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Nifty settles below 10,300 mark on F&O expiry

The Sensex and the Nifty ended with small losses on Thursday. Trading was volatile as the June 2020 F&O contracts expired today, 25 June 2020. IT shares declined while FMCG shares climbed. The barometer S&P BSE Sensex declined 26.88 points or 0.08% at 34,842.10. The Nifty 50 index fell 16.4 points or 0.16% at 10,288.90.

The Nifty opened lower at 10,235.55 and hit an intraday low of 10,194.50 in early trade. The index firmed up once again in morning session. The recovery proved short lived and the index tumbled once again near the day's low in early afternoon trade. The Nifty bounced back in mid-afternoon trade and hit the day's high of 10,361.80. It pared gains in late trade and ended with small losses below 10,300 mark.

Investors were cautious amid media reports that China has significantly ramped up its military presence in Pangong Tso, Galwan Valley and several points in eastern Ladakh. According to the reports, People's Liberation Army of China has increased its troops and weaponry along the Line of Actual Control in Arunachal Pradesh, Sikkim and Uttarakhand. India has rubbished China's claim of sovereignty over the Galwan Valley, and said that unilateral attempt to change status quo on LAC will not be accepted.

The broader market advanced. The S&P BSE Mid-Cap index gained 0.62% while the S&P BSE Small-Cap index rose 0.76%.

The market breadth was positive. On the BSE, shares 1532 rose and 1169 shares fell. A total of 119 shares were unchanged.

COVID-19 update:

Total COVID-19 confirmed cases worldwide stood at 94,31,973 far with 4,82,805 deaths. India reported 1,86,514 active cases of COVID-19 infection and 14,894 deaths, according to the data from the Ministry of Health and Family Welfare, Government of India.

Economy:

The International Monetary Fund (IMF) on 24 June 2020 projected a sharp contraction of 4.5% for the Indian economy in 2020, a historic low, citing the unprecedented coronavirus pandemic that has nearly stalled all economic activities, but said the country is expected to bounce back in 2021 with a robust 6% growth rate.

The IMF projected the global growth at -4.9% in 2020, 1.9 percentage points below the April 2020 World Economic Outlook (WEO) forecast. Given the unprecedented nature of this crisis, as is the case for almost all countries, this projected contraction is a historic low, Gita Gopinath, IMF's Chief Economist, said as she released the World Economic Outlook Update.

Numbers to Watch:

The yield on 10-year benchmark federal paper fell to 5.892% as compared with 5.918% at close in the previous trading session.

In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 75.6550, compared with its close of 75.7250 during the previous trading session.

In the commodities market, Brent crude for August 2020 settlement fell 29 cents at $40.02 a barrel. The contract fell $2.32, or 5.44% to settle at $40.31 a barrel in the previous trading session.

Foreign Markets:

The US Dow Jones futures were down 176 points, indicating a negative opening in the US stock market today.

Shares in Europe and Asia were mixed on Thursday after a sharp retreat overnight on Wall Street as new coronavirus cases in the US climbed to their highest level in two months. Markets in Hong Kong, Taiwan and Shanghai were closed for holidays. Global markets continue to digest the IMF's latest forecast for the global economy and warning of soaring debt levels.

The rise in new infections is stoking worries that re-openings of businesses closed earlier to fight the pandemic may have to be curtailed, despite indications that economies are recovering from lockdowns that are being eased in countries across the globe.

The US stock market finished session lower on Wednesday, 24 June 2020, as investor sentiment was dampened by reports showing the increase in number of newly confirmed coronavirus cases and as the US signaled possible new tariffs on European goods.

The US Trade Representative said it was weighing new tariffs on $3.1 billion (RM13.2 billion) in European goods amid a dispute over subsidies to planemaker Airbus, ratcheting up a fresh trade war tensions with the European Union. The Trump administration also has been threatening to reimposing tariffs on imports of aluminum from Canada on July 1 as the new USMCA, or the United States Mexico Canada Agreement, which replaced the North American Free Trade Agreement, is set to take effect.

Buzzing Indian Segments:

The Nifty IT index fell 1.17% to 14,411.20. Infosys (down 2.04%), HCL Technologies (down 1.71%), Oracle Financial Services Software (down 1.63%), TCS (down 1.54%), Persistent Systems (down 1.37%), Tech Mahindra (down 1.26%) and Mindtree (down 0.54%) declined.

Cyient rose 8.40% after the company announced it has collaborated with Microsoft to accelerate Internet of Things (IoT) solutions.

