Benchmark indices ended with strong gains on Wednesday after the Reserve Bank of India (RBI) announced measures to tackle the rising second wave of COVID-19 pandemic. The Nifty managed to close above the 14,600 mark. Barring the Nifty Realty index, all sectoral indices on the NSE ended in the green.
The S&P BSE Sensex, rallied 424.04 points or 0.88% to 48,677.55. The Nifty 50 index gained 121.35 points or 0.84% to 14,617.85.
Sun Pharmaceutical Industries (up 5.94%), Kotak Mahindra Bank (up 2.42%), ICICI Bank (up 1.88%), TCS (up 1.55%) and HDFC Bank (up 1%) boosted the indices.
In the broader market, the BSE Mid-Cap index rose 1.05% and the BSE Small-Cap index added 0.77%.
The market breadth was strong. On the BSE, 1,834 shares rose and 1,110 shares fell. A total of 168 shares were unchanged.
COVID-19 Update:
Total COVID-19 confirmed cases worldwide stood at 15,43,66,761 with 32,27,887 deaths. India reported 34,87,229 active cases of COVID-19 infection and 2,26,188 deaths while 1,69,51,731 patients have been discharged, according to the data from the Ministry of Health and Family Welfare, Government of India.
India records 3,780 fresh fatalities, over 3.80 lakh cases in single day.
In a significant move that could boost the creation of health infrastructure for Covid care, the corporate affairs ministry (MCA) on Wednesday clarified that spending CSR funds for the establishment of medical oxygen generation and storage plants; manufacturing and supply of oxygen concentrators, ventilators, cylinders and other medical equipment for countering Covid are eligible CSR activities under company law.
India Services PMI:
Falling from 54.6 in March to 54 in April, the seasonally adjusted India Services Business Activity Index pointed to the slowest increase in output for three months. The latest reading was indicative of a solid rate of expansion that outpaced the long-run survey average. Anecdotal evidence indicated that ongoing growth of new work underpinned the rise in output, which was nevertheless stymied by the intensification of the COVID-19 crisis. The rate of increase in new business matched that seen in March.
RBI Governor Speech:
The Reserve Bank of India (RBI) Governor Shaktikanta Das in his address to the media said that wide-ranging and swift actions are needed against the spread of the second COVID-19 wave. The central bank is monitoring emerging developments while Das said the global economic outlook is highly uncertain and clouded with downside risks. Das further added that in India's fight against second wave of COVID-19, the RBI proposed to take extra measures. The bank will continue to monitor the emerging situation and deploy all instruments at its command, Das said. Disruption in manufacturing units so far is minimal. Consumption demand is holding up, he added.
RBI announced several measures to protect small and medium businesses, individual borrowers from the adverse impact of the intense second wave of COVID-19 across the country. RBI will undertake a purchase of government securities of Rs 35,000 crore in the next two weeks under the newly introduced GSAP-2.0. RBI announced term liquidity facility of Rs 50,000 crore to ease access to emergency health services. The central bank has also decided to conduct special three-year long-term repo operations (SLTRO) of Rs 10,000 crore at repo rate for the small finance banks (SFBs).
The RBI has also asked banks not to penalise till 31 December 2021 customers whose periodic KYC updating is due or pending. The RBI also gave a three-month extension under which banks could deduct loans to new MSME borrowers from their net demand and time liabilities (NDTL) for calculation of the cash reserve ratio (CRR).
Numbers to Watch:
The yield on 10-year benchmark federal paper fell to 5.978% as compared with 6.015% at close in the previous trading session.
In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 73.91, compared with its close of 73.8525 during the previous trading session.
MCX Gold futures for 4 June 2021 settlement fell 0.02% to Rs 46,860.
The US Dollar index (DXY), which tracks the greenback's value against a basket of currencies, fell 0.04% to 91.25.
In the commodities market, Brent crude for July 2021 settlement rose 94 cents at $69.82 a barrel. The contract rose $1.32, or 1.95% to settle at $68.88 a barrel in the previous trading session.
Foreign Markets:
European shares were trading higher while Asian markets declined on Wednesday as sentiment took a knock from a selloff in large cap Wall Street tech stocks.
In US, the Nasdaq fell more than 2% on Tuesday as steep declines in megacap growth stocks pushed Wall Street below record trading levels, with investors seeking shelter in more defensive parts of the market.
