Nirmala Sitharaman's Take on Stimulus Measures, Dr Reddy's Q4 Results, and Top Cues in Focus Today

Thu, 21 May Pre-Open

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Indian share markets ended on a strong note yesterday.

Benchmark indices rose sharply tracking mixed cues from global markets, backed by buying pressure in banking, financials and pharma stocks.

At the closing bell yesterday, the BSE Sensex stood higher by 622 points (up 2.1%) and the NSE Nifty closed higher by 187 points (up 2.1%).

The BSE Mid Cap index and the BSE Small Cap index ended up by 1.5% and 1.1%, respectively.

On the sectoral front, gains were largely seen in the healthcare sector, capital goods sector and finance sector.

From the global financial markets, Japanese stocks gained yesterday, supported by hopes that the government would allow economic and social activities to resume in response to a decline in new coronavirus infections.

Investor sentiment also got a boost after the Bank of Japan said it would hold an emergency meeting on Friday to decide the details of a loan programme for small firms.

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Nirmala Sitharaman: Open to More Stimulus Measures

Finance Minister Nirmala Sitharaman defended the government's stimulus measures, saying she remains open to more measures as and when needed as the impact of the coronavirus pandemic and the consequent lockdown unfolds.

Sitharaman said that decisions were made by various government departments and took cognisance of the best way to spend the public money.

She told The Economic Times that the government's restrained fiscal policy was informed by history. "Mostly I would say, coming from the learning based on the experiences of 2008-13, that's one of the reasons why we have taken this course," she said.

In the wake of the 2008 financial crisis, the then United Progressive Alliance (UPA) government led by the Congress had announced a substantial stimulus package, but it eventually led to a spike in inflation, balance of payments crisis and currency depreciation.

On the issue of a bigger stimulus through monetisation, she said all suggestions had been considered and this was the call that had been taken.

She countered the criticism from various quarters that the package was largely made up of supply-side measures and didn't contain much that would boost demand.

She said the package has been designed in such a way that every sector benefits, responding to the question that there was no direct support for stressed industries such as aviation and hospitality.

The measures announced by the finance minister included free food grains for the poor, support packages for micro small and medium enterprises and a host of sectors, easy loans for struggling business besides a slew of reforms aimed at creating a self-reliant India.

Prime Minister Narendra Modi announced a Rs 20 trillion stimulus package and the finance minister announced the allocation of the funding to various sectors over a series of five press conferences last week.

However, investors were disappointed by the measures announced. Indian share markets crashed over 3% on Monday as the measures announced failed to provide any near-term relief.

It is interesting to note that unlike the previous stimulus packages, this one is no longer a tiny fraction of India's GDP.

This is the largest stimulus package ever announced by India.

At about 10.2%, it is among the biggest stimulus packages announced over the past few months by governments all around the world. This is evident in the chart below:

It would be interesting to track the upcoming developments from this space. We will keep you updated on the same. Stay tuned.

Dr Reddy's Q4FY20 Result: 76% YoY Jump in Net Profit

Dr Reddy's Laboratories reported a 76% year-on-year (YoY) jump in its net profit for the quarter ended March 31, 2020 (Q4FY20).

For Q4FY20, the company's net profit stood at Rs 7,642 million against Rs 4,344 million in the corresponding quarter of the previous financial year.

Revenues came in at Rs 44.3 billion. EBITDA came at Rs 10 billion against an estimate of Rs 9.3 billion, while EBITDA margin came at 22.6%.

The company said that its global generics segment clocked a 20% YoY jump to Rs 36.4 billion.

Among the geographies, Europe's segment saw a jump of 80% YoY in revenue, while North America and emerging markets rose 21% and 15% YoY, respectively. India segment rose 5% YoY.

The company's board of directors also recommended a final dividend of Rs 25 per equity share for the financial year 2019-20.

Speaking of the pharma sector, in December 2019, co-head of Research at Equitymaster, Tanushree Banerjee had predicted that pharma could be the sector to see a big rebound in 2020.

And rightly so, most pharma companies have re-emerged as the safer bets for investors in the ongoing market turmoil. Last month, the Indian rupee touched a new record low of Rs 76.92 against the US dollar. Most pharma companies generate their revenues through exports. Hence, a depreciating rupee is a positive development for them.

As per Tanushree, in a post Covid-19 world, healthcare expenditures globally will see a big rejig.

Tanushree has her eyes on an exciting tech stock. The company in question is developing its medical division. It's focusing on telemedicine, which Tanushree believes will be a huge growth driver in a post Corona world.

L&T Infotech's Q4 Revenue Grows at 4.7% Sequentially

From the IT sector, Larsen & Toubro (L&T) Infotech posted revenue growth of 4.7% in constant currency terms on a sequential basis in the March quarter (Q4FY20).

In rupee terms, the firm's revenue grew by 7.1% quarter on quarter (QoQ) at Rs 30.1 billion, while consolidated net profit rose 13% year-on-year to Rs 4.3 billion.

The company reported 10.3% jump in profit before tax (PBT) at Rs 5.5 billion over the previous quarter.

The company said it won two large deals in Q4 with net-new TCV in excess of US$ 100 million, culminating in a record eight large deal wins in FY20.

The company's board also recommended a final dividend of Rs 15.50 per equity share of face value of Rs 1 each.

Apart from the above, market participants will also be tracking Bajaj Auto share price, Ajanta Pharma share price and UltraTech Cement share price as these companies announced their March quarter results yesterday.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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