Sensex tanks 1172 pts, Nifty ends below 17,200; HDFC Bank, Infy drag

The equity market settled with deep losses on Monday, extending losses for the fourth trading session. IT and financial shares dragged the headline indices, led by a selloff in HDFC Bank and Infosys amid disappointing sets of earnings last week. On the other hand, auto, metal and FMCG shares bucked the weak market trend. Rising bond yields, firm crude oil prices and a steep rise in fresh COVID-19 cases in India also dampened investors sentiment.

The barometer index, S&P BSE Sensex slumped 1,172.19 points or 2.01% at 57,166.74. The Nifty 50 index tumbled 302 points or 1.73% at 17,173.65.

In the broader market, the BSE Mid-Cap index fell 0.95% and the BSE Small-Cap index lost 1.01%.

The market breadth was negative. On the BSE, 1,462 shares rose while 2,062 shares fell. A total of 146 shares were unchanged.

The NSE`s India VIX, a gauge of market`s expectation of volatility over the near term, jumped 8.71% to 19.3350.

COVID-19 Update:

India recorded 2,183 new COVID-19 cases and 214 deaths in the 24 hours ending 8 AM on Monday, according to the Union Ministry of Health and Family Welfare. The active cases currently stand at 11,542 and comprise 0.03% of the total infections. The recovery rate remained unchanged at 98.76% and 1,985 recoveries were reported on Sunday.

Delhi is registering an uptick in cases; daily cases breached the 500 mark on Sunday, with the city recording 517 cases in 24 hours. The positivity rate in the national capital has jumped from 0.5% to 5.33% in two weeks. Amid the increase in infections, the Delhi Disaster Management Authority (DDMA) will take stock of the situation and meet on 20 April 2022.

Monsoon Update:

India is likely to witness normal rainfall during the southwest monsoon season this year, the India Meteorological Department (IMD) said on Thursday.

The rainfall during the 2022 monsoon season (June to September) averaged over the country as a whole is likely to be normal (96-104% of Long Period Average (LPA)). Quantitatively, the monsoon seasonal (June to September) rainfall is likely to be 99% of the LPA with a model error of ą 5%. The LPA of the season rainfall over the country as a whole for the period 1971-2020 is 87 cm, IMD noted.

Economy:

India`s inflation based on wholesale price index (WPI) stood at 14.55% in March 2022 compared with 7.89% in March 2021.

"The high rate of inflation in March, 2022 is primarily due to rise in prices of crude petroleum & natural gas, mineral oils, basic metals, etc owing to disruption in global supply chain caused by Russia-Ukraine conflict," the Ministry of Commerce & Industry said in a statement today.

WPI grew 13.11% in February 2021, while the figure for January was 13.68%.

Meanwhile, the poverty in India is 12.3% lower in 2019 compared with 2011. The poverty headcount rate has declined from 22.5% in 2011 to 10.2% in 2019. According to policy research working paper of World Bank, poverty reduction was higher in rural areas as against urban India. Rural poverty dropped by 14.7% while urban poverty declined by 7.9% during 2011 to 2019.

Numbers to Watch:

The yield on India`s 10-year benchmark federal paper fell to 7.155% as compared with 7.215% 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 76.2550, compared with its close of 76.19 during the previous trading session.

MCX Gold futures for 3 June 2022 settlement rose 0.81% to Rs 53,421.

The US Dollar index (DXY), which tracks the greenback`s value against a basket of currencies, rose 0.34% to 100.67.

In the commodities market, Brent crude for June 2022 settlement fell 7 cents at $111.63 a barrel. The contract rose $2.92 or 2.68% to settle at $111.70 a barrel during the previous trading session.

Oil prices firmed up as concerns grew about tighter global supply, with the deepening crisis in Ukraine raising the prospect of heavier sanctions by the West on top exporter Russia.

Foreign Markets:

Asian stocks closed on a mixed note on Monday, with investors reacting to the release of Chinese economic data, including first-quarter gross domestic product figures. China has reported gross domestic product of 4.8% in the first quarter of 2022, as against 4% in the fourth quarter. Markets in Australia and Hong Kong were closed on Monday for a holiday.

In Europe, the European Central Bank (ECB) kept its monetary policy unchanged last Thursday but confirmed it will end its bond buying in the third quarter. Once the bond buying program is completed, the ECB is expected to begin hiking interest rates, following the same path as the other major central banks across the globe.

Buzzing Segment:

The Nifty IT index slumped 4.58% to 32,780.05. The index has tumbled 10.11% in seven sessions.

