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Benchmarks slip for 2nd day; HDFC Bank, Bharti Airtel top drags.

The domestic equity benchmarks ended almost flat after a volatile session on Wednesday. The Nifty regained 15,000 mark after slipping below that level in intraday trade. Investors booked profits after recent steep gains.

The barometer index, the S&P BSE Sensex, slipped 19.69 points or 0.04% to 51,309.39. The Nifty 50 index lost 2.80 points or 0.02% to 15,106.50.

HDFC Bank (down 1.77%), Bharti Airtel (down 1.45%) and Infosys (down 0.68%) were top drags. TCS (up 1.11%), Reliance Industries (up 0.99%) and HDFC (up 0.84%) supported the indices.

The broader market outperformed the benchmark indices. The BSE Mid-Cap index rose 0.71% and the BSE Small-Cap index gained 0.42%.

The market breadth was almost even. On the BSE, 1465 shares rose and 1499 shares fell. A total of 161 shares were unchanged.

Numbers to Watch:

The yield on 10-year benchmark federal paper fell to 6.012% as compared with 6.074% at close in the previous trading session.

In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 72.84, compared with its close of 72.87 during the previous trading session.

In the commodities market, Brent crude for April 2021 settlement rose 37 cents at $61.46 a barrel. The contract rose 53 cents, or 0.88% to settle at $61.09 a barrel in the previous trading session.

Foreign Markets:

Shares in Europe and Asia advanced on Wednesday as traders digest a slew of new corporate earnings.

The advancement in COVID-19 vaccination efforts and a slowdown in new coronavirus cases across the globe lifted the investor sentiment. However, rising global inflationary expectations rekindled concerns over the possibility of a reflation trade in bonds, which could dampen the sentiment for global equities.

China’s consumer inflation declined in January, according to the country’s National Bureau of Statistics which reported the consumer price index slipped 0.3% from a year ago. The NBS also reported the producer price index rose 0.3% year over year in January.

In US, Nasdaq extended their runs to fresh highs on Tuesday, as strong earnings and economic recovery prospects buoyed investor sentiment. The S&P 500 and Dow ended slightly lower, however, breaking their six-day streak of gains, as investors rotated out of large-cap tech names into other sectors.

Lawmakers in Washington appear to be moving closer to another economic relief bill. House Democrats unveiled the details of a relief proposal that included $1,400 direct checks with faster phase-outs than previous bills.

President Joe Biden on Tuesday met with Treasury Secretary Janet Yellen and the chief executives of some of the country’s largest businesses in the Oval Office to discuss his $1.9 trillion stimulus plan and the outlook for the economy.

Buzzing Index:

The Nifty Auto index rose 0.95% to 11,010.85. The index had declined 1.39% in the previous session.

Mahindra & Mahindra (up 2.21%), Hero MotoCorp (up 1.18%), Tata Motors (up 1.18%), Escorts (up 0.99%), TVS Motor (up 0.61%) and Bajaj Auto (up 0.17%) advanced.

Maruti Suzuki India (down 0.04%) and Ashok Leyland (down 0.52%) declined.

Eicher Motors fell 1.66%. On a consolidated basis, Eicher Motors’ net profit rose 6.79% to Rs 532.59 crore on 19.28% increase in revenue from operations at Rs 2,828.26 crore in Q3 December 2020 over Q3 December 2019. EBITDA stood at Rs 672 crore in Q3 FY21, growing 13% as against Rs 592 crore in the same quarter of the previous financial year.

Royal Enfield sold 1.99 lakh motorcycles in the quarter, registering an increase of 5% from 1.89 lakh motorcycles sold over the same period in FY 2019-20.

Earnings Impact:

Titan Company rose 0.21%. The company posted a 10.85% fall in standalone net profit to Rs 419 crore on a 17.64% rise in total income to Rs 7,324 crore in Q3 FY21 over Q3 FY20. The company’s Jewellery business grew by 16% (excluding gold bullion sales) to Rs 6249 crore in Q3 FY21 from Rs 5409 crore in Q3 FY20. The Jewellery division declared Earnings before interest and tax (EBIT) of Rs 752 crore for the quarter compared to Rs 701 crore in the previous year. There was a significant recovery in the diamond studded segment of the jewellery business. While coins sales continue to remain high, wedding jewellery segment also witnessed a very good growth in the quarter.

Tata Steel slipped 1.33%. On a consolidated basis, the steel major reported net profit at Rs 4,010.94 crore in Q3 December 2020 compared with net loss of Rs 1,228.53 crore in Q3 December 2019. Net sales jumped 11.6% to Rs 38,805.91 crore in Q3 FY21 over Q3 FY20. EBITDA improved 53% QoQ and 161% YoY to Rs 9,540 crore, with improved realization across key entities. The company generated free cash flow of Rs 12,078 crore in Q3FY21, driven by strong operating performance and better working capital management.

