After attaining record high levels in early trade, key equity barometers reversed trend and ended near the day's low on Monday. The Nifty settled below the 12,250 level. Selling emerged at record high levels due to concerns over stretched valuations.
Crude oil prices regained $65 mark, raising worries over the already widening fiscal deficit. Investors also turned cautious ahead of the Union Budget on 1 February 2020. The Q3 earnings of index majors such as Reliance Industries, HDFC Bank, TCS and Kotak Mahindra Bank failed to impress investors.
The barometer BSE S&P Sensex fell 416.46 points or 0.99% to 41,528.91. The index rose 328.50 points or 0.78% to hit a record high of 42,273.87 in early trade today.
The Nifty 50 index lost 121.60 points or 0.98% to 12,230.75. The index rose 78.15 points or 0.63% to hit a record high of 12,430.50 in early trade today.
The BSE Mid-Cap index fell 0.57% to 15,618.86. The index jumped 6.39% in the preceding nine trading sessions.
The BSE Small-Cap index fell 0.39% to 14,651.17 after spurting 7.24% in the preceding nine trading sessions.
The market breadth was weak. On the BSE, 950 shares rose and 1581 shares fell. A total of 181 shares were unchanged.
Numbers to Watch:
The yield on 10-year benchmark federal paper rose to 6.645% at 16:45 IST compared with 6.622% at close in the previous trading session.
In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 71.125, compared with its close of 71.08 during the previous trading session.
In the commodities market, Brent crude for March 2020 settlement rose 37 cents to $65.22 a barrel. The contract rose 87 cents or 1.34% to settle at $65.72 a barrel during the previous trading session. Oil prices spiked on Monday after two large crude production bases in Libya shut down due to a military blockade. This could curtail crude flows from Libya to a trickle.
Foreign Markets:
European shares were trading lower while most shares in Asia ended higher on Monday. The moves came as the People's Bank of China kept the one year and five year loan prime rates unchanged for January.
US stocks closed higher on Friday, ending the week at new record high, helped by data suggesting the economy and corporate profits are in good health. The rally was supported by a partial resolution of the US-China trade dispute and the passage of the US, Mexico, Canada trade deal by Congress.
Sentiment was boosted by data on US December housing starts that showed home constructing rising 16.9%, to annual rate of 1.608 million units, to the fastest pace since 2006. In other US economic data, the Federal Reserve reported that industrial production fell 0.3% in December.
Buzzing Indian Segment:
Shares of six public sector undertakings (PSUs) were in action after the NSE announced changes in the Nifty CPSE (Central Public Sector Enterprises) index on Friday, 17 January 2020.
Earlier, stocks having more than 51.5% government holding under promoter category were eligible for inclusion in the index. As per the revised norms, stocks having more than 51% government holding under promoter category would be eligible for inclusion in the index.
Accordingly, Power Finance Corporation (down 7.91%) and Indian Oil Corporation (down 4.20%) were excluded from the Nifty CPSE Index while NHPC (up 11.78%), NMDC (up 7.06%), Cochin Shipyard (up 3.54%) and Power Grid Corporation of India (up 3.75%) were included in the index.
The total number of constituents forming part of NIFTY CPSE index will change from 10 to 12. These changes shall become effective from 24 January 2020 (close of 23 January 2020), the exchange said in a press release.
Meanwhile, NMDC announced second price hike in January 2020. Earlier, the company had hiked prices on 2 January 2020. Prices of lump ore (65.53, 6-40mm) have been hiked by Rs 400 or 14.29% to Rs 3200 per ton. Prices of fines (643,-10mm) have been hiked by Rs 350 or 13.67% to Rs 2910 per ton.
Q3 Earnings:
Kotak Mahindra Bank fell 4.70%. The bank reported a net profit of Rs 1595.90 crore in Q3 December 2019 as against net profit of Rs 1290.93 crore in Q3 December 2018, registering a rise of 23.62%. PBT (profit before tax) fell 1.35% to Rs 1944.07 crore in Q3 December 2019 as against Rs 1970.71 crore in Q3 December 2018. Total income rose 12% to Rs 8077.03 crore in Q3 December 2019 over Q3 December 2018.