Mphasis (down 4.91%), Tech Mahindra (down 4.43%), L&T Technology Services (down 4.48%), Wipro (down 3.67%), TCS (down 3.63%), Larsen & Toubro Infotech (down 2.66%), Coforge (down 2.26%) and HCL Technologies (down 1.99%) slumped.

Infosys slumped 7.27% to Rs 1,621.45 after the IT firm`s consolidated net profit fell 2.1% to Rs 5,686 crore on a 1.3% increase in revenues to Rs 32,276 crore in Q4 FY22 over Q3 FY22. Meanwhile, on a year-on-year basis, Infosys` net profit and revenue in Q4 FY22 increased 12% and 22.7%, respectively.

In dollar terms, the company reported revenues of $4,280 million, registering a growth of 18.5% YoY for the quarter ended 31 March 2022. Revenues in constant currency terms grew by 20.6% YoY and 1.2% QoQ. Operating margin for the quarter stood at 21.5%, a decline of 3% YoY and 2% QoQ.

The company issued revenue growth guidance of 13%-15% in constant currency and operating margin guidance of 21%-23% for FY23.

Mindtree fell 3.44% to Rs 3956.15. The company`s net profit stood at Rs 473.10 crore in Q4 March 2022, a growth of 8.1% quarter-on-quarter and 49.1% year-on-year. Revenue was at Rs 2897.40 crore, a growth of 5.4% q-o-q and 37.4 % y-o-y.

The board recommended a final dividend of Rs 27 per share for the financial year ended 31 March 2022.

Stocks in Spotlight:

HDFC Bank fell 4.74% to Rs 1395.35. The private lender`s net profit rose 22.83% to Rs 10,055.18 crore on 8.07% increase in total income to Rs 41,085.78 crore in Q4 March 2022 over Q4 March 2021. The bank`s profit before tax (PBT) rose 20.35% year-on-year to Rs 13,044.66 crore in Q4 March 2022. The bank`s provisions and contingencies (excluding tax provisions) fell 29.43% to Rs 3,312.35 crore in Q4 March 2022 over Q4 March 2021.

Net interest income (interest earned less interest expended) in Q4 March 2022 grew by 10.2% to Rs 18,872.70 crore from Rs 17,120.20 crore in Q4 March 2021. Core net interest margin was at 4% on total assets, and 4.2% based on interest earning assets.

Housing finance major, HDFC fell 4.81% to Rs 2263.05. HDFC and HDFC Bank on 4 April 2022 announced merger, in which shareholders of HDFC will receive 42 shares of HDFC Bank, for 25 shares held in HDFC. As a result, HDFC Bank will be 100% owned by public shareholders and existing shareholders of HDFC will own 41% of HDFC Bank.

Tata Steel rose 1.51%. The steel major`s board will consider a stock split proposal on 3 May 2022. The board will also consider Q4 March 2022 results and recommend dividend, if any, for the financial year ended 31 March 2022.

Tata Power Company fell 5.55%. BlackRock Real Assets-led consortium, including Mubadala Investment Company, invest Rs 4,000 crore by way of equity / compulsorily convertible instruments for a 10.53% stake in Tata Power Renewables, translating to a base equity valuation of Rs 34,000 crore. The final shareholding will range from 9.76% to 11.43% on final conversion.

The proposed investment is expected to fund Tata Power Renewables` aggressive growth plans. Over the next five years, Tata Power Renewables aims to achieve a portfolio of over 20 GW of renewables assets and a market leading position in the rooftop and electric vehicle charging space across India.

Jubilant Ingrevia jumped 5.73% after the company bagged a CDMO contract for an estimated value of Rs 270 crore in the specialty chemicals business, spanning over a period of three years, from one of its international customers.

Through the contract, the company will supply two key GMP intermediates for one of the `patented drugs` of the innovator pharmaceutical customer. Both these products involve seven steps specialised chemistry. Commercial supplies of both these products will start from FY23 onwards. The company will use GMP facility to service this contract.

Swiss Military Consumer Goods jumped 4.81% after company reported a net profit of Rs 1.23 crore in Q4 FY22 as against a net profit of Rs 0.23 crore in Q4 FY21. Revenue from operations increased to Rs 21.91 crore in the fourth quarter from Rs 3.25 crore recorded in the same period last year.

MEP Infrastructure Developers hit an upper circuit limit of 5% at Rs 21.10 after the company said its board will consider fund raising on 21 April 2022.

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