Sensex drops 124 pts; Nifty below 15,850; RIL, HDFC twins drag

The domestic equity barometers ended a volatile session with modest losses on Monday. The Nifty failed to hold the 15,850 mark. While realty and auto stocks tumbled, metals, pharma and IT shares managed to end in the green.

The barometer index, the S&P BSE Sensex, fell 123.53 points or 0.23% to 52,852.27. The Nifty 50 index lost 31.60 points or 0.20% to 15,824.45.

The NSE`s India VIX, a gauge of market`s expectation of volatility over the near term, jumped 5.84% to 12.45.

Reliance Industries (down 1.31%), HDFC (down 0.80%) and HDFC Bank (down 0.58%) were major drags.

The broader market ended higher. The BSE Mid-Cap index rose 0.06% and the BSE Small-Cap index gained 0.34%.

The market breadth was positive. On the BSE, 1837 shares rose and 1515 shares fell. A total of 157 shares were unchanged.

COVID-19 Update:

Total COVID-19 confirmed cases worldwide stood at 19,41,65,023 with 41,59,142 deaths.

India reported 39,361 new COVID-19 cases, 35,968 recoveries, and 416 deaths in the last 24 hours. The total active cases in the country has now reached 4,11,189, the total recoveries are 3,05,79,106 and the death toll stands at 4,20,967. The total vaccinations stands at 43,51,96,001.

Politics:

B.S. Yediyurappa has reportedly announced his resignation as the Karnataka chief minister after weeks of uncertainty. While resigning, Yediyurappa was seen breaking down on the stage from where he made the announcement. Yediyurappa even issued a word of caution to colleagues and said people have lost their faith in the government, reports added.

Numbers to Watch:

The yield on 10-year benchmark federal paper rose to 6.172% as compared with 6.165% 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 74.4225, compared with its close of 74.405 during the previous trading session.

MCX Gold futures for 5 August 2021 settlement rose 0.31% to Rs 47,680.

The US Dollar index (DXY), which tracks the greenback`s value against a basket of currencies, fell 0.22% to 92.70.

In the commodities market, Brent crude for September 2021 settlement fell 33 cents at $73.77 a barrel. The contract rose 31 cents, or 0.42% to settle at $74.10 a barrel in the previous trading session.

Foreign Markets:

European markets declined across the board on Monday, 26 July 2021 tracking lackluster global sentiment as investors monitored corporate earnings and looked ahead to a key meeting of the U.S. Federal Reserve. Investors continue to monitor a surge in COVID-19 cases across the continent driven by the highly-transmissible delta variant, which has led several countries to re-impose social restrictions.

Most Asian stocks ended lower today as Chinese tech stocks in Hong Kong plunged. China`s antitrust regulator ordered Tencent to give up its exclusive music licensing rights and slapped a fine on it for anti-competitive behavior, marking yet another development in Beijing`s ongoing crackdown on its domestic internet titans.

Investors likely continued to monitor the COVID-19 situation in Asia as it weighs on sentiment. In South Korea, the second highest level of virus restrictions will be reportedly applied to non-capital areas starting Tuesday. Indonesia on Sunday also reportedly extended its COVID-19 restrictions by a week.

U.S. equities rose Friday with the major averages hitting new records as they overcame concerns about economic growth from earlier in the week. The Dow closed above 35,000 for the first time ever. The blue-chip average rose 238.20 points, or 0.68%, to 35,061.55. The S&P 500 gained 1.01% to 4,411.79 and the Nasdaq Composite climbed 1.04% to 14,836.99, both new closing highs for the benchmarks.

Earnings Impact:

SBI Life Insurance Company rose 2.52%. The life insurer reported 43% fall in net profit to Rs 223.16 crore in Q1 FY22 from Rs 390.89 crore registered in Q1 FY21.

Net premium income increased 9.55% to Rs 8312.55 crore in Q1 FY22 over Q1 FY21. The company`s net income from investments stood at Rs 7,409.91 crore in Q1 FY22, falling 13.6% from Rs 8,582.80 posted in Q1 FY21.

