Rising Demand for Gold, RBI Rate Cut, Key Q1FY20 Results, and Top Cues in Focus Today

Fri, 26 Jul Pre-Open

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On Thursday, Indian share markets extended their decline for the 6^th day as markets witnessed selling pressure during closing hours.

The BSE Sensex closed lower by 17 points to end the day at 37,831. Tata Motors and Yes Bank were among the top losers.

While the broader NSE Nifty ended down by 19 points to end at 11,252.

Among BSE sectoral indices, energy stocks fell the most by 1.9%, followed by metal stocks and capital goods stocks.

Top Stocks in Action Today

Bharat Heavy Electricals (BHEL) share price will be in focus today as the company has signed a Memorandum of Understanding (MoU) with NTPC, for forming a Joint Venture (JV) company, to set up a 800 MW Technology Demonstration Plant (TDP) at NTPC's existing power plant in Sipat, Chhattisgarh.

Mphasis share price will also be in focus today as the company has entered into partnership with AppDynamics, a Cisco company and the leader in application intelligence.

Reportedly, the company's participation in the AppDynamics partner program will help to provide a comprehensive one-stop solution to improve businesses' application performance and address service reliability challenges at the enterprise scale.

Market participants will also track Maruti Suzuki share price, Bajaj Auto share price, JSW Steel share price, and Force Motors share price as these companies are set to announce their June quarter (Q1FY20) results later today.

Results Corner

Bajaj Finance has reported 43% year-on-year (YoY) rise in its June quarter consolidated net profit. This was the highest ever profit recorded by the company.

Net interest income during the quarter grew 43% YoY to Rs 36.9 billion. The consolidated asset under management surged 41% YoY to Rs 1.29 lakh crore.

Oberoi Realty has reported 71.1% fall in its net profit at Rs 711 million for the June quarter as compared to Rs 2,460.5 million for the same quarter in the previous year.

Total income of the company decreased by 61.5% at Rs 2,147.5 million for Q1FY20 as compared Rs 5,573.8 million for the corresponding quarter previous year.

Bharti Infratel has reported a fall of 70.5% in its net profit at Rs 4,481 million for the quarter under review as compared to Rs 15,179 million for the same quarter in the previous year.

PI Industries has reported 23.4% rise in its net profit at Rs 1,008 million for Q1FY20 as compared to Rs 817 million for the same quarter in the previous year.

You can read our recently released Q1FY20 results: Zee Entertainment, SKF India, Torrent Pharma, Monsanto India, TVS Motors, Jyothy Labs, DCM Shriram, United Spirits.

Gold Demand Rises

India's gold demand in Q1FY20 saw an increase of 14% on a year-on-year basis, but reports stated it might remain muted in the next two quarters. Among the reasons for a weak outlook are high domestic prices.

The rates, already high in international markets, will increase further in India on account of the 2.5% import duty increase announced in Union Budget 2019 earlier this month.

Jewellery demand increased by 16% in the June quarter to 168 tonnes, while investment demand increased by 10% to 44 tonnes. Unofficial gold imports fell sharply in the first quarter to just 15 tonnes, the lowest in several quarters.

Note that, despite ongoing massive rally in gold prices, the country's gold reserves remained unchanged at US$ 24.3 billion, according to the central bank data.

Both gold and silver prices have surged this week in India, reflecting a firming global trend. Watch Vijay Bhambwani talk about investing opportunities in gold.

RBI Likely to Cut Interest Rates

As per an article in The Economic Times, the Reserve Bank of India is set to cut interest rates in August for the fourth meeting in a row, according to a Reuters poll of economists.

Majority of the economists said risks to their already-modest growth forecasts were skewed more to the downside.

Here's an excerpt from the article:

• India's inflation has remained below the central bank's medium-term target of 4% for almost a year and is not expected to rise significantly above that until at least 2021.
  
  Yet despite three interest rate cuts this year and expectations for more, India's growth outlook was downgraded in the latest poll compared to the previous quarterly economic survey in April.
  
  The economy expanded at 5.8% year-on-year in the January-March quarter, its slowest pace in five years and losing its title to China as the fastest-growing economy. India is now forecast to grow in the range of 6.3% to 7.2% each quarter through to end-March.

The article also stated that if the RBI does cut rates next month, it will be the most aggressive amongst dovish central banks in Asia.

The last time RBI delivered so many back-to-back cuts was after the global financial crisis over a decade ago, when most major central banks went on a cutting spree to revive economic growth.

Stay tuned for more updated from this space.

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