KEY HIGHLIGHTS
Closing Bell: Markets Fall Most In A Month
Indian equity markets has their biggest single-day drop since early-June, tracking weakness in Asian peers and sustained selling among largecap financial names.
The S&P BSE Sensex ended 1.8% lower at 36,033 while the NSE Nifty 50 index managed to hold on to the 10,600 mark, ending 1.79% lower at 10,609. Only 3 out of the 50 Nifty constituents managed to end the trading day with gains.
Selloff in banking stocks continued. The Nifty Bank ended lower for the third straight day, ending 3% lower for its longest losing streak in two months. The index has declined close to 1,500 points over the last three trading sessions.
Metals and Auto stocks were the other sectoral laggards, ending lower by 2.5% each. I.T. and realty index fell over 1% respectively.
Pharma was the only outperformer, with the Nifty Pharma index ending 0.5% higher.
Broader markets declined in today's session. The Midcap index ended 1.1% lower while the smallcap index declined 1.5%.
The India Volatility Index ended higher for the third straight day, ending 5.7% higher at 26.7. This was the biggest single-day gain for the Volatility Index in two months.
Market breadth remaind in favour of the laggards through the session. 1,368 stocks on the NSE ended with losses while 481 reported gains.
How Did The Sectoral Indices Fare
Covid-19 Impact: Bata India
- Have resumed more than 1,200 out of the 1,400 stores across the country.
- Going slow on new store openings.
- Will continue expanding into newer towns through the franchise route.
- No borrowings or outstanding loans taken by the company.
Shares gained as much as 2.86% to Rs 1,287.6, snapping a five-day losing streak.
Earnings Expectations: Wipro Q1FY21
- Total income seen 8.5% lower at Rs 14,414 crore
- Ebit seen 8.5% lower at Rs 2,322 crore
- Ebit margins seen flat at 16.1%
- Net profit seen 11.8% lower at Rs 2,069 crore
- A BQ Poll suggests I.T. services revenue seen 6.2% lower at $1,945 million
- All estimates are consolidated and compared on a quarter-on-quarter basis
Key Factors At Play For Wipro:
- Has discontinued practice of quarterly guidance for now.
- Covid-19 related disruption in business to take a toll on revenue
- Weakness expected in the BFSI vertical.
- Healthcare may mitigate some revenue weakness.
- Margins may remain steady over deferment of pay hikes.
All Constituents Of The Auto Index Decline
Buzzing Stock: Prestige Estates
- Declines as much as 4% to Rs 181.5
- Trades at the lowest level in a month
- Down for the sixth straight day
- Longest losing streak since June 2019
- Has declined in 10 out of the last 12 trading sessions
- Has declined 15% in the last six trading sessions
- Today's volumes are 24% lower than its 20-day average
- Trading at its 50-Day Moving Average of 180.6
- 17 out of the 19 analysts tracking the stock have a buy recommendation; 1 sell call
- Return potential for the stock as per Bloomberg data is 47.3%
Active Stock Options
- Reliance Industries' 2,000 Call: Premium down 10.3% to Rs 54.1. The contract has added 7.8 lakh shares in Open Interest.
- Bharti Airtel's 600 Call: Premium up 35.6% to Rs 24.9. The contract has added 11.2 lakh shares in Open Interest.
- State Bank of India's 200 Call: Premium down 37% to Rs 4.45. The contract has added 20.4 lakh shares in Open Interest.
Markets At 2:30 P.M.
