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Budget News

  • Benchmarks decline for 3rd day; RIL corrects 2%
  • July 31,2020  17:00
  • Key domestic benchmarks ended with modest losses on Friday, dragged by Reliance Industries and HDFC twins. Global cues were subdued following a record contraction in US gross domestic in the second quarter.

    The S&P BSE Sensex dropped 129.18 points or 0.34% at 37,606.89. The Nifty 50 index fell 28.70 points or 0.26% at 11,073.45. The Nifty declined 2.01% in three sessions.

    The broader market was positive. The S&P BSE Mid-Cap index gained 0.36% while the S&P BSE Small-Cap index rose 0.82%.

    The market breadth was negative. On the BSE, 1220 shares rose and 1438 shares fell. A total of 177 shares were unchanged.

    COVID-19 Update:

    Total COVID-19 confirmed cases worldwide stood at 1,73,03,253 with 6,73,284 deaths. India reported 5,45,318 active cases of COVID-19 infection and 35,747 deaths while 10,57,805 patients have been discharged, according to the data from the Ministry of Health and Family Welfare, Government of India.

    Numbers to Track:

    The yield on 10-year benchmark federal paper rose to 5.837% compared with previous closing of 5.825% in the previous trading session.

    In the foreign exchange market, the partially convertible rupee edged higher to 74.81 compared with its previous closing 74.845.

    In the commodities market, Brent crude for September 2020 settlement rose 39 cents to $43.33 a barrel. The contract rose 1.85% to end at $42.94 in the previous trading session.

    MCX Gold futures for 5 August 2020 settlement rose 0.87% to Rs 53,600.

    Global Markets:

    European markets were mixed while Asian markets ended mildly lower following a record contraction in US gross domestic in the second quarter.

    Investors cautiously await the outcome of Euro Zone GDP figures. In France, the statistics office said GDP fell by 13.8% in the second quarter of the year. On Thursday, the German statistics office announced the German economy contracted by 10.1% in the second quarter.

    China's official manufacturing Purchasing Managers' Index for July came in above expectations on Friday. The manufacturing PMI for July was at 51.1 from June's 50.9, according to the country's National Bureau of Statistics.

    Japan's industrial output snapped four months of decline in June. Official data released on Friday showed factory output increased 2.7% in June from the previous month when it hit its lowest level since March 2009 during the financial crisis.

    US stock futures rose after some of the biggest tech stocks - Facebook, Amazon, Alphabet and Apple - reported quarterly results that beat expectations. Apple also announced a 4-for-1 stock split.

    The S&P 500 and Dow closed lower on Thursday after data painted a worrying economic picture on a crucial day for corporate earnings reports. The Nasdaq eked out a positive finish as investors braced for a litany of quarterly results from behemoths of the technology and e-commerce world.

    A first reading on US gross domestic product data for the second quarter confirmed the pandemic pummeled the economy. US GDP collapsed at a 32.9% annualized rate during the second quarter, following a 5% slump in the first quarter. The US economy shrank by its sharpest contraction since the second world war. More depressing signs emerged of the coronavirus pandemic's heavy toll on the country's economy. The record-setting quarterly fall in economic growth came as another 1.43 million Americans filed for unemployment benefits last week.

    Investors also worried about the expiration of enhanced employment benefits on Friday as US Congress was no closer to a deal on Thursday to extend or replace the extra $600-per-week in payments to tens of millions thrown out of work by the coronavirus.

    Buzzing Indian Segment:

    The Nifty Pharma index rose 3.56% to 11,148.90. The index has risen 10.80% in four sessions.

    Aurobindo Pharma (up 6.74%), Cadila Healthcare (up 6.68%), Cipla (up 5.01%), Lupin (up 3.78%), Divi's Laboratories (up 2.21%) and r Reddy's Laboratories (up 0.36%) advanced.

    Sun Pharmaceutical Industries jumped 4.27%. The drug major reported a consolidated net loss of Rs 1,655.60 crore in Q1 June 2020 as compared to a net profit of Rs 1,387.48 crore in Q1 June 2019. Net sales declined 9.6% on a year-on-year (YoY) basis to Rs 7,467.19 crore in the first quarter of the financial year 2020-21. Research and development expenses rose 2.1% YoY to Rs 415.19 crore in Q1 June 2020.

    Profit before tax and exceptional items fell 12% to Rs 1,449.43 crore in Q1 FY21 from Rs 1,647.44 crore in Q1 FY20. The company recorded an exceptional expenditure of Rs 3,633.33 crore during the quarter ended 30 June 2020 on account of settlement of civil antitrust matters by Taro Pharmaceuticals U.S.A., Inc., Sun Pharma's subsidiary, with the United States' Department of Justice and certain other provisions relating to the same.

    Stocks in Spotlight:

    HDFC Bank (up 1.69%), Kotak Mahindra Bank (up 1.52%), Asian Paints (up 1.52%) were major index shakers.

    HDFC fell 1.55%. The housing finance major on Thursday (30 July 2020) said that its shareholders approved fund raising up to an amount not exceeding Rs 1.25 lakh crore by issuing redeemable non-convertible debentures and/or other hybrid instruments on private placement basis.

