the last 14 trading sessions
- Down 22% in the last eight trading sessions
- Today's volumes are more than double of its 20-day average
- Breaks below its 50-Day Moving Average of 181.1
- Has fallen 60% from its 52-week high of Rs 426 on January 20, 2020
- 17 out of the 19 analysts tracking the stock have a buy recommendation; 1 sell call
- Return potential of the stock as per Bloomberg data is 62.3%
Nifty I.T.: Gains In Nine Out Of The Last 10 Trading Sessions
Earnings Reaction: GTPL Hathway
- Revenue up 11% to Rs 495.4 crore
- Net profit up 40% to Rs 46.4 crore
- Ebitda up 14% to Rs 122.1 crore
- Ebitda margin at 24.6% from 23.9%
- Lower finance costs aid operational performance
- Subscription revenue up 7% to Rs 265.3 crore
- Broadband revenue up 34% to Rs 52.7 crore
- Broadband ARPU was flat at Rs 422
- Paying subscribers stood at 7.2 million as of June 30
- All numbers are consolidated and compared on a year-on-year basis
During the current financial year, we plan to launch a Hybrid box, which will enable us to provide multiservice product that will have Broadband, OTT and Cable service at an attractive price point.Anirudhsinh Jadeja, Managing Director, GTPL Hathway
Shares are locked in an upper circuit of 5% at Rs 76.75. The stock has gained in three out of the four trading sessions this week.
Stock Reaction: Indiabulls Real Estate
The company informed the exchanges about the proposal from the Embassy group to merge 11 Embassy assets worth 61.9 million square feet into Indiabulls Real Estate.
The board has constituted a committee of the company to appoint merchant bankers, lawyers and rs to arrive at the swap ratio and definitive agreements. The same will be placed before the board in four weeks.
Post filing of the scheme of amalgamation with relevant regulatory authorities, Sameer Gehlaut as promoter will initiate the process of depromoterisation along with existing promoter group entities.
Once the scheme is effective, Jitendra Virwani will be the new promoter of the amalgamated company along with his other promoter entities.
Shares fell as much as 5% to Rs 57.65 and are down for the fourth straight day.
Markets At 10:10 A.M.
- Benchmark indices gain after initial fluctuation
- Nifty up 0.5% at 10,674
- Sensex up 0.74% at 36,319
- Nifty Bank down 0.75% at 21,181
- Nifty Midcap Index down 0.3%
- Nifty Smallcap Index down 0.5%
- India Volatility Index down 2% at 25.76
- Nifty Media, FMCG and realty index fall over 1% each
- Nifty Metal index declines 1% as well
- Nifty I.T. continue to remain strong; up 5.1%
- Nifty Auto is the only other sectoral gainer; up 0.6%
- Infosys is the top Nifty gainer; up 11.85%
- Bharti Infratel is the top Nifty laggard; down 4%
- 531 stocks on the NSE trade with gains while 1,135 decline
Money Market Update
India's currency opened flat in today's session after ending Wednesday's session with gains despite volatility in the equity markets.
The rupee opened at 75.20 against the U.S. Dollar as compared to Wednesday's close of 75.15. It was the second best performing currency in Asia on Wednesday.
India returned to a trade surplus for the first time in 18 years with imports falling more than exports. A goods trade surplus is not likely to continue, according to Barclays Bank, as domestic demand gradually recovers.
Yield on the 10-year government bond opened at 5.809% as compared to Wednesday's close of 5.813%.
Within the bond markets, traders will await any OMO announcements ahead of the sale of government debt worth Rs 30,000 crore on Friday.
Earnings Reaction: Minda Corp
- Revenue down 10% to Rs 697.9 crore
- Ebitda down 53% to Rs 38.4 crore
- Ebitda margin down to 5.5% from 10.7%
- Net loss of Rs 299.7 crore from net profit of Rs 41.92 crore
- Exceptional loss of Rs 293.29 crore as impairment charge post withdrawal of financial support to its material wholly-owned subsidiary Minda KTSN Plastic Solutions GmbH, Germany
- All numbers are consolidated and compared on a year-on-year basis
Stock Reaction: Himatsingka Seide
The company has informed the exchanges that its plant in Doddaballapur in Karnataka has been shut for operations till July 21, 2020 or until further orders from the Karnataka Government.
The state government has imposed a lockdown in certain parts of the state in the wake of a rise in new Covid-19 cases.
Shares fell as much as 3% to Rs 56.3. The stock has declined in three out of the four trading sessions this week.
Coronavirus India Update
- India reports largest single-day spike in new cases
- 32,695 cases reported in the last 24 hours
- Total number of cases now at 9,68,876
- Active cases now at 3,31,146
- Number of patients cured / discharged / migrated at 6,12,815
- Death toll rises to 24,915
- 606 deaths reported over the last 24 hours
- 20,783 people recovered in the last 24 hours
Earnings Reaction: Infosys
The I.T. major surpassed analyst estimates in the first quarter. While revenue in U.S. Dollar terms fell 2.4%, in rupee terms it saw a growth of 1.4%.
Operational performance was strong with Ebit rising 8.9% and margins expanded to 22.7% from 21.2% in the previous quarter.
The management reinstated its guidance for the year. It now expects revenue growth of 0-2% in constant currency terms. It also expects operating margins to range between 21-23% for FY21.
Brokerages like CLSA and JPMorgan have raised their respective price targets on the stock to Rs 1,000 while Macquarie has raised its price target to Rs 910 from Rs 751.
