Key equity indices ended with modest gains on Friday with the Nifty reclaiming the 11,750 level. Banks and metal shares were in demand. Domestic shares bounced on value buying after a steep selloff in the previous session. The gains were capped as prospects for a new fiscal stimulus package in US remain dim and coronavirus cases continue to rise across Europe.
The barometer index, the S&P BSE Sensex, rose 254.57 points or 0.64% at 39,982.98. The Nifty 50 index gained 82.10 points or 0.70% at 11,762.45. Both these indices crashed about 2.5% on Thursday.
HDFC Bank (up 2.55%), Kotak Mahindra Bank (up 2.10%), ICICI Bank (up 1.29%) and Infosys (up 1.77%) boosted indices. Index heavyweight Reliance Industries fell 1.36% to Rs 2175.50, restricting gains for the benchmarks today.
In the broader market, the S&P BSE Mid-Cap index rose 1.05% while the S&P BSE Small-Cap index gained 0.97%.
The market breadth was positive. On the BSE, 1477 shares rose and 1157 shares fell. A total of 177 shares were unchanged.
Coronavirus Update:
Total COVID-19 confirmed cases worldwide stood at 3,89,25,204 with 10,98,378 deaths. India reported 8,04,528 active cases of COVID-19 infection and 1,12,161 deaths while 64,53,779 patients have been discharged, according to the data from the Ministry of Health and Family Welfare, Government of India.
Economy:
The Reserve Bank of India (RBI) on Friday announced Open Market Operations (OMOs) in State Developments Loans (SDLs) for Rs 10,000 crore on 22 October 2020.
Meanwhile, the central government will borrow up to Rs 1.1 lakh crore on behalf of the states to bridge the shortfall in GST collections, the Finance Ministry said on Thursday.
In a statement, the Union Finance Ministry said states were offered a special window to borrow Rs 1.1 lakh crore over and above their existing limits, to bridge the shortfall. "The amount so borrowed will be passed on to the states as a back-to-back loan in lieu of GST compensation cess releases," the ministry said.
"Under the Special Window, the estimated shortfall of Rs 1.1 lakh crore (assuming all States join) will be borrowed by Government of India in appropriate tranches," the statement said.
The Centre borrowing on behalf of states is likely to ensure that a single rate of borrowing is charged and this would also be easy to administer. The borrowing, the statement said, "will not have any impact on the fiscal deficit of the Government of India."
"The amounts will be reflected as the capital receipts of the State Governments and as part of the financing of its respective fiscal deficits," it said.
Credit rating agency Moody's Investors Service reportedly said on Thursday that India's fiscal position "remains very weak". The government's latest fiscal measures, it said, will have a minimal impact on the country's growth prospects and that the government's 'small scale' package is actually a credit negative as it reflects the country's 'limited budgetary firepower to support the economy'.
Moody's expects India's GDP to drop 11.5% in 2020-21, so the 0.5% of GDP gain expected by the government from these stimulus measures will provide only 'a small boost', it added.
Numbers to Track:
In the foreign exchange market, the partially convertible rupee rose to 73.35 compared with its previous closing 73.3675.
The yield on 10-year benchmark federal paper rose to 5.935% compared with previous closing of 5.898% in the previous trading session.
MCX Gold futures for 04 December 2020 settlement was currently trading almost flat at Rs 50,713.
In the commodities market, Brent crude for December 2020 settlement lost 55 cents to $42.61 a barrel. The contract declined 0.37% or 16 cents to settle at $43.16 in the previous trading session.
Global Markets:
European shares advanced while Asian shares ended mixed on Friday.
The US stock market finished lower on Thursday as the rise in weekly jobless claims compounded worries about a stalling economic recovery.
The number of Americans who applied for jobless benefits in early October shot up to the highest level in seven weeks. Initial jobless claims filed through state programs jumped by 53,000 to 898,000 in the week ended 10 October from a revised 845,000 in the prior week, the Labor Department said Thursday.
Selling was also triggered amid uncertainty about a new stimulus bill after Treasury Secretary Steven Mnuchin suggested on Wednesday that a new relief package is not likely to pass before next month's elections. Senate Majority Leader Mitch McConnell has also cast doubts on whether a bill can pass before the elections and recently announced plans to vote on a more limited relief package.
In economic news, the pace of growth in regional manufacturing activity jumped to 32.3 in October from 15.0 in September, a report released by the Federal Reserve Bank of Philadelphia on Thursday showed. With the much bigger than expected increase, the Philly Fed Index spiked to its highest level since before the coronavirus- lockdowns. The sharp increase by the headline index came as the new orders index soared to 42.6 in October from 25.5 in September and the shipments index surged up to 46.5 from 36.6.
Buzzing Indian Segment:
The Nifty Metal index jumped 3.97% to 2,329.85. The index fell 0.49% in the previous session.
JSW Steel, Jindal Steel & Power, Tata Steel, Hindalco Industries, SAIL and NALCO rose by 3.2% to 6.71%.
Shares of three air conditioner makers rose after the government banned the import of air conditioners (ACs) with refrigerants.
Voltas (up 4.20%), Blue Star (up 4.22%) and Johnson Controls-Hitachi Air Conditioning India (up 4.28%) advanced.
In a notification issued on Thursday, the Directorate General of Foreign Trade (DGFT) moved split system and other ACs with refrigerants into the 'prohibited' category from the current 'free' category.