U.S. Treasury Secretary Janet Yellen said Tuesday that interest rates may have to rise to keep a lid on the burgeoning growth of the U.S. economy brought on in part by trillions of dollars in government stimulus spending. The former Fed chair later tempered her comments somewhat on the need for higher rates, saying she respects the Federal Reserve's independence and was not trying to influence decision-making there.
Earnings Impact:
Adani Enterprises rose 0.45%. The company reported a 282.2% jump in consolidated net profit to Rs 233.95 crore in Q4 FY21 from Rs 61.21 crore in Q4 FY20. Revenue from operations inched up 0.7% year-on-year (YoY) to Rs 13,525.07 crore during the quarter. The profit for Q4 FY21 was impacted by one-time exceptional loss of Rs 179.45 crore. The EBIDTA for the quarter increased by 65% at Rs 1068 crore owing to better margins in IRM segment and increased sales in domestic content requirement segment in solar manufacturing business, leading to better profits.
SRF rose 1.95%. The chemical maker reported 96% jump in consolidated net profit to Rs 381 crore on 40% jump in revenue from operations to Rs 2,608 crore in Q4 FY21 over Q4 FY20. The company's Earnings before Interest and Tax (EBIT) increased 73% to Rs 575 crore in Q4FY21 over Q4FY20. The company's chemicals business reported an increase of 31% in its segment revenue to Rs 1,153 crore during Q4FY21 from Rs 882 crore reported in the corresponding period last year.
Adani Ports & Special Economic Zone (APSEZ) fell 3.98%. On a consolidated basis, the company posted 285% jump in net profit to Rs 1287.80 crore on 21.1% rise in total income to Rs 4072.42 crore in Q4 FY21 over Q4 FY20. Profit before tax soared by 500% to Rs 1539 crore in Q4 FY21 as against Rs 256.73 crore in Q4 FY20. The company's operating revenue grew 24% year on year to Rs 3,608 crore in Q4 FY21. EBITDA (excluding forex gain of Rs 24 crore in Q4 FY21 versus forex loss of Rs 1,004 crore in Q4 FY20) jumped 39% year on year to Rs 2287 crore in Q4 FY21.
Procter & Gamble Hygiene & Health Care (PGHH) fell 2.14%. The FMCG company posted a 7.9% rise in net profit to Rs 98.33 crore on 15.8% jump in net sales to Rs 759.66 crore for Q3 March 2021 over Q3 March 2020. The FMCG company's profit before tax (PBT) grew 3.5% to Rs 129.23 crore in Q3 March 2021 over Q3 March 2020. The growth in revenues was backed by the strength of trusted product portfolio and strong retail execution. Both the feminine care and healthcare business delivered strong double-digit sales growth in the quarter.
Adani Total Gas added 0.28%. The company's consolidated net profit jumped 18.6% to Rs 144.82 crore on 26.4% surge in net sales to Rs 584.48 crore in Q4 FY21 over Q4 FY20. On a standalone basis, the combined volume of CNG and PNG stood at 166 MMSCM (Million Metric Standard Cubic Meter) in Q4 FY21 as against 145 MMSCM in Q4 FY20, registering a growth of 14.48% Y-o-Y (year-on-year). The average volume in Q4 FY21 increased to 1.85 MMSCMD (Million Metric Standard Cubic Meter Per Day) as compared to average volume of 1.67 MMSCMD in Q3 FY21, showing recovery of 11% on Q-o-Q (quarter-on-quarter) basis.
IIFL Securities jumped 3.55% after the company reported 107.5% increase in consolidated net profit to Rs 77.31 crore in Q4 FY21 compared with Rs 37.25 crore in Q4 FY20. Total income during the quarter increased 22.1% year-on-year (YoY) to Rs 256.29 crore. Profit before tax in Q4 FY21 was at Rs 91.58 crore, up by 79.7% from Rs 50.96 crore in Q4 FY20. Assets under management stood at Rs 43,755 crore as on 31 March 2021.
