Global Stock Market Drivers, Key Q1FY20 Results, and Top Cues in Focus Today

Fri, 2 Aug Pre-Open

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On Thursday, Indian share markets hit fresh 5-month lows at the benchmark level as global cues, weak corporate earnings and continuous selling by foreign portfolio investors knocked off investment sentiment.

The BSE Sensex closed lower by 463 points to end the day at 37,018. Vedanta and Tata Motors were among the top losers.

While the broader NSE Nifty ended down by 138 points to end at 10,980.

Among BSE sectoral indices, metal stocks fell the most by 3.4%, followed by telecom stocks and IT stocks.

Top Stocks in Action Today

Eicher Motors share price will be in focus today as its motorcycle division has reported 22% fall in sales at 54,185 units in July 2019 as compared to 69,063 motorcycles sold in July 2018.

To know more about the company, you can read Eicher Motors' latest result analysis on our website.

Zee Entertainment (ZEEL) share price will also be in focus as Invesco Oppenheimer Developing Markets fund has agreed to make an additional investment in the company. The fund has agreed to buy up to 11% stake in ZEEL from its promoters, for a total consideration value of up to Rs 42.2 billion.

Market participants will also track Bata India share price, Nestle share price, HDFC share price, and ITC share price as these companies will announce their June quarter results later today.

Results Corner

Marico has reported a rise of 17.3% in its net profit at Rs 2.5 billion for the June quarter (Q1FY20) as compared to Rs 2.1 billion for the same quarter in the previous year.

Total income of the company increased by 5.6% at Rs 18 billion for Q1FY20 as compared Rs 17.1 billion for the corresponding quarter previous year.

UPL has reported a fall of 57.2% in its net profit at Rs 2.2 billion for the quarter under review as compared to Rs 5.1 billion for the same quarter in the previous year.

CARE Ratings has reported 46% decline in its consolidated net profit at Rs 135 million. Consolidated operational revenues slipped 17% at Rs 4,990 million against Rs 6,000 million in the corresponding quarter of previous fiscal. Operating profit margin during the quarter contracted to 20.1% from 45.6% in the previous year quarter.

You can read our recently released Q1FY20 results: Jagran Prakashan, Hero MotoCorp, UPL, Axis Bank, IOC, Vinati Organics.

Global Stock Market Drivers

The Federal Reserve cut interest rates on July 31 to shore up the economy against risks including global weakness, but the head of the US central bank said he did not view the move as the start of a lengthy series of rate cuts.

Fed Chairman Jerome Powell cited global weakness, simmering trade tensions and a desire to boost too-low inflation in explaining the central bank's decision to lower borrowing costs for the first time since 2008 and move up plans to stop winnowing its massive bond holdings.

In a statement at the end of its latest two-day policy meeting, the Fed said it had decided to cut rates "in light of the implications of global developments for the economic outlook as well as muted inflation pressures."

The central bank also said it will "continue to monitor" how incoming information will affect the economy and "will act as appropriate to sustain" a record-long US economic expansion.

Speaking of the US Fed policy decision effects in India, one of the key reasons foreign investors poured money into India was the shift in monetary policy stance by the US Federal Reserve.

The US central bank, until some months ago, was on track to hike interest rates and shrink the Fed balance sheet. But seeing signs of slowdown in the economy and the nervousness in the stock markets, it showed its willingness to turn dovish.

So, it's unlikely we'll see any interest rate hikes by the US Federal Reserve in 2019.

Rupee hits Five-Week Low

On Thursday, the Indian rupee fell as the dollar surged to a two-month high and US Treasury yields climbed following comments from Federal Reserve chief Jerome Powell, which were more hawkish than expected.

After a gap down opening, the domestic currency recovered during closing hours. The rupee opened at the lowest level since June 27.

On July 31 the rupee has recovered from the lows and finished 6 paise higher at 68.79 against the US dollar ahead of the outcome of US Federal Reserve meeting.

From the Automobiles Sector...

Country's largest carmaker Maruti Suzuki reported 36.2% decline in passenger vehicle sales in the domestic market at 98,210 units for July. Total sales declined 33.5% at 1,09,264 units in July. The company had sold 1,64,369 in July last year.

While sales of mini cars Alto and old WagonR dropped 69.3% to 11,577 units, those of compacts (Swift, Dzire, Baleno, Ignis, Celerio and new WagonR) fell 22.7% to 57,512 units.

Sales for Vistara Brezza, Ertiga, S-Cross dropped 38.1% to 15,178 units and vans by 37.9% to 9,814 units. Sales of light commercial vehicle Super Carry stood flat at 1,732 units during the month.

Exports in July were down by 9.4% at 9,258 units as against 10,219 units in the corresponding month last year.

Meanwhile, Bajaj Auto registered a fall of 5% in total sales to 381,530 units in July 2019 against 400,343 units in July 2018.

Motorcycle sales decreased by 3% and stood at 322,210 units in July 2019 against 332,680 units in July 2018.

The company reported 12% fall in commercial vehicles sales, which stood at 59,320 units as compared to 67,663 units in month of July 2018.

However, the company's total exports stood at 176,060 units, registering a gain of 8% as compared to 162,832 units sold in the corresponding month last year.

Automobile sales have fallen every month for almost a year now, except for October when the numbers were flat. In June, nine out of India's 11 main passenger vehicle makers reported a double-digit decline in sales.

Richa Agarwal, editor of Hidden Treasure, believes that the companies which will adapt their business models to the rapidly changing environment will survive and thrive.

In fact, she has picked out 4 Rebound Stocks to profit from the market crash.

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

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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