Profit before tax slumped nearly 40% to Rs 233.42 crore in Q1 FY22 from Rs 387.68 crore in Q1 FY21. The company made a provision of Rs 10.26 crore during the quarter for taxes. Profitability was impacted after the company said it created additional reserve of Rs 440 crore towards COVID-19 pandemic as of 30 June 2021.

Kotak Mahindra Bank rose 1%. The private sector bank reported a 32% increase in standalone net profit to Rs 1641.92 crore on a 5% rise in total income to Rs 8,062 crore in Q1 FY22 over Q1 FY21.

Operating profit before provisions and contingencies jumped nearly 19% to Rs 3,121 crore in Q1 FY22 over Q1 FY21. Net Interest Income (NII) for Q1FY22 increased to Rs 3,942 crore, from Rs 3,724 crore in Q1FY21, registering a growth of 6%. Net Interest Margin (NIM) for Q1 FY22 was at 4.60% as compared to 4.4% in Q1 FY21.

On the asset quality front, the bank`s gross NPAs stood at 3.56% as on 30 June 2021 as against 3.25% as on 31 March 2021 and 2.7% as on 30 June 2020. The ratio of net NPAs stood at 1.28% as on 30 June 2021 as against 1.21% as on 31 March 2021 and 0.87% as on 30 June 2020.

Provision and Contingencies reduced by 3% to Rs 934 crore in Q1 FY22 over Rs 962 crore in Q1 FY21. COVID related provisions as at 30 June 2021 were maintained at Rs 1,279 crore. In accordance with the Resolution Framework for COVID-19 and MSME announced by RBI, the bank has implemented total restructuring of Rs 552 crore as at 30 June 2021. Capital adequacy ratio of the bank as per Basel III as at 30 June 2021 was 23.1% and Tier I ratio was 22.2%.

Reliance Industries (RIL) fell 1.31%. The conglomerate reported a 7.3% fall in consolidated net profit to Rs 12,273 crore on a 58.6% rise in net sales to Rs 139,949 crore in Q1 FY22 over Q1 FY21. On a sequential basis, RIL`s net profit declined 8% while net sales fell 6.44% in Q1 FY22 over Q4 FY21.

The telecom arm of RIL, Reliance Jio, witnessed a 44.9% year-on-year (YoY) growth in the net profit at Rs 3,651 crore in Q1 FY22 over Q1 FY21. The consolidated revenue from operations grew by 9.8% to Rs 22,267 crore in Q1 FY22 over Q1 FY21. Jio posted a total average revenue per customer (ARPU) during the quarter of Rs 138.40 per subscriber per month while customer base as on 30 June 2021 stood at 440.6 million with a net addition of 42.3 million customers year on year.

For Reliance Retail, net profit for the quarter was Rs 962 crore higher by 123% year on year. Gross Revenue stood at Rs 38,547 crore, rising by 21.9% year on year. Reliance Retail`s store expansion was constrained during the quarter as the business opened 123 stores taking the total count to 12,803.

Oil to chemicals (O2C) segment, segment revenues for Q1 FY22 increased by 75.2% year on year to Rs 103,212 crore ($ 13.9 billion) primarily on account of sharp increase in product prices on the back of higher crude prices. RIL said downstream margins continued to remain strong with product deltas near or above 5-year averages. Favorable light-feed cracking environment and increased domestic gas availability helped O2C optimize its costs. O2C maintained its market share in domestic markets. In addition, O2C continues to strategically place its products in export markets.

In the oil and gas (exploration & production) business, segment revenue for Q1 FY22 increased by 153.2% year on year to Rs 1,281 crore. This was primarily due to smooth ramp up of gas production from R-Cluster and commencement of production from SatCluster field in KG D6 block. Price realization for CBM gas for the Quarter was higher by 16% at $ 6.01/mmbtu (GCV). Realizations in the US Shale business improved to $ 4.95/MCFe on the back of higher gas and condensate prices.

In the media business, revenue from operations rose 50% year on year to Rs 1,214 crore during Q1 FY22. Viewership share of TV entertainment rose further to 11%, up sharply from a low of 9.2% in Q1 FY21. On the back of a full roster of compelling content, the portfolio was able to re-scale adrevenue to the same levels as in 1Q FY20. News advertising remained resilient despite the second wave, led by a rise in news consumption and digital events replacing physical ones.

