Decoding The Markets This Week
Closing Bell: A Strong Close
A last-hour surge led to Indian equity markets posting a fifth straight weekly advance, the longest weekly winning streak since April 2019.
The S&P BSE Sensex ended 1.5% higher at 37,020 while the NSE Nifty 50 index ended 1.75% higher at 10,927. Benchmark indices gained in four out of the five trading sessions this week.
Among the sectoral indices, banking and auto stocks ended near the highest point of the day, with gains of 1.7% each.
The PSU Bank index was the top performing index in today's session, ending with gains of 1.8%. The I.T. index was the only sectoral index to have ended with losses of 0.6%.
Broader markets performed in-line with benchmarks. The midcap and smallcap indices ended with gains of 1.4% each.
The India Volatility Index ended 5.4% lower, below the mark of 24 at 23.99.
Market breadth was in favour of the advances. 1,219 stocks on the NSE ended with gains while 598 posted losses.
For the week, the Sensex ended 1.2% higher while the Nifty gained 1.24%.
Pandemic May Boost Accuracy Of Analysts
ICICI Securities says that the pandemic may help improve the accuracy of India's analysts, Bloomberg News reports.
The brokerage house says that the consensus one-year forward forecast for EPS on the Nifty 50 index has been overestimated by about 20% on average since 2014.
Analysts have slashed their forward earnings estimate for the Nifty index for FY21 by 30% so far.
Companies on the Nifty index saw its profit slump 53% year-on-year for the quarter ending while consensus estimates were for a 7.4% gain.
More Worries For Airlines?
I.T. Index Is The Biggest Sectoral Laggard
Earnings Reaction: L&T Finance Holdings
- Net Interest Income down 15.7% to Rs 1,408.9 crore
- Net profit down 73% to Rs 148.3 crore
- Exceptional gain of Rs 225.6 crore on divestment of entire stake in L&T Capital Markets
- Incremental provision of Rs 577 crore out of which provision for Covid-19 is Rs 277 crore
- Moratorium on retail lending book at 44% from 79% in the previous quarter
- Provision Coverage Ratio at 69% from 58%
- 19% increase in Farm Equipment units financed during June
- Gross Stage 3 assets at 5.24% from 5.72%
Shares gained as much as 2.93% to Rs 61.5.
Active Stock Options
- Reliance Industries' 2,000 Call: Premium up 50% to Rs 28.47. The contract has shed 6.1 lakh shares in Open Interest.
- Britannia's 4,000 Call: Premium down 40% to Rs 63.75. The contract has added 1.83 lakh shares in Open Interest.
- Infosys' 900 Put: Premium up 3.1% to Rs 24.65. The contract has added 4.6 lakh shares in Open Interest.
Buzzing Stock: BPCL
- Top gainer on the Nifty 50 index
- Gains as much as 12.9% to Rs 444.6
- Biggest single-day gain since March 31, 2020
- Trades at the highest level in nearly five months
- Up for the second straight day
- Adds to Thursday’s gain of 6.6%
- Has gained 19% in the last two trading sessions
- Today's volumes are nine times higher than its 20-day average
- Trades in overbought territory with Relative Strength Index (RSI) at 73
- Has gained 76% from its 52-week low of Rs 252 on March 24, 2020
- 34 out of the 40 analysts tracking the stock have a buy recommendation; 1 sell call
- The stock now trades 1.6% above its 12-month consensus price target of Rs 435.7, implying a negative return potential.
Markets At 2:10 P.M.
- Benchmark indices set to post yet another weekly gain
- Nifty up 0.74% at 10,818
- Sensex up 0.66% at 36,711
- Nifty Bank up 0.1% at 21,626
- Nifty Midcap Index up 1%
- Nifty Smallcap Index up 1.1%
- India Volatility Index down 3% to 24.59
- Nifty I.T. remains top sectoral laggard; down 0.8%
- Nifty Metal remains the top sectoral gainer; up 1.9%
- Nifty Auto, Nifty Pharma up 1% each
- BPCL extends gains as top Nifty gainer; up 11.2%
- Nestle India is the top Nifty laggard; down 1.6%
- 1,174 stocks on the NSE trade with gains while 604 decline
Money Market Update
The currency ended with gains in today's trading session, capping off the week with modest advances.
The rupee ended at 75.02 against the U.S. Dollar, as compared to Thursday's close of 75.19.
Today's gains meant that the currency ended as the best performer in Asia, outperforming all of its peers.
On a weekly basis, the currency ended with gains of 0.25%, ending as the best performer in Asia for the week as well.
75 is acting as a crucial support, if that breaks we can see a fall towards 74.80/74.85 with 75.50 being the resistance.Rahul Gupta, Emkay Global Financial Services
Future Retail Clarifies On ET Report
- The Economic Times had reported that RIL mulls a share swap deal with Future Group
- Company say article without their verification
- No discusssion with any of the lenders to negotiate any lending terms so far other than seeking moratorium
- Not authorised any party to carry out any such negotiation
- Continue to evaluate and explore various opportunities or associations in the company's interest.
