Sensex Ends 285 Points Lower; Energy and FMCG Stocks Witness Selling

Thu, 30 Jan Closing

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Indian share markets witnessed selling pressure throughout the day and ended deep in the red, amid concerns over the impact of coronavirus on global economy.

The BSE Sensex stood lower by 285 points, while the NSE Nifty closed down by 94 points.

The BSE Mid Cap index ended the day down by 1.4%, while the BSE Small Cap index ended down by 1%.

All sectoral indices ended on a negative note with stocks in the energy sector, FMCG sector and metal sector witnessing most of the selling pressure.

Asian stock markets tumbled further, as the rising death toll from a virus spreading from China led airlines to cut flights and stores to close, increasing pressure on the world's second-largest economy.

As of the most recent closing prices, the Hang Seng was down 2.6% while the Nikkei was down 1.7%.

The rupee was trading at 71.48 against the US$.

Market participants were tracking Colgate share price, Dabur share price, and Force Motors share price as these companies announced their December quarter results (Q3FY20) today.

In news from the automobile sector, Bajaj Auto posted 8.3% year-on-year (YoY) rise in its consolidated net profit at Rs 13.2 billion for the quarter ended December 2019. It had posted a net profit of Rs 12.2 billion in the corresponding quarter last year.

Total revenue from operations grew 2.7% to Rs 76,396.6 million from Rs 74,358 million in the year-ago quarter.

Tax expense for the Q3FY20 stood at Rs 4.1 billion against the Rs 4.6 billion in the year-ago quarter.

On standalone basis, the company registered a 15% YoY growth in net profit at Rs 12.6 billion while revenues increased 3% to Rs 76.4 billion.

The company's earnings before interest, tax, depreciation, and amortization (EBITDA) grew 13% to Rs 14.1 billion. Operating EBITDA margin improved sequentially by 150 bps to 18.4%.

The company sold 12.02 lakh vehicles in the December quarter against 12.59 lakh vehicles in the same quarter last year.

Sales in domestic market decreased 13% YoY to 639,714 units while the company registered its highest-ever export volume of 562,772 units during the quarter.

Bajaj Auto share price ended the day up by 1.3%.

In other news, shares of Escorts rallied over 8% today amid expectation of a gradual turnaround in tractor industry volumes, supported by a low base and improving rural sentiments.

The company's EBITDA margins improved 89 basis points to 13%, driven by better mix and cost savings.

However, total operational revenue declined 1.3% to Rs 16.3 billion over the previous year quarter.

Net profit rose 9.2% to Rs 1.5 billion on a YoY basis.

To know more about the company, you can read Escorts' Q3FY20 result analysis on our website.

Speaking of the automobile sector, note that India's automobile industry is bracing itself for a unique challenge in the first quarter of 2020 when the transition of BS-IV to BS-VI emission norms has to be made at the stroke of midnight on 31 March 2020.

No BS-IV vehicle could be sold from 1 April 2020, which means automakers would have to reduce their inventory on BS-IV models to zero by then.

The exercise is likely to see companies show extra caution in dispatching cars to dealers in the next few months, which may cause a continuation of the decline in wholesale numbers.

However, despite the slowdown in the auto sector, the sales volume of electric vehicles (EVs) are growing at a robust pace.

Sale of Electric Vehicles in India Projected to Go Up 10x in the Next Two Decades

Electric vehicles are very much on their way to invading Indian roads. The threat of disruption in this era is something you cannot ignore.

The recently announced government incentives will give a further boost to EV sales.

The coming one year will be a real test for India's auto companies.

It will also tell us if this slowdown is temporary or if there has been a structural change in the sector.

In our view, companies in the sector adapting their business models to the rapidly changing environment will survive and thrive.

We will keep you updated on all the trends shaping up in this space. Stay tuned.

Moving on to news from the pharma sector, shares of Aurobindo Pharma slipped 8% today after the US drug regulator classified the inspection of the company's oral solids formulation manufacturing facility of Unit VII as Official Action Indicated (OAI).

The USFDA had conducted a Current Good Manufacturing Practice (cGMP) inspection at the company's Unit 7 an oral solids formulation manufacturing facility from September 19-27, 2019 and issued 7 observations to the drug maker.

The drug company in exchange filing said it has received a letter from the US Food and Drug Administration (USFDA) classifying the inspection conducted at the aforesaid facility as OAI.

The company added that "these observations have no impact on the existing business with respect to the operations and revenues."

Aurobindo Pharma share price ended the day down by 5.2%.

Speaking of pharma sector, in the video below, Tanushree tells us where the sector stands now and also about the potential for a rebound.

Watch Now...

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