ITC slipped 0.59% to Rs 211.10. The tobacco major reported 28.6% rise in standalone net profit to Rs 3,013.49 crore on a 37.3% rise in net sales to Rs 12,142.43 crore in Q1 FY22 over Q1 FY21. As compared to Q4 FY21, the company`s net profit and net sales are lower by 19.6% and 7.7%, respectively.

Total FMCG segment revenue increased by 22.4% YoY to Rs 8,848 crore during the period under review. In the FMCG segment, cigarettes revenue rose by 32.9% YoY to Rs 5,122 crore while the revenue from other FMCG segment improved by 10.4% YoY to Rs 3,726 crore during the quarter.

Hotel business revenue stood at Rs 127 crore (up 4.6x YoY), agri-business revenue was at Rs 4,091 crore (up 9.2% YoY) and paperboards, paper & packaging revenues were at Rs 1,583 crore (up 54.2% YoY) in the first quarter of FY22.

With regard to the FMCG - Others business, the company said that both urban & rural growth rates in the FMCG Industry moderated in the immediate aftermath of the sharp rise in new cases; however there has been a progressive rebound since June`21 with the easing of restrictions and increase in mobility.

With regard to the FMCG - Cigarettes business, the company said that the strong volume recovery momentum witnessed in the second half of FY21 was impacted by localised lockdowns and restricted hours of convenience store operations in the wake of second wave of the pandemic. Product accessibility was sustained despite market disruptions leveraging the company`s multi-channel distribution network. Certain markets in the South, metro cities and towns were relatively more impacted

�Wide availability of smuggled cigarettes continues despite deterrent actions by concerned authorities; this remains a key challenge for the legal cigarette industry which has witnessed significant reduction in volumes in recent years,� ITC added.

The second wave of the pandemic triggered a fresh round of mobility and travel restrictions leading to severe disruptions, impacting the progressive recovery witnessed in H2 of FY21 in the Hotels business. With reduction in new COVID infections and easing of travel restrictions in June`21, domestic leisure segment witnessed an uptick.

In the Agri Business, the company recorded strong growth in Wheat, Rice & Leaf Tobacco exports and Soya in the domestic market.

In the Paperboards and Specialty Papers Business, domestic customer offtake saw positive trends in most key segments such as pharma and consumer goods. However, certain end-user segments such as publications, cupstock, On-the-Go liquid packaging and wedding cards continued to be impacted by the pandemic-related disruptions.

United Spirits fell 3.77%. The liquor major`s consolidated net profit stood at Rs 50.30 crore in Q1 June 2021 compared with net loss of Rs 246.60 crore in Q1 June 2020. Revenue from operations soared 66.8% to Rs 1721.70 crore in Q1 FY22 over Q1 FY21.

Reported net sales increased after the company witnessed a healthy momentum in demand for the first three weeks of April 2021 until the second COVID-19 surge in India hit alarming levels and led to resumption of lockdown in various states. The restrictions on on-premise establishments and consumer behavioural shifts impacted the balance between the on- and off-premise occasion in most markets.

Ambuja Cements added 1.43%. The cement maker posted a 59.5% rise in standalone net profit to Rs 723 crore on a 55.8% increase in net sales to Rs 3,342 crore in Q2 2021 over Q2 2020. The company`s premium products volume grew at 69% compared to the same period last year.

Total operating cost per ton saw a marginal decline, despite continuous headwinds faced on account of rising input costs. The operational efficiency programs in the plants along with logistics efficiencies partly mitigated the impact. Total operating cost spiked by 52.4% to Rs 2,411 crore in Q2 June 2021 over Q2 June 2020.

Multi Commodity Exchange of India (MCX) added 3.05%. The exchange`s consolidated net profit tanked 29.5% to Rs 39.80 crore on 20% increase in revenue from operations to Rs 87.60 crore in Q1 June 2021 over Q1 June 2020.

ICICI Bank rose 0.01%. The private bank`s standalone net profit jumped 77.59% to Rs 4,616.02 crore on 6.47% fall in total income to Rs 24,379.27 crore in Q1 June 2021 over Q1 June 2020. Operating profit dropped 17.46% to Rs 8,894.40 crore in Q1 FY22 as against Rs 10,776.45 crore in Q1 FY21.

