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Benchmark equity indices closed lower for the second week in a row due to weak global sentiments amid rising US Treasury yields and concerns over Fitch Ratings downgrading US credit rating. For the week, the BSE Sensex lost 0.66% to close at 65,721.25 and the Nifty 50 index fell 0.66% to close at 19,517.
In broader markets, the BSE Midcap index was flat at 30,162.66. The BSE Smallcap index added 1.51% to close at 35,070.65.
Top gainers among Nifty sectoral indices were IT [3.21%], Pharma [1.86%], and Consumer Durables [0.95%]. Top losers were Realty [-4.23%], PSU Bank [-4.05%], FMCG [-1.72%], Auto [-1.35%], and Oil & Gas [-1.32%].
On a weekly basis, FIIs were net seller for Rs 3,545.6 crore and DIIs were net buyers for Rs 5,617.4 crore in the cash segment.
The Indian rupee fell 10 paise to 82.84 against the US dollar on Friday.
Company News
Reliance Industries Ltd (RIL): The conglomerate has signed a Memorandum of Understanding (MoU) with Brookfield Asset Management for manufacturing renewable energy and decarbonization equipment in Australia. Under the terms of the MoU, Brookfield will work with Reliance to explore avenues of direct capital investment and development of skills, knowledge and expertise in the renewable energy sector of Australia to facilitate the nation’s transition to a net zero future. Reliance and Brookfield will also evaluate the establishment of advanced operations in Australia to make/or assemble equipment used in the construction of renewable energy projects supplying equipment to all players in the market including Origin Energy Markets.
State Bank of India (SBI): The country’s largest lender said its standalone net profit surged 178.25% to Rs 16,884.29 crore in Q1FY24 from Rs 6,068.08 crore in Q1FY23. Total income grew 44.07% YoY to Rs 1,08,038.83 crore in the quarter ended June 2023. Net interest income (NII) dropped 3.68% YoY to Rs 38,905 crore during the quarter under review. Operating profit surged 98.37% YoY to Rs 25,297 crore in the reported quarter. The ratio of net NPAs to net advances stood at 1% as on 30 June 2023 as against 0.67% as on 31 March 2022 and 0.71% as on 30 June 2022. Shares of the bank tanked 2.91% to Rs 573.3 per share on the NSE.
In other news, SBI has raised Rs 10,000 crore via an infrastructure bond issue at a coupon rate of 7.54% and the tenor of these bonds is 15 years. The proceeds of bonds will be utilised to enhance long-term resources for funding infrastructure and affordable housing.
Maruti Suzuki India: The automaker reported a 3% increase in total sales at 1,81,630 units in July, riding on the back of demand for its utility vehicle range. The company had dispatched a total of 1,75,916 units to its dealers in the same month last year. Total domestic passenger vehicle sales were at 1,52,126 units as compared to 1,42,850 units in the year-ago month, a growth of 6%. The company said its exports last month stood at 22,199 units over 20,311 units in the same month last year.
Separately, Maruti Suzuki India has recorded a 145.4% year-on-year growth in standalone profit at Rs 2,485.1 crore for the quarter ended June FY24, largely driven by higher sales, improved realisation, and higher non-operating income. Revenue grew by 22% YoY to Rs 32,327 crore in the quarter under review. Meanwhile, the car maker has approved terminating the contract manufacturing agreement with Suzuki Motor Gujarat Ltd. It exercised its option to acquire shares of Suzuki Motor Gujarat from Suzuki Motor Corporation.
InterGlobe Aviation (IndiGo): The carrier has reported the highest-ever quarterly profit and revenue in Q1FY24. The airline’s profit stood at Rs 3,090.6 crore for the quarter ended June FY24, compared to a loss of Rs 1,064.3 crore in the year-ago period. Revenue surged 30% YoY to Rs 16,683.1 crore. Ebitdar is up 679% to Rs 5,169.49 crore in Q1FY24 as against Rs 663.89 crore in Q1FY23. Its board has approved the incorporation of a limited liability partnership for Rs 7 crore, which will be completed in three years.
