Key equity barometers ended near the flat line with some positive bias on Wednesday. The barometer S&P BSE Sensex rose 18.75 points or 0.05% at 36,051.81. The Nifty 50 index rose 10.85 points or 0.10% at 10,618.20.
After surging over 2% in afternoon trade, the Sensex and the Nifty witnessed sharp profit booking in the late trade. Rally in IT shares supported gains. However, a sharp reversal in index major Reliance Industries (RIL) put pressure on bourses.
Global cues were strong as hopes for the swift launch of COVID-19 vaccines countered fears about the surge in coronavirus cases.
In the broader market, the BSE Mid-Cap index lost 0.35% and the BSE Small-Cap index fell 0.05%. Both these indices underperformed the Sensex.
The market breadth was negative. On the BSE, 1092 shares rose and 1532 shares fell. A total of 155 shares were unchanged.
India reported 3,19,840 active cases of COVID-19 infection and 24,309 deaths, according to the data from the Ministry of Health and Family Welfare, Government of India. Total coronavirus cases worldwide stood at 1,33,23,530 with 5,78,628 deaths so far, according to data from Johns Hopkins University.
Numbers to Watch:
The yield on 10-year benchmark federal paper fell to 5.815% as compared with 5.825% 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 75.15, compared with its close of 75.42 during the previous trading session.
In the commodities market, Brent crude for September 2020 settlement rose 37 cents at $43.27 a barrel. The contract rose 18 cents, or 0.42% to settle at $42.90 a barrel in the previous trading session.
The US Dow index futures were up 418 points, indicating a strong opening in the US stocks later today.
European markets advanced while Asian markets ended mostly higher after Biotech firm Moderna's potential vaccine to prevent COVID-19 produced a "robust" immune response, or neutralizing antibodies, in all 45 patients in its early stage human trial, according to newly released data in the peer-reviewed New England Journal of Medicine.
Meanwhile, the Bank of Japan said in its outlook report on Wednesday that the country's economy is "likely to improve gradually" from the second of this year, though the pace is "expected to be only moderate" as the impact of the coronavirus pandemic remains globally.
"For the time being, the Bank will closely monitor the impact of COVID-19 and will not hesitate to take additional easing measures if necessary, and also it expects short- and long-term policy interest rates to remain at their present or lower levels," the BoJ reported added.
US stock indexes closed near session highs Tuesday, after Federal Reserve Gov. Lael Brainard called for sustained large-scale asset purchases by the US central bank to help the economy rebound amid a "thick fog of uncertainty" brought on by COVID-19.
Investors continued to monitor the corporate earnings, efforts by some US states to close down businesses again coupled with rising coronavirus cases and deteriorating US-China relations.
Simmering tensions between the United States and China loom large, as US President Donald Trump on Tuesday said he signed legislation to impose sanctions on China in response to its interference with Hong Kong's autonomy. Trump also said he signed an executive order ending Hong Kong's special status with the U.S.
Reliance Industries 43rd AGM:
Index major Reliance Industries (RIL) fell 3.71% to Rs 1845.60. The stock jumped as much as 3.23% to hit a record high of Rs 1978.50 in afternoon trade.
Jio Platforms, a subsidiary of the company, today (15 July) signed binding agreements with Google International LLC pursuant to which Google would invest Rs 33,737 crore for a 7.73% equity stake in Jio Platforms on a fully-diluted basis. Google is investing at an equity valuation of Rs 4.36 lakh crore, RIL said in a statement issued on bourses today, 15 July.
With this, the total investment from financial and strategic investors into Jio Platforms stands at Rs 1,52,056 crore.
RIL held its 43rd annual general meeting (AGM) virtually. The company's chairman and managing director Mukesh Ambani hosted the meeting.
Reliance Jio has made a complete 5G solution from "scratch” which would enable the company to launch world-class 5G services in India. Ambani announced that the "Made in India" tech can be deployed and launched within a year's time once the 5G spectrum is available.
"Due to unforeseen circumstances and COVID-19, the deal with Saudi Aramco has not progressed as per the earlier timeline. We are committed to a long-term partnership with Saudi Aramco," Ambani said.
"Our O2C business has competitive feedstock streams that are the building blocks for specialty and new value chains of Acetyls, Acrylates, Phenols and Polyurethanes. Reliance has been approached by global companies for strategic partnerships in its petrochemical business, including in utilizing these feedstocks. These potential partnerships will help us build competitive manufacturing capacity at our existing sites to serve the deficit Indian market that still depends on large-scale imports of chemicals," stated Ambani.
For Reliance Retail, Ambani said: "Four things that give me huge satisfaction are: First, more than two-thirds of our nearly 12,000 stores are operated in Tier II, Tier III and Tier IV towns. Second, the deep-rooted bond with tens of thousands of farmers that has helped us source over 80% of our fresh fruits and vegetable directly from farmers. We sell more fruits and vegetables than any other organised retailer in the country. Third, we continue to provide large employment and development opportunities for lakhs of people across India. Fourth, our growth model is based on partnership with small merchants and shopkeepers."
"We have successfully piloted JioMart grocery model with kirana partners. The beta version of JioMart grocery platform is being piloted in 200 cities. Daily orders have crossed 2.5 lakh, and the number is growing each day," Ambani said.
The Nifty IT index surged 5.24% to 16,459.80. The index had lost 1.13% yesterday.
TCS (up 2.85%), HCL Technologies (up 4.13%) and Tech Mahindra (up 2.78%) advanced.
IT major Infosys rose 6.16% to Rs 831.45. The IT major reported a 2% fall in consolidated net profit to Rs 4,233 crore on a 1.7% rise in revenue from operations to Rs 23,665 crore in Q1 June 2020 (Q1FY21) over Q4 March 2020 (Q4FY20). The result was announced after market hours today, 15 July 2020.