Shares are locked in an upper circuit of 5% at Rs 110.5, snapping a two-day losing streak.
Eighth Day Of Gains For The Nifty Pharma Index
Longest winning streak for the index since October 2019.
Earnings Reaction: Britannia Q1FY21
- Revenue up 27% to Rs 3,420.7 crore
- Net profit more than doubles to Rs 545.7 crore
- Ebitda up 82% to Rs 716.9 crore
- Ebitda margin at 21% from 14.6%
- Net profit aided by higher other income
- Other income up 39% to Rs 93.68 crore
- Gross margins expanded 130 basis points to 41.6% from 40.3%
- Raw Material Costs up 30% to Rs 1,776 crore
- Raw material costs as a percentage to sales at 51.9% from 50.7%
- Adjacent businesses delivered healthy profit growth
- Expect prices to be stable going forward given positive outlook on monsoon and harvest.
- Cost efficiencies, rationalisation of media spends aided operating profit this quarter.
- All numbers are consolidated and compared on a year-on-year basis
Shares have given up gains, trading little changed at Rs 3,861, post the announcement.
European Markets Open Flat
Benchmark indices across Europe have opened little changed but with a positive bias, extending a weekly advance. The EU summit on a Covid-19 rescue fund gets underway today.
The Stoxx 600 has opened 0.2% higher with auto stocks leading the gains.
Asian markets have ended mixed while futures on the Dow Jones are trading little changed.
Brent crude trades 0.6% lower at $43.12 per barrel while gold trades 0.2% higher at $1,800/Oz.
Let's take a look at how benchmark indices across Europe have opened:
- Euro Stoxx 50 little changed at 3,365
- DAX up 0.2% at 12,899
- CAC down 0.2% at 5,074
- FTSE 100 little changed at 6,254
- IBEX 35 down 0.4% at 7,444
How Are The Sectoral Indices Faring
Cotton Prices Face Pressure
Global cotton prices are set to face pressure with output in the world's biggest producer India set to climb next year, Bloomberg News reports.
Early showers in India's main growing areas spur planting which may improve yields.
The crop may total as much as 37 million bales of 170 kg each in the year beginning October 1, Arun Sekhsaria, Managing Director of DD Cotton, one of the country's biggest exporter of cotton.
India's total domestic demand is now estimated at 28 million bales in 2019-20, down more than 15% from an earlier forecast of 33.1 million bales.
Rains across the country have been 10% above normal starting June 1.
Earnings Reaction: Granules India Q1FY21
- Revenue up 24% to Rs 735.6 crore
- Net profit up 34% to Rs 111.4 crore
- Ebitda up 55% to Rs 183.6 crore
- Ebitda margin at 25% from 19.9%
- Deferred tax reversal of Rs 21.82 crore
- Other income up to Rs 5.6 crore from Rs 1.85 crore
- Release of 12.95% of pledged shares during the quarter
- 3.64% of the total shareholder equity remains pledged currently
- First interim dividend of 25 paise per share
- Regulated markets like North America and Europe contributed to 71% of the total revenue
- All numbers are consolidated and compared on a year-on-year basis
Our first quarter performance gives us confidence that we are on track to end the year as per the plan, we expect to maintain our focus on delivering increased shareholder value.Krishna Prasad Chigurupati, Chairman & MD, Granules India
Shares gained as much as 3.62% to Rs 254.70, post the announcement.
Markets At Noon
- Benchmark indices continue to consolidate
- Nifty up 0.6% at 10,808
- Sensex up 0.5% at 36,664
- Nifty Bank up 0.25% at 21,651
- Nifty Midcap Index up 1.1%
- Nifty Smallcap Index up 1%
- India Volatility Index down 2.8% to 24.65
- Nifty I.T. is off the day's low; down 0.2%
- Nifty Metal remains top sectoral gainer; up 2.2%
- Nifty Auto up 1.3% while FMCG index up 1%
- BPCL is the top Nifty gainer; up 6.3%
- Axis Bank is the top Nifty laggard; down 1.5%
- 1,160 stocks on the NSE trade with gains while 565 decline
Indian Fuel Sales Drop For The First Time After Lockdown Eased
Sale of Gasoline and Diesel by the country's top three fuel retailers fell during the first half of July, Bloomberg News reports.
This is the first instance of sales dropping since the nationwide lockdown to combat the Covid-19 pandemic was eased in May.
Diesel sales fell over 18% during the July 1-15 period, as compared to the same period last month, an official requesting anonymity told Bloomberg News. Diesel sales are down 21% as compared to the previous year.
