Indices extend gains for 3rd day

July 03,2020

The Sensex and the Nifty ended with modest gains after a volatile session on Friday. IT and auto shares advanced while banks corrected. As per provisional closing, the barometer S&P BSE Sensex rallied 177.72 points or 0.5% at 36,021.45. The Nifty 50 index surged 55.65 points or 0.53% at 10,607.35.

The Nifty opened higher at 10,614.95, but pared gains in morning trade. The index hovered around 10,600 mark for most part of the session. Selling in afternoon session dragged Nifty to the day's low level of 10,562.65. Buying in last hour, however, boosted the index above 10,600 mark.

In the broader market, the S&P BSE Mid-Cap index rose 0.56% while the S&P BSE Small-Cap index gained 0.74%. Both these indices outperformed the Sensex.

The market breadth was almost even. On the BSE, 1,361 shares rose and 1,375 shares fell. A total of 153 shares were unchanged. In Nifty 50 index, 32 stocks advanced while 18 stocks declined.

ICICI Bank (down 0.47%) and HDFC Bank (down 1.42%) declined and put pressure on bourses.

Index heavyweight Reliance Industries (RIL) rose 1.53% after the company said Intel Capital will invest Rs 1,894.50 crore in Jio Platforms for a 0.39% equity stake. Intel Capital joins the list of firms who have recently invested in Jio Platforms, taking the total investment amount to Rs 1,17,588.45 crore.

COVID-19 Update:

Total COVID-19 confirmed cases worldwide stood at 1,08,73,186 far with 5,21,337 deaths. India reported 2,27,439 active cases of COVID-19 infection and 18,213 deaths, according to the data from the Ministry of Health and Family Welfare, Government of India.

Buzzing Index:

The Nifty Realty index gained 0.9% to 202.85. The index lost 9% in the past seven sessions.

Indiabulls Real Estate (up 4.93%), Godrej Properties (up 3.09%), Phoenix Mills (up 2.35%), Prestige Estates (up 1.64%), Sunteck Realty (up 1.24%), Brigade Enterprises (up 0.87%) and Sobha Realty (up 0.22%) were top gainers in realty segment.

Stocks in Spotlight:

HDFC Life Insurance (up 4.36%) will replace Vedanta (up 0.14%) in the benchmark Nifty 50 index from 31 July 2020. Vedanta has been replaced from 11 indices, including the Nifty 50, Nifty 500, Nifty 100, Nifty Large Midcap 250 and Nifty 200, among others. The replacement comes after Vedanta initiated delisting process from bourses last month.

Meanwhile, SBI Cards and Payments (up 3.44%) will replace HDFC Life Insurance in Nifty Next 50 index.

Motherson Sumi Systems (MSSL) skid 5.%. The board of directors of Motherson Sumi Systems approved a group reorganization plan. The reorganization realigns interests of all its stakeholders and creates a simplified corporate structure for growth of businesses across product portfolios within auto components space and allied operations. The reorganization plan approved by the respective boards of MSSL and Samvardhana Motherson International (SAMIL) among other things, entails demerger of Domestic Wiring Harness (DWH) business from MSSL into a new company which is in the process of being incorporated as a wholly owned subsidiary of MSSL (New Co.) and subsequent merger of SAMIL into MSSL to consolidate 100% shareholding in Samvardhana Motherson Automotive Systems Group BV (SMRP BV) as well as to bring all auto component and allied businesses in SAMIL under MSSL.

Cadila Healthcare rose 0.56% after the pharmaceutical major said its vaccine for COVID-19 has successfully completed pre-clinical development and received permission to initiate human clinical trials. The drug maker announced before trading hours today, 3 July 2020 that its plasmid DNA vaccine candidate for COVID-19 (ZyCoV-D) developed indigenously at its Vaccine Technology Centre in Ahmedabad (Gujarat) has successfully completed the preclinical phase. It has now received permission from the Drug Controller General of India - Central Drugs Standard Control Organisation (CDSCO) to initiate Phase I/II human clinical trials in India.

Muthoot Finance rose 3.46%after the company said its board will meet on 18 July 2020 to consider a stock split. In the same meeting, the board will also seek shareholders' approval to increase its borrowing powers to Rs 75,000 crore from existing Rs 50,000 crore. The announcement was made post market hours yesterday, 2 July 2020.

