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Shares zoom as India begins phased exit from lockdown

The Sensex and the Nifty ended the day with massive gains on Monday, rising for fourth straight session. Easing of lockdown, better than expected GDP numbers and positive global sentiment boosted market sentiment. Buying was broad based with banks, metals and auto stocks in demand.

As per provisional closing, the barometer S&P BSE Sensex jumped 831.62 points or 2.56% at 33,255.72. The Nifty 50 index gained 234.80 points or 2.45% at 9,815.10.

The Nifty opened higher at 9726.85 and advanced further in early trade. Strong buying in early afternoon pushed the index to the day's high of 9931.60. The barometer witnessed some profit booking at higher level in the later part of the day, which pulled the index near 9800 level at closing.

The broader market rallied. The S&P BSE Mid-Cap index surged 2.67% while the S&P BSE Small-Cap index gained close to 3%.

There were more buyer than sellers. On the BSE, 1887 shares rose and 596 shares fell. A total of 146 shares were unchanged. In Nifty 50 index, 40 stocks advanced while 10 stocks declined.

COVID-19 Update:

Total COVID-19 confirmed cases worldwide stood at 61,71,182 far with 3,72,116 deaths. India reported 93,322 active cases of COVID-19 infection and 5,394 deaths, according to the data from the Ministry of Health and Family Welfare, Government of India.

Economy Reopening:

Union Ministry of Home Affairs (MHA) issued guidelines for a phased-wise reopening of the economy from 1 June 2020. The new rules allow religious places, shopping malls, hotels and restaurants to open from June 8. The government has decided to allow all activities prohibited earlier in areas outside containment zones in a phased manner.

Domestic Macroeconomic Data:

India's economy grew at 3.1% in Q4 March 2020. The gross domestic product (GDP) had expanded by 5.7% in the corresponding quarter of 2018-19, according to data released by the National Statistical Office (NSO). In 2019-20, the Indian economy grew by 4.2% against 6.1% expansion recorded in 2018-19. The government has also revised down the GDP growth in Q1, Q2, and Q3 to 5.2%, 4.4%, and 4.1% respectively.

Estimates will undergo revision as statutory data submission deadlines were extended by government in view of Covid-19 outbreak, Ministry of Statistics and Programme Implementation (MOSPI) said in a press note. Meanwhile, the growth rate of Index of Eight Core Industries for April 2020 declined by 38.1% (provisional) compared to decline of 9% (provisional) in March 2020.

Meanwhile, the seasonally adjusted IHS Markit India Manufacturing PMI rose to 30.8 in May from 27.4 in April. The latest reading pointed to another substantial decline in the health of the Indian manufacturing sector, albeit one that was slightly softer than recorded in April.

Commenting on the latest survey results, Eliot Kerr, Economist at IHS Markit, said: "The latest PMI data suggested that Indian manufacturing output fell further in May. This result is particularly poignant given the record contraction in April which was driven by widespread business closures. The further reduction in May highlights the challenges that businesses might face in the recovery from this crisis, with demand remaining subdued while the longevity of the pandemic remains uncertain."

Q4 Earnings Today:

V-Guard Industries (up 3.96%), Orient Electric (up 6.1%) and Welspun Enterprises (up 3.58%) are some of the companies that will announce their quarterly earnings today.

Earnings Impact:

IDBI Bank hit an upper circuit of 20% at Rs 24.35 after the bank reported a net profit of Rs 135 crore as against net loss of Rs 4,918.44 crore in Q4 March 2019. The bank returned to profit after reporting net loss for last 13 quarters. Total income rose 4.7% to Rs 6,924.94 crore in Q4 March 2020 from Rs 6,616.06 crore in Q4 March 2019. Profit before tax (PBT) stood at Rs 289.66 crore in Q4 March 2020 as against a pre-tax loss of Rs 7,136.90 crore in Q4 March 2019. IDBI Bank posted net interest income of Rs 2,356 crore in Q4 March 2020, rising 46% year-on-year from Rs 1,609 crore posted in the same period last year. Net interest margin stood at 3.8% in Q4 March 2020, rising 154 basis points from 2.26% in Q4 March 2019.

Gross non-performing assets (NPAs) stood at Rs 47,272.37 crore as on 31 March 2020 as against Rs 49,502.68 crore as on 31 December 2019 and Rs 50,027.94 crore as on 31 March 2019. The ratio of gross NPAs to gross advances stood at 27.53% as on 31 March 2020 as against 28.72% as on 31 December 2019 and 27.47% as on 31 March 2019. The ratio of net NPAs to net advances stood at 4.19% as on 31 March 2020 as against 5.25% as on 31 December 2019 and 10.11% as on 31 March 2019. Provisions and contingencies declined 81.4% to Rs 1,584.14 crore in Q4 March 2020 from Rs 8,532.78 crore in Q4 March 2019. Provision coverage ratio (including technical write-offs) is 93.74% as on 31 March 2020.

Jubilant Life Sciences hit an upper circuit of 5% at Rs 464.35 after consolidated net profit stood at Rs 260.49 crore in Q4 March 2020 compared with net loss of Rs 100.65 crore in Q4 March 2019. Consolidated net sales slipped 1.9% to Rs 2,307.32 crore in Q4 March 2020 over Q4 March 2019. The EBITDA grew 58% to Rs 556 crore in Q4 FY20 from Q4 FY19. EBITDA margin improved to 23.3% in Q4 FY20 as against 14.7% in Q4 FY19.

During the quarter, Jubilant Life Sciences signed a licensing agreement with Gilead Sciences to register, manufacture and sell Gilead's investigational drug, Remdesivir, a potential therapy for COVID-19 in 127 countries including India, and is working towards launching the drug in July 2020.