On the asset quality front, the ratio of gross NPAs to gross advances stood at 5.15% as on 30 June 2021 as against 5.46% as on 30 June 2020. The ratio of net NPAs to net advances stood at 1.16% as on 30 June 2021 as against 1.23% as on 30 June 2020.

Provision and Contingencies tumbled 62.44% to Rs 2,851.69 crore in Q1 June 2021 over Rs 7,593.95 crore in Q1 June 2020. Provision coverage ratio was robust stood at 78.20% at 30 June 2021, higher than 77.70% at 31 March 2021.

At 30 June 2021, the bank held COVID-19 related provisions of Rs 6,425 crore (i.e. $ 864 million). The bank`s total capital adequacy at 30 June 2021 was 19.27% and Tier-1 capital adequacy (including profits for Q1 FY2022) stood at 18.24% compared to the minimum regulatory requirements of 11.08% and 9.08% respectively.

The Net Interest Income (NII) surged 17.84% to Rs 10,936 crore as on 30 June 2021 as against Rs 9,280 crore as on 30 June 2020. The Net Interest Margin (NIM) stood at 3.89% as on 30 June 2021 as against 3.69% as on 30 June 2020.

While total deposits rose 16% year-on-year to Rs 9,26,224 crore, total advances increased by 17% year-on-year to Rs 738,598 crore as on 30 June 2021.

SBI Cards and Payment Services (SBI Cards) advanced 6.31%. The company posted a 22.6% fall in standalone net profit to Rs 304.61 crore on 11.6% rise in total income to Rs 2,450.94 crore in Q1 FY22 over Q1 FY21. On a sequential basis, the company`s net profit grew by 74% compared with Rs 175 crore posted in Q4 FY21.

Earnings before credit costs increased by 4% to Rs 1,056 crore in Q1 FY22 from Rs 1,014 crore in Q1 FY21. Meanwhile, the company`s finance costs decreased by 16.6% to Rs 229 Cr in Q1 FY22 from Rs 275 crore in Q1 FY21. On the asset quality front, gross NPA were at 3.91% as of Q1 FY22 as compared to 1.35% in Q1 FY21. Net NPA were at 0.88% as of Q1 FY22 versus 0.43% in Q1 FY21.

SBI Card`s total balance sheet size as of 30 June 2021 was at Rs 26,608 crore as against Rs 24,260 crore as of 30 June 2020. Total gross advances (Credit card receivables) as of 30 June 2021 were at Rs 24,438 crore, as against Rs 23,330 crore as of 30 June 2020.

Yes Bank rose 1.76% after the bank`s net profit soared 355.2% to Rs 206.84 crore in Q1 FY22 from Rs 45.44 crore posted in Q1 FY21. Total income declined 8.6% year on year (YoY) to Rs 5,581.84 crore in Q1 FY22 over Q1 FY21. Standalone operating profit dropped 20% to Rs 920 crore in Q1 FY22 from Rs 1,147 crore in Q1 FY21.

On the asset quality front, the ratio of gross NPAs stood at 15.6% as on 30 June 2021 as against 15.41% as on 31 March 2021 and 17.30% as on 30 June 2020. The ratio of net NPAs stood at 5.78% as on 30 June 2021 as against 5.88% as on 31 March 2021 and 4.96% as on 30 June 2020.

Provision and Contingencies reduced by 41% to Rs 644 crore in Q1 FY22 over Rs 1,087 crore in Q1 FY21. Fresh slippages lower at Rs 2,233 crore compared to Rs 11,873 crore registered in last quarter, supported by provision write back due to recoveries / resolutions.

JSW Steel slipped 1.81%. The steel major`s consolidated net profit stood at Rs 5,900 crore in Q1 June 2021 compared to a net loss of Rs 582 crore in Q1 June 2020. Consolidated net sales soared 148.2% to Rs 28,432 crore in Q1 FY22 as against Rs 11,454 crore in Q1 FY21.

Production of Crude Steel grew 39% to 4.10 million tonnes (MT) in Q1 FY22 as against 2.96 million tonnes (MT) in Q1 FY21. Total sales jumped 29% to 3.61 million tonnes (MT) as compared to 2.80 million tonnes (MT).

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