RBL Bank rose 1.35%. The bank reported 34.1% drop in net profit to Rs 75.34 crore on 3.6% decline in total income to Rs 2610.83 crore in Q4 FY21 over Q4 FY20. Net Interest Income (NII) declined by 11% to Rs 906 crore in Q4 FY21 over Q4 FY20. Net Interest Margin (NIM) was at 4.17% as on 31 March 2021 as against 4.93% as on 31 March 2020. Cost to income was 45% in Q4 FY21 as against 50.6% in Q4FY20. The bank's operating profit grew 17% to Rs 877 crore in Q4 March 2021 from Rs 752 crore in Q4 March 2020. Provisions and contingencies increased 27.5% to Rs 766.25 crore in Q4 FY21 compared with Rs 601.17 crore in Q4 FY20. On the asset quality side, gross non-performing assets (NPAs) stood at Rs 2,601.53 crore as on 31 March 2021 as against Rs 1,050.21 crore as on 31 December 2020 and Rs 2,136.52 crore as on 31 March 2021.
Larsen & Toubro Infotech (LTI) gained 1.70% after the company's consolidated net profit rose 5.1% to Rs 545.70 crore on 3.7% increase in revenue to Rs 3,269.40 crore in Q4 FY21 over Q3 FY20. LTI's consolidated net profit surged 27.6% and revenue increased 8.8% in Q4 FY21 over Q4 FY20. Consolidated EBITDA margin stood at 21.9% in Q4 FY21 compared with 19.2% in Q4 FY20 and 23.2% in Q3 FY21. Total headcount was at 35,991 in Q4 FY21 as against 31,437 in Q4 FY20 and 33,983 in Q3 FY21. The attrition rate (LTM) stood at 12.3% in Q4 FY21 as against 16.5% in Q4 FY20 and 12.4% in Q3 FY21. In dollar terms, revenue grew 4.6% Q-o-Q and 9.1% Y-o-Y to $447.40 million. The constant currency revenue growth was 4.4% Q-o-Q and 7.1% Y-o-Y.
DCM Shriram fell 4%. The company reported 15.1% rise in consolidated net profit to Rs 231.72 crore on 16.7% increase in net sales to Rs 2,174.92 crore in Q4 FY21 over Q4 FY20. Profit before tax in the fourth quarter was at Rs 308.50 crore, up 24.4% from Rs 247.91 crore in the same period last year. Net debt as on 31 March 2021 stood at Rs 180 crore as compared to Rs 1,623 crore as on 31 March 2020. The reduction in debt was led by lower sugar inventory and significantly lower fertilizer subsidy outstanding. Judicious approach to capex and working capital across businesses also led to lower net debt.
Stocks in Spotlight:
IDBI Bank jumped 4.40%. The Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, on Wednesday gave its in-principle approval for strategic disinvestment along with transfer of management control in IDBI Bank. The extent of respective shareholding to be divested by GoI and LIC shall be decided at the time of structuring of transaction in consultation with RBI.
Hikal hit an upper circuit of 10% at Rs 313.65 after the company said it signed a 10-year multi product deal with a leading global pharmaceutical innovator company. The contract entails the development and supply of a portfolio of niche APIs over a period of 10 years. The development will start this year and commercial supplies will commence post successful development and plant commercialisation estimated to be in FY 2024 onwards. With this deal, Hikal is entering into a niche area of chemistry and products thereby bolstering its animal health vertical. Hikal and its customer will be jointly investing at its Panoli, Gujarat site to setup a multipurpose manufacturing asset for manufacturing of these APIs.
InterGlobe Aviation added 1.85% after the aviation company said that a meeting of the board of directors of the company is scheduled on 7 May 2021, to consider and approve raising of funds by issue of equity shares through qualified institutions placement (QIP).
Hindustan Aeronautics (HAL) gained 1.56% after the company said it signed an MoU with Rolls-Royce to establish packaging, installation, marketing and services support for Rolls-Royce MT30 marine engines in India. Through this MoU, Rolls-Royce and HAL will expand their long-standing partnership in India and work together in the area of marine applications for the first time. MT30 is a naval gas turbine currently in-service with naval programs worldwide in various propulsion arrangements across seven ship types.
Alembic Pharmaceuticals dropped 5.05%. The drug maker received a final approval from the US drug regulator for its Abbreviated New Drug Application (ANDA) for dorzolamide hydrochloride and timolol maleate ophthalmic solution. The approved ANDA is therapeutically equivalent to the reference listed drug product (RLD), Cosopt Ophthalmic Solution, 2% and 0.5% of Akorn Operating Company.
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