- Benchmark indices continue to remain near the day's low
- Nifty down 1.76% at 10,612
- Sensex down 1.76% at 36,058
- Nifty Bank down 3.4% at 21,344
- Nifty Midcap Index down 1.1%
- Nifty Smallcap Index down 1.9%
- India Volatility Index up 5.5% to 26.63
- Nifty Pharma remains the only sectoral gainer; up 0.3%
- Nifty Auto, Media and Metal down over 2.3% each
- Nifty PSU Bank extends losses, down 3.6%
- Dr Reddy's is the top Nifty gainer; up 1.2%
- IndusInd Bank is the top Nifty laggard; down 5.5%
- 46 out of the 50 Nifty constituents decline
- 1,405 stocks on the NSE decline while 411 trade with gains
Earnings Reaction: Mindtree Q1FY21
- U.S. Dollar revenue down 9% to $253.2 million
- Revenue down 7% to Rs 1,908 crore
- Net profit up 3% to Rs 213 crore
- Ebit up 2.4% to Rs 262 crore
- Ebit margin at 13.7% from 12.5%
- Retail, CPG and Manufacturing revenue down 6% to Rs 392.7 crore
- BFSI revenue down 8% to Rs 387.9 crore
- Communications, Media and Technology revenue up 10% to Rs 973.7 crore
- Travel & Hospitality revenue down 54% to Rs 154.5 crore
- Order book of $391 million
- Added six new clients during the quarter
- All numbers are consolidated and compared on a quarter-on-quarter basis
Shares ended 3.45% lower at Rs 973, down for the second day in a row.
Money Market Update
The currency ended weak in today's session, marking its biggest single-day drop in nearly a month.
The rupee ended at 75.43 against the U.S. Dollar, as compared to Monday's close of 75.19.
Three of the rupee's peers underperformed the currency in today's session. The Offshore Chinese Renminbi, South Korean Won and the Thai Baht ended lower than the rupee.
Yield on the 10-year bond ended at 5.82% as compared to Monday's close of 5.786%.
Google In Talks For Jio Platforms Investment
Google is in advanced talks to buy a stake in Jio Platforms, Bloomberg News reports citing people familiar with the matter.
The technology giant has been discussing an investment of about $4 billion, sources said, adding that the announcement could come as soon as the next few weeks.
Details of the potential deal could change and negotiations can fall apart, the sources said.
Representatives of Google and Reliance Industries did not respond to Bloomberg News' request for a comment.
Shares of Reliance Industries recovered from the day's low of 2.5% and are now trading 0.6% lower at Rs 1,924.
Stock Reaction: Dr Reddy's Laboratories
The company has announced the launch of the Over-the-Counter Nicotine Polacrilex Lozenges, the store brand version of Nicorette Lozenges in the U.S. Market.
The Nicotine Lozenges brands and store brand market had total retail sales of nearly $200 million for the most recent 12-months ending May 2020, according to IRI.
Nicorette is a trademark of GSK Consumer Healthcare, the exchange filing said.
This launch truly demonstrates our ability to deliver on more complex dosage forms for the benefit of consumers who wish to quit smoking by reducing withdrawal symptoms, including nicotine cravings.Marc Kikuchi, CEO - North America Generics, Dr Reddy’s Labs
Shares recovered from the day's low to gain as much as 1.24% to Rs 3,948, post the announcement. It is currently the top gainer on the Nifty 50 Index.
Buzzing Stock: RBL Bank
- Worst performer on the Nifty Midcap index
- Falls as much as 8.3% to Rs 163.1
- Biggest single-day fall in two months
- Trades at the lowest level in a month
- Down for the third straight day
- Longest losing streak in two months
- Has declined 13% in the last three trading sessions
- Today's volumes are 0.9 times higher than its 30-day average
- Breaks below its 100-Day Moving Average of 169.3
- Was at a 52-week high of Rs 647 on July 15, 2019; Has declined 75% since then
- 20 out of the 31 analysts tracking the stock have a buy recommendation; 7 sell calls
- Return potential of the stock as per Bloomberg data is 11.8%
All Constituents Of The Nifty Bank Decline
Earnings Reaction: Century Textiles Q1FY21
- Revenue down 54% to Rs 409.7 crore
- Net loss of Rs 36.3 crore from net profit of Rs 69.35 crore
- Ebitda down 84% to Rs 30.1 crore
- Ebitda margin at 7.3% from 21.6%
- Deferred tax outgo of Rs 12.1 crore this quarter
- Textiles segment revenue down 72% to Rs 54.32
- Pulp and Paper revenue down 52% to Rs 299.5
- Real Estate revenue flat at Rs 36.03 crore
Management Commentary:
- This quarter is an unusual one and cannot be compared with any of the previous quarter.
