Sensex tumbles 1,172 pts; Nifty holds 17,100 level; Infy down 7%

Domestic equity benchmarks tumbled in morning trade as IT stocks dragged after Infosys reported lower-than-expected Q4 results. HDFC twins were also under pressure after HDFC Bank`s Q4 earnings fell short of expectations. A steep rise in fresh Covid cases in India also dampened investors sentiment.

At 10:30 IST, the barometer index, S&P BSE Sensex slumped 1,171.54 points or 2.01% at 57,167.39. The Nifty 50 index tumbled 317.50 points or 1.82% at 17,158.15.

Selling was wide spread. The S&P BSE Mid-Cap index declined 1.25%. The S&P BSE Small-Cap index fell 0.99%.

The market breadth, indicating the overall health of the market, was weak. On the BSE, 1,196 shares rose while 2,097 shares fell. A total of 133 shares were unchanged.

COVID-19 Update:

India recorded 2,183 new COVID-19 cases and 214 deaths in the last 24 hours on Monday, according to the Union Ministry of Health and Family Welfare. The active cases of COVID-19 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.

Economy:

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.

According to the study, farmers with small landholding sizes have experienced higher income growth. Real incomes for farmers with the smallest landholdings have grown by 10% in annualized terms between the two survey rounds in 2013 and 2019 compared to a 2% growth for farmers with the largest landholding.

Buzzing Index:

The Nifty Bank index declined 2.08% to 36,684.40. The index lost 2.81% in two trading sessions.

Among the components of the Nifty Bank index, AU Small Finance Bank (down 0.49%), ICICI Bank (down 1.15%), IndusInd Bank (down 1.16%), Bandhan Bank (down 1.32%) and Punjab National Bank (down 1.64%) were the top losers.

Among the other losers were, Axis Bank (down 1.66%), State Bank of India (down 1.7%), IDFC First Bank (down 1.93%), Federal Bank (down 2.07%) and Kotak Mahindra Bank (down 2.15%).

HDFC Bank dropped 3.45%. 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.

The bank`s gross non-performing assets (NPAs) stood at Rs 16,140.96 crore as on 31 March 2021 as against Rs 15,086 crore as on 31 December 2021 and Rs 16,013.55 crore as on 31 March 2020. The ratio of gross NPAs to gross advances stood at 1.17% as on 31 March 2021 as against 1.32% as on 31 December 2021 and 1.26% as on 31 March 2020. The ratio of net NPAs to net advances stood at 0.32% as on 31 March 2021 as against 0.40% as on 31 December 2021 and 0.37% as on 31 March 2020.

Stocks in Spotlight:

Infosys slumped 6.94%. 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. For the quarter ended 31 March 2021, Free cash flow (FCF) was Rs 5,769 crore, registering a YoY decline of 0.9% while FCF conversion was at 101.3% of net profit. Infosys said growth was broad-based, supported by continued momentum in large deal wins with total contract value (TCV) of large deal wins was $2.3 billion in Q4 FY22.

Tata Steel advanced 2.28%. The steel major`s board will consider a stock split proposal on 3 May 2022. 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 Steel group is among the top global steel companies with an annual crude steel capacity of 34 million tonnes per annum.

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