Market rises for 4th day; Nifty ends near 10,800

July 06,2020

The market advanced for fourth straight session on Monday, tracking strong global cues. Auto, metal and realty stocks were in demand. Strength in index heavyweights Reliance Industries (RIL) (up 3.55%) and TCS (up 2.63%) boosted the indices.

As per provisional closing, the barometer S&P BSE Sensex rallied 465.86 points or 1.29% at 36,487.45. The Nifty 50 index surged 162.15 points or 1.53% at 10,769.50.

Investors' risk appetite also strengthened after the media reported that India and China have begun a slight disengagement from the face-off sites in the Galwan Valley and Gogra-Hot Springs areas of eastern Ladakh. According to the reports, the Chinese People's Liberation Army (PLA) has possibly moved back by 1 to 1.5 km from the friction site in Galwan Valley. The PLA was seen removing tents and structures at Patrolling Point 14, reports added.

As per the proposed disengagement plan, the rival troops will gradually move back distances of 2.5 to 3 km in phases to de-escalate tensions at the face-off sites, which will later be followed by de-induction of huge military build-ups along the LAC.

The Nifty opened higher at 10,723.85 and advanced further as the session progressed. The index crossed 10,800 mark in afternoon trade, but profit booking pulled the index below that level. The Nifty is near its 200-day simple moving average placed at 10,881.60.

In the broader market, the S&P BSE Mid-Cap index rose 1.27% while the S&P BSE Small-Cap index gained 1.3%.

The market breadth was strong. On the BSE, 1,637 shares rose and 1155 shares fell. A total of 188 shares were unchanged on the BSE. In Nifty 50 index, 40 stocks advanced while 10 stocks declined.

Foreign portfolio investors (FPIs) bought shares worth Rs 857.29 crore, while domestic institutional investors (DIIs), were net sellers to the tune of Rs 331.96 crore in the Indian equity market on 3 July, provisional data showed.

COVID-19 Update:

India reported 2,53,287 active cases of COVID-19 infection and 19,693 deaths, according to the data from the Ministry of Health and Family Welfare, Government of India. Total coronavirus cases worldwide stood at 11,458,291 with 534,460 deaths so far, according to data from Johns Hopkins University.

Buzzing Segment:

Fertilizers stocks were in demand following the record fertilizer sale during April-June 2020. Deepak Nitrite (up 7.23%), SRF (up 5.55%), Chambal Fertilisers & Chemicals (up 4.98%), Rashtriya Chemicals and Fertilisers (up 3.45%), Fertilisers & Chemicals Travancore (up 2.92%), Gujarat State Fertilizers & Chemicals (up 2.67%), Deepak Fertilisers & Petrochemicals Corporation (up 2.49%), Zuari Global (up 1.77%) and Tata Chemicals (up 1.09%) advanced.

National Fertilizers jumped 14.29% after the company said fertiliser sales jumped 21.5% in Q1 June 2020 over Q1 June 2019.

During April-June 2020 POS sale of fertilizers to farmers was 111.61 lakh metric tonne (MT) which is 82.81% higher than the last year sale of 61.05 lakh MT during the same period.

Stocks in Spotlight:

ICICI Bank was up 0.25%. The bank's board will meet on 8 July 2020 to consider the proposal of raising funds by issue of equity shares and/or other equity linked securities, through permissible modes.

HDFC Bank added 2.74% after the private lender's advances aggregated to approximately Rs 10,04,500 crore as of 30 June 2020, registering a growth of around 21% from Rs 8,29,700 crore registered in 30 June 2019. Deposits aggregated to approximately Rs 11,89,500 crore as of 30 June 2020, registering a growth of around 25% from Rs 9,54,600 crore in 30 June 2019.

IndusInd Bank rose 1.67% after the bank said its net advances rose 4% to Rs 2,00,357 crore in Q1 June 2020 from Rs 1,93,520 crore from Q1 June 2019. Deposits stood at Rs 2,11,970 crore in Q1 FY21, up 6% from Rs 2,00,586 crore in Q1 FY20.

Federal Bank gained 1.42% after the private bank's total deposits grew 17% to Rs 1.54 lakh crore (provisional) as on 30 June 2020 as against Rs 1.32 lakh crore as on 30 June 2019. Gross advances advanced 8% to Rs 1.23 lakh crore (provisional) as on 30 June 2020 compared with Rs 1.13 lakh crore as on 30 June 2019.