Loan disbursement rose 10.36% to Rs 216,774 crore year-on-year. The bank saw its asset quality deteriorate slightly in December quarter. Provisions and contingencies (excluding tax provisions) rose 8.84% to Rs 444 crore in Q3 December 2019 over Q2 September 2019.
HDFC Bank fell 1.80% after the bank reported a spike in the provisions in Q3 December 2019. The bank reported a 32.77% rise in net profit to Rs 7416.48 crore in Q3 December 2019 from Rs 5585.9 crore in Q3 December 2018. Profit before tax (PBT) for Q3 December 2019 was at Rs 9,901.90 crore. Adjusting for one-off credit items, the core PBT at Rs 10,401.90 crore, grew by approximately 21%.
Provisions and contingencies (excluding tax provisions) grew 37.62% on YoY basis to Rs 3043.56 crore in Q3 December 2019.
Index heavyweight Reliance Industries (RIL) fell 3.08%. RIL, on consolidated basis, reported 13.55% increase in net profit to Rs 11,640 crore on 2.52% decrease in net sales to Rs 152,939 crore in Q3 December 2019 over Q3 December 2018. The revenue decreased primarily due to 10.6% decline in order-to-cash (O2C) business revenues, with lower product price realization and 6.6% fall in Brent crude price. This was partially offset by continuing growth momentum in consumer businesses. Digital services and retail business recorded an increase of 36.2% and 27.4% respectively, in revenue during the quarter. RIL's gross refining margin (GRM), or what it makes from turning every barrel of crude to fuel, came in at $9.2 per barrel from $8.8 per barrel.
According to reports, RIL's proposed deal with Saudi Aramco will miss the planned March 31 timeline. RIL proposed to sell 20% stake its oil and chemicals business for an estimated $15 billion to Saudi Aramco.
TCS fell 2.16%. IT major's consolidated net profit rose 0.95% to Rs 8,118 crore on 2.25% increase in net sales to Rs 39,854 crore in Q3 December 2019 over Q3 December 2018. The IT major unveiled Q3 results after trading hours on Friday, 17 January 2020.
TCS reported 0.20% year-on-year rise in net profit compared with Rs 8,105 crore net profit reported for the same quarter last year. Revenue for the quarter rose 6.7% compared with Rs 37,338 crore in the year-ago period. In constant currency terms, revenues grew 6.8% year on year, with operating margin expanding to 25%.
ICICI Lombard General Insurance Company fell 4.01%. The net profit grew 23% to Rs 294 crore in Q3 December 2019 (Q3FY20) from Rs 239 crore in Q3 December 2018 (Q3FY2019). Profit before tax (PBT) increased 8.1% to Rs 390 crore in Q3FY20 from Rs 361 crore in Q3FY2019. Total income rose 15.6% to Rs 2914.89 crore in Q3FY20 over Q3FY19. Total tax expense fell 21.2% to Rs 95.81 crore in Q3FY20 from Rs 121.53 crore in Q3FY19. The result was announced after market hours on Friday, 17 January 2020.
L&T Finance Holdings tumbled 7.15% after consolidated net profit rose 1.9% to Rs 591.03 crore on 8.44% increase in total income to Rs 3,735.79 crore in Q3 December 2019 over Q3 December 2018. Consolidated profit before tax (PBT) slipped 6.5% to Rs 725.22 crore in Q3 December 2019 as against Rs 775.81 in Q3 December 2018. The result was announced after market hours on Friday, 17 January 2020.