Stocks in Spotlight:
HCL Technologies declined 3.76%. The IT firm's consolidated net profit soared 18.5% to Rs 3,142 crore on 6.1% increase in revenue to Rs 18,594 crore in Q2 September 2020 over Q2 September 2019. Sequentially, consolidated net profit rose 7.4% and revenue increased 4.2% in Q2 September 2020 (Q2FY21) over Q1 June 2020 (Q1FY21).
HCL's provision for tax rose 7.53% to 999 crore in Q2FY21 from Rs 929 crore in Q1FY21. Consolidated EBITDA grew by 8.4% to Rs 4,951 crore in Q2FY21 from Rs 4,566 crore in Q1FY21. EBITDA margin improved to 26.6% in Q2FY21 from 25.6% in Q1FY21.
Mindtree dropped 6.75%. The IT firm's consolidated net profit jumped 88% to Rs 253.70 crore on a 0.61% rise in revenue to Rs 1,926 crore in Q2 September 2020 over Q2 September 2019.
Sequentially, consolidated net profit rose 19% and revenue increased 0.9% in Q2 September 2020 (Q2FY21) over Q1 June 2020 (Q1FY21). Consolidated profit before tax (PBT) stood at Rs 344.70 crore in Q2FY21, rising 19% from Rs 289.80 crore in Q1FY21. Current tax expense rose 18.49% to Rs 91 in Q2FY21 over Q1FY21.
Consolidated EBITDA grew by 8.8% to Rs 378.40 crore in Q2FY21 over Q1FY21. EBITDA margin stood at 19.6% during Q2FY21 over 18.2% in Q1FY21. Meanwhile, the company has declared a dividend of Rs 7.5 per equity share. The record date for payment is 27 October 2020 and the dividend will be paid on 11 November 2020.
Cyient advanced 6.22% after the company's consolidated net profit rose 3.07% to Rs 83.90 crore on 1.16% increase in revenue from operations to Rs 1,003.30 crore in Q2 September 2020 (Q2FY21) over Q1 June 2020 (Q1FY21). The PAT increased mainly from higher operating income driven by higher volume and efficiency.
Services revenue stood at $114.10 million, registering a growth of 1.7% QoQ and a drop of 18.7% year-on-year (YoY). DLM revenue was at $20.90 million, recording a growth of 13.3% QoQ and a 12.3% fall YoY. Order intake in Q2FY21 is at $127.3 million, increased by 9% QoQ.
Federal Bank rose 0.97%. The bank reported 26.1% decline in net profit to Rs 307.62 crore on 8.7% increase in total income to Rs 3997.23 crore in Q2 September 2020 over Q2 September 2019. Profit before tax stood at Rs 414.47 crore, sliding 11.25% compared with Rs 467 crore in the same period last year. Tax expense surged 112% to Rs 106.85 crore in Q2 September 2020 over Q2 September 2019.
The bank's provisions and contingencies increased by 135% to Rs 592.06 crore in Q2 September 2020 over Q2 September 2019. During the current quarter, as a prudent measure, the bank made an additional provision of Rs 401.61 crore against the further likely impact of COVID-19 pandemic. The aggregate provision against the likely impact of COVID-19, including the RBI mandated provision, stands at Rs 587.91 crore as on 30 September 2020.
Hathway Cable & Datacom fell 4.12%. The company reported a consolidated net profit of Rs 52.22 crore in Q2 FY21 as against net loss of Rs 5.42 crore in Q2 FY20. Net sales during the quarter fell 2.5% year-on-year (YoY) to Rs 431.24 crore. On the segmental front, revenue from the broadband business was at Rs 153.34 crore (up 10% YoY) while the revenue from the cable television business was at Rs 277.90 crore (down 8.2% YoY) in the second quarter.
Total expenditure declined 9.5% to Rs 310.85 crore while the interest payments were down by 91.8% to Rs 4.27 crore in Q2 September 2020 over Q2 September 2019. Profit before tax (PBT) in Q2 FY21 stood at Rs 69.43 crore, surging from Rs 5.57 crore in Q2 FY20.
Shakti Pumps (India) rose 2.15% after the company posted a consolidated net profit of Rs 15.24 crore in Q2 September 2020 compared with net loss of Rs 1.70 crore in the same period last year. Consolidated revenue from operations surged 120% to Rs 201.08 crore in Q2 September 2020 as against Rs 91.20 crore in Q2 September 2019.
Phillips Carbon Black added 2.98%. On a consolidated basis, the carbon black maker recorded a 25% fall in net profit to Rs 58.09 crore on 23.07% decline in revenue from operations to Rs 663.86 crore in Q2 September 2020 over Q2 September 2019. The earnings were impacted in the backdrop of the continued global recession in the automobile industry further aggravated by the COVID-19 pandemic.
UPL slumped 7.77% after KPMG resigned as the auditor with effect from 8 October 2020 for the company's material arm in Mauritius, UPL Corporation. In order to re-organize the audit process to improve productivity, at the request of the company, KPMG Mauritius has resigned as statutory auditors of UPL Corporation, Mauritius.
"There are no circumstances connected with our resignation which we consider should be brought to the notice of the members," KPMG said in a statement.
BSR & Co. LLP, chartered accountants, continues to carry out the audit of group consolidated financials of UPL, India which includes UPL Corporation, Mauritius and its subsidiaries.
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