Hero MotoCorp: Shares of the company tanked over 5% on Tuesday after media reports said that the Enforcement Directorate has raided the residence of Hero MotoCorp chairman Pawan Munjal in a case of alleged money laundering. The Enforcement Directorate conducted searches at his premises located in Delhi and neighbouring Gurugram, and registered a case against him under the Prevention of Money Laundering Act (PMLA). The ED took action after receiving inputs from the Department of Revenue Intelligence case. The DRI had also caught a close aide of Pawan Munjal with a large amount of undeclared foreign currency at the airport.
Hindustan Petroleum Corporation (HPCL): The state-owned oil retailer has reported a standalone profit of Rs 6,203.9 crore for the quarter ended June FY24, rising 92.5% over the previous quarter driven by strong operating numbers. Revenue from operations stood at Rs 1,11,960.6 crore in Q1FY24, rising 3.7% over Rs 1,07,928 crore in the previous quarter.
GAIL India: The state-owned company recorded a revenue of Rs 32,212.1 crore in Q1 FY24 as against Rs 32,843 crore in Q4 FY23. The company’s profit jumped 1,412 crore in Q1 FY24 from Rs 603 crore in the preceding quarter. The company’s EBITDA soared to Rs 2,432.6 crore in Q1 FY24 from Rs 307 crore in Q1 FY23.
Meanwhile, UBS Securities upgraded its rating on the shares to ‘buy’ from ‘sell’ and hiked its target price on the stock to Rs 150 from Rs 80. UBS Securities cited the potential benefits of realised tariffs from tariff integration and the positive impact of India’s increasing gas demand and GAIL’s pipeline expansion.
Bharti Airtel: The telecom operator has registered a profit of Rs 1,612.5 crore for the quarter ended June FY24, falling 46.4% from Rs 3005.6 crore in the previous quarter due to a foreign exchange loss of Rs 3,416 crore. Revenue from operations grew by 4% sequentially to Rs 37,440 crore in the quarter under review. Its mobile ARPU stood at Rs 200 in the reported quarter as against Rs 193 in the preceding period.
Meanwhile, Airtel said that it has prepaid Rs 8,024 crore to the Department of Telecom (Government of India) towards part prepayment of deferred liabilities pertaining to spectrum acquired in auction of year 2015. The said instalments had an interest rate of 10% and have been prepaid by Airtel, leveraging much lower cost financing available to it.
Mahindra & Mahindra (M&M): The utility vehicles and tractor manufacturer said its standalone net profit zoomed 98% to Rs 2,774 crore in Q1FY24 as against Rs 1,404 crore recorded in Q1FY23. Revenue from operations jumped 23% YoY to Rs 24,368 crore in the quarter ended June 2023. EBITDA grew by 46% to Rs 3,547 crore in the first quarter of FY24 as compared with Rs 2,422 crore recorded in the same quarter last fiscal. M&M sold 1,86,138 vehicles, up 21% YoY, while total tractors sold in Q1FY24 stood at 1,14,293 units, down 3% YoY.
Mahindra & Mahindra announced that global investment firm Temasek will invest Rs 1,200 crore in its electric vehicle subsidiary Mahindra Electric Automobile Ltd (MAEL). With this stake buyout, Temasek will own 1.49% to 2.97% stake in Mahindra Electric Automobile Ltd, M&M said in a release. Temasek will invest the amount in the form of Compulsorily Convertible Preference Shares (CCPS) at a valuation of up to ₹80,580 crore.
Sun Pharmaceuticals: The drug maker reported a net profit of Rs 2,022.54 crore in Q1FY24, a decline of 1.86% from Rs 2,060.88 crore in Q1FY23. Net sales rose 10.96% YoY to Rs 11,940.84 crore in the quarter ended June 2023. Sales of formulations in India for Q1FY24 were at Rs 3,560.4 crore, up 5.1% over Q1FY23. US formulation sales were $471 million for Q1FY24, up 12% YoY, and accounted for about 33% of total consolidated sales for the quarter. India formulation sales accounted for about 30% of total consolidated sales. During the reported quarter, EBITDA grew 15.5% YoY to Rs 3,331.8 crore and EBITDA margin improved to 27.9% as against 26.8% for Q1 of last fiscal.