Consolidated profit before tax (PBT) stood at Rs 5792 crore in Q1FY21, rising 5.39% from Rs 5496 crore in Q4FY20. Total tax expense jumped 30% to Rs 1520 crore in Q1FY21 over Q4FY20.
On a consolidated basis, operating profit jumped nearly 9% to 5,365 crore in Q1FY21 from Rs 4,927 crore posted in Q4FY20. Operating margin stood at 22.7% in Q1FY21 higher than 21.2% in Q4FY20.
Sequential revenue growth in constant currency terms declined 2% in Q1FY21. After skipping in last quarter, Infosys said that FY21 revenue growth guidance is in the range of 0-2% in constant currency terms.
Seperately, US-based Vanguard and Infosys announce strategic partnership for digital transformation of Vanguard's defined contribution record keeping business.
Wipro rallied 16.84% to Rs 262.95 after the IT major reported a 2.76% rise in consolidated net profit to Rs 2390.40 crore on a 5% decline in revenue from operations to Rs 14913.10 crore in Q1 June 2020 (Q1FY21) over Q4 March 2020 (Q4FY20).
In dollar terms, IT services revenue stood at $1921.60 million in Q1, a decrease of 7.3% QoQ. Sequential revenue growth in constant currency terms declined 7.5% in Q1FY21. IT services operating margin improved to 19% in Q1FY21 from 17.6% in Q4FY20.
Wipro said that the conditions caused by the Covid-19 pandemic could decrease technology spending. This may adversely affect demand for the company's products and also affect the rate of customer spending which could adversely affect the customers' ability or willingness to purchase its offerings.
Meanwhile, Wipro on Tuesday said it has signed an agreement to acquire Brazil-based IVIA Serviços de Informática for about $22.4 million. IVIA's local talent and long-standing relationships, combined with Wipro's global expertise, will help expand the information technology firm's geographical footprint in Brazil, Wipro said in a statement. The acquisition will also help Wipro set up delivery centres in the northeast of Brazil leveraging IVIA's workforce, it added.
Stocks in Spotlight:
Bandhan Bank fell 0.78% after the bank's standalone net profit fell 31.58% to Rs 549.81 crore on a 14.93% increase in total income to Rs 3,404.84 crore in Q1 June 2020 over Q1 June 2019. Profit before tax tanked 40.22% to Rs 735.11 crore in Q1 FY21 as against Rs 1,229.70 crore in Q1 FY20. Tax expenses dropped 56.51% to Rs 185.30 crore in Q1 FY21 as compared to Rs 426.08 crore in Q1 FY20. The Q1 earnings were announced during trading hours today, 15 July 2020.
The bank's provisions and contingencies surged 577.35% to Rs 849.06 crore in Q1 June 2020 over Rs 125.35 crore in Q1 June 2019. During the quarter the bank has taken accelerated additional provision on standard advances amounting to Rs 750 crore. With this provision and additional standard assets provision that bank is carrying in micro banking portfolio total additional provision in books stands at Rs 1,769 crore.
Federal Bank fell 2.45%. The bank's net profit rose 4.3% to Rs 400.77 crore on 8.61% increase in total income to Rs 3932.52 crore in Q1 June 2020 over Q1 June 2019. Profit before tax (PBT) fell 9% to Rs 537.76 crore in Q1 June 2020 over Q1 June 2019. Tax expense fell 33.6% to Rs 136.99 crore during the period under review. The result was declared during market hours today, 15 July 2020.
Provisions and contingencies soared 105.49% crore in Q1 June 2020 to Rs 394.62 crore from Rs 192.04 crore in Q1 June 2019. Federal Bank said that the aggregate provision against the likely impact of COVID-19, including the RBI mandated provision, as of 30 June 2020 stands at Rs 186.30 crore. The provision coverage ratio (including technical writeoffs) stood at 75.09% in Q1 June 2020.
Delta Corp rose 4.81%. The company reported consolidated net loss of Rs 28.24 crore in Q1 June 2020 as against net profit of Rs 42.48 crore in Q1 June 2019. Consolidated net sales slumped 74.08% to Rs 48.34 crore in Q1 June 2020 over Rs 186.51 crore in Q1 June 2019.
The company reported a negative EBIDTA of Rs (20.05) crore, which includes a provision of Rs 23.68 crore on account of license fees payable. The casino operator has made a representation to the government of Goa along with the rest of the industry, to consider a waiver of payment of licence fees during the lockdown period. The company said it is hopeful of a positive response on the same from the government.
HEG fell 1.11%. India Ratings and Research (Ind-Ra) has downgraded HEG's long-term issuer rating to 'INDAA-' from 'INDAA' while maintaining ‘stable' outlook.
Cadila Healthcare gained 0.18% after the company said that it has started human studies for its potential coronavirus vaccine. ZyCoV-D, the company's plasmid DNA vaccine, was found to be safe, immunogenic and well-tolerated in the pre-clinical toxicity studies, Zydus said in an exchange filing. In the human trials, Zydus will enroll over 1,000 subjects across multiple clinical study sites in the country.
In a separate announcement today, the company said that Zydus Cadila received final approval from the USFDA to market Betamethasone Dipropionate Ointment USP, 0.05%. The ointment is used to treat a variety of skin conditions (e.g., eczema, dermatitis, allergies, rash).
Maruti Suzuki India rose 0.48%. The car major proactively announced to voluntarily recall WagonR (1 Litre) manufactured between 15 November 2018 and 15 October 2019 and Baleno (petrol) manufactured between 8 January 2019 and 4 November 2019. The recall will cover 134,885 vehicles of both Baleno and WagonR models, Maruti Suzuki announced during trading hours today, 15 July.