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Mid Session Commentary
You are here : Equity | News | Mid Session Commentary
Barometers pare losses; banks extend losses
(12:18, 31 Jul 2020)

Key equity indices pared losses in early afternoon trade. At 12:20 IST, the barometer index, the S&P BSE Sensex, was down 18.65 points or 0.05% at 37,717.63. The Nifty 50 index fell 6 points or 0.05% at 11,096.15. Global cues were subdued following a record contraction in US gross domestic in the second quarter.

In broader market, the S&P BSE Mid-Cap index was up 0.31% while the S&P BSE Small-Cap index was up 0.58%. Both these indices outperformed the Sensex.

The market breadth was negative. On the BSE, 1012 shares rose and 1379 shares fell. A total of 133 shares were unchanged.

Foreign portfolio investors (FPIs) bought shares worth Rs 207.30 crore, while domestic institutional investors (DIIs), were net sellers to the tune of Rs 387.24 crore in the Indian equity market on 30 July, provisional data showed.

Derivatives:

The NSE's India VIX, a gauge of market's expectation of volatility over the near term, rose 0.97% to 24.9675. The Nifty August 2020 futures were trading at 11,096, at a premium of 6 points compared with the spot at 11,090.

On the weekly index options front, the Nifty option chain for 6 August 2020 expiry showed maximum Call OI of 28.29 lakh contracts at the 11,200 strike price. Maximum Put OI of 24.77 lakh contracts was seen at 11,000 strike price.

On the monthly index options front, the Nifty option chain for 27 August 2020 expiry showed maximum Call OI of 19.37 lakh contracts at the 11,500 strike price. Maximum Put OI of 30.84 lakh contracts was seen at 10,000 strike price.

COVID-19 Update:

Total COVID-19 confirmed cases worldwide stood at 17,297,276 with 673,223 deaths. India reported 5,45,318 active cases of COVID-19 infection and 35,747 deaths while 10,57,805 patients have been discharged, according to the data from the Ministry of Health and Family Welfare, Government of India.

US Economy:

A first reading on US gross domestic product data for the second quarter confirmed the pandemic pummeled the economy. US GDP collapsed at a 32.9% annualized rate during the second quarter, following a 5% slump in the first quarter. The US economy shrank by its sharpest contraction since the second world war. More depressing signs emerged of the coronavirus pandemic's heavy toll on the country's economy.

The record-setting quarterly fall in economic growth came as another 1.43 million Americans filed for unemployment benefits last week.

Buzzing Index:

The Nifty Bank index declined 0.57% to 21,524.20. The index is down 2.63% in three trading sessions.

HDFC Bank (down 2.45%), IDFC First Bank (down 2.22%), Bandhan Bank (down 1.36%), RBL Bank (down 1.18%), Punjab National Bank (down 1.1%) and Kotak Mahindra Bank (down 0.65%) were top losers in banking space.

RIL's Q1 June 2020 result:

Reliance Industries (RIL) lost 1.31% after the conglomerate reported a 31% jump in consolidated net profit to Rs 13,248 crore in Q1 June 2020 compared with Rs 10,141 crore in the corresponding period of last year. Consolidated total income for the quarter stood at Rs 95,626 crore, down 42.11% compared with Rs 165,199 crore year-on-year. The decline in revenue was primarily due to fall in O2C revenues, led by sharp decline of 57.6% in average Brent crude price. Retail business also witnessed 17% decline in revenues due to lockdown and restrictions in store operations. Overall decline in revenue was partially offset by increase in revenue of Digital services business with strong subscriber addition and significant improvement in ARPU. The company also managed to bring down total expenditure by about 42% YoY to Rs 87,406 crore in Q1 June 2020 from Rs 1,50,858 crore in Q1 June 2019. EBITDA declined 11.8% to Rs 21,585 crore in Q1 FY21 over Q1 FY20.

Reliance Jio Infocomm's net profit surged 182.8% to Rs 2,520 crore on 33.7% increase in operating revenue to Rs 16,557 crore in Q1 FY21 over Q1 FY20. EBITDA jumped 55.4% to 7,281 crore during the period under review. EBITDA margin expanded 613 bps to 44% during the period under review. ARPU during the quarter of Rs 140.3 per subscriber per month. Total wireless data traffic during the quarter of Rs 1,420 crore GB (30.2% YoY growth) with strong customer engagement and best-in-class network performance.

Reliance Retail, however, witnessed a 17.20% YoY fall in revenue at Rs 31,633 crore during the quarter. EBITDA declined 47.40% to Rs 1,083 crore in Q1 FY20 from Rs 2,060 crore in Q1 FY20. EBITDA margin stood at 3.8% as on 30 June 2020 as against 6% as on 30 June 2019. The company said that the quarter saw 21% growth year on year across the operational businesses of Grocery and Connectivity. Consumer Electronics and Fashion and Lifestyle businesses were hit particularly hard by the cessation of activity during the lockdown period, as stores were closed for the most part of the quarter. It further said that EBITDA was positive and resilient despite the limitations in the quarter, with cost management initiatives leading to fixed cost savings, which helped cushion the impact of lower profits from lower sales.

O2C - Petrochemicals revenue degrew by 33% YoY to Rs 25,192 crore in the June quarter. EBITDA contracted by 49.7% to Rs 4,430 crore in Q1 FY20 from Rs 8,810 crore in Q1 FY20. EBITDA margin stood at 17.6% as on 30 June 2020 as against 23.4% as on 30 June 2019. Weak domestic demand and higher share of exports impacted margins as compared to regional benchmarks. The impact of lower realization was partially offset by cost optimization and integration benefits, RIL said in a statement.

Revenues from the Refining & Marketing segment declined by 54.1% Y-o-Y to ₹ 46,642 crore due to lower crude oil price and lower throughput during the quarter. Consequently, EBITDA fell 25.8% to Rs 3,818 crore in Q1 FY20 from Rs 5,143 crore in Q1 FY20. EBITDA margin stood at 8.2% as on 30 June 2020 as against 5.1% as on 30 June 2019. Gross refining margin (GRM) fell to $6.3 per barrel in the first quarter of the financial year 2020-21 from $8.1 reported in the corresponding period last year. GRM was impacted by lower product cracks and narrower light-heavy crude differential. However, RIL maintained a significant premium of $7.2/bbl over regional benchmark margin.

Oil and Gas (Exploration & Production) Business reported 45.2% drop in revenue as it stood at Rs 506 in Q1 June 2020 as against Rs 923 crore in Q1 June 2019, primarily due to lower production in domestic business post closure of Panna Mukta and D1D3 fields and lower prices. The segment reported a negative EBITDA of Rs 32 crore with a negative EBITDA margin of 6.3% in Q1 FY21 due to lower volumes and weak realizations. It had reported an EBITDA of Rs 207 crore with an EBITDA margin of 22.4% in Q1 FY20.

RIL's Media Business witnessed 35.2% YoY decline in revenues to Rs 807 crore in Q1 FY21 primarily due to the COVID-19 linked clampdown on spending by advertisers, particularly in entertainment segment. EBITDA fell 41.3% to Rs 27 crore in Q1 June 2020 from Rs 46 crore in Q1 June 2019. However, aggressive and broad-based cost-controls across business verticals limited the fall, the company said.

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