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Shares rally on coronavirus vaccine hopes; India VIX slumps 6%

·9-min read

Domestic shares rallied on Thursday, mirroring positive global markets as increasing optimism for a safe and effective COVID-19 vaccine eased concerns about a second wave of infections. US-based Pfizer Inc said a COVID-19 vaccine being developed with German biotech firm BioNTech showed promise and was found to be well-tolerated in early-stage human trials.

The barometer S&P BSE Sensex rallied 429.25 points or 1.21% at 35,843.70. The Nifty 50 index jumped 121.65 points or 1.17% at 10,551.70.

HDFC (up 2.95%) and Reliance Industries (up 1.30%) were major index movers.

The Nifty opened higher at 10,493.05 and firmed up as the session progressed. The index crossed 10,550 level in afternoon trade and hit the day's high of 10,598.20, before profit booking set in in late trade.

The NSE's India VIX, a gauge of market's expectation of volatility over the near term, slumped 5.74% to 26.50.

In the broader market, the BSE Mid-Cap index rose 1.04% and the BSE Small-Cap index gained 0.92%. Both these indices lagged the Sensex.

The market breadth was strong. On the BSE, 1,719 shares rose and 1,044 shares fell. A total of 127 shares were unchanged.

COVID-19 update:

Total COVID-19 confirmed cases worldwide stood at 1,06,95,608 far with 5,16,255 deaths. India reported 2,26,947 active cases of COVID-19 infection and 17,834 deaths, according to the data from the Ministry of Health and Family Welfare, Government of India.

Numbers to Watch:

The yield on 10-year benchmark federal paper rose to 5.841% as compared with 5.838% 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 75.0450, compared with its close of 75.6025 during the previous trading session.

In the commodities market, Brent crude for September 2020 settlement rose 20 cents at $42.23 a barrel. The contract rose 76 cents, or 1.84% to settle at $42.03 a barrel in the previous trading session.

Foreign Markets:

Shares in Europe and Asia jumped on Thursday, taking cues from the overnight rally on Wall Street as hopes for development of a coronavirus vaccine offset some of the concerns about rising coronavirus cases in the United States.

Investors continued to monitor the escalating tension between American and Beijing, over the Hong Kong issue. As per media reports, China said it will announce reciprocal curbs on U.S. media outlets in the country. The comment reportedly comes after the United States said in June it would start treating another four major Chinese media outlets as foreign embassies, following similar moves on other outlets earlier in the year, in a move likely to further sour fraught ties between the world's top two economies, media reports said.

The US stock market finished session mostly higher on Wednesday, 1 July 2020, with the Nasdaq close at a record high, as bullish investors took heart from cheering economic data and news of a potential coronavirus vaccine.

The ADP National Employment Report showed the nonfarm private sector created 2.4 million jobs in June, with 70% of new jobs in the leisure, hospitality, trade and construction industries. Meanwhile, data from the Institute for Supply Management (ISM) showed index of US factory activity jumped to a reading of 52.6 last month from 43.1 in May, ending three straight months of contraction, or readings below 50.

Buzzing Indian Segments:

The Nifty Auto index rose 2.81% to 6,907.10. Mahindra & Mahindra (up 6.05%), Hero MotoCorp (up 4.93%), Ashok Leyland (up 1.87%) and Escorts (up 0.81%) advanced.

Maruti Suzuki India rose 2.58%. The car major on Thursday announced the launch of its vehicle lease subscription services for individual customers – Maruti Suzuki Subscribe. Through this, the company would offer cars for subscription as a pilot project in Gurugram and Bengaluru. The subscription will be initially available on Swift, Dzire, Vitara Brezza and Ertiga from Maruti Suzuki ARENA Channel and Baleno, Ciaz and XL6 from NEXA Channel. Maruti Suzuki has tied up with ORIX Auto Infrastructure Services, a subsidiary of ORIX Corporation, Japan, to launch Maruti Suzuki Subscribe for the Indian market.

Tata Motors rose 0.84%. The company's total domestic automobile sales slumped 82% to 23,845 units in Q1 June 2020 as against 1.31 lakh units in Q1 June 2019.Sales were impacted by a sharp decline in the production of commercial as well as passenger vehicles owing to the lockdown and subdued market demand. Total commercial vehicles (CV) sales were down 90% to 10,476 units while the total passenger vehicles (PV) sales slumped 61% to 14,571 units in Q1 FY21 over Q1 FY20.

