TCS Q2 results out, SBI’s new chairman, and more ..

7th October 2020 Highlights: Markets climb for 5th day, TCS Q2 results out, SBI’s new chairman, and more.

-7th October 2020-

Sensex 39,878.95 ▲ 0.77%

Nifty 11,738.85 ▲ 0.66%

Today, the markets were able to sustain the morning gains all the way to the closing bell. The markets ended in the green for the 5th consecutive day - up 0.7%. Stocks like RIL, Titan, Maruti Suzuki, and Bajaj Auto were major driving forces behind this rally. Even as index heavyweight Reliance Industries saw some profit booking after a flying start, a steady rise in IT and auto majors helped maintain the upward momentum. TCS (+1.4%), Infosys (+1.3%), Bajaj Auto, (+3.6%), Hero Moto (+2.8%) and Maruti (+2.3%) saw healthy gains. With today’s rise, the Nifty50 has gained for five consecutive sessions.

Top Gainers (Nifty)

Titan - Rs 1250.00 ▲ 4.50% 

Bajaj Auto - Rs 3077.40 ▲ 3.54%

Hero MotoCorp - Rs 3233.65 ▲ 3.10%

Maruti Suzuki - Rs 7046.90 ▲ 2.24%

Reliance Ind - Rs 2257.15 ▲ 2.13%

Top Losers (Nifty)

Bajaj Finance - Rs 3331.20 ▼ 4.12%

Bharat Petroleum - Rs 342.25 ▼ 2.78%

Tata Motors - Rs 141.00 ▼ 2.66%

Hindalco Industries - Rs 172.85 ▼ 2.29%

Power Grid - Rs 159.60 ▼ 2.21%

Here are the top stories of the day.

Q2 Results: TCS Announced Results; Buyback and Interim Dividend Details Out

The company's net profit dropped around 7.05% to Rs 7,475 crores for the September-ended quarter as compared to Rs 8,042 crores from a year-ago period.

Revenue came in at Rs 40,135 crore which is a 4.7% rise from the previous quarter and 3% rise from a year-ago period.

Interim Dividend: The board has announced an interim dividend of Rs 12 per share, the record date for which is October 15, 2020. The payment date has been set on November 3.

Buyback: The board of the company approved a buyback proposal of up to 5.33 crore shares for an amount not exceeding Rs 16,000 crores.

This is equal to almost 1.42% of the paid-up capital. The buyback is being done at Rs 3,000 per share.

The company also said that it will be rolling out salary hikes effective October 1.

Shares of the company ended 0.78% higher at Rs 2,737.4 per share. TCS shares reached an all-time high of Rs 2,769 in today's trade.

Sebi Tightens AT-1 Rules for Retail Investors

The Securities and Exchange Board of India tightened rules for fresh issues of additional tier-1 bonds issued by banks.

According to the new rules, retail investors will be restricted from investing in such instruments.

The following were some rules that Sebi detailed:

+Issue of AT-1 instruments mandatory on the electronic book provider platform irrespective of the issue size.

+Issuers and stock exchanges to ensure that only qualified institutional buyers are allowed to participate in the issuance of AT-1 instruments.

+Minimum allotment of AT-1 instruments to not be less than Rs 1 crore. Minimum trading lot for AT-1 instruments to be Rs 1 crore.

What are AT-1 Bonds?

AT-1 bonds are those bonds that are issued to shore up the core capital of the bank. Sebi explained in a circular that these instruments have features which grant the bank, which is the issuer (i.e. banks in consultation with RBI) a discretion to write down the principal/interest, to skip interest payments, to make an early recall, etc. without a fair chance for investors to legal recourse, even if such actions by the issuer result in a potential loss to investors.

US Makes Immediate Changes to H1-B Visa Program

The US has brought in an ‘interim final rule’ to the H1B visa program skipping a 60-day notice period that is required before any sweeping changes are brought in.

Though the details of the changes are yet to be fully made clear, it appears that the changes will make it tougher for the employers to hire as they will have to go through a greater number of procedures to prove that the role they’re hiring for cannot be filled by someone from within the country.

The move is being justified as necessary to reduce the impact of the economic crisis due to the pandemic.

This move is likely going to impact Indian tech talent adversely.

Titan’s revenues back to normal in the 'new normal’

Titan’s jewellery business (its largest revenue segment) seems to have recovered to pre-COVID levels. The Tata-owned brand’s Q2 revenue stands at 98% of the revenue in the same period last year (excluding raw gold sales). Walk-ins in the stores have risen, while conversion rates and the average ticket size are also higher. In the quarter ended 30 September, the company has boosted its cash flow by selling excess gold worth ₹390 crore from its inventory. Meanwhile, the recovery of the company’s watch business has been relatively slower (sales are at 55% of last year’s levels), possibly due to reduced demand in the WFH scenario. However, the recovery rate was higher at ~70% in September and could improve further as we enter the festive season. Titan’s shares gained 4.5% today.

 

Diagnostics lab stocks hit record highs

Diagnostics service providers are on a record-breaking streak in the pandemic-hit economy on expectations of strong Q2 earnings. Metropolis posted its highest-ever quarterly revenue. Even its non-COVID testing business has recovered to around 85% of last year’s levels. The company expects margins to improve with higher revenues. Similar growth trends were seen in Thyrocare, which is creating additional facilities with COVID testing in Bangalore and Kolkata to meet the increased demand. The company’s Q2 revenue has increased by 37% YoY and 171% on a QoQ basis. More impressive, though, was the 20% rise in its stock price. The shares of Dr Lal Pathlabs also grew by 10.8%, while Metropolis rose by a comparatively modest 2.8%.

 

Bajaj Finance shares drop as new loans decline

As Indian consumers turn cautious about spending, Bajaj Finance, the country’s largest consumer products lender, is feeling the pinch. In Q2, the company’s new loans nearly halved to 36 lakh from 65 lakh in the same period last year. A similar drop was seen in the lender’s new customer acquisition. It seems that the decline in business performance is steeper than market expectations, especially considering the strong performance of financial institutions such as HDFC Bank and HDFC. The shares of Bajaj Finance were down 4% today. That said, the company has shown resilience by accelerating its provisioning for Covid-19 to strengthen its balance sheet.

New Chairman Takes Charge for SBI

Dinesh Khara took charge as the new chairman of State Bank of India (SBI) from October 7, 2020.

Before this, Mr Khara was serving as the Managing Director, Global Banking & Subsidiaries.

Dinesh Khara succeeds Rajnish Kumar. Mr Kumar was the chairman of the bank between October 2017 and 2020.

Closing bell

As mentioned yesterday, we saw the stock-specific activity as the results season kicks in. In the days ahead, we may see a divergence in the movement of Indian markets as compared to international markets.

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🥇 Gold: Rs 50,090 ▼ 1.57% at 6 PM

🥈 Silver: Rs 59,981 ▼ 3.33% at 6 PM

🔀  USD-INR Rate: Rs 73.35/USD ▼ 0.16%

Dow Jones: 27,772.76 ▼ 1.33% - Oct 6

Nasdaq: 11,154.60  ▼ 1.56% - Oct 6

HAPPY INVESTING!

SEE YOU TOMORROW..