GAIL (India) rose 1.95%. The state-owned natural gas processing and distribution company’s consolidated net profit slipped 6.5% to Rs 1897.04 crore on 12.39% decline in revenue from operations to Rs 15,680.62 crore in Q3 FY21 over Q3 FY20.

Mahanagar Gas lost 0.86%. The city gas distributor’s net profit increased 16.7% to Rs 217.21 crore on 10.5% decline in net sales to Rs 666.40 crore in Q3 FY21 over Q3 FY20. CNG sales volumes jumped 47.58% to 173.26 million SCM (standard cubic metre) and total PNG sales volumes rose 11.29% to 81.61 million SCM in Q3 FY21 over Q2 FY21. Total volumes jumped 33.63% quarter-on-quarter to 254.88 million SCM in Q3 FY21.

Burger King India fell 1.01% to Rs 152.40 after the company posted a net loss of Rs 29.03 crore in Q3 FY21, higher than net loss of Rs 21.73 crore in Q3 FY20. Net sales dropped 28.4% to Rs 163.19 crore in Q3 FY21 as against Rs 227.92 crore in Q3 FY20.

The company opened 9 new stores in Q3 FY21 while the total store count as of 31 December 2020 stood at 270 stores. Same store sales growth (SSG) stood at -34.8% in Q3 FY21 as against -0.2% in Q3 FY20. It expects SSSG growth at 5%-7% FY22 onwards and expects number of stores at 470 in FY24.

Varroc Engineering tumbled 7.85% after the company reported consolidated net loss of Rs 136.96 crore in Q3 FY21 compared with net profit of Rs 29.33 crore in Q3 FY20. Net sales jumped 24.6% to Rs 3,492.66 crore in Q3 FY21 over Q3 FY20. The India business revenue increased 29.2% year on year. The Global Lighting Business (VLS) revenue increased 9.0% YoY in Euro terms. Reported EBITDA declined 8.8% year on year to Rs 245.65 crore in Q3 FY21 over Q3 FY20. EBITDA margin declined to 7% in Q3 FY21 from 9.6% in Q3 FY20, mainly due to lower margins in VLS.

Spandana Sphoorty Financial slumped 6.06% after the microfinance lender reported a consolidated net loss of Rs 29.72 crore in Q3 FY21 compared with net profit of Rs 129.53 crore in Q3 FY20. Total income fell 4% year-on-year (YoY) to Rs 344.26 crore during the quarter. Impairment charge on financial instruments and other provisions stood at Rs 199.93 crore in Q3 December 2020, steeply higher than Rs 41.54 crore in Q3 December 2019. The company reported a pre-tax loss of Rs 36.56 crore in Q3 FY21 as against a pre-tax profit of Rs 175.80 crore in Q3 FY20.

Polyplex Corporation jumped 17.36% to Rs 883.10 after the company posted an 81.4% jump in consolidated net profit to Rs 224.73 crore on a 13.3% rise in net sales to Rs 1237.22 crore in Q3 FY21 over Q3 FY20. Further, the company’s board declared a special interim dividend of Rs 100 per share. Record date for the same has been fixed at 19 February 2021.

Bank of India rose 2.70% after the state-run lender reported 412.39% surge in net profit to Rs 541 crore in Q3 FY21 from Rs 106 crore in Q3 FY20. Net Interest Income (NII) declined by 9.19% to Rs 3,740 crore in the third quarter from Rs 4,118 crore in the same period last year. Net Interest Margin (NIM) was at 2.81% as on 31 December 2020 as against 3.45% as on 31 December 2019.

On the asset quality front, the ratio of gross NPAs (GNPA) to gross advances stood at 13.25% as on 31 December 2020 as against 13.79% as on 30 September 2020 and 16.30% as on 31 December 2019. The ratio of net NPAs (NNPA) to net advances stood at 2.46% as on 31 December 2020 as against 2.89% as on 30 September 2020 and 5.97% as on 31 December 2019.

TTK Prestige surged 17.43% after the company’s consolidated net profit increased by 37.2% to Rs 83.84 crore on a 23.6% rise in revenue from operations to Rs 725.63 crore in Q3 FY21 over Q3 FY20.

Investment & trading in securities market is always subjected to market risks, past performance is not a guarantee of future performance.

CapitalStars Investment Adviser: SEBI Registration Number: INA000001647.

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