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Market breaks 5-day winning streak; IT shares drag

·8-min read

The market corrected on Wednesday, snapping a five-day rising streak. Mixed global cues triggered profit booking in domestic shares. IT stocks tumbled while metal shares bucked trend.

The barometer S&P BSE Sensex tumbled 345.51 points or 0.94% at 36,329.01. The Nifty 50 index lost 93.90 points or 0.87% at 10,705.75. Both these indices jumped about 5% in the past five trading sessions.

The Nifty opened higher at 10,818.65 on Wednesday, but soon pared gains in early trade. The index hovered around the flat line for most part of the session. Strong selloff in the last hour of trade dragged the benchmark index briefly below 10,700 mark.

In the broader market, the BSE Mid-Cap index fell 0.39% and the BSE Small-Cap index declined 0.43%.

The market breadth was negative. On the BSE, 1246 shares rose and 1513 shares fell. A total of 160 shares were unchanged.

Association of Mutual Funds in India (AMFI) Monthly Data:

Net equity inflows into mutual funds slumped to Rs 240.55 crore in June from Rs 5,256.52 crore in May, as per the latest data released by AMFI. Large cap funds and multi cap funds saw outflows in June. Meanwhile, the total inflows into various debt mutual fund categories stood at Rs 2,861.68 crore, compared to Rs 63,665.54 crore in May.

COVID-19 update:

India reported 2,64,944 active cases of COVID-19 infection and 20,642 deaths while 4,56,830 patients have been cured, according to the data from the Ministry of Health and Family Welfare, Government of India. Total coronavirus cases worldwide stood at 11,830,885 with 544,163 deaths so far, according to data from Johns Hopkins University.

Economy:

Union Finance Minister Nirmala Sitharaman held review meeting with CMDs of 23 Central Public Sector Enterprises (CPSEs) on Tuesday to boost expenditure in the economy. In 2019-20, the capital expenditure (capex) by the 23 CPSEs stood at Rs 1,66,029 crore against the target of Rs 1,64,822 crore, which is 101%. Sitharaman said CPSEs have a very important role in giving a push to the economy. She encouraged the CPSEs to perform better to achieve targets and to ensure that the capital outlay provided to them for the year 2020-21 is spent properly and within time. FM said better performance of CPSEs can help the economy in a big way to recover from the impact of COVID-19. FM stated that extraordinary situation requires extraordinary efforts and with collective efforts, we will not only perform better but also help the Indian economy to achieve better results.

Numbers to Watch:

The yield on 10-year benchmark federal paper fell to 5.778% as compared with 5.792% 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 75.02, compared with its close of 74.9350 during the previous trading session.

In the commodities market, Brent crude for September 2020 settlement fell 7 cents at $43.01 a barrel. The contract fell 2 cents, or 0.05% to settle at $43.08 a barrel in the previous trading session.

Foreign Markets:

European shares traded lower while Asian shares ended mixed on Wednesday. Investors remained concerned over rising coronavirus cases in some parts of the world that cast doubts over the pace of the global economic recovery.

The US stock market tumbled on Tuesday, 07 July 2020, with the S&P 500 snapping its 5-day win streak, as investors withdrew profit off the table amid concerns about sharp jump in new coronavirus cases nationwide coupled with gloomy economic forecasts that suggested uneven economic recovery. Most of sectors declined, with bank stocks, whose performance is linked to the outlook for the economy, led losses. Airline and travel-related stocks, which were among the hardest hit during lockdowns, also fell.

Florida's greater Miami area became the latest US coronavirus hot spot to roll back its reopening, while Texas registered an all-time high in the number of people hospitalized at any one moment with COVID-19 for an eighth straight day. Federal Reserve Bank of Atlanta President Raphael Bostic said the renewed spread of coronavirus may threaten the pace of the recovery as businesses and consumers put plans on hold.

The Organisation for Economic Co-operation and Development factored in the risk of a second wave of COVID-19 in its bleak economic forecasts, adding that countries need to move quick to extend unemployment benefits.

Buzzing Indian Segments:

The Nifty IT index fell 1.72% to 15,513.65. The index jumped 4.83% in the past five trading sessions.

HCL Technologies (down 2.91%), Infosys (down 2.49%), Oracle Financial Services Software (down 1.29%), Wipro (down 0.78%), Tech Mahindra (down 0.77%) and Mphasis (down 0.24%) tumbled.

