Key equity benchmarks tumbled on Monday, after a recovery in the previous trading session. Tensions in Jammu and Kashmir (J&K), coupled with weak global cues spoiled investors sentiment. Weakness in the banking, metal and auto stocks dragged the indices lower.
The barometer index, the S&P BSE Sensex, fell 418.38 points or 1.13% to 36,699.84, as per the provisional closing data. The Nifty 50 index fell 138.70 points or 1.26% to 10,858.65, as per the provisional closing data.
In the broader market, the S&P BSE Mid-Cap index fell 1.26%. The S&P BSE Small-Cap index fell 1.69%.
The market breadth was weak. On the BSE, 736 shares rose and 1685 shares fell. A total of 142 shares were unchanged.
The Union Government on Monday moved a resolution in Rajya Sabha to scrap Article 370 of the Constitution that gives special status to Jammu and Kashmir. President Ram Nath Kovind issued a notification- The Constitution (Application to Jammu and Kashmir) Order, 2019 that will come into force immediately. The order is set to supersede the Constitution (Application to Jammu and Kashmir) Order, 1954 as amended from time to time.
The government also moved a bill proposing division of the state of Jammu and Kashmir into two union territories- Jammu and Kashmir division and Ladakh. Amit Shah in Rajya Sabha said the union territory in Ladakh will have no legislature while the union territory of Jammu and Kashmir will have a legislature like Delhi and Puducherry.
At least 8,000 paramilitary troops have been airlifted to J&K from different parts of the country today. The Army and the Air Force have been put on high alert, the media reported.
On the economic front, the IHS Markit India Services Business Activity Index rose to 53.8 in July from 49.6 in June, pointing to the quickest increase in output in one year. Four of the five monitored subsectors posted expansion, the sole exception being Real Estate & Business Services.
Meanwhile, Finance Minister Nirmala Sitharaman will hold a series of meetings this week to take stock of the economy which has witnessed a downturn in recent quarters, Finance Secretary Rajiv Kumar told the media on Monday.
On Tuesday, Sitharaman will meet representatives of micro, small and medium enterprises (MSME) sector. On 7 August, Sitharaman will meet business leaders from the automobile sector. Transport Minister Nitin Gadkari will also participate in the meeting.
On 8 August, the Finance Minister is scheduled to meet industry bodies. A day later, she will meet financial market chiefs from the BSE India, the National Stock Exchange of India (NSE) and mutual fund houses. On 11 August, Sitharaman will meet with representatives from the real estate industry and home buyers. All the meetings will be attended by union ministers of the concerned sectors.
On the equity front, Bharti Airtel (up 4.53%), Tech Mahindra (up 2.15%), Coal India (up 1.57%), Tata Consultancy Services (up 1.57%) and HDFC (up 1.27%) advanced.
UPL (down 5.86%), Power Grid Corporation of India (down 4.70%), Grasim Industries (down 3.98%), GAIL (India) (down 3.88%) and Zee Entertainment Enterprises (down 3.34%) declined
FMCG major Nestle India gained 2.40%. The company's net profit rose 10.8% to Rs 437.84 crore on 11.4% rise in net sales to Rs 2982.83 crore in Q2 June 2019 over Q2 June 2018. The result was announced after market hours on Friday, 2 August 2019.
Domestic sales increased by 13.1% in Q2 June 2019 largely driven by volume & mix while company's export dropped by 13.9% in Q2 June 2019 primarily due to lower coffee exports to Turkey. The company also announced that it will start construction of its ninth factory in India. The factory for 'Maggi Noodles' will involve an initial investment of nearly Rs 700 crore over the next two years is located in Gujarat.
ITC fell 1.89%. The company's net profit rose 12.6% to Rs 3173.94 crore on 6% rise in net sales to Rs 11,361.35 crore in Q1 June 2019 over Q1 June 2018. The result was announced after market hours on Friday, 2 August 2019.
On consolidated basis, ITC's consolidated net profit rose 12.8% to Rs 3355.01 crore on 6.7% rise in net sales to Rs 12532.31 in Q1 June 2019 over Q1 June 2018.
The company reported that it has posted a steady performance during the quarter amid sluggish demand conditions. ITC's flagship cigarette business grew 6% to Rs 5433.4 crore in Q1 June 2019 over Q1 June 2018.
Reliance Industries slipped 3.42%. The company said that its wholly-owned subsidiary, Reliance Industrial Investments and Holdings (RIIHL), has entered into an agreement for acquisition of equity shares of Shopsense Retail Technologies for a cash consideration not exceeding Rs 295.25 crore. RIIHL has an option to further invest an amount of up to Rs 100 crore which is likely to be completed by December 2021. The total investment will translate into approximately 87.6% of equity share capital in Fynd on a fully diluted and converted basis. The announcement was made on Saturday, 3 August 2019.
A foreign brokerage has reportedly downgraded the stock to 'Underperform' from 'Neutral' and cut price target to Rs 995 from Rs 1,350.