    Reliance Industries (RIL) lost 1.98% to Rs 2066.95. The conglomerate reported a 31% jump in consolidated net profit to Rs 13,248 crore in Q1 June 2020 compared with Rs 10,141 crore in the corresponding period of last year. Total income for the quarter stood at Rs 95,626 crore, down 42.11% compared with Rs 165,199 crore year-on-year.

    The decline in revenue was primarily due to fall in O2C revenues, led by sharp decline of 57.6% in average Brent crude price. Retail business also witnessed 17% decline in revenues due to lockdown and restrictions in store operations. Overall decline in revenue was partially offset by increase in revenue of Digital services business with strong subscriber addition and significant improvement in ARPU.

    The company also managed to bring down total expenditure by about 42% YoY to Rs 87,406 crore in Q1 June 2020 from Rs 1,50,858 crore in Q1 June 2019. EBITDA declined 11.8% to Rs 21,585 crore in Q1 FY21 over Q1 FY20.

    Profit before exceptional item and tax tumbled 40.54% to Rs 8,542 crore during the period under review. Current tax expense slumped 71.09% to Rs 923 crore in Q1 FY21 over Q1 FY20.

    RIL reported exceptional gain of Rs 4,966 crore (net of taxes of Rs 1,508 crore) in Q1 FY21 due to profit on divestment of shares of Reliance BP Mobility Services.

    Reliance Jio Infocomm's net profit surged 182.8% to Rs 2,520 crore on 33.7% increase in operating revenue to Rs 16,557 crore in Q1 FY21 over Q1 FY20. EBITDA jumped 55.4% to 7,281 crore during the period under review. EBITDA margin expanded 613 bps to 44% during the period under review. ARPU during the quarter of Rs 140.3 per subscriber per month. Total wireless data traffic during the quarter of Rs 1,420 crore GB (30.2% YoY growth) with strong customer engagement and best-in-class network performance.

    State Bank of India jumped 2.63% after the bank's net profit surged 81.2% to Rs 4189.34 crore on 5.4% rise in total income to Rs 74,457.86 crore in Q1 FY21 over Q1 FY20.

    Profit before tax stood at Rs 5559.78 crore in Q1 June 2020, up by 36.8% from Rs 4063.22 crore in Q1 June 2019. Tax expense declined 21.7% on a year-on-year (YoY) basis to Rs 1,370.44 crore in the first quarter on the financial year 2020-21.

    Exceptional items for quarter ended 30 June 2020 represent profit of Rs 1,539.73 crore on sale of certain portion of investment in bank's subsidiary SBI Life lnsurance Company.

    The bank's provisions and contingencies increased by 36.1% to Rs 12,501.30 crore in Q1 FY21 from Rs 9,182.94 crore in Q1FY20. Of this, the provision for non performing assets declined by 19.1% YoY to Rs 9,420.46 crore in the June quarter. Provision Coverage Ratio as on 30 June 2020 was 86.32%.

    Indian Oil Corporation ended flat at Rs 88.55. On a standalone basis, net profit dropped 47% to Rs 1910.84 crore on 41% fall in revenue from operations to Rs 88,936.54 crore in Q1 June 2020 over Q1 June 2019.

    Average Gross Refining Margin (GRM) for the period April-June 2020 was at -$1.98 per barrel from $4.69 per barrel in April-June 2019. The core GRM or the current price GRM for the period April-March 2020 after offsetting inventory loss/ gain comes to $4.27 per barrel.

    The company accounted for NIL Budgetary Support in April - June 2020 as against Rs 655.92 crore accounted in April-June 2019 as revenue grants on sale of SKO (PDS).

    Tata Communications hit an upper circuit of 5% at Rs 759.80 after consolidated net profit surged 245.40% to Rs 258.58 crore on 5.6% increase in net sales to Rs 4,402.94 crore in Q1 June 2020 over Q1 June 2019. EBITDA soared 26.2% to Rs 1,042 crore in Q1 FY21 over Q1 FY20. EBITDA margin grew 390 bps to 23.7% in Q1 FY20, on the back of strong profitable growth in data business and focus on cost efficiencies. CAPEX for the quarter stood at Rs 372 crore as compared to Rs 342 crore in Q4 FY20, recording an increase of 8.77% Q-o-Q (quarter-on-quarter).

    Torrent Pharmaceuticals jumped 9.27% after the company reported a 48.6% jump in consolidated net profit to Rs 321 crore on 0.88% rise in total income to Rs 2,060 crore in Q1 June 2020 over Q1 June 2019. EBITDA rose 19% year on year to Rs 664 crore in Q1 June 2020 over Q1 June 2019. R&D spends in Q1 June 2020 were at Rs 108 crore (5% of revenue from operations), declining 21% from Rs 136 crore (7% of revenue from operations) in Q1 June 2019.

    Deepak Fertilisers & Petrochemcials jumped 9.73% after the company's consolidated net profit soared to Rs 121.14 crore in Q1 June 2020 from Rs 10.7 crore in Q1 June 2019. Net sales jumped 23.16% to Rs 1382.08 crore in Q1 June 2020 from Rs 1122 crore in Q1 June 2019.

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