Shares gained as much as 10% to an all-time high of Rs 914.55.
Opening Bell: Gains Given Up
Indian equity markets began the weekly options expiry session on a volatile note, giving up gains in the early minutes of trade.
The S&P BSE Sensex opened 1% higher at 36,401 while the NSE Nifty 50 index has opened 0.83% higher. Both benchmarks gave up gains soon after.
A last hour sell-off in Reliance Industries led to benchmark indices giving up most of their sessions gains on Wednesday to end little changed.
Among the sectoral indices, the I.T. index has opened 3% higher led by a strong surge in Infosys while the rest of the indices have opened flat.
Broader markets too have opened with modest gains. The midcap index has opened 0.4% higher while the smallcap index has opened 0.3% higher.
Market breadth stood in favour of the advances at the moment. 873 stocks on the NSE opened with gains while 514 declined.
Latest On The Coronavirus
- Total cases cross 13.5 million globally
- Death toll crosses 5.83 lakh
- Tokyo lifts virus alert to highest level
- Texas recorded 10,971 new cases
- Overall cases in U.S. rise to 3.47 million
- 280 cases reported in Tokyo
- 317 new cases reported in Victoria, Australia
- 11,126 cases reported in California
- Ireland delays pub reopening plans
- Oxford vaccine trial to report positive news
Top Reads On Bloombergquint.com
How Did The Fund Flows Fare On Tuesday
Key Stocks In Focus
- Infosys: U.S. Dollar revenue down 2.4% sequentially while Ebit rises 8.9%. Ebit margin rose to 22.7% from 21.2% in the previous quarter. BFSI, communications, energy and Hi-Tech segment revenue increased. FY21 revenue growth guidance in the range of 0-2% in constant currency terms. Expects FY21 operating margin between 21-23%.
- State Bank of India: Board approves raising additional tier-I capital up to Rs 4,000 crore and fresh tier-II capital up to Rs 10,000 crore. It will redeem Rs 11,015 crore of existing tier-II bonds with call dates in FY21 and sell new bonds to replace them. The bond sale for redemption will be over and above the proposed tier-II capital raising.
- Yes Bank: FPO subscribed 24% on day 1. Retail book subscribed 9% while the Qualified Institutional Buyers (QIB) portion was subscribed 66%.
- Power Grid, GAIL: Provisional demand notices towards license fee have been withdrawn by the Department of Telecommunications.
- Covid-19 Impact On Manappuram Finance: May be able to withstand the impact of the pandemic. Lenders continue to roll over credit lines and have also extended additional finance. Expect to maintain profitability of its gold loan business. However, the negative impacts of the pandemic may impact profitability of its vehicle finance, MSME finance and housing finance business. Made additional provisions of Rs 70.25 crore for the quarter ended March, towards expected credit losses.
- Cochin Shipyard: Signed contracts for construction and supply of two Autonomous Electric Ferry for ASKO Maritime AS, Norway, with an option to build two more identical vessels.
- Indiabulls Real Estate: Received proposal from the Embassy Group for the merger of the group's residential and commercial assets aggregating to 61.9 million square feet into the company. On filing the scheme of amalgamation with the relevant regulatory authorities, Sameer Gehlaut, as promoter, along with other existing promoter group entities shall initiate the process of de-promoterisation. Once that is effective, Jitendra Virwani along with other promoter entities of the Embassy Group will be the new promoters of the amalgamated company.
- Non-Nifty Earnings Today: AB Money, Bajaj Consumer Care, Cyient, L&T Finance, L&T Technology.
- IPO Update: Rossari Biotech’s IPO received 79 times demand on the last day of the offer.
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Your Trade Setup For The Day
A Check On Indian ADRs
U.S. Markets On Wednesday
- Benchmark indices rise to the highest in a month
- S&P 500 ends 0.9% higher, briefly turns positive for the year
- Dow Jones ended 0.9% higher while the Nasdaq gained 0.6% after fluctuating for most parts of the day
- MSCI All-Country World Index gained 1.1% to Rs 549.55 - the highest in five months
- Bloomberg Dollar spot index fell 0.4% to the lowest in five weeks
- Yield on the 10-year treasury stood at 0.63%
- West Texas Intermediate crude gained 1.8% to $41.03 per barrel
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Stock Specific Activity To Be In Focus
Good Morning!
The weekly options contracts for the Nifty and Nifty Bank are set to expire on Thursday. The benchmark indices gave up gains of as much as 2% to end flat on Wednesday.
That was mainly dragged by the selloff in Reliance Industries Ltd. after the oil-to-telecom conglomerate delayed its plan to sell a stake to Saudi Aramco. The index heavyweight ended 4% lower.
The Singapore-traded SGX Nifty, an early indicator of the Nifty 50 Index’s performance in India, was flat at 10,662 as of 7:40 a.m. on Thursday.
Markets are expected to react to Infosys' first-quarter results. Most brokerages have maintained their bullish stance on the stock and raised their price targets.
Other mid-cap IT stocks such as Cyient, L&T Technology Services and consumer firms like Bajaj Consumer will report earnings on Thursday.
Across the Asia-Pacific, markets are trading mixed with equities dipping in Japan and Australia, while Chinese shares gained and those in South Korea fluctuated.
Futures on the Dow Jones are trading lower by 40 points after the index ended higher on Wednesday.
The U.S. dollar fell, treasuries little changed while West Texas Intermediate crude was flat at $41.15 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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