SENSEX RALLIES 630 PTS, RISES FOR 4TH DAY; NIFTY SETTLES ABOVE 16,500; IT SHARES CLIMB

The headline equity indices settled with strong gains on Wednesday amid positive global cues. The Nifty ended above the 16,500 mark. IT, FMCG and metal shares advanced while media, auto and realty stocks declined.

The barometer index, the S&P BSE Sensex, was up 629.91 points or 1.15% to 55,397.53. The Nifty 50 index gained 180.30 points or 1.10% to 16,520.85.

The broader market underperformed the headline equity indices. The S&P BSE Mid-Cap index rose 0.25% while the S&P BSE Small-Cap index added 0.42%.

The market breadth was positive. On the BSE, 1,880 shares rose and 1,459 shares fell. A total of 150 shares were unchanged.

The Sensex has risen 3.71% while the Nifty has advanced 3.65% in four consecutive sessions.

Economy:

The Central Government on Wednesday (20 July 2022) slashed the windfall tax on petrol, diesel, jet fuel and crude oil following a decline in international rates.

The government has reduced the windfall tax on diesel and aviation turbine fuel (ATF) by Rs 2 a litre and scrapped Rs 6 per litre tax on export of petrol. The tax on ATF has now been cut to Rs 4 a litre from Rs 6 and on diesel to Rs 11 from Rs 13 per litre. Further, the Rs 23,250 per tonne additional tax on crude oil produced domestically has been cut to Rs 17,000 per tonne.

Following the notification, oil explorers and refiners rallied. Oil India (up 5.84%), ONGC (up 4%) and Reliance Industries (up 2.47%) surged.

Numbers to Track:

The yield on India`s 10-year benchmark federal paper rose to 7.449% as compared with 7.434% at close in the previous trading session.

In the foreign exchange market, the rupee was lower against the dollar. The partially convertible rupee was hovering at 80.0500, compared with its close of 79.92 during the previous trading session.

MCX Gold futures for 5 August 2022 settlement rose 0.02% to Rs 50,330.

The US Dollar index (DXY), which tracks the greenback`s value against a basket of currencies, was up 0.31% to 107.01.

In the commodities market, Brent crude for September 2022 settlement fell $1.37 or 1.28% at $105.98 a barrel.

Global Markets:

Shares in Europe and Asia advanced on Wednesday, following a sharp bounce in U.S. stocks overnight.

China kept its one-year and five-year loan prime rates unchanged at 3.7% and 4.45% Wednesday.

In Europe, investors eye the European Central Bank`s policy meeting in Frankfurt on Thursday, with policymakers having given advance notice of a first hike in 11 years but facing a backdrop of slowing growth amid the war in Ukraine and subsequent threats to energy supplies.

U.K. inflation hit yet another new 40-year high in June as food and energy prices continued to soar, escalating the country`s historic cost-of-living crisis. The consumer price inflation hit an annual rate of 9.4% in June compared with 9.1% in May, data showed on Wednesday.

"Indicative modeled consumer price inflation estimates suggest that the CPI rate would last have been higher around 1982, where estimates range from nearly 11% in January down to approximately 6.5% in December," the U.K.`s Office for National Statistics said in a report on Wednesday.

U.S. stocks closed with sharp gains on Tuesday as more companies joined big banks in reporting earnings that beat forecasts, offering respite to investors worried about higher inflation and a tightening Fed denting the corporate bottomline.

Buzzing Segment:

The Nifty IT index rose 2.93% to 28,146.35. The index has climbed 6.27% in three consecutive sessions.

L&T Technology Services (up 6.58%), Mphasis (up 5.09%), Coforge (up 3.82%), Tech Mahindra (up 3.60%), Mindtree (up 3.29%), Larsen & Toubro Infotech (up 3.02%), TCS (up 2.82%), HCL Technologies (up 2.79%) and Infosys (up 1.88%) advanced.

IT major Wipro rose 1.49%. The IT major`s consolidated net profit dropped 16.96% to Rs 2,563.6 crore in Q1 FY23 as against Rs 3,087.3 crore in Q4 FY22. Revenue from operations increased 3.21% quarter on quarter (QoQ) to Rs 21,528.6 in Q1 FY23 over Q4 FY22. On a year on year (YoY) basis, the IT firm`s net profit tumbled 20.68% while revenue jumped 17.95% in Q1 FY23.

