Indices decline after choppy trade; Nifty ends below 14,350

The benchmark indices ended a volatile session with modest losses on Friday. The Nifty closed below the 14,350 level. Selling was triggered by concerns that the spike in COVID-19 cases in the country could derail the economic recovery.

The S&P BSE Sensex, declined 202.22 points or 0.42% at 47,878.45. The Nifty 50 index declined 64.80 points or 0.45% at 14,341.35.

Hindustan Unilever (down 1.78%), Bharti Airtel (down 1.70%), ICICI Bank (down 1.57%), Infosys (down 1.27%) and HDFC Bank (down 0.54%) were major drags.

The broader market outperformed the benchmarks. The S&P BSE Mid-Cap index rose 0.16% while the S&P BSE Small-Cap index added 0.51%.

The market breadth was positive. On the BSE, 1589 shares rose and 1336 shares fell. A total of 174 shares were unchanged.

COVID-19 Update:

Total COVID-19 confirmed cases worldwide stood at 14,47,67,231 with 30,72,522 deaths. India reported 24,28,616 active cases of COVID-19 infection and 1,86,920 deaths while 1,36,48,159 patients have been discharged, according to the data from the Ministry of Health and Family Welfare, Government of India.

Economy:

India Ratings and Research (Ind-Ra) on Friday revised down India`s FY22 real GDP growth forecast to 10.1%, from earlier projection of 10.4%, citing the second wave of COVID-19 infections and slower pace of vaccination. Ind-Ra said the impact of the second wave will not be as disruptive as the first one, despite the daily case load touching three times of the first wave`s peak, as lockdowns are set to be localised ones.

Numbers to Track:

In the foreign exchange market, the partially convertible rupee fell to 75.0125 compared with its previous closing of 74.94.

The yield on 10-year benchmark federal paper rose to 6.061% as compared to its previous close of 6.050%.

MCX Gold futures for 4 June 2021 settlement added 0.04% to Rs 47,792.

The US Dollar index (DXY), which tracks the greenback`s value against a basket of currencies, was down 0.30% to 91.06.

In the commodities market, Brent crude for June 2021 settlement lost 1 cent to $65.39 a barrel. The contract rose 0.12% to settle at $65.4 in the previous trading session.

Global Markets:

European shares declined while Asian stocks closed on a mixed note on Friday. US markets ended lower amid reports that the US government will propose a hike in capital gains tax rate on wealthy individuals.

US President Joe Biden is planning a capital gains tax hike to as high as 43.4% for wealthy Americans. The proposal would hike the capital gains rate to 39.6% for those earning $1 million or more, up from 20% currently, as per reports.

On the economic front, the number of Americans applying for unemployment aid fell last week to 547,000, a new low since the pandemic struck and a further encouraging sign that layoffs are slowing on the strength of an improving job market. The Labor Department said on Thursday that applications declined 39,000 from a revised 586,000 a week earlier.

Buzzing Indian Segment:

The Nifty FMCG index fell 0.93% at 33,726.10. The index fell 3.23% in four consecutive sessions.

Britannia Industries, Hindustan Unilever, Varun Beverages, Dabur India, Nestle India, Jubilant FoodWorks, Godrej Consumer Products, Emami, ITC and Colgate-Palmolive (India) fell by 0.2% to 2.67%.

Earnings Impact:

Tata Elxsi jumped 4.78% after the company`s net profit increased by 9.5% to Rs 115.2 crore on a 8.7% rise in net sales to Rs 518.40 crore in Q4 FY21 over Q3 FY21. The company`s net profit has risen by 40.3% while its net sales have increased by 18.1% as compared to Q4 FY20. EBITDA margin was at 32.4% as on 31 March 2021 as compared to 30.1% as on 31 December 2020. ?The growth was led by America and India with both reporting 21.1% QoQ growth while Europe grew by 1.6% QoQ,? the Tata Group company said in a statement. The company`s board has recommended a final dividend of Rs 24 per share for FY21 and a one-time special dividend of Rs 24 per share.

Rallis India declined 2.25%. The company posted a consolidated net profit of Rs 8.12 crore in Q4 March 2021. Net sales surged 36.1% to Rs 471.26 crore in Q4 FY21 over Q4 FY20. Meanwhile, the board has recommended a dividend of Rs 3 per share for the financial year 2020-21.

Indus Towers lost 3.32%. The company reported 38% jump in consolidated net profit to Rs 1,364 crore on 3% rise in revenue to Rs 6,492 crore in Q4 FY21 over Q4 FY20. EBITDA increased by 17% to Rs 3,413 crore in Q4 March 2021 as against Rs 2,906 crore in Q4 March 2020. The operating free cash flow rose 2% to Rs. 1,494 crore in Q4 FY21 over Q4 FY20. Indus Towers added net 3,715 towers across 22 telecom circles in India during the fourth quarter compared with the third quarter of the financial year 2020-21.

Stocks in Spotlight:

Alembic Pharmaceuticals fell 0.47%. The drug maker has received final approval from the US drug regulator for its Abbreviated New Drug Application (ANDA) doxepin hydrochloride capsules. The approved ANDA is therapeutically equivalent to the reference listed drug product (RLD), Sinequan capsules of Pfizer Inc. The drug is is used to treat mental/mood problems such as depression and anxiety. The capsules have an estimated market size of $41 million for twelve months ending December 2020 according to IQVIA.

LT Foods fell 0.56% after the company announced the expansion of its premium rice-based snacks brand "Kari Kari" to Australia and UAE. The company said that its joint venture company with Kameda Seika, Japan`s largest rice crackers company, has started exporting Kari Kari in the markets of Australia & UAE.

Torrent Power rose 2.71% after the company said it secured a long-term power purchase arrangement (PPA) for 300 MW capacity of solar power generation. The project will be set up in Gujarat at an estimated cost of Rs 1,250 crore. It is expected to be commissioned within 18 months from the PPA date. The PPA term is 25 years from the scheduled commercial operation date.

HDFC rose 0.73%. The housing finance major concluded the sale of 47,75,241 equity shares of Re 1 each, representing 24.48% stake of Good Host Spaces to Baskin Lake Investments, an affiliate of global private equity Warburg Pincus, at Rs 452.71 per equity share, aggregating to a total consideration of Rs 216.18 crore.

Nazara Technologies jumped 5.05% after the company`s consolidated revenue surged 84% to Rs Rs 454.20 crore in FY21 compared with Rs 247.50 crore in FY20. The revenue growth was led by gamified learning and eSports segments. The gamified learning segment registered 820% growth in revenue, growing from Rs 19.10 crore in FY20 to Rs 175.8 crore in FY21. Esports segment revenue surged 102% to Rs 170.10 crore in FY21, from Rs 84.20 crore in the previous fiscal.

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