Metal shares fell. Jindal Steel & Power (down 5.48%), Hindustan Copper (down 3.46%), JSW Steel (down 3.44%), NMDC (down 3.37%), Hindustan Zinc (down 3.2%), Tata Steel (down 2.77%), Hindalco Industries (down 2.72%), Steel Authority of India (down 2.69%), Vedanta (down 2.13%) and National Aluminium Company (down 1.94%) declined.
Private sector bank shares fell. Yes Bank (down 8.15%), RBL Bank (down 4.53%), Kotak Mahindra Bank (down 3.25%), City Union Bank (down 2.83%), ICICI Bank (down 1.91%), Axis Bank (down 1.66%), HDFC Bank (down 1.62%), IndusInd Bank (down 0.4%) and Federal Bank (down 0.29%) declined.
Public sector bank shares fell. Bank of Maharashtra (down 4.21%), State Bank of India (down 2.67%), Central Bank of India (down 2.56%), Allahabad Bank (down 2.52%), Indian Bank (down 2.34%), Canara Bank (down 1.98%), Bank of Baroda (down 1.76%), Punjab National Bank (down 1.48%), Bank of India (down 1.29%), Syndicate Bank (down 1.09%), Corporation Bank (down 0.92%), IDBI Bank (down 0.71%), UCO Bank (down 0.62%), United Bank of India (down 0.42%) and Union Bank of India (down 0.08%) declined. Andhra Bank was up 2.81%.
The Reserve Bank of India (RBI) has imposed monetary penalty on seven banks for non-compliance with certain provisions of directions issued by RBI on Code of Conduct for Opening and Operating Current Accounts, Opening of Current Accounts by Banks - Need for Discipline, Discounting/ Rediscounting of Bills by Banks, Reserve Bank of India (Frauds classification and reporting by commercial banks and select FIs) directions 2016, End Use of Funds - Monitoring and Deposits on Balance Sheet Date.
These include Allahabad Bank (Rs 2 crore), Bank of Baroda (Rs 1.5 crore), Bank of India (Rs 1.5 crore), Bank of Maharashtra (Rs 2 crore), Indian Overseas Bank (Rs 1.5 crore), Oriental Bank of Commerce (Rs 1 crore) and Union Bank of India (Rs 1.5 crore). The penalties have been imposed in exercise of powers vested in RBI under the provisions of Section 47A(1)(c) read with Sections 46(4)(i) and 51(1) of the Banking Regulation Act, 1949, taking into account the failure of the banks to adhere to the aforesaid directions issued by RBI. This action is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the banks with their customers.
Jammu & Kashmir Bank lost 2.84%. The bank's net profit declined 58.4% to Rs 21.87 crore on 18.9% rise in total income to Rs 2256.25 crore in Q1 June 2019 over Q1 June 2018. The result was announced on Saturday, 3 August 2019.
The bank's gross non-performing assets (NPAs) stood at Rs 6030.84 crore as on 30 June 2019 as against Rs 6221.35 crore as on 31 March 2019 and Rs 6241.67 crore as on 30 June 2018. The ratio of gross NPAs to gross advances stood at 8.48% as on 30 June 2019 as against 8.97% as on 31 March 2019 and 9.83% as on 30 June 2018.
The bank's provisions and contingencies rose 15% to Rs 293.21 crore in Q1 June 2019 from Rs 255.01 crore in Q1 June 2018. The bank reported a provision coverage ratio of 66.61% as on 30 June 2019. The bank's capital adequacy ratio (Basel III) declined to 11.76% in Q1 June 2019 from 12.42% in Q1 June 2018.
Punjab & Sind Bank lost 3.86%. The bank announced, after market hours on Friday, 2 August 2019, that on determination and disclosures of material events, an NPA Account, viz. Fairdeal Supplies with outstanding dues of Rs 40.49 crore has been declared as fraud and reported to RBl as per regulatory requirement. Bank is in the process of filing of Complaint / FIR with Central Bureau of Investigation.
In a separate announcement on Saturday, 3 August 2019, the bank said that the Reserve Bank of India has imposed a penalty of Rs 1 crore on it for delay in reporting fraud in Kingfisher Airlines.
In a separate announcement on Saturday, 3 August 2019, the bank announced that Director, FIU -IND in exercise of powers conferred under the Prevention of Money Laundering Act, 2002 has imposed a penalty of Rs 2.87 crore on the bank for non compliance of the Money Laundering (Maintenance of Records) Rules, 2005.
Tata Power lost 2.20% while Tata Motors slipped 4.79%. Tata Power announced that it has partnered with Tata Motors to install 300 fast charging stations by the end of the FY2020, across key five cities namely Mumbai, Delhi, Pune, Bangalore and Hyderabad. Today, both companies inaugurated their first 7 charging stations in Pune, to enable the e-mobility drive in the city. Over the next two months, 45 more chargers will be installed across the other four cities. These chargers will be installed at Tata Motors dealerships, certain Tata Group retail outlets and other public locations. The announcement was made on Saturday, 3 August 2019.
Tata Communications fell 1%. On a consolidated basis, the company reported a net profit of Rs 76.61 crore in Q1 June 2019 compared with a net loss of Rs 58.49 crore Q1 June 2018. The income from operations rose 5.7% to Rs 4168.62 crore in Q1 June 2019 over Q1 June 2018. The result was announced after market hours on Friday, 2 August 2019.