Tata Motors: The company reported a total sales of 80,633 vehicles in domestic and international markets in July 2023, down by 1.4% from 81,790 units sold during July 2022. The auto major’s total domestic wholesales last month declined marginally to 78,844 units from 78,978 units, YoY. Total Commercial Vehicle (CV) sales in July fell 4% to 32,944 units from 34,154 units in the same month last year. The company’s total passenger vehicle sales, including EVs, rose marginally to 47,689 units from 47,636 units.
Titan: The Tata Group company has recorded a standalone profit of Rs 777 crore for the quarter ended June FY24, falling 2% compared to the year-ago period impacted by weak operating numbers. Revenue from operations grew by 24.4% to Rs 11,145 crore compared to the year-ago period.
Power Grid Corporation of India: The state-owned electric services company registered a nearly 6% year-on-year decline in standalone profit at Rs 3,542.65 crore for the quarter ended June FY24, though the operating margin was dented by a lower topline. Revenue from operations during the quarter fell 0.1% to Rs 10,436.1 crore compared to the year-ago period.
Paytm: Merchant payment volumes clocked by Paytm during the month of July surged by 39% on-year to Rs 1.47 lakh crore, as per its regulatory filing. Paytm’s loan distribution business during the month marked a growth of 148% on-year at Rs 5,194 crore. The number of loans disbursed in July stood at 43 lakh, which was up by 46% as against the year-ago period, the company informed the stock exchanges. Average monthly transacting users (MTU) stood at 9.3 crore in July, rising by 19% as compared to the same month of the previous year, Paytm said. The number of merchants paying subscription for payment devices has increased by 3.8 lakh in July to reach a total of 82 lakh, it further noted.
Zomato: The company’s consolidated revenue rose 70.86% to Rs 2,416 crore in Q1FY24 from Rs 1,414 crore in Q1FY23. Consolidated net profit stood at Rs 2 crore in Q1FY24 versus a net loss of Rs 186 crore reported in the year-ago period. Ebitda loss stood at Rs 48 crore in the quarter under review as against an EBITDA loss of Rs 307 crore in the year-ago period.
Adani Group Companies
Adani Enterprises: The company reported a consolidated net profit of Rs 674 crore for the quarter ended June 2023, a rise of 44% over Rs 469 crore reported during the same period of last fiscal. Its revenue from operations stood at Rs 25,438 crore, down 38% from Rs 40,844 crore reported during the previous corresponding quarter, due to correction in coal prices. The company said its EBITDA increased by 47% YoY to Rs 2,896 crore on account of strong operational efficiency.
Adani Ports: The company reported a 7% YoY growth in July 2023 in its total cargo volumes to 34 million metric tonnes (MMT). The company said that the growth was observed across all cargo segments, including containers (23%), and liquid & gas (27%). The company’s logistics volumes continue to record a significant jump with year-to-date (YTD) rail volumes of 178,689 TEUs (20% YoY) and general purpose wagon investment scheme (GPWIS) volumes of 5.77 MMT (39% YoY).
Adani Energy Solutions: The company which was earlier known as Adani Transmission posted an 8% rise in its consolidated net profit at Rs 181.98 crore in the June quarter due to higher revenues. The consolidated net profit was Rs 168.46 crore in the quarter ended on June 30, 2022. The total income of the company rose to Rs 3,772.25 crore during the quarter under review from Rs 3,249.74 crore a year ago. In terms of distribution business (AEML), it maintained supply reliability at 99.9 per cent (ASAI). Energy demand (units sold) was up 7.6 per cent YoY. Distribution losses were 4.85 per cent.
Ambuja Cements: The company has bought a 56.74% stake in smaller rival Sanghi Industries at an enterprise value of Rs 5000 crore ($604.4 million), according to its exchange filing. Ambuja will acquire a 56.74% stake in Sanghi for Rs 1674 crore rupees ($202.4 million), and launch an open offer for a further 26% stake at Rs 114.22 per share, a 13.8% premium to Sanghi Industries stock closing price on August 2. The acquisition will be fully funded through internal accruals.