Bajaj Auto rose 0.93%. The auto major reported 31% decline in total vehicles sales to 2.78 lakh units in June 2020 as against 4.04 lakh units in June 2019. The company's total vehicle sales surged 119% in June from 1.27 lakh units registered in May 2020. Due to nationwide lockdown, the company's sales were disrupted in April and May this year. In April, there were no sales in the domestic market, but the company exported 37,878 units.

TVS Motor Company rose 0.31%. The company recorded over three-fold increase in June 2020 sales to 198,387 units from 58,906 units sold in the month of May 2020. Its June sales, however, are lower by 33.22% as compared to 297,102 units sold in the same period last year. Total exports were 53,123 units in the month of June 2020, down by 24% from 69,900 units in June 2019. TVS Motor said it is witnessing a positive uptake in both domestic retail as well as exports. The company faced supply chain constraints in June; however, it has undertaken various countermeasures, some of which have started yielding results in June itself. The company is expecting to overcome these in the month of July.

The Nifty IT index rose 2.65% to 15,122.55. HCL Technologies (up 3.33%), Infosys (up 3.25%), TCS (up 3.14%), Tech Mahindra (up 2.94%), Wipro (up 2.22%), Mindtree (up 1.22%), Hexaware Technologies (up 0.76%) and Persistent Systems (up 0.57%) advanced.

Shares of companies whose fortunes are linked to orders from Indian Railways advanced after India's Railway Ministry began the formal process to allow a private company to run trains on 109 routes.

Texmaco Rail (up 12.86%), Hind Rectifiers (up 4.98%), Titagarh Wagons (up 4.95%), RITES (up 4.24%), IRCON International (up 3.85%), IRCTC (up 3.56%) and Bharat Heavy Electricals (up 1.80%) advanced.

Stocks in Spotlight:

Pfizer jumped 5.15% after the company's US-based parent reported positive preliminary results from a joint project to develop a coronavirus vaccine. An early trial of an experimental coronavirus vaccine from US-based Pfizer and Germany's BioNTech showed it's safe and prompted patients to produce antibodies against the new virus, keeping it in the lead pack for a pandemic shot. The preliminary data come from a so-called phase 1/2 trial that aimed to show the vaccine is not toxic and triggers an immune system response to prepare the body to fight off the virus.

Axis Bank fell 2.24%. The private lender said its board approved raising upto Rs 15,000 crore through issuance of various instruments. The move comes days after Axis Bank's issuer credit rating was downgraded to junk or BB+ by rating agency S&P Global.

Tata Power spurted 8.37% to Rs 49.85. The board of directors of the company approved issuance of 49,05,66,037 equity shares through a preferential issue to the promoter, Tata Sons, at Rs 53 per equity share for an aggregate sum of Rs 2,600 crore, subject to shareholder approvals.

The board has also given in-principle approval for setting up of Infrastructure Investment Trust (InvIT) for the company's renewable business on terms and conditions to be discussed with potential investors.

Coal India shed 0.19% after provisional coal production dropped 12.8% to 39.20 million tonnes (MT) while provisional coal offtake shrunk by 15% to 41.61 MT in June 2020 over June 2019.

Jindal Steel & Power (JSPL) gained 0.13%. The company recorded a 12% growth in sales volumes to 1.56 million tonnes (MT) and 8% rise in standalone steel (including pig iron) production to 1.67 MT in Q1 June 2020 over Q4 March 2020 (Q-o-Q). The export sales contributed to 58% of total sales volumes in Q1 FY21. The company's consolidated sales rose by 7% to 2.07 MT (Q-o-Q) during Q1 FY21. Consolidated production fell 4% (Q-o-Q) to 2.03 MT in Q1 FY21.

Dixon Technologies (India) rose 1.24% after the company said it has entered into new line of business to manufacture set top boxes. The total investment in the new business will be about Rs 40-50 lakh and the company expects a revenue of Rs 100-150 crore in fiscal 2021, Dixon Technologies (India) announced post trading hours yesterday, 1 July 2020.

Eveready Industries India gained 0.06% after consolidated net profit surged to Rs 63.07 crore in Q4 March 2020, higher than net profit of Rs 4.54 crore in Q4 March 2019. Consolidated net sales declined 32.4% to Rs 224.08 crore in Q4 FY20 over Q4 FY19.

The company reported exceptional gain of Rs 62.03 crore on sale of land at Hyderabad. The profitability was aided by rise in gross margin in the core segments of batteries and flashlights and improvement in operating margin due to additional cost savings measures. The discontinuance of the packaged tea business further helped the company in improving margins and releasing working capital, Eveready Industries said in a regulatory filing.