Hindustan Zinc fell 0.23% after net profit dropped 26.72% to Rs 1,620 crore on 15.66% decline in net sales to Rs 4,626 crore in Q3 December 2019 over Q3 December 2018. On a standalone basis, profit before tax was down by 26.43% to Rs 2,095 crore in Q3 December 2019 as against Rs 2,848 crore in Q3 December 2018. Net tax expense for Q3 December 2019 declined 25.43% to Rs 475 crore from Rs 637 crore in Q3 December 2019. EBITDA fell 20% to Rs 2,288 crore in Q3 December 2019 over Q3 December 2018. The Q3 results was declared during market hours today, 20 January 2020.
Chennai Petroleum Corporation jumped 4.80% after reporting standalone net profit of Rs 6.37 crore in Q3 December 2019 as against net loss of Rs 367.10 crore in Q3 December 2019. Standalone profit before tax (PBT) stood at Rs 9.09 crore in Q3 December 2019 as against pre-tax loss of Rs 555.34 crore in Q3 December 2018. Net sales fell 7.3% to Rs 9,146.67 crore in Q3 December 2019 from Rs 9,865.83 crore in Q3 December 2018.
GNA Axles slumped 11.54% after the company announced a dismal Q3 result on 18 January 2020. On consolidated basis, net profit slumped 57.5% to Rs 7.63 crore in Q3 December 2019 as against Rs 17.95 crore in Q3 December 2018. Net sales for Q3 2019 stood at Rs 214.14 crore as against Rs 246.25 crore in Q3 2018, registering a fall of 13%.
Federal Bank rose 2.35% after the bank announced Q3 results during market hours today, 20 January 2020. On a standalone basis, Federal Bank's net profit jumped 32.07% to Rs 440.64 crore on a 13.28% increase in total income to Rs 3,738.22 crore in Q3 December 2019 over Q3 December 2018. The standalone profit before tax (PBT) rose 12.60% to Rs 582.96 crore in Q3 December 2019 as against Rs 517.71 crore in Q3 December 2018. Tax expense reduced by 22.68% to Rs 142.32 in Q3 December 2019 as compared with Rs 184.08 crore in Q3 December 2018.
Bank of Maharashtra jumped 5.37% after the bank announced Q3 earnings during trading hours today, 20 January 2020. On a standalone basis, Bank of Maharashtra's reported a net profit of Rs 135.26 crore in Q3 December 2019 compared with net loss of Rs 3,764.26 crore in Q3 December 2018. Total income soared 13.16% to Rs 3,458.59 crore in Q3 December 2019 over Q3 December 2018.
Stocks in Spotlight:
Fine Organic Industries surged 5.13% after ICRA upgraded credit rating of the company. In an exchange filing made after market hours on Friday, Fine Organic said that the credit ratings agency ICRA had upgraded its long term rating to [ICRA] AA- (Stable) from [ICRA] A+ (positive) while reaffirming the company's short term rating at [ICRA] A1+.
Prestige Estates Projects surged 10.84% after the company said its subsidiary acquired 50% stake in Lokhandwala DB Realty LLP. Prestige Falcon Realty Ventures, a wholly-owned subsidiary of Prestige Estates Projects, has invested in Lokhandwala DB Realty LLP by way of capital account contribution and admitted as a partner of the LLP with 50% economic and voting rights, the company said in a regulatory filing.
Biocon gained 0.36%. Biocon in an exchange filing during market hours today announced that the US Food and Drug Administration (FDA) conducted a Pre-Approval Inspection (PAI) of the oral solid dosage manufacturing facility of Biocon Pharma, a subsidiary of Biocon. The PAI was triggered by the submission of an Abbreviated New Drug Application (ANDA). The inspection of the Bengaluru facility, which took place between 13 and 17 January 2020, concluded with zero observations and no Form 483 was issued.
Lupin declined 4.39%. The pharma major on Saturday (18 January) announced the completion of an inspection carried out by the United States Food and Drug Administration (USFDA) at its Vizag API (active pharmaceutical ingredient) manufacturing facility. The inspection was carried out between 13 and 17 January 2020. The inspection for the API facility at Vizag closed with five 483 observations.
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