HDFC was down 0.9%. The housing finance company announced that it assigned loans amounting to Rs 1,376 crore in Q1 June 2020, down 80.97% compared with Rs 7,230 crore in Q1 June 2019. All the loans assigned during the quarter were to HDFC Bank pursuant to the buyback option embedded in the home loan arrangement between HDFC and HDFC Bank. In Q1 June 2020, the profit on sale of investments was Rs 1,241 crore, lower than Rs 1,894 crore in Q1 June 2019. This was on account of the sale of 2.60 crore equity shares of HDFC Life Insurance Company (HDFC Life). As at 30 June 2020, HDFC's equity shareholding in HDFC Life stood at 50.1%. The Reserve Bank of India has mandated that HDFC reduce its shareholding in HDFC Life to 50% or below by 16 December 2020. Gross income from dividend for Q1 June 2020 was Rs 298 crore, higher than Rs 1 crore in corresponding period of the previous year

Edelweiss Financial Services tumbled 3.38% after the NBFC reported a consolidated net loss of Rs 2,281.55 crore in Q4 March 2020 as against net profit of Rs 246.32 crore in Q4 March 2019. The NBFC's total income dropped 35.4% to Rs 1,965.87 crore in Q4 FY20 from Rs 3,041.20 crore in Q4 FY19. Edelweiss said its total impairment stood at Rs 2,549 crore in Q4 March 2020 based on revisions in the Expected Credit Loss (ECL) model and impact of COVID-19.

Kalpataru Power Transmission jumped 9.8% after the company said it signed definitive agreements to sell Alipurduar Transmission to Adani Transmission for a total enterprise value of about Rs 1286 crore.

Sobha rose 4.24% after the realtor achieved new sales volume of 650,400 square feet valued at Rs 488 crore, with a total average realization of Rs 7,498 per square feet in Q1 June 2020. Sobha's share in total sales value is at Rs 393.10 crore.

Indian Energy Exchange (IEX) gained 2% after the electricity market at IEX witnessed a total trade of 4790 MU in June 2020, recording a 5% year-on-year increase. The total electricity market trade rose in June despite the national peak demand registering a 10% YoY decline during the month.

Prism Johnson hit an upper circuit of 10% to Rs 48.50 after the company on Monday (6 July) said its board approved divestment of its entire holding of 51% of the paid-up equity share capital in Raheja QBE General Insurance Company, a material subsidiary. The stake will be sold for an aggregate consideration of Rs 289.68 crore to QORQL, a technology company with majority shareholding of Vijay Shekhar Sharma and remaining held by Paytm (owned by One97 Communications).

The company separately announced on Monday (6 July) that it has agreed to acquire an additional 35,00,000 equity shares at Rs 37 each, aggregating to Rs 12.95 crore, constituting 35% in the total paid-up equity share capital of Sanskar Ceramics. The company presently holds 15% of the paid-up equity share capital in Sanskar. Subsequent to the aforesaid investment, the shareholding of the company in Sanskar would increase to 50%. Sanskar is engaged in the business of manufacturing of ceramic tiles at Morbi in Gujarat.

Meanwhile, the firm said on Friday (4 July) that it continues to tightly manage its cash flows, keeping enough liquidity in hand and making sure that working capital limits remain majorly undrawn. The liquid investment balance at the end of Q1 June 2020 was more than Rs 470 crore. During Q1, the net debt was reduced by about Rs 275 crore at standalone level. Certain loan installment which were due in later part of FY 20-21 and FY 21-22 were prepaid during the last quarter. The company added that it continues to explore its strategy of pre-payment/refinancing of loans well in advance. These measures would enable it to optimize interest cost and take care of loan obligations upto March 2022.

Global Markets:

European shares traded with decent gains while Asian markets were up across the board on Monday as investors focused on the prospect of economic recovery and progress on potential coronavirus drugs, shrugging off concerns about a further acceleration of the pandemic.

US market was shut on Friday to observe the July Fourth holiday which falls on Saturday this year. The Dow Jones Futures were trading 341 points higher, indicating a strong opening in US markets.

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