The Nifty FMCG index rose 2.12% to 30,113.25. Hindustan Unilever (up 2.04%), Dabur India (up 0.98%), Marico (up 0.95%), Godrej Consumer Products (up 0.89%), Colgate Palmolive (India) (up 0.64%), Nestle India (up 0.52%), Tata Consumer (up 0.39%), Jyothy Labs (up 0.34%) and Britannia Industries (up 0.11%) jumped.

Earnings Impact:

Indian Oil Corporation (IOCL) declined 2.24% after the PSU OMC reported a consolidated net loss of Rs 7,782.55 crore in Q4 March 2020 as against net profit of Rs 6,004.88 crore in Q4 March 2019. Consolidated net sales of Q4 March 2020 stood at Rs 1,18,007.32, declining 6.4% from Rs 1,26,076 crore in Q4 March 2019. IOCL reported a one-time loss of Rs 11,304.64 crore in Q4 March 2020 on the back of a significant fall in oil prices which lead to a write down in valuation of inventories below cost for the specified period of Rs 6,855.35 crore.

United Breweries (UBL) slipped 0.24% after liquor manufacturer's net profit tumbled 39.2% to Rs 41.58 crore on 12.6% decline in net sales to Rs 1,425.11 crore in Q4 March 2020 over Q4 March 2019. During the quarter, revenue from the beer segment was at Rs 3,095.25 crore (down 10.40% Y-o-Y) and Rs 4.66 crore from non-alcoholic beverages (down 7.17% Y-o-Y).

"COVID-19 impacted performance in the March Quarter 2020. The full year performance was negatively impacted by elections in Q1, overall economic slowdown, unfavorable policy changes in Andhra Pradesh and input cost increases. The price increases taken by the company in the markets of Karnataka, Maharashtra, Rajasthan and Goa helped partially offset increased input prices of barley and new glass bottles resulting in less than 2% reduction in gross margin. In Q4 gross margin increased marginally due to a combination of positive price/mix and more stable input costs," UBL said.

Canara Bank dropped 4.20% after the bank reported net loss of Rs 3,259.33 crore in Q4 March 2020 as against net loss of Rs 551.53 crore in Q4 March 2019. Total income rose 1.6% to Rs 14,222.39 crore in Q4 FY20 over Q4 FY19. Pre-tax loss stood at Rs 3,334.51 crore in Q4 March 2020 compared with pre-tax loss of Rs 2,550.04 crore incurred in Q4 March 2019. Provisions and contingencies slipped 2.68% to Rs 5,375.38 crore in Q4 March 2020 over Rs 5,523.50 crore in Q4 March 2019. The provision coverage ratio of the bank was at 75.86% as on 31 March 2020.

General Insurance Corporation of India (GIC Re) rose 1.54% after consolidated net profit soared 36.4% to Rs 1,260.02 crore on 43.1% jump in total income to Rs 9,886.85 crore in Q4 March 2020 over Q4 March 2019. Consolidated profit before tax (PBT) dropped 26.1% to Rs 1,123.19 crore in Q4 March 2020 as against Rs 1,520.04 crore in Q4 March 2019. On a consolidated basis, GIC Re reported net loss of Rs 186.46 crore in the year ended March 2020 (FY20) as against net profit of Rs 2,757.57 crore in the year ended March 2019 (FY19). Total income rose 15.59% to Rs 52,098.44 crore in FY20 over FY19. Consolidated gross premium income of the company surged 12.94% to Rs 51,515.02 crore in FY20 from Rs 45,611.32 crore in FY19. Investment income of the group grew 10.84% to Rs 7,146.88 crore in FY20 as against Rs 6,447.75 crore in FY19.

Stocks in Spotlight:

IIFL Finance hit an upper circuit of 10% at Rs 82.20 after promoter Nirmal Jain bought an additional 0.12% stake in the NBFC on Wednesday. Promoter Nirmal Bhanwarlal Jain acquired 4,54,000 shares, or 0.12% equity, in IIFL Finance through open market on Wednesday (24 June). Jain's stake in the NBFC increased to 12.61% from 12.49% earlier. Total promoter holding in the NBFC increased to 25.06% from 24.94% earlier. According to Sebi rules, an open offer is triggered if the promoter's stake crosses 25%.

However, IIFL Finance issued a clarification on Thursday (25 June) that the promoter group's voting rights in the company has not exceeded 25% and promoter group has no intent to acquire more than 25% voting rights in the company or make any public offer.

Bharti Infratel fell 2.12% to Rs 228.20 after the company's board extended the long stop date for the long pending merger with Indus Towers to 31 August 2020. Earlier, Bharti Infratel and Indus Towers had in April 2018, entered into a proposed scheme of amalgamation and arrangement to create a pan-India tower company.



Source: Capitalmarket.com