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Sensex, Nifty trim gains; defense stocks in demand

·4-min read

Domestic equity benchmarks came off the day's high in morning trade. The undertone of the market continued to be positive amid positive global cues. US President Donald Trump signed executive actions extending financial relief to Americans hit by the coronavirus pandemic.

At 10:23 IST, the barometer index, the S&P BSE Sensex, was up 309.99 points or 0.81% at 38,350.56. The Nifty 50 index added 96.90 points or 0.86% at 11,310.95.

The Supreme Court (SC) will be hearing the adjusted gross revenue (AGR) case later today, 10 August. The apex court on 20 July reserved its order on permitting telecom companies to make staggered payments over 15 years. Bharti Airtel shed 0.46% while Vodafone Idea added 2.27%.

In the broader market, the S&P BSE Mid-Cap index gained 1.47% while the S&P BSE Small-Cap index rose 1.27%. Both these indices outperformed the benchmark Sensex.

The market breadth was strong. On the BSE, 1514 shares rose and 688 shares fell. A total of 121 shares were unchanged.

Buzzing Segment :

Shares of eight defence companies rose by 4.6% to 9.6% after defence minister Rajnath Singh on Sunday announced import ban on 101 defence items. Dynamatic Technologies (up 9.65%), Bharat Electronics (up 8.27%), Astra Microwave Products (up 8.2%), Hindustan Aeronautics (up 7.72%), Bharat Dynamics (up 6.9%), Bharat Forge (up 5%), Premier Explosives (up 4.81%) and BEML (up 4.6%) were top gainers in defence segment.

The defence ministry has decided to put 101 items put on embargo to boost indigenisation of defence production. The embargo on imports is planned to be progressively implemented between 2020 and 2024. The deadline has been set for December 2025. The list of 101 embargoed items comprises some high technology weapon systems like artillery guns, assault rifles, corvettes, sonar systems, transport aircraft, light combat helicopters (LCHs), radars and many other items.

Earnings Today:

Among the Nifty stocks, Power Grid Corporation of India (up 1.02%), Shree Cement (up 1.74%) and Titan Company (up 0.69%) will announce their quarterly earnings today.

Among the other stocks, Akzo Nobel (up 0.08%), AstraZeneca Pharma (up 3.16%), Bank of Baroda (up 1.34%), Camlin Fine Sciences (up 2.50%), Cochin Shipyard (up 2.52%), Equitas Holdings (up 0.39%), HEG (up 1.09%), IPCA Labs (up 5.96%), KEC International (up 0.63%), Meghmani Organics (down 0.81%), TTK Prestige (up 0.76%), Ujjivan Financial Services (up 0.37%) and V-Mart Retail (up 1.37%) will announce their quarterly earnings today.

Earnings Impact:

Divi's Laboratories surged 13.58% to Rs 3162.35 after the company's consolidated net profit jumped 81% to Rs 492 crore on a 47% increase in total income to Rs 1748 crore in Q1 FY21 over Q1 FY20. Profit before tax in Q1 June 2020 stood at Rs 661 crore, up by 77% from Rs 373 crore in Q1 June 2019. Forex gain for the current quarter amounted to Rs 5 crore as against a loss of Rs 6 crore during the corresponding quarter of the last year. The company has been able to have near normal operations during the quarter and there was minimal impact due to COVID-19 pandemic.

The company further said that while a significant part of the ongoing capex programs has been completed during the last financial year, due to the COVID-19 pandemic, there has been delay in implementing the balance part of the capex programs taken up by the company due to non-availability of workmen of some contractors implementing the projects. It expects to complete the capex programs by second half of the financial year.

Cipla jumped 6.76% to Rs 777.85 after the company's net profit rose 21% to Rs 578 crore on 9% increase in total revenue from operations to Rs 4,346 crore in Q1 FY21 over Q1 FY20. EBITDA margin stood at 24.1% as 30 June 2020 as against 22.7% as 30 June 2019. Cipla said that it has achieved zero net debt position led by strong collections and improved EBITDA.

India business grew by 16% YoY with strong growth across the three businesses. Overall South African business continued the strong growth momentum to deliver growth of 17% on a YoY basis in local currency; private business continues to outpace the market. The US business reported $135 million led by Albuterol ramp-up; 14% QoQ growth.