Sensex tumbles 540 pts on COVID fears; RIL, HDFC Bank drag

·10-min read

Domestic shares went on a southward spiral on Monday amid a broader selloff. Global cues were weak as fresh COVID concerns and fading hopes for more US fiscal stimulus before the presidential election weighed on the market sentiments. Governments across Europe have tightened restrictions to curb an accelerating second wave of COVID-19 infections.

The barometer index, the S&P BSE Sensex slumped 540 points or 1.33% at 40,145.50. The Nifty 50 index fell 162.60 points or 1.36% at 11,767.75. Auto and metal shares lead the decline.

Index heavyweight Reliance Industries (RIL) tumbled 3.97% after US e-commerce giant Amazon got a favourable ruling in Singapore with regard to the Future-RIL deal.

HDFC Bank (down 1.84%), ICICI Bank (down 2.85%) and Axis Bank (down 2.74%) dragged the indices lower.

In the broader market, the BSE Mid-Cap index slipped 1.77% and the BSE Small-Cap index lost 0.88%.

Sellers dominated market breadth. On the BSE, 1000 shares rose and 1678 shares fell. A total of 182 shares were unchanged.

COVID-19:

Total COVID-19 confirmed cases worldwide stood at 4,29,26,013 with 11,52,990 deaths, according to data from Johns Hopkins University.

India reported 6,53,717 active cases of COVID-19 infection and 1,19,014 deaths while 71,37,228 patients have been discharged, according to the data from the Ministry of Health and Family Welfare, Government of India.

RBI Governor Shaktikanta Das on Sunday tweeted that he has been tested positive for COVID-19 but he is asymptomatic. He assured that work in RBI will go on normally.

Numbers to Watch:

The yield on 10-year benchmark federal paper fell to 5.835% as compared with 5.844% at close in the previous trading session.

In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 73.8450, compared with its close of 73.61 during the previous trading session.

In the commodities market, Brent crude for December 2020 settlement fell 80 cents at $40.97 a barrel. The contract fell 69 cents, or 1.63% to settle at $41.77 a barrel in the previous trading session.

Foreign Markets:

The US Dow Jones index futures were down 250 points, indicating a weak opening in the US stocks today.

European markets declined while Asian shares ended mixed on Monday as new coronavirus cases surge in the US as well in countries across Europe. The Hong Kong market is closed on Monday for a holiday.

The central committee of China's ruling Communist Party, led by Xi, is set to meet in Beijing from October 26 to 29 to discuss a proposal for national development for the next five years - from 2021 to 2025. The government sets these economic and social priorities every five years.

The resurgence of the coronavirus in Europe has continued in recent days. France reported a record daily rise in new infections on Sunday, Italy ordered bars to close early and shut public gyms and Spain issued a nationwide curfew to stem a worsening outbreak. The US also reported a record number of daily COVID-19 infections on Friday with more than 83,000, surpassing its mid-July peaks despite President Donald Trump's insistence that the country is “rounding the turn” on the virus.

In US, the S&P 500 and Nasdaq closed modestly higher on Friday in choppy trading while the Dow ended lower on the day as investors weighed the potential for additional fiscal stimulus.

Intel shares fell 10.6% following the release of mixed quarterly numbers for the chipmaker. Gilead Sciences Inc rose as its antiviral drug Remdesivir became the first and only drug approved for treating patients hospitalized with COVID-19 in the United States.

US House Speaker Nancy Pelosi said it still was possible to get another round of COVID-19 aid before the November 3 election, but that it was up to President Donald Trump to act. Trump and Treasury Secretary Steven Mnuchin countered that Pelosi must compromise to get an aid package.

Buzzing Segments

The Nifty Auto index fell 3.22% to 7,833.65. It jumped 2.93% in the previous session.

Maruti Suzuki India, Tata Motors, Eicher Motors, TVS Motor, Ashok Leyland, Mahindra & Mahindra, Bajaj Auto and Hero Motocorp fell by 0.68% to 6.8%.

The Nifty Metal index fell 3.50% to 2,357.55. The index rose 3.37% in the past three sessions.

Hindustan Zinc, NMDC, Tata Steel, SAIL, JSW Steel, Jindal Steel & Power and Hindalco Industries fell by 1.27% to 5.35%.

Vedanta fell 0.91% to Rs 103.85 after the company's board approved an interim dividend of Rs 9.50 per equity share for the financial year 2020-21 amounting to Rs 3,500 crore.

Earnings Impact:

Kotak Mahindra Bank rose 2.36%. The private lender's net profit jumped 26.7% to Rs 2,184.48 crore on 3.78% increase in total income to Rs 8,288.08 crore in Q2 September 2020 over Q2 September 2019. The bank's gross non-performing assets (NPAs) stood at Rs 5,335.95 crore as on 30 September 2020 as against Rs 5,619.33 crore as on 30 June 2020 and Rs 5,033.55 crore as on 30 September 2019. The bank's provisions and contingencies fell 9.64% to Rs 368.59 crore in Q2 September 2020 over Rs 407.93 crore in Q2 September 2019. Capital adequacy ratio of the bank as per Basel III, as on 30 September 2020 stood at 22% and Tier I ratio was at 21.4%. Net Interest income (NII) for Q2FY21 increased to Rs 3,913 crore, from Rs 3,350 crore in Q2FY20, up 17%. Net Interest Margin (NIM) for Q2FY21 was at 4.52%. Operating profit for Q2FY21 stood at Rs 3,297 crore, recording a 31% jump Y-o-Y from Rs 2,509 crore in Q2FY20.