Jubilant Life Sciences fell 3.74%. The company announced that it has issued commercial papers of Rs. 40 crore on 2 August 2019. The announcement was made after market hours on Friday, 2 August 2019.
Anuh Pharma lost 1.14%. The drug company announced that it has received approval from WHO Geneva Prequalification that the Prequalification Inspection Group has recommended that the API's Pyrimethamine, Pyrazinamide and Sulfadoxine can be considered to be compliant with the standards of Good Manufacturing Practices (GMP) for Active Pharmaceutical Ingredients (APis) published by the World Health Organisation (WHO) for manufacturing and packaging of APis by chemical synthesis. The announcement was made on Saturday, 3 August 2019.
Laurus Labs slumped 5.38%. On a consolidated basis, the pharma company reported a 3.6% rise in the net profit to Rs 15.731 crore on a 2.14% increase in the revenue from operations to Rs 550.56 crore in Q1 June 2019 over Q1 June 2018. The result was announced after market hours on Friday, 2 August 2019.
Lupin shed 1.12%. The pharma major announced the receipt of the Establishment Inspection Report (EIR) from the U.S. FDA for its Aurangabad facility. The facility was inspected by the U.S. FDA between May 6, 2019 and May 15, 2019. Lupin's Aurangabad facility is involved in the manufacture of Oral Solid Dosage, Oral Liquid and Powder for Oral Suspension products for the US Market, WHO/Global Institution markets and the India market. The announcement was made during market hours today, 5 August 2019.
Aditya Birla Capital rose 3.13% after consolidated net profit rose 26.89% to Rs 269.85 crore on 19.13% rise in total income to Rs 3711.79 crore in Q1 June 2019 over Q1 June 2018. The result was announced after market hours on Friday, 2 August 2019.
Bata India rose 4.53%. The company's consolidated net profit rose 22.52% to Rs 100.97 crore on 11.08% rise in total income to Rs 899.62 crore in Q1 June 2019 over Q1 June 2018. The result was announced after market hours on Friday, 2 August 2019.
Deepak Nitrite lost 1.81% after consolidated net profit rose 601.55% to Rs 131.61 crore on 128.64% rise in total income to Rs 1062.57 crore in Q1 June 2019 over Q1 June 2018. The result was announced after market hours on Friday, 2 August 2019.
Adani Power fell 5.37%. The private sector thermal power producer, announced the completion of acquisition of GMR Chhattisgarh Energy (GCEL), which owns and operates a 1,370 MW (2 X 685 MW) supercritical power plant at Raikheda village, in Raipur District of Chhattisgarh. The acquisition of GCEL was concluded at an Enterprise Valuation of approx. Rs. 3.530 crore. The announcement was made after market hours on Friday, 2 August 2019.
Adani Green Energy lost 2.77%. The company announced that it has part commissioned 100 MWac capacity on 2 August, 2019 in the state of Rajasthan out of 200 MWac Solar Power Project, having Power Purchase Agreement with Maharashtra State Electricity Distribution Company (MSEDCL) at Rs. 2.71/kWh for a period of 25 years. The announcement was made after market hours on Friday, 2 August 2019.
Most auto stocks declined. Tata Motors (down 5.09%), Eicher Motors (down 2.49%), Mahindra & Mahindra (down 2.24%), Ashok Leyland (down 1.24%), Escorts (down 1.01%), Maruti Suzuki India (down 0.66%) and Hero MotoCorp (down 0.2%) declined.
Bajaj Auto (up 0.59%) and TVS Motor Company (up 0.21%)
As per reports, according to industry body FADA, approximately two lakh jobs have been cut across automobile dealerships in India in the last three months as vehicle retailers take the last resort of cutting manpower to tide over the impact of the unprecedented sales slump.
Relaxo Footwears rose 2.15%. The company's net profit rose 8.3% to Rs 49.75 crore on 15.4% rise in net sales to Rs 648.30 crore in Q1 June 2019 over Q1 June 2018. The result was announced on Saturday, 3 August 2019.
Revenues growth was mainly driven by favourable product mix and an increase in volumes. The company's earnings before interest tax depreciation and amortization (EBITDA) increased 28% to Rs 106 crore in Q1 June 2019 from 83 crore in Q1 June 2018. The EBITDA margin grew to 16.4% in Q1 June 2019 from 14.7% Q1 June 2018.
Overseas, shares in European stocks continued to trade lower while Asian stocks ended lower on Monday as a sharp escalation in the Sino-US trade war kept financial markets on edge.
US stocks ended at their lowest levels in a month on Friday as investors worried that President Trump's escalation of the trade war with China would impact economic growth. Stocks extended losses after China vowed to retaliate against President Trump's decision on Thursday to impose 10% tariffs on the remaining $300 million of imports from China not already subject to levies.
On the US data front, the U.S. economy added 164,000 jobs in July. The job gains pushed the size of the U.S. labor force to a record high. Wages rose 3.2% on a year-over-year basis.
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