Voltas soared 12% after consolidated net profit rose 12.5% to Rs 159.50 crore on a 1.3% rise in net sales to Rs 2078.39 crore in Q4 March 2020 over Q4 March 2019. Unitary cooling products Segment Revenue (gross) increased by 20% and was Rs 1199 crore in Q4 March 2020 as compared to Rs 998 crores in the corresponding quarter last year. Consolidated profit before tax stood at Rs 216.74 crore in Q4 March 2020, rising by 30.9% from Rs 165.60 crore in Q4 March 2019. Total tax expenses surged 140% to Rs 57.24 crore in Q4 March 2020 from Rs 23.86 in Q4 March 2019.

Amara Raja Batteries jumped 6.5% after consolidated net profit rose 15.3% to Rs 137.30 crore on 0.9% rise in net sales to Rs 1,581.39 crore in Q4 March 2020 over Q4 March 2019. Consolidated profit before tax stood at Rs 178.93 crore in Q4 March 2020, rising 0.5% from Rs 177.99 crore in the same period last year. Total tax expenses declined 17.4% to Rs 48.63 crore in Q4 March 2020 from Rs 58.91 crore in Q4 March 2019. The result was announced on Saturday, 30 May 2020.

Rashtriya Chemical & Fertilizers (RCF) surged 13.38% to Rs 45.10 after consolidated net profit surged 202% to Rs 142.38 crore on 15% increase in net sales to Rs 2606 crore in Q4 March 2020 over Q4 March 2019. Profit before tax stood at Rs 200 crore in Q4 March 2020, surging 146% from Rs 81.38 crore in the same period last year. Total tax expenses rose 69% to Rs 57.85 crore in Q4 March 2020 over Q4 March 2019. The result was announced after market hours on Friday, 29 May 2020.

Buzzing Index:

The Nifty Bank surged 3.58% to 19,987.35, continuing its winning run to fifth consecutive trading session. The index has gained 15.6% in just five trading sessions from its previous closing low of 17278.9 reported on 22 May 2020.

Punjab National Bank (up 9.16%), Bank of Baroda (up 8.86%), RBL Bank (up 8.13%), IDFC First Bank (up 7.24%), SBI (up 5.77%), Bandhan Bank (up 4.61%), IndusInd Bank (up 4.28%), HDFC Bank (up 3.91%), Federal Bank (up 3.79%), Axis Bank (up 3.25%), ICICI Bank (up 2.43%) and Kotak Mahindra Bank (up 1.91%) were top gainer in Nifty Bank index.

Stocks in Spotlight:

Mahindra & Mahindra (M&M) surged 7.03% to Rs 467.10 after the company's Farm Equipment Sector (FES) reported over five times rise in May tractor sales, as it sold 24,341 units during the month as compared to 4,772 units sold in April. While FES' domestic sales rose 2% to 24,017 units, exports contracted by 72% to 324 units in May 2020 over the corresponding period last year.

Escorts' Agri Machinery Segment (EAM) sold a total of 6,594 tractors in May 2020, a decline of 3.4% as against 6,827 tractors sold in May 2019. The company's domestic tractor sales in May 2020 stood at 6,454 tractors, registering a minor decline of 0.5% as against 6,488 units in May 2019. Exports in May 2020 stood at 140 tractors as against 339 tractors sold in May 2019, down 58.7% YoY. Shares of Escorts were up 6.76% at Rs 967.65 on BSE, rising for fourth consecutive trading session

Biocon soared 5% after the company's partner Mylan received favourable ruling from the United States Patent and Trademark Appeal Board (US PTAB) on Sanofi's four device patents for Lantus SoloSTAR. The PTAB found three claims of the 9,604,008 patent unpatentable, and two claims to be patentable. However, Mylan and Biocon have previously obtained a covenant not to sue from Sanofi on the ‘008 patent and therefore this ruling does not impact Biocon and Mylan's ability to commercialize Semglee (Insulin Glargine) upon final approval from the U.S. Food and Drug Administration.

Adani Power surged 7.69% after the company said its board will consider delisting proposal on 3 June 2020. The promoter group collectively held 74.97% stake while the public shareholders held 25.03% stake in the company as on 29 May 2020.

Global Markets:

European markets were trading higher while Asian markets closed with decent gains on Monday as economies continued to progress on the reopening front. The gains were led by Chinese stocks after the data released over the weekend showed the country's factory activity expanding for third straight month.

China's National Bureau of Statistics said that the manufacturing activity in the country eased slightly, reporting official manufacturing PMI of 50.6 for the month of May, as compared to 50.8 in April. PMI readings above 50 indicate expansion, while those below that level signal contraction.

Meanwhile, the Caixin/Markit manufacturing PMI for May came in at 50.7 as compared to the April reading of 49.4. Caixin and IHS Markit said, "May data signalled a further increase in output following February's record decline, with firms widely mentioning the resumption of works due to an easing of COVID-19 related measures."

The US equity market finished volatile session mostly higher on Friday, 29 May 2020, as traders seems relief after newly announced US policies to punish China did not threaten a trade detente between Washington and Beijing.

President Donald Trump lashed out at China in his brief remarks, but traders seemed relieved that he did not announce new tariffs or a withdrawal from the phase one trade agreement. Following China's recent move to approve a controversial security law for Hong Kong, Trump said he is directing his administration to remove special exemptions for the city. Trump argued Hong Kong is "no longer sufficiently autonomous" to warrant preferential treatment by the U.S., claiming China has abandoned the idea of "one country, two systems."