Benchmarks end near day's high led by Infy

July 16,2020

Amid bouts of volatility, the equity benchmarks ended near the day's high on Thursday. IT shares were the top contributors, followed by pharma and private bank stocks. Trading was volatile due to expiry of weekly index options.

As per provisional closing, the barometer S&P BSE Sensex surged 419.87 points or 1.16% at 36,471.68. The Nifty 50 index jumped 121.75 points or 1.15% at 10,739.95.

In the broader market, while the S&P BSE Mid-Cap index gained 0.71%, the S&P BSE Small-Cap index lost 0.13%.

There were more sellers than buyers. On the BSE, 1080 shares rose and 1526 shares fell. A total of 164 shares were unchanged.

COVID-19 Update:

India reported 3,31,146 active cases of COVID-19 infection and 24,915 deaths, according to the data from the Ministry of Health and Family Welfare, Government of India. Total coronavirus cases worldwide stood at 13,556,202 with 584,139 deaths so far, according to data from Johns Hopkins University.

Economy:

India's exports declined by 12.41% to $21.91 billion in June, mainly due to drop in shipments of petroleum, textiles, engineering goods, and gems and jewellery items. Imports too plunged 47.59% to $21.11 billion in June, leaving a trade surplus of $0.79 billion, compared to a deficit of $15.28 billion in the same month of the last year, according to the data released by the Commerce and Industry Ministry on Wednesday.

Buzzing Index:

The Nifty Private Bank index rose 1.13% to 11,845.20, amid value buying. The index had slipped 7.09% in the past four sessions.

Among the index constituents, Federal Bank (up 4.42%), IndusInd Bank (up 2.88%), Kotak Mahindra Bank (up 2.44%), Axis Bank (up 1.70%), IDFC First Bank (up 1.39%), RBL Bank (up 1.37%) and HDFC Bank (up 0.97%) advanced.

Bandhan Bank (down 2.33%), City Union Bank (down 0.49%) and ICICI Bank (down 0.51%) declined.

Stocks in Spotlight:

Infosys jumped 9.49% to Rs 910.35 after net profit rose 11.45% to Rs 4,233 crore on 8.54% increase in net sales to Rs 23,665 crore in Q1 June 2020 over Q1 June 2019.

On a quarter-on-quarter basis, the consolidated net profit fell 2% while revenues increased 1.7% in Q1 June 2020 (Q1FY21) over Q4 March 2020 (Q4FY20).

Profit before tax (PBT) rose 5.4% to Rs 5792 crore in Q1FY21 over Q4FY20. Tax expense jumped 30.9% to Rs 1520 crore in Q1FY21 over Q4FY20.

Operating profit jumped 8.9% to 5,365 crore in Q1FY21 over Q4FY20. Operating margin stood at 22.7% in Q1FY21, higher than 21.2% in Q4FY20.

Infosys forecast FY21 revenue growth in the range of 0%-2% in constant currency terms. Operating margin for FY21 is expected to be in the range of 21%-23%.

The company announced large deal wins worth $1.74 billion during the quarter. In the US dollar terms, revenue of the company declined year-on-year by 0.3% but grew by 1.5% in constant currency.

State Bank of India rose 1.14% to Rs 185.95. The bank's board approved raising fresh additional Tier I (AT 1) capital up to an amount of Rs 4000 crore subject to GoI concurrence. Furthermore, the bank said it will raise fresh capital of upto Rs 10,000 crore through Tier 2 capital.

Titan Company shed 0.72% to Rs 961. The company said that the lockdown necessitated by the COVID-19 pandemic is expected to hit the company's businesses very substantially in the financial year 2020-21. The company expects the economy to shrink, and tight regulations on operations of stores to continue for some time.

IDBI Bank fell 1.75% to Rs 39.20, reversing most of the gains acquired in the previous trading session. The stock rose 1.92% on Wednesday.

The bank said that it will raise up to Rs 11,000 crore equity capital through various modes in about a year to strengthen its capital base. The bank will seek approval from shareholders for the fund-raising proposal at its upcoming annual general meeting (AGM) scheduled on 17 August 2020.

Larsen & Toubro Infotech's consolidated net profit fell 2.6% to Rs 416.40 crore on 2.08% decline in revenue from operations to Rs 2,949.20 crore in Q1 June 2020 over Q4 March 2020.

EBITDA rose 2.38% to Rs 592 crore in Q1 FY21 as against Rs 578.20 crore in Q4 FY20. EBITDA margin stood at 20.1% in Q1 FY21 as against 19.2% in Q4 FY20 and 18.4% in Q1 FY20. The scrip rose 4.53% to Rs 2295.

SBI Cards & Payment Services rose 4.08% to Rs 720.15 after the company appointed Ashwini Kumar Tewari as the managing director (MD) and chief executive officer (CEO) of the company from 1 August 2020 for a period of 2 years. Ashwini Kumar will replace Hardayal Prasad, who is retiring from State Bank of India.

Minda Corporation fell 3.05% to Rs 66.65 after the company reported a consolidated net loss of Rs 299.77 crore in Q4 FY20 compared with net profit of Rs 41.92 crore in Q4 FY19. Net sales declined 9.5% year-on-year (YoY) to Rs 697.93 crore during the quarter.

The company has recorded impairment charge of Rs 293.29 crore which has been presented as exceptional items in respect of goodwill relating to Minda KTSN Plastic Solutions GmbH Co. & KG, Germany (MKTSN) and reduction in carrying value of property, plant and equipment and other assets of MKTSN after it filed for insolvency.

Global Markets:

European and Asian markets declined across the board on Thursday as concerns over rising global coronavirus cases and simmering US-China tensions weighed over optimism of COVID-19 vaccine.

China's economy rebounded from a painful contraction to grow by 3.2% over a year earlier in the latest quarter as anti-virus lockdowns were lifted and factories and stores reopened. The expansion reported on July 16 was a dramatic improvement over the previous quarter's 6.8% contraction.

In US, stocks ended sharply higher on Wednesday, following promising early data for a potential COVID-19 vaccine and a strong quarterly report from Goldman Sachs.

Moderna Inc rallied after a small-scale study showed its experimental COVID-19 vaccine produced high levels of virus-killing antibodies. Goldman Sachs rose after it said its trading revenue doubled in the second quarter, driven by big swings in stock and bond markets since March.

US industrial production soared by 5.4% in June after jumping by 1.4% in May, spiked, according to a report released by the Federal Reserve on Wednesday. Despite the substantial increase, the Fed noted industrial production remained 10.9% below its pre-pandemic February level.

The Federal Reserve's Beige Book survey showed U.S. businesses saw an uptick in activity into the beginning of July as states eased restrictions to contain the novel coronavirus pandemic.

Meanwhile, OPEC and allies such as Russia agreed to ease record supply curbs from August, though the drop was cushioned by hopes for a swift U.S. demand pick-up after a bigger-than-expected drawdown from the country's crude stocks.

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