Nestle India rose 2.48%. The FMCG major reported 1.34% decline in net profit to Rs 587.09 crore on 10.2% increase in net sales to Rs 3,525.41 crore in Q3 September 2020 over Q3 September 2019. Profit before tax (PBT) rose 12.41% to Rs 786.50 crore in Q3 September 2020 over Q3 September 2019. The company's total sales and domestic sales both increased by 10.2% driven by volume and mix. Export sales increased by 9.4%. Demand in out of home channel improved through the quarter but continues to be impacted by COVID. The FMCG major said factories have returned to normal output. The firm has reported double digit growth in key brands, boosted by in-home consumption. Demand in 'Out of Home' channels also improved during the quarter. E-commerce grew by 97%, contributing about 4% of domestic sales. The company has planned Rs 2600 crore investment over the next three to four years.

SBI Life Insurance Company gained 1.10% after the company's net profit jumped 131% to Rs 299.73 crore on 44.82% rise in total income to Rs 18458.25 crore in Q2 FY21 over Q2 FY20. Net premium income in the second quarter increased by 27.16% to Rs 12,857.95 crore as against Rs 10,111.51 crore recorded in the same period last year. The company's income from investments (net) surged by 113.09% to Rs 5,590.37 crore in Q2 FY21 from Rs 2,623.46 crore in Q2 FY20.

ICICI Lombard General Insurance Company lost 0.20%. The company reported 35.02% rise in net profit to Rs 415.74 crore in Q2 FY21 as against Rs 307.91 crore in Q2 FY20. Total income increased by 5.28% to Rs 2883.40 crore in Q2 September 2020 compared with Rs 2738.92 crore in Q2 September 2019. Capital gains were at Rs 124 crore in Q2 FY2021 compared with Rs 69 crore in Q2 FY2020, registering a growth of 79.71%. Gross Direct Premium Income (GDPI) of the company was at Rs 3,189 crore in Q2 FY2021 compared to Rs 2,953 crore in Q2 FY2020, a growth of 8%. Excluding crop segment, GDPI of the company increased to Rs 3,186 crore in Q2 FY2021 compared to Rs 2,898 crore in Q2 FY2020, registering a growth of 9.9%. This was higher than the industry growth (excluding crop segment) for Q2 FY2021 of 9.2%.

Polycab India jumped 8.36%. The wire maker's consolidated net profit jumped 14% to Rs 221.6 crore on 6% decline in revenue to Rs 2,113.7 crore in Q2 FY21 over Q2 FY20. The revenue surged 116.43% in Q2FY21 compared with Rs 976.60 in Q1FY21. Improving overall business environment with staggered unlocking led to better performance sequentially. Profit before tax (PBT) in Q2 September 2020 stood at Rs 288 crore, up by 25% from Rs 230.30 crore in Q2 September 2019.

Persistent Systems gained 1.15% after the company reported a 13.31% growth in consolidated net profit to Rs 101.98 crore on 1.65% increase in revenue from operations to Rs 1,007.74 crore in Q2FY21 over Q1FY21. EBITDA jumped 13.2% to Rs 165.80 crore in Q2FY21 over Q1FY21. In US dollar terms, revenue rose 3.9% to $136.09 million in Q2FY21 over Q1FY21. Profit before tax (PBT) in Q2 September 2020 stood at Rs 137.51 crore, rising 12.7% from Rs 122.04 crore in Q1 June 2020. Current tax expense rose 1.25% to Rs 43.61 crore in Q2FY21 as against Rs 43.07 crore in Q1FY21.

Stocks in Spotlight:

Future Retail (FRL) fell 5.08% and Reliance Industries (RIL) slumped 3.97% after Amazon.com won an interim award against the Future Group, placing the Future-Reliance Retail deal on hold.

The Singapore International Arbitration Centre (SIAC) passed an interim order asking Future Group to hold its sell-out plans to Reliance Group and wait for the final judgment on the plea filed by Amazon. The US-based retail giant had filed an arbitration petition with SIAC claiming that Future Group breached the contract under which the US online giant took an indirect stake in their retail business in 2019.

On 29 August 2020, RIL's subsidiary Reliance Retail Ventures (RRVL) announced acquisition of the retail & wholesale business and the logistics & warehousing business of the Future Group as going concerns on a slump sale basis for Rs 24,713 crore.

In a BSE filing made before market hours today, FRL said it was examining the communication and the order received from the Singapore International Arbitration Centre (SIAC).

Meanwhile, RRVL said that it had entered into the transaction for acquisition of assets and business of Future Retail under proper legal advice and the rights and obligations are fully enforceable under Indian Law. “RRVL intends to enforce its rights and complete the transaction in terms of the scheme and agreement with Future group without any delay,” it added.

IndusInd Bank rose 1.45%. The media reported that Kotak is looking at an all-stock acquisition of IndusInd Bank. It also said that the UK-based Hinduja family began the discussion for selling control of the Mumbai-based lender following a dispute between the four brothers over the family's fortune.

IndusInd Bank on 25 October 2020, however, said that the reports of a takeover are "malicious, untrue and baseless".

Cosmo Films rose 0.94% to Rs 471.65 after the company said its board approved a proposal to buyback shares worth up to Rs 73 crore at a price not exceeding Rs 576 per share.

Aurobindo Pharma rose 0.20% to Rs 784.65 after the company said it reached a definitive agreement to sell Natrol LLC., a wholly owned subsidiary of Aurobindo Pharma USA to an affiliate of New Mountain Capital to combine with Jarrow Formulas. The all-cash transaction is valued at $550 million.



Source: Capitalmarket.com