Sensex and Nifty post biggest weekly gains in a month and Nifty Bank in 3 months
The key benchmark indices logged strong gains during this week as investors cheered optimism about a potential coronavirus vaccine and pick up in business activity. Due to monthly F&O expiry, trading was volatile. The Nifty50 index managed to wrap up near 650 level and Sensex crossed 39650 mark.
The Sensex rose 1032.59 points or 2.69% to settle at 39,467.31. The Nifty 50 Index gained 246 points or 2.42% to settle at 11,646.60 for the week ended on Friday, 20 August 2020.
Midcap Index gains for 4th straight week, posts biggest weekly gains in a month, Midcap Index up 2.3% & PSU Bank top gaining index this week with 8% and Bank Nifty surged 10% this week.
Key domestic equity barometers ended with strong gains on Monday, 24 August 2020. The liquidity infusion by the US Government boosted investors’ sentiment. The stocks ended with significant gains on Friday, 28 August 2020 after the US Federal Reserve said they might keep interest rates low even if inflation rises, in a prominent overhaul to its strategy.
On the equity front, these are the stocks that moved the most, top gainers and losers from this week
5 of the top ten Nifty gainers are financial: Indusind Bank gained 29% State Bank of India surged 13% this week
Shares of IndusInd Bank surged over 29 percent while those of State Bank of India (SBI) climbed over 13 percent this week on BSE after the global financial firm UBS elevated these stocks from ‘sell’ to ‘buy”.
Year on year the “Bank stocks are down 12-62 percent and have underperformed the broader markets. USBbelieves the sector’s downside risks are limited and upgrade IndusInd Bank and SBI from sell to buy.”
For Indusind Bank USB has set a target price of Rs 675 and Rs 260 for SBI.
“USBreduced FY21E GNPL construction and credit expenditures but raised the NIM estimates, which ultimately resulted in a17-115%upgrade in FY21E earnings for the banks. according to them, the estimates are 4-30 percent higher than agreement for select coverage banks.
“Share price of the banking companies are trading below the five-year average and the expectations for most of the banking stocks are to trade around the valuations of the five-year average. Though asset quality risks for IndusInd Bank and SBI remain higher than peers, the current valuations reflect most negatives, driving the upgrades.
According to USB, the government and RBI relief measures in terms of supplementary liquidity infusion safeguarded funding for SME’s, and the tail risks in the banking system are minimum because of loan restructuring rules for all segments, in the past few months.
Axis Bank up 15%
Axis bank stock rallied after the bank proposed to acquire a 17.002 percent stake in Max Life, a material subsidiary of Max Financial Services, post the transaction Axis Bank will have 18% ownership in Max Financial Services.
Earlier this year, Max Financial services executed a definitive agreement with Acid Bank for a sale of a 29% stake sale in Max Life, a material subsidiary of the company to Axis bank.
The parties have executed the definitive agreements. The deal terms have also reportedly been tweaked after the Insurance Regulatory and Development Authority of India (IRDAI) raised concerns over four clauses in the agreement.
As the trade is subject to regulatory approvals, Axis bank and Max Life are expected to approach respective regulatory authorities in some time, along with revised applications for their consideration and approval..
Zee limited surged 11%
Under Strategy 4.0, management has increased disclosures from Q1FY21 as promised earlier, which is expected to further improve in the ensuing quarters. Cash flow improvement through a reduction in working capital requirement is key for re-rating. In our view, the resolution of balance sheet issues would have driven management to increase the disclosures. Strong execution (channel launches and market share gains) in the last few years and hope of not repeating balance sheet mistakes will regain investor interest. After two years of balance sheet deterioration on account of aggressive content investments and various write-offs, the management is confident on delivering FCF/PAT of 50% from FY22E.
Shares of ICICI Bank advanced 10%
Shares of ICICI Bank jumped10 percent from last week to close at Rs 409.75 on BSE on August 28 after the bank said it had sold 6,442,000 shares or 2 percent stake of ICICI Securities for Rs 310 crore via open market transaction.