Gasoline sales during the July 1-15 period fell 7% while on a year-on-year basis, they are down 13%.
Aviation sales rose 12% while that of LPG rose 11% as compared to the previous month.
F&O Snapshot: Active Options Contracts
- Nifty July futures add 7.6% and 7.97 lakh shares in Open Interest.
- Nifty Bank July futures add 19% and 2.85 lakh shares in Open Interest.
Nifty: July 23 Expiry
- 10,800 Call: Premium up 46% to Rs 119. The contract has added 14.4 lakh shares in Open Interest.
- 10,700 Put: Premium down 40% to Rs 70. The contract has added 13.8 lakh shares in Open Interest.
- 10,900 Call: Premium up 50% to Rs 70.1. The contract has added 9.82 lakh shares in Open Interest.
Nifty Bank: July 23 Expiry
- 22,000 Call: Premium down 6.3% to Rs 253.25. The contract has added 3.71 lakh shares in Open Interest.
- 21,000 Put: Premium down 20.8% to Rs 179.5. The contract has added 2.46 lakh shares in Open Interest.
- 21,500 Put: Premium down 15.3% to Rs 353. The contract has added 1.75 lakh shares in Open Interest.
Midcap Earnings To Watch Out For
Buzzing Stock: HEG
- Gains as much as 9.5% tp Rs 795
- Biggest single-day gain in three months
- Snaps nine-day losing streak
- Nine-day losing streak was the longest in four months
- Today's volumes are more than five times higher than its 20-day average
- Has recovered 88% from its 52-week low of Rs 409.6 on March 25, 2020
- One out of the three analysts tracking the stock have a buy recommendation
- Return potential of the stock as per Bloomberg data is 29.3%
All Stocks On The Metal Index Gain
Earnings Reaction: L&T Technology Services
- Revenue down 3.9% to Rs 1,294.7 crore
- Net profit down 42.5% to Rs 117.2 crore
- Ebitda down 24.5% to Rs 205.9 crore
- Ebitda margin at 15.9% from 20.2%
- Higher employee costs impact margins
- Other income of Rs 56.5 crore in the base quarter
- Transportation segment revenue down 13% to Rs 408 crore
- Plant Engineering segment revenue down 13% to Rs 179.2 crore
- Industrial products segment revenue down 5% to Rs 251.2 crore
- Medical Devices segment revenue up 55% to Rs 165.9 crore
- Telecom and Hi-tech segment revenue flat at Rs 209.4 crore
- All numbers are consolidated and compared on a year-on-year basis
The company will also acquire Orchestra Technologies for $25 million, a sum that will be paid in tranches. The target company is a U.S.-based specialist technology solutions provider for the telecom industry.
Shares fell as much as 8.1% - the most in four months to Rs 1,325. The stock has recovered from the day's low.
Covid-19 Impact: Deepak Fertilisers
- Downstream industry continues to reel under the lockdown and has impacted production.
- CNA and DNA plants at Dahej are now fully operational post the initial disruption.
- Nitric Acid plants at Taloja running intermittently depending on market demand.
- Continue to struggle through the challenge of low availability of contract workmen, truck drivers etc. which has intermittently impacted supply chain.
- IPA demand is expected to remain stronger.
- CNA customers have gradually started operations.
- Expect to see demand revival if lockdown is eased further.
- Has adequate capital to meet requirements.
Shares gained as much as 2.45% to Rs 116.95, up for the second straight day.
Stock Reaction: PTC India & PTC India Financial Services
PTC India in an exchange filing on Thursday said that it is exploring opportunities for monetisation of its investment in PTC India Financial Services.
PTC India currently holds 65% stake and it also intends to sell the controlling stake in the financial services company.
The market of PTC India financial services stood at Rs 884 crore as on Thursday.
The last date for submission of interest is July 31, according to the exchange filing.
Shares of PTC India gained as much as 4.8% to Rs 50.45 while those of PTC India Financial Services are locked in an upper circuit of 10% at Rs 15.07.
Earnings Reaction: Cyient Q1FY21
- Revenue declined 7.6% to Rs 991.7 crore
- Net profit rose 76.2% to Rs 81.4 crore
- Impairment of non-current asset of Rs 40 crore in the base quarter
- Ebit up 22.2% to Rs 40.2 crore
- Ebit margin at 4% from 3%
- Net profit rises due to lower employee and lower other expenses along with higher other income
- Other income up 27% to Rs 684 crore
- Services segment revenue down 11% to Rs 851.7 crore
- Design-led Manufacturing segment revenue up 11% to Rs 140.4 crore
- All numbers are consolidated and compared on a quarter-on-quarter basis
Shares are off the day's high after gaining as much as 9.3% to Rs 310.8. The stock trades at the highest level in four months and is up for the fifth straight day.
Markets At 10:10 A.M.