- Pulp and Paper division had a capacity utilisation of 57% despite the pandemic.
- Textile division forayed into masks under the BIRLA-CARE brand which got orders of more than 1 million pieces.
- Sales volume for pulp and paper business were low at 54,725 MT
- Textile business achieved capacity utilisation of 50% mainly due to fulfillment of U.S. export orders.
Shares of the company ended 3.5% lower at Rs 300.70.
Europe Follows Asia Lower
Benchmark indices in Europe snapped a three-day gaining streak, opening with losses, in-line with their peers in Asia.
The Stoxx 600 opened 1.2% lower with losses led by technology and travel stocks. Real Estate and Telecom stocks outperformed.
Asian markets have ended lower while futures on the Dow Jones are trading higher by 130 points and near the day's high.
Brent Crude trades 1.3% lower at $42.17 per barrel while Gold is little changed at $1,800/Oz.
Let's take a look at how benchmarks across Europe have opened:
- Euro Stoxx 50 down 1.2% at 3,309
- DAX down 1.2% at 12,648
- CAC down 1.43% at 4,986
- FTSE 100 down 0.9% at 6,119
- IBEX 35 down 1.2% at 7,338
How Are The Sectoral Indices Faring
Duty On Synthetic Rubber Import From South Korea
India has imposed a basic customs duty of 10% on polybutadiene rubber from South Korea, Bloomberg News reports citing a CBIC notification.
The duty will be in place until January 28, 2021. The government has withdrawn a concessional customs duty applicable under the comprehensive economic partnership agreement for 200 days.
The Directorate General of Trade Remedies (DGTR) investigated imports of polybutadine rubber from South Korea and concluded that the domestic industry has suffered serious injury due to the concessions granted to Korean imports.
Stock Reaction: City Union Bank
The private lender announced on Monday that it will raise further capital to the tune of Rs 600 crore through a QIP, subject to shareholder approval.
The lender had secured shareholder approval last year to raise funds worth Rs 500 through a QIP, but had not utilised the same, the exchange filing said.
The bank will also raise Rs 500 crore through issue of unsecured perpetual debt instruments, NCDs, Basel-III compliant Tier-I and Tier-II bonds or other such debt securities, on a private placement basis.
Shares fell as much as 3.3% to Rs 123.5, down for the third straight day.
June WPI At -1.81%
The Wholesale Price Index fell 1.81% in the month of June, as compared to a 3.21% decline in May, the Ministry of Commerce and Industry stated.
18 analysts surveyed by Bloomberg had expected the WPI to decline 2.4% this month, with estimates ranging between a decline of 1.5% to a decline of 3.6%.
Primary article prices fell 1.21% compared to last year, while that of fuel, power and lighting fell 13.6%.
Wholesale food prices rose 2.1% year-on-year while Manufactured product prices were flat compared to the previous year.
Markets At Noon
- Benchmark indices extend losses; near day's low
- Nifty down 1.42% at 10,649
- Sensex down 1.37% at 36,184
- Nifty Bank down 2.7% at 21,494
- Nifty Midcap Index down 1.2%
- Nifty Smallcap Index down 1.7%
- India Volatility Index up 6% to 26.76
- Nifty Pharma is the only sectoral gainer; up 0.2%
- Nifty PSU Bank extends losses; down 3.2%
- Nifty Auto, Nifty Metal decline over 2% each while Nifty Media falls 1.7%
- Bharti Airtel is the top Nifty gainer; up 1%
- IndusInd Bank is the top Nifty laggard; down 4.6%
- 45 out of the 50 Nifty constituents decline
- 395 stocks on the NSE trade with gains while 1,356 decline
Ahead Of The RIL AGM
Stock Reaction: Phoenix Mills
The company informed the exchanges on Monday that the Board of Directors have approved raising of funds not exceeding Rs 1,100 crore through issue of equity shares, NCDs or through any other option on a preferential basis or through private placement or any other permissible mode.