The company said that its closing strength of employees for IT Services was at 258,574, an increase of 15,446 QoQ. TTM attrition rate was 23.3%.

Earnings Impact:

CARE Ratings gained 2.29% to Rs 468.75 after the company`s board approved a proposal to buy back up to 23.68 lakh shares of the company at a price of Rs 515 per share. The maximum consideration payable in cash for the proposed buyback shall not exceed Rs 1,21,95,20,000, the credit rating agency said.

Hindustan Unilever rose 1.55% after the company reported 11% rise in standalone net profit to Rs 2,289 crore on a 19% increase in revenue from sale of products to Rs 14,016 crore in Q1 FY23 over Q1 FY22. The company recorded an underlying volume growth of 6%. As per Nielsen FMCG market share report May 2022, HUL continued to grow significantly ahead of the market, gaining value and volume market shares.

Ambuja Cements fell 0.90%. The cement major`s standalone net profit jumped 44.9% to Rs 1,048 crore on 18.4% increase in net sales to Rs 3,958 crore in Q2 CY22 over Q2 CY21. The company`s sales volume (cement+ clinker) grew by 15.11% YoY to 7.39 million tons and realizations improved by 2.96% YoY to Rs 5,357 per ton in Q2 CY2022. Profit before tax in Q2 CY2022 stood at Rs 1,138 crore, up by 17.6% from Rs 967 crore in Q2 CY2021.

Rallis India slipped 1.63% after the company reported 18.3% fall in net profit to Rs 67 crore despite a 16.5% rise in revenue to Rs 863 crore in the quarter ending 30 June 2022 as compared with the same period last year. The Tata Group company said that the revenue growth was driven by 11.6% of price growth and 5% of volume growth. On the segmental front, Crop Care segment recorded revenue growth of 26.5% YoY while the Seeds segment revenue remained flat for the quarter.

ICICI Lombard General Insurance Company declined 4.05%. The insurance company`s net profit soared 79.6% to Rs 349.03 crore on 2.9% rise in total income to Rs 4,149.38 crore in Q1 FY23 over Q1 FY22. Profit before tax jumped 80.1% to Rs 465.11 crore in Q1 FY23 from Rs 258.26 crore posted in Q1 FY22. The insurance company reported capital gains of Rs 32 crore in Q1 FY23 as against Rs 327 crore in Q1 FY22.

L&T Finance Holdings slipped 1.86%. The investment company reported 47% jump in consolidated net profit to Rs 262 crore in Q1 FY23, buoyed by highest-ever quarterly retail disbursements of Rs 8,938 crore (up 10% QoQ and up 148% YoY). Retail portfolio mix in Q1 FY23 was at 54%, up from 45% in Q1 FY22 and the retail book has increased by 6% QoQ and 19% YoY.

Hatsun Agro Product (HAP) declined 1.68% after the company`s net profit fell 10.9% to Rs 51.95 crore in Q1 FY23 from Rs 58.33 crore recorded in Q1 FY22. Net sales jumped 30.9% to Rs 2,014.61 crore in Q1 FY23 as against Rs 1,538.78 crore in the corresponding quarter previous year.

Newgen Software Technologies slumped 5.45% after the company`s` consolidated net profit declined 66.6% to Rs 19.17 crore on 18.8% decline in revenue from operations to Rs 187.89 crore in Q1 FY23 over Q4 FY22. On year on year (YoY) basis, the company`s consolidated net profit declined 11.25% while revenue from operations rose 17.77%. Profit before tax stood at Rs 22.95 crore in Q1 June 2022, sliding by 65.28% quarter on quarter (QoQ) and declining 19.82% YoY.

Syngene International fell 1.51% after the company`s consolidated net profit declined 4.4% to Rs 73.9 crore in Q1 FY23 from Rs 77.3 crore in Q1 FY22. Revenue from operations during the quarter increased 8.4% YoY to Rs 644.5 crore. Profit before tax in Q1 FY23 stood at Rs 92.8 crore, down by 2% from Rs 94.7 crore recorded in the same period last year.

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