27th October 2020 Highlights: Markets up 1%, Q2 results corner, Harley-Hero partnership, & more.
-27th October 2020-
Sensex 40,522.10 ▲ 0.94%
Nifty 11,889.40 ▲ 1.03%
The markets ended up by over 1% today. The markets rose especially after MSCI said it was making changes to its global indices after revisions in the foreign ownership limits.
Hopes of Stimulus 4.0 brought back cheer to the markets today. The Nifty Bank index rose 2.8% and drove the benchmark indices up. The fresh round of stimulus is expected to have an infrastructure focus. Kotak Mahindra Bank (+11.7%), Nestle (+5.9%) and Asian Paints (+5.6%) were the top Nifty50 gainers, whereas HDFC (-2.1%), TCS (-1.9%) and ONGC (-1.8%) lost some ground.
Top Gainers (Nifty)
Kotak Mahindra Rs 1587.65 ▲ 12.05%
Shree Cement Rs 21734.35 ▲ 6.41%
Nestle India Rs 17229.85 ▲ 5.97%
Asian Paints Rs 2198.15 ▲ 5.64%
Bajaj Finance Rs 3453.25 ▲ 4.84%
Top Losers (Nifty)
TCS Rs 2631.45 ▼ 2.09%
Infosys Rs 1090.85 ▼ 1.94%
ONGC Rs 66.85 ▼ 1.91%
Wipro Rs 334.05 ▼ 1.69%
HDFC Rs 2039.15 ▼ 1.66%
Here are the top stories of the day.
Q2 Results: Bharti Airtel, Tata Motors
Bharti Airtel
The consolidated net loss of Bharti Airtel for the July to September reduced to Rs 763 crores from Rs 23,045 crores a year ago.
Revenue from operations rose 22% to Rs 25,785 crores from 21,131 crores a year ago.
The mobile average revenue per user (ARPU) came in at Rs 162, compared to Rs 128 a year ago.
Airtel said in a separate press release that it will exit the Ghanian telecom market.
The shares of the company ended 0.16% lower at Rs 433.35 per share. The results of the company were declared after markets closed.
Tata Motors
Tata Motors posted a consolidated net loss of Rs 307.3 crores. It had reported a loss of Rs 187.7 crores in the same quarter last year.
The company's net loss in the April to June quarter was reported at Rs 8,443.98 crores.
The company's total revenue from operations dropped 18.19% to Rs 53,530 crores.
The profit before taxes for JLR was reported at £65 million. The free cash flow of JLR was £ 463 million in the quarter under review.
The company said that Jaguar Land Rover returned to profit because of significant positive cash flow in the quarter as sales and revenue recovered from the impact of Covid-19.
Retail sales were up 53.3% to 1.13 lakh units from the April to June quarter but down 11.9% year-on-year.
The shares of Tata Motors ended 1.46% higher at Rs 135.65 per share.
Kotak Mahindra Bank surprises the street
Kotak Mahindra Bank has beaten street expectations with its Q2 results. It reported a standalone net profit of ₹2,184 crore, up 27% as compared to the same period last year, versus the market expectation of ₹1,600 crore. In comparison, market leader HDFC Bank posted a net profit growth of ~18%. Kotak’s earnings were boosted by a growth of 17% in net interest income*, lower provisions and higher treasury income. Since the start of Q2 till yesterday, shares of Kotak had risen 4% and underperformed the Nifty Bank index, which has gained 13% in the same period. Today, however, the stock rose 11.7% and covered lost ground after its results were announced.
(*Net interest income is the difference between the interest a bank earns from its lending activities and the interest it pays to depositors).
MSCI Rejigs Foreign Exposure Limits
Morgan Stanley Capital International (MSCI) will implement changes in Foreign Ownership Limits (FOL) in the MSCI global indices containing Indian securities.
Morgan Stanley Research expects MSCI India to receive passive inflows of $2.5 billion.
Kotak Bank, IPCA Lab, PI Ind may enter the MSCI Global Index, the Morgan Stanley Research note added.
MSCI India's weight in the MSCI Emerging Markets index will increase to 8.7% (due to weight increases for current constituents) and 8.8% (due to new additions) from the current level of 8.1%. This will result in passive inflows of $1.93 billion and $600 million respectively.
Rise in PVC prices boosts margins for Finolex
Leading PVC pipe maker Finolex Industries posted a sharp rise in its EBITDA margin at 24.7% for Q2FY20 as against 14.2% last year. The rise in margins is a result of better price realisations and lower costs. The growth was also supported by its PVC resin segment—contributing 42% of total revenues—which benefited from rising PVC prices. Domestic supply-side issues and rise in international PVC prices resulted in a ~40% surge in PVC rates. The stock gained 3.5% for the day and its peers Supreme Industries (+4.91%) and Jain Irrigation (+2.1%) too traded in the green. Generally, PVC price hikes are passed through to the customers, resulting in inventory gains for the pipe makers.
Ceat back on track after dismal Q1
In Q2, the RPG Group-owned tyre maker’s revenues grew to ₹1,978 crore, up 76% over the previous quarter, and 17% over the same quarter last year. Compared to a net loss of ₹35 crore Q1, the company made a net profit of ₹182 crore in Q2. The net profit was supported by a deferred tax credit, resulting from the amalgamation of its wholly-owned subsidiary Ceat Specialty Tyres. Higher sales and lower raw material costs have helped to increase its Q2 margin, which stood at 15.5% (versus 10.4% last year). The stock hit an intraday high of nearly 11% and closed with a gain of 1.1%. Tyre stocks have been on a roll this month, with JK Tyres (21.3%), Ceat (14.5%), MRF (14.5%) and Apollo Tyres (14.3%) seeing double-digit gains.
Harley-Davidson To Partner With Hero MotoCorp
Hero MotoCorp will sell and service Harley-Davidson motorcycles in India.
Hero, through its network, will also sell the various parts and accessories, merchandise, riding gears, apparel, etc. through its network.
Harley-Davidson had announced its exit from India in September this year.
Closing bell
The US markets declined sharply on Monday, against the backdrop of rising Covid cases in the US and across Europe. Further, hopes of another stimulus in the US seem bleak, for the time being. Back home, since mid-October, the Indian markets have been seeing time correction, with prices moving sideways.
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