JSW Steel fell 1.23% to Rs 192.10 after the company's crude steel production fell 30.2% to 2.96 million tons (MnT) in Q1 FY21 from 4.24 MnT in Q1 FY20. The decline was primarily due to a fall in production at Vijayanagar Works after certain employees tested COVID-19 positive. The average capacity utilisation dropped to 76% in June 2020. The production of flat rolled products was down by 29.6% to 2.05 MnT while the production of long rolled products declined 57.1% to 0.45 MnT in Q1 FY21 over Q1 FY20. The operations are now stabilising with reduced employee strength, the steel maker said.

Affle (India) hit an upper circuit of 5% at Rs 1,523.90 after the company said it signed a definitive agreement on 2 July 2020 to acquire 8% stake in Singapore's OSLabs for $2.86 million. The acquisition is likely to complete by 25 July 2020. OSLabs (Indus OS)'s total unaudited consolidated revenue from operations (financial year ended 31 March 2020) was Rs 18.05 crore. OSLabs is a strategic investment for Affle as it owns and operates 'Made for India' Indus App Bazaar which is India's largest independent indigenous apps store and it partners with OEMs in India. Indus App Bazaar with over 400,000 apps in English and 12 Indian languages, enhances Affle's vernacular and verticalization strategy, and strengths Affle's position as the enabling platform for the indigenous apps ecosystem in India.

JB Chemicals & Pharmaceuticals rose 0.51% after US private equity giant KKR on 2 July 2020 agreed to acquire about 54% stake in the Mumbai-based drug manufacturer for Rs 3,109 crore. KKR will make the investment through its subsidiaries, Tau Investments Holdings, Tau Holdco, and KKR Asia III Fund Investments. The deal will see KKR acquire 4.17 crore fully paid-up equity shares of the face value of Rs 2 for a price of Rs 745 per share. The deal triggered an open offer for an additional 26% stake in JB Chemicals. KKR launched an open offer to acquire an additional 26% stake or 2 crore full paid-up equity shares of the drug maker. The open offer will also be made at a price of Rs 745 per share. If successful the open offer will add another Rs 1,496 crore to the deal, taking the total value of the deal to Rs 4,605 crore.

VST Tillers Tractors fell 2.38%. The company's total auto sales jumped 46.03% to 3,480 units in June 2020 from 2,383 units sold in May 2020. The company's total sales, however, are down by 14.13% from 4,053 units sold in June 2019.

Global Markets:

After initial strength, European markets slipped into negative terrain as concern over a spike in U.S. coronavirus infections tempered the optimism arising from upbeat economic data out of the US, China and the euro zone.

Back in Europe, German car sales reportedly plunged 40% in June to a 30-year low. Final IHS Markit services and composite PMI (purchasing managers' index) readings Friday confirmed that the slump in business activity caused by the coronavirus pandemic eased in June as countries began to reopen their economies. The composite reading came in at 48.5 in June, a sharp rise from May's 31.9 and close to the 50 mark, which separates expansion from contraction.

Asian markets ended higher following the overnight gains on Wall Street after a report by the U.S. Labor Department showed another record spike in employment in the month of June 2020.

Meanwhile, China's services sector grew at its fastest pace in over a decade in June 2020 with the Caixin/Markit services Purchasing Manager's Index (PMI) coming in at 58.4 for the month. The 50 level in PMI readings separates growth from contraction on a monthly basis.

The US stock market finished session higher on Thursday, 2 July 2020, with the Nasdaq reached an all-time closing high, as bullish investors took heart from better than expected June 2020 employment report which provided assurance that the U.S. economic recovery was well under way. However, market gains capped amid concerns about rising coronavirus cases.

US nonfarm payrolls surged by 4.8 million jobs in June, thanks to rises in the hard-hit hospitality sectors. A separate report on jobless claims, the most timely data on employment, showed initial claims for state unemployment benefits fell just 55,000 to a seasonally adjusted 1.427 million for the week ended June 27. The number of people receiving benefits after an initial week of aid rose 59,000 to 19.290 million in the week ending Jun. 20.

However, US daily COVID-19 cases topped 50,000 for the first time with increases in major states including Florida, Texas and California. On Thursday, Florida reported a record-shattering 10,000 new cases of the disease.

U.S. financial markets will be closed on Friday to observe the July Fourth holiday which falls on Saturday this year.

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