It will also issue up to a maximum of 15.62 lakh equity warrants, convertible into a maximum of 15.62 lakh equity shares having a face of Rs 2 each worth Rs 100 crore.
The warrants will be issued to a promoter group entity - Ashok Apparels, at a premium of Rs 638 per share, as per the exchange filing. The conversion option can be exercised at any time during the period of 18 months from the date of allotment.
Shares fell as much as 3.6% to Rs 571.65, down for the second straight day.
F&O Snapshot: Active Options Contracts
- Nifty July futures add 5.8% and 6.7 lakh shares in Open Interest.
- Nifty Bank July futures add 1.6% and 27,750 shares in Open Interest.
Nifty: July 16 Expiry
- 10,700 Put: Premium up 170.1% to Rs 119.8. The contract has shed 6.4 lakh shares in Open Interest.
- 10,800 Call: Premium down 63.6% to Rs 33.9. The contract has added 23.55 lakh shares in Open Interest.
- 10,600 Put: Premium up 180% to Rs 64.7. The contract has added 4.25 lakh shares in Open Interest.
Nifty Bank: July 16 Expiry
- 21,500 Put: Premium up 214.8% to Rs 332.45. The contract has added 33,120 shares in Open Interest.
- 21,000 Put: Premium up 288.2% to Rs 145.95. The contract has added 1.45 lakh shares in Open Interest.
- 22,000 Call: Premium down 67.2% to Rs 148.8. The contract has added 5.9 lakh shares in Open Interest.
Buzzing Stock: Tata Communications
- Among top performers on the Nifty 500 index
- Trades at an all-time high
- Locked in a 5% upper circuit at Rs 700.3
- Second straight day of upper circuit
- Up for the fourth straight day
- Has gained in eight out of the last 10 trading sessions
- Up 12.3% in the last four trading sessions
- Today's volumes are 0.8 times higher than its 30-day average
- Stock in overbought territory with Relative Strength Index (RSI) at 81
- The stock has now gained more than 3.5 times from its 52-week low of Rs 200 on March 19, 2020
- Two out of the six analysts tracking the stock have a buy recommendation; 0 sell calls
- The stock now trades 10.9% higher than its 12-month consensus price target of Rs 623.1, implying a negative return potential
Covid-19 Impact: JMC Projects
- Construction activities have resumed in most of the projects.
- There has been a significant fall in workmen count across project sites.
- Scale of work progress is yet to get back to pre-Covid-19 situation.
- Business is expected to normalise by Q2FY21 upon resumption of free movement of migrant workmen.
- Company is taking appropriate measures including invoking the force majeure conditions and change in law simultaneously to take care of Covid-19 related impact.
- Do not expect any issue in servicing of debt.
- Revenue and profit will decline in Q1FY21.
Shares fell as much as 4% to Rs 48, down for the fifth straight day.
June Auto Sales Data From SIAM
- Passenger car sales down 58% to 55,497 units
- Passenger vehicle sales down 49.6% to 1,05,617 units
- Utility Vehicle sales down 31.1% to 45,201 units
- Scooter sales down 47.37% to 2,68,811 units
- Motorcycle sales down 35.2% to 7,92,970 units
- Two-wheeler sales down 38.56% to 10,13,431 units
Stock Reaction: Balaji Telefilms
The television and web content production company informed the exchanges of the shoot of all its television shows being halted.
Shoot came to a halt as one of the actors tested positive for Covid-19, the company said in a statement.
Shooting of all the shows under the production house continue to be on hold till further notice, the company said.
Shares are at the lowest point of the day, down 3.7% to Rs 75.4, down for the second straight day.
All Constituents Of The PSU Bank Index Decline
Brokerage Reaction: BHEL
Shares of the utility company are declining after brokerage house Citi downgraded the stock to sell from neutral.