Adani Wilmar: The company reported a loss of Rs 79 crore in the June 2023 quarter as against a net profit of Rs 194 crore in Q1FY23. Consolidated revenue slipped 12% YoY to Rs 12,928 crore from Rs 14,724 crore in the year-ago period. EBITDA plunged 71% to Rs 130 crore in the June 2023 quarter from Rs 443 crore in the Q1 of last fiscal.
Economy News
The S&P Global India services Purchasing Managers’ index (PMI) rose to 62.3 in July, from 58.5 in June and 61.2 in May. India’s seasonally adjusted S&P Global India manufacturing Purchasing Managers’ Index (PMI) posted 57.7 in July, broadly in line with the reading of 57.8 in June.
Growth of eight key infrastructure sectors slowed down to 8.2% in June 2023 compared to the year-ago month due to a decline in the production of crude oil, natural gas, and electricity, as against 5% in May, according to Commerce Ministry. The core sector growth was 13.1% in June 2022. Coal and Cement sectors witnessed a growth of 9.8% and 9.4%, respectively. The eight sectors are Coal, Crude Oil, Natural Gas, Refinery Products, Fertilizers, Electricity, Steel, and Cement.
India’s overall unemployment rate fell in July due to increased demand for labour in agriculture sector with the onset of monsoon rains. The total unemployment rate fell to 7.95% in July, from 8.45% in June, according to data released by private forecaster Centre for Monitoring Indian Economy. Rural unemployment rate fell to 7.89%, from 8.73% in June, while urban unemployment rate rose to 8.06% in July from 7.87% in June.
India’s fiscal deficit stood at Rs 4,51,370 crore at the end of the first quarter touching 25.3% of the full-year target of Rs 17.87 lakh crore, according to data released by the government.
Global Markets
The US markets closed lower as investors were concerned over falling bond prices and Fitch Ratings downgrading the US debt rating from AAA to AA+ due to expected fiscal deterioration over the next three years. The Dow Jones Industrial Average fell 1.11%, the Nasdaq dropped 2.85%, and the S&P 500 index tanked 2.27%.
On the economic front, the Labor Department’s nonfarm payroll report showed that employers added 187,000 jobs in July, compared with June’s downward revised reading of 185,000. The unemployment rate fell to 3.5% in July from 3.6% in June. Wage growth was unchanged at 4.4% over the 12-month period in July compared with June. U.S. private sector employment increased by 324,000 jobs in July, and annual pay was up 6.2% YoY. The Institute for Supply Management manufacturing Purchasing Managers’ Index stood at 46.4 in July indicating contraction.
Japan’s stock markets fell over the week with the Nikkei 225 index losing 1.7% and the broader Topix index falling 0.7%.
The yield on the 10-year Japanese government bond (JGB) rose to 0.65%, from 0.55% at the end of the previous week. Meanwhile, Japan’s central bank announced two bond-purchase operations, aimed at limiting the rising bond yields. Moreover, Kazuo Ueda, Governor of Bank of Japan, said he does not expect yields to rise to 1% under the present conditions. Japanese Yen weakened to about JPY 142.6 against the US dollar from around 141.1 the prior week.
Japan’s services sector expansion slowed to 53.8 in July from a reading of 54 in June, according to latest Purchasing Managers’ Index (PMI) data compiled by au Jibun Bank. The manufacturing PMI continued to be in contraction territory, as data showed a reading of 49.6 in July compared to 49.8 in the prior month.
China’s stock market ended higher as investors’ sentiments were buoyed after the country’s central bank said it would increase funding support for the development of the country’s real estate sector. The Shanghai Stock Exchange index gained 0.37%, the CSI 300 advanced 0.7%. But, the Hang Seng index fell 1.89%.
China’s official manufacturing purchasing managers index came in at 49.3, higher than June’s figure of 49.0, according to the national bureau of statistics. The PMI for non-manufacturing activity stood at 51.5, a slower rate of expansion compared to the 53.2 registered in June.