The escalated tensions between United States and China and the warning by S&P Global Ratings over Indian economic condition will weigh on investor sentiment as stock markets begin trading this week. US administration on Friday said it was restricting US visas for a number of Chinese officials for infringing on the autonomy of Hong Kong. In reply, Chinese authorities have notified the US that if this continues, China would back away from the commitment to purchase US farm goods. Another worrying element for the stock markets is the warning by S&P ratings about Indian economy’s deteriorating condition. The ratings agency anticipates India's GDP growth to contract 5% in FY21. S&P said difficulties in containing the virus, anemic policy response, and underlying vulnerabilities are leading it to expect the GDP contraction. Let us look at the stocks that will be in focus as markets open on Monday:
- HDFC Bank: The lender is planning to raise Rs10,000-13,000cr via share sales in India and issuance of American Depository Receipts (ADRs) in the third quarter of 2020-21, media reports suggested citing unnamed sources. The equity capital is likely to be raised through a combined issuance of domestic shares and ADRs. It will be a qualified institutional placement (QIP) plus ADR issuance, as per media reports.
- Reliance Industries Ltd: The conglomerate has pushed back the start of production from the second wave of discoveries in its eastern offshore KG-D6 block to September/October after the COVID-19 lockdown imposed unprecedented constraints in execution of the deep-water project. The company, along with its partner BP Plc of the UK, was initially targeting the start of production from the R-Series field in the Krishna Godavari block in May but pushed it back to June-end due to the lockdown.
- Bajaj Finance Ltd: S&P Global Ratings on Friday said it lowered its ratings on Bajaj Finance and Axis Bank to” junk”, reflecting the ratings agency’s view that economic risks have increased for banks and financial institutions operating in India. S&P downgraded Bajaj Finance’s issuer credit rating to BB+/stable/B from BBB-/negative/A-3 earlier.
- Axis Bank: The lender clarified that S&P Global ratings inadvertently mentioned the bank being on credit watch. In a statement to the stock exchanges, the private sector lender said that S&P confirmed that it was an editorial error and the bank is on stable outlook. S&P had downgraded ratings of Axis Bank and four Indian non-bank financiers, citing worsening operating conditions as a result of the covid-19 pandemic. Axis Bank’s issuer credit rating was cut one notch to BB+, indicating junk status.
- IDBI Bank: The lender announced its plan to divest 27% of its stake in IDBI Federal Life Insurance Company to its existing partners. In a statement to the stock exchanges on Friday, IDBI Bank said it will sell 23% to Ageas Insurance and 4% to Federal Bank at a combined value of about Rs595cr. The company has been formed by a 3-way joint venture between IDBI Bank, Federal Bank and Ageas Insurance.
- ITC Ltd: The company reported a 9.28% rise in its consolidated net profit to Rs3,926.46cr for the fourth quarter ended 31st March,2020. It’s revenue from operations was down 4.93% to Rs12,560.64cr during the quarter under review as against Rs13,212.19cr in the corresponding period previous fiscal. The cigarettes revenue dipped by 6.5% to Rs5,130.5cr while the Cigarettes EBIT declined by 11.7% to Rs3,403cr impacted by the lock-down in the last 15 days of March and the excise related price hikes of ~10-12% taken across categories.
- Coal India Ltd: State-run Coal India reported a 23% decline in its consolidated net profit to Rs 4,625cr in the January-March quarter of FY'20. Its sales during the quarter under review were down by 4% to Rs25,597cr as compared to Rs26,704cr registered in the same period of FY19. Total expenditure stood at Rs22,033.90cr in Q4FY20 over Rs 21,471.78cr in Q4FY19.
- Dr Reddy’s Laboratories Ltd: The pharmaceutical company expects to launch 25 products in the US market in the current financial year, according to a top company official. The drug major has also earmarked a capital expenditure (capex) of Rs1,000cr for finding various projects during the ongoing financial year. As of March 31, 2020, the company has 99 cumulative filings pending for approval with the US Food and Drug Administration (USFDA).
- NTPC Ltd: The state-run power company reported over 70%decline in its consolidated net profit at Rs1,523.77cr in the March quarter mainly due to higher tax provision under the Vivad Se Vishwas' scheme. The consolidated net profit of the company stood at Rs 5,161.39 crore for the corresponding quarter last fiscal, NTPC said in a filing to the stock exchanges on Saturday.
- Zee Media Corporation: The company reported a consolidated net profit of Rs11.14cr for the fourth quarter ended 31st March2020. The company had posted a net loss of Rs86.66cr during January-March quarter of the previous fiscal, Zee Media said in a filing to the stock exchanges on Saturday. Its revenue from operations was down 18.42% at Rs 138.15cr during the quarter under review, as against Rs169.35cr in the corresponding period of the previous fiscal.
US stocks sank on Friday after Texas and Florida rolled back reopening measures on fresh fears that the coronavirus would derail an economic recovery. The Dow Jones Industrial Average fell 730 points, or 2.8%, at 25,015. Meanwhile, the S&P 500 index finished 2.4% lower at 3,009, while the Nasdaq Composite Index closed 2.6% lower at 9,757.
U.S. states saw a single-day record rise of 37,000 in infections on Thursday, led by Florida, Texas, California and Arizona, surpassing the 36,188 level from April 24. Governors in Texas and Florida ordered all bars to close again on Friday, making the states the first to reverse some reopening measures after months of lockdowns.