Citi's Rationale behind the downgrade:
- Valuations unappealing post recent rally
- Risks to cash flows and profits
- Adverse industry trends to not only continue in medium-term but worsen in the short-term
- Expect Q1FY21E revenue to decline ~30% year-on-year
- See increased pressure on cash flows and mounting receivables
- Open 30-day negative catalyst watch on the stock
Shares fell as much as 9.6% to Rs 38.50. Citi has maintained its price target of Rs 34 on the stock. It is also the worst performing stock on the Nifty Midcap Index.
Markets At 10:10 A.M.
- Benchmark indices remain near the day's low
- Nifty down 0.75% at 10,721
- Sensex down 0.75% at 36,421
- Nifty Bank down 1.8% at 21,688
- Nifty Midcap Index down 0.5%
- Nifty Smallcap Index down 1%
- India Volatility Index up 3% to 26
- Nifty PSU Bank remains top sectoral laggard; down 2%
- Nifty Auto, Nifty Metal fall over 1% each
- Nifty I.T. and Nifty Pharma are the only two sectoral gainers; up 0.5% each
- HCL Technologies is the top Nifty gainer; up 1.7%
- IndusInd Bank is the top Nifty laggard; down 3.5%
- 481 stocks on the NSE trade with gains while 1,180 decline
Money Market Update
The currency opened weak in today's session after ending little changed on Monday. The rupee opened at 75.33 against the U.S. Dollar as compared to Monday's close of 75.19.
Retail inflation in June rose to 6.09% as compared to analyst estimates of 5.3%. The government will release Wholesale Price Inflation data today.
Within the bond markets, traders will look forward to the sale of state government bonds worth Rs 11,250 crore.
Earnings Reaction: 5Paisa Capital
- Reports quarterly profit for the first time since launch.
- Net profit of Rs 2.73 crore from net loss of Rs 55 lakh
- Total consolidated income up 85% to Rs 42.44 crore
- Acquired 1.6 lakh clients during the quarter - the highest ever in a quarter.
- Total customers now at 7 lakh
With the pandemic accelerating digital growth, millennials thronging to capital markets, and a buoyant stock market, I am optimistic that we are entering a new era of investing and incredible growth in coming quarters.Prakarsh Gagdani, Whole-time Director & CEO, 5paisa Capital
Shares are locked in an upper circuit of 5% at Rs 324.6, up for the fourth straight day. The stock has gained in 10 out of the last 11 trading sessions.
Coronavirus India Update
- India reports 28,498 new cases over the last 24 hours
- Total number of cases now at 9,06,752.
- Active cases at 3,11,565
- Number of patients cured / discharged / migrated at 5,71,460
- Death toll rises to 23,727
- 553 deaths reported over the last 24 hours
- 17,989 recoveries reported over the last 24 hours
Stock Reaction: BF Utilities
As per the company's latest shareholding pattern released to the exchanges on Monday, investor Radhakishan Damani has acquired 1.3% stake in the company.
The promoter of D-Mart now holds 4.91 lakh shares of the company, as per the shareholding pattern.
Shares are locked in an upper circuit of 10% at Rs 220.8, post the announcement.
Large Trade Alert: Eveready Industries
63.7 lakh shares of the battery and flash lights maker exchanged hands in three large deals. 8.8% of the total equity of the company exchanged hands in three large deals.
Buyers and sellers of the trade were unknown according to Bloomberg data.
The stock is locked in an upper circuit of 10% - the most in five months at Rs 89.1, snapping a two-day losing streak.
Opening Bell: A Weak Start
Indian Equity markets opened lower, tracking weakness among its Asian peers.
The S&P BSE Sensex and NSE Nifty 50 index opened 0.5% lower at 36,517 and 10,750 respectively. Benchmark indices ended with modest gains on Monday, substantially off the day's high.
Banking stocks have opened lower for the third straight day. The Nifty Bank has opened 1% lower while the PSU bank index has opened 0.4% lower.
Metal and auto stocks have opened 0.5% lower each.
Market breadth has opened in favour of the declines. 779 stocks on the NSE opened with gains while 1,130 opened with declines.