After the share divestment, ICICI Bank now holds 77.22 percent stake as of June quarter in ICICI Securities.
This sale was to meet SEBI guidelines of 25 percent minimum public shareholding requirement, the lender said in a notice to BSE.
ICICI Securities Limited (I-Sec) is a subsidiary of ICICI Bank. It offers services like broking, distribution of financial products, wealth management and investment banking.
As of June 30, 2020, ICICI Bank held 79.22 percent equity holding (25,52,16,095 shares) in ICICI Securities, as per data on BSE.
As per Sebi norms, once a company is listed, its promoters are required to bring down their shareholding to 75 percent within a stipulated period to meet the minimum public float requirement of 25 percent.
The Board of Directors of the bank had approved the sale of up to 6,442,000 equity shares of face value Rs 5 each of ICICI Securities, representing up to 2 percent of its issued and paid-up equity share capital, through an open market sale.
Sun Pharma jumped 4.34%
Drug major Sun Pharma on Tuesday said its arm DUSA Pharmaceuticals has reached a resolution with the US Department of Justice (DOJ) concerning the promotion of LevulanKerastick and BLU-U on payment of $20.75 million (around Rs 148.51 crore).
“DUSA fully cooperated with DOJ in its investigation of a complaint filed by a former employee in September 2016,” Sun Pharmaceutical Industries said in a regulatory filing.
Under the civil settlement agreements signed with the DOJ, DUSA will pay $20.75 million to resolve allegations related to the promotion of LevulanKerastick (aminolevulinic acid HCL) and BLU-U, it stated.
The product is indicated for the treatment of minimally to moderately thick actinic keratoses of the face or scalp.
Sun Pharma said DUSA had already made a provision towards this in its fourth-quarter financials for the year ended March 31, 2020.
“The settlement does not constitute any admission by DUSA of any liability or wrongdoing”, the company added.
As part of the resolution, DUSA and Sun Pharma have entered into a corporate integrity agreement with the Office of Inspector General of the US Department of Health and Human Services.
Mahindra & Mahindra jumped 3.39%
M&M firm has signed a memorandum of understanding (MOU) with the Israel based firm to explore the development and manufacturing of electric commercial vehicles to cater to global markets.
The strategic alliance will power REE’s revolutionary electric vehicle corner module and platform technology of integrating powertrain, suspension and steering components in the curve of a vehicle wheel.
Mahindra said this memorandum of understanding (MoU) will help it to use REE Automotive’s corner modular platform technology to integrate powertrain, suspension and steering components in the arch of a vehicle wheel. On the other hand, REE will benefit from Mahindra’s vehicle design, engineering, manufacturing and overall global presence.
The coalition will help to cater to REE’s global customer requirements for 200,000-250,000 electric commercial vehicle units over a few years, including potential Mahindra’s domestic and international volumes. Production would be increased further to boost additional volume in the global and Indian markets.
Shares of Power Grid Corporation plunged 3.73%
For the June 2020 quarter, State-owned company, Power Grid Corporation of India Ltd posted an over 18 percent decline in its consolidated net profit to Rs 2,048.42 crore.
According to a BSE filing, the company posted a consolidated net profit of Rs 2,502.80 crore in the same quarter of the previous financial year 2019-20.
Its total income increased to Rs 9,816.72 crore in the April-June 2020 quarter, compared to Rs 9,361.72 crore in the same period last year.
Expenses increased to Rs 6,277.29 crore, from Rs 5,982.30 crore a year ago.
ONGC fell 0.93%
State-owned Oil and Natural Gas Corporation (ONGC) on Monday said its board will meet on September 1 to consider raising funds of up to Rs 45,000 crore.
ONGC in a BSE filing said the board will also consider and authorize the company’s financial results for the June quarter on the announced date.
It will consider raising of funds “by way of availing Bank loan(s) and/ or issue of debt instruments (including bonds, NCDs and notes) in domestic and/or overseas market including drawdown(s) under Euro Medium Term Note (EMTN) programs not exceeding Rs 35,000 for.”