- Benchmark indices hold on to opening gains
- Nifty up 0.5% at 10,793
- Sensex up 0.4% at 36,630
- Nifty bank up 0.65% at 21,737
- Nifty Midcap Index up 1.2%
- Nifty Smallcap Index up 1.1%
- India Volatility Index down 1.1% to 25.07
- Nifty I.T. is the only sectoral laggard; down 1%
- Nifty Metal is the top sectoral gainer; up 2.8%
- Nifty Media, Nifty Auto up over 1% each
- Bharti Infratel is the top Nifty gainer; up 4.6%
- 44 out of the 50 Nifty constituents advance
- TCS is the top Nifty laggard; down 1.8%
- 1,149 stocks on the NSE trade with gains while 496 decline
Money Market Update
The currency has opened flat today after ending Thursday's trading session on a similar note.
The rupee opened at 75.25 against the U.S. Dollar as compared to Thursday's close of 75.19.
The currency is unchanged on a weekly basis, trading similar to the closing level of July 10.
Yield on the 10-year Government bond opened unchanged at 5.813% as compared to Thursday's close of 5.814%.
Within the bond market today, traders will watch for the weekly debt auction of Rs 30,000 crore. The Reserve Bank of India will also be releasing its weekly forex data later today.
Stock Reaction: Cadila Healthcare
The drugmaker informed the exchanges of securing an approval from COFEPRIS to conduct clinical trials in Mexico with Pegylated Interferon alpha-2b to treat Covid-19.
The trialss will commence this month with dosing in patients, the company said in an exchange filing. Trials are already underway in India for the same.
Quoting recent studies, the company said that interferon alpha significantly reduces Covid-19 titers in vitro.
Pegylated Interferon alpha has the potential to reduce virus titres when given earlier in the disease. The focus is on reducing the viral load and generating virus eliminating specific immune response.Sharvil Patel, Managing Director, Cadila Healthcare
Shares gained as much as 2.1% to Rs 368.5, up for the third straight day.
Earnings Reaction: HCL Technologies
The I.T. services company reported a 7.4% decline in its U.S. Dollar revenue on a sequential basis. Net profit too fell 7.3% compared to the previous quarter.
Ebit fell 5.7% while Ebit margins contracted 40 basis points to 20.5% from 20.9% in the previous quarter. Revenue was in-line with consensus estimates while net profit was ahead of analyst projections.
The company has re-introduced its guidance for the year, which it had suspended in the fourth quarter due to the Covid-19 pandemic.
It expects revenue to grow between 1.5-2.5% sequentially for the next three quarters on a constant currency basis while it expects Operating Margins to range between 19.5-20.5% for FY21.
Shares fell to the day's low, falling as much as 2.8% in opening trade, staging a recovery post that. It now trades 1.9% higher at Rs 639.50, up for the third straight day.
Coronavirus India Update
- Total confirmed cases in India cross the 1 million mark
- India reportes nearly 35,000 cases in the last 24 hours
- 34,956 new cases reported overnight
- Total cases now at 10,03,832
- Active cases at 3,42,473
- Patients cured / discharged / migrated at 6,35,757
- Death toll rises to 25,602
- 687 deaths reported in the last 24 hours
- 22,942 patients recovered in the last 24 hours
Opening Bell: A Sedate Start
Indian equity markets opened little changed as markets look to end yet another week with gains.
The S&P BSE Sensex opened 0.2% higher at 36,547, while the NSE Nifty 50 index opened 0.1% higher at 10.752.
Both benchmark indices have gained in three out of the last four sessions this week.
Among the sectoral indices, Nifty I.T. is the only laggard, opening lower by 0.6% while the Metal index is up 2 percent.
Broader markets are in-line with the benchmarks. Midcap index opened 0.7% higher while the Smallcap index gained 0.5%.
Market breadth was in favour of the advances. 1,015 stocks on the NSE opened with gains while 520 declined.
How Did The Fund Flows Fare On Thursday
A Check On Indian ADRs
More Gains In Stock?
Good Morning!
Indian equity markets managed to close the weekly options expiry session on a positive note, ending with gains of more than 1% after a volatile session on Thursday.
The Singapore-traded SGX Nifty, an early indicator of the Nifty 50 Index’s performance in India, rose 0.7% at 10,778 as of 8:30 a.m. on Friday.
Asian markets are mixed on the final trading day of the week, as the tech rally shows signs of fragility and tensions between the U.S. and China persist.
Markets in Japan and Australia have declined, while those in South Korea and Hong Kong are seeing modest gains. Markets in China have opened flat.
The U.S. dollar has dipped, treasuries are holding on to modest gains at 0.62% after mixed jobless claims from the U.S. and oil prices are retreating.
Futures on the Dow Jones are up 62 points at 26,615, and the West Texas Intermediate crude gained 0.1% to $40.79 a 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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