Latest On The Coronavirus
- Global cases crosses the 13 million mark
- Death toll rises to 5.7 lakh
- Hong Kong tightens restrictions to contain a resurgence in virus cases
- Queensland imposes quarantine on anyone entering the state from hotspots
- Japan eyes allowing entry of executives from U.S., Europe
- Texas cases rise 2.2% to 2,64,313
Top Reads On Bloombergquint.com
How Did The Fund Flows Fare On Monday
Key Stocks In Focus
- City Union Bank: Board approved raising Rs 600 crore via QIP issue. To also raise Rs 500 crore via debt.
- Godrej Industries: Board approved raising Rs 750 crore via NCDs on a private placement basis.
- Phoenix Mills: Board approved raising Rs 1,100 crore via equity. It will also issue up to 15.63 lakh convertible equity warrants at Rs 640 per warrant, aggregating to Rs 100 crore.
- Sobha: Godrej Group's promoter entity Anamudi Real Estates increased its stake in the company to 9.99% in the June quarter from 1.08% in the March quarter.
- BF Utilities: Radhakishan Damani acquired 4.91 lakh shares or 1.3% stake during the quarter ending June as per the latest shareholding pattern.
- Motherson Sumi: Moody's Investors Service has confirmed the company's Corporate Family Rating (CFR) as Ba1. The outlook has been revised to negative from ratings under review. The negative outlook reflects the weak liquidity and the company's upcoming refinancing tasks under more challenging market conditions.
- Adani Green Energy: Increased its capacity by 50MW to 2,595 MW for the first quarter of fiscal 2021, on a sequential basis.
- Balaji Telefilms: Shoot of all television shows halted as one of the company’s actor has tested positive for Covid-19.
- Capri Global Capital: Total number of customers who opted for moratorium stood at 49% as on June 30. On back of the strong liquidity, the Company has not sought any moratorium from any of its lenders. The company has made 100% scheduled repayments till date and also prepayments of Rs 355 crore due till March 2021.
- Arvind Fashion Rights Issue: Kotak Standard Multicap Fund sold 4.83 lakh shares at Rs 36.26 per share.
- Q1FY21 Earnings Today: Mindtree, Century Textiles, Oberoi Realty, Delta Corp.
- Q4FY20 Earnings Today: ICRA, Khadim India, National Peroxide.
To know more about companies sharing Covid-19 updates, brokerage views and more, click here.
Your Trade Setup For The Day
A Check On Indian ADRs
U.S. Markets On Monday
- Benchmark indices declined after hitting their highest level since the Covid-19 pandemic
- Dow Jones ended little changed; S&P 500, Nasdaq underperformed.
- S&P 500 ended 1% lower
- Nasdaq hit another record high before ending with losses.
- Focus now on whether profit outlook will back stimulus fuelled by central banks and fiscal spending.
- Bloomberg Dollar spot index rose 0.1%.
- Yield on the 10-year treasury stood at 0.62%.
- West Texas Intermediate crude fell 2.1% to $39.69 per barrel. It has extended its losses today.
Retreat In Store?
Good Morning!
Indian equities managed to eke out gains on Monday even as they failed to sustain at the day's highest. The S&P BSE Sensex and the NSE Nifty 50 index ended flat but with a positive bias.
But the Singapore-traded SGX Nifty, an early indicator of the Nifty 50 Index’s performance in India, fell 0.43% to 10,765 as of 7:30 a.m. on Tuesday.
Asian markets have slipped this morning, tracking weakness in its peers on Wall Street amid fresh tensions between the U.S. and China over the latter's claims on the South China Sea.
Markets in Japan, Australia and South Korea have declined. Futures on the Dow Jones are trading higher by 50 points after the benchmark ended flat on Monday. The S&P 500 and the Nasdaq ended with losses after hitting their respective highs.
Treasuries and the U.S. dollar were little changed. Oil prices fell below the $40-per-barrel mark ahead of an OPEC+ meeting where the group may announce plans to start tapering historic production cuts.
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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