Sector bellwether TCS fell 2.30% to Rs 2217.65. The company's board will consider Q1 results tomorrow, 9 July 2020.

The Nifty Metal index rose 1.57% to 2,054.30. The index fell 1.73% in the previous session.

Hindustan Copper (up 10.56%), SAIL (up 8.94%), NALCO (up 6.72%), Vedanta (up 2.65%), NMDC (up 2.48%), JSW Steel (up 2.36%), Hindalco Industries (up 1.74%), Tata Steel (up 1.23%) and Jindal Steel & Power (up 0.64%) spurted.

Stocks in Spotlight:

Reliance Industries (RIL) fell 1.46%. Jio Platforms, a subsidiary of RIL, on Tuesday (7 July) received the subscription amount from Jaadhu Holdings, LLC (a wholly owned subsidiary of Facebook Inc). Jio Platforms has allotted equity shares to Jaadhu Holdings following which Jaadhu Holdings holds 9.99% of the fully diluted equity share capital of Jio Platforms.

Maruti Suzuki India declined 2.93%. The company's total production dropped 54.66% to 50,742 units in June 2020 from 1,11,917 units produced in June 2019. Total passenger vehicle production fell 54.87% to 49,476 units in June 2020 over 1,09,641 units in June 2019. On a sequential basis, production level soared 1266% from 3,714 units produced in May 2020.

Titan Company slipped 2.43%. The company said jewellery revenue in May and June months were at slightly below 20% and around 70% compared to the corresponding months of the previous year. The division also sold gold in the bullion market worth Rs 610 crore at market rates to optimize the inventory levels. After suffering complete loss of sales in April due to lockdown, Titan Company started reopening the stores, primarily high street stores, from 6th May onwards in the non-containment areas. As at the end of June 2020, the company has re-opened around 83% of its stores across all businesses. Almost all manufacturing operations have commenced operations.

Indian Oil Corporation (IOCL) rose 0.87% after the company said it has resumed work on projects worth Rs 1.04 lakh crore across the country, after the easing of lockdown from 20 April 2020. IOCL has commenced works on 336 projects that have investment of more than Rs 1 crore in each project, at an anticipated project cost totaling to Rs 1.04 lakh crore. The amount spent on these ongoing projects is about Rs 1,764 crore till the end of June 2020. Additionally, more than 50 projects have also resumed since 1 July 2020, a company said in a statement issued on 8 July 2020.

Yes Bank gained 1.36%. The bank on Tuesday (7 July 2020) announced that the capital raising committee of the board of directors has approved raising funds by way of a further public offering (FPO). It added that the committee would meet "on or after July 10, 2020" to consider and approve the price band and discount if any as permitted under SEBI regulations.

Adani Ports and Special Economic Zone (APSEZ) fell 1.50%. The company said it will raise $1.25 billion through dollar bonds to repay its existing debt. The fund-raising plan was approved by the board of APSEZ on Tuesday (7 July). The bonds will be issued in one or more tranches overseas on a private placement basis or otherwise, to eligible persons, entities, bodies corporate, companies, banks, financial institutions and any other categories of eligible investors permitted to invest in the bonds under applicable laws. The board has authorized the finance committee to determine the detailed terms and conditions thereof.

Lupin fell 0.63%. The drug major recalled metformin hydrochloride extended-release tablets out of an abundance of caution in line with the ongoing interaction with the US Food and Drug Administration on NDMA impurity levels. NDMA is classified as a probable human carcinogen (a substance that could cause cancer) based on results from laboratory tests. NDMA is a known environmental contaminant and found in water and foods, including meats, dairy products and vegetables.

NBCC (India) fell 0.18% after the company said it secured total business worth Rs 431.63 crore in June 2020. The company bagged an EPC order worth Rs 284.63 crore from BHEL for construction of natural draught cooling towers for 5X800 MW Yadadri STPP. It also won a project worth Rs 147 crore for construction & development of student's hostel and faculty apartments at IIT-BHU, Varanasi. The announcement was made on Wednesday (8 July).

NCC lost 1.51%. The construction firm said it received five new orders totaling to Rs 1396 crore in June 2020. All five orders pertain to water division. These orders were received from various state government agencies and do not include any internal orders, NCC said.



Source: Capitalmarket.com