In one of the starkest displays of economic slowdown, the core sector growth for May 2020 dipped to (-38.1%) even as GDP growth for the March quarter dipped to 3.1%. On the GDP front, agricultural growth saw an improvement to 4% in 2019-20 even as manufacturing and services faltered. The core sector was driven lower by cement and steel that showed nearly 85% de-growth on a YOY basis in April 2020. Other heavyweight sectors like refined products and Electricity also fell more than 20%. The sharp fall was largely driven by the COVID-19 driven total lockdown prevailing in the month of April.
Seven out of the top 10 companies on the Nifty added Rs.176,000 crore in market capitalization during the week ended on 29 May 2020. The rally in the last 3 days of the trading week was solely responsible for the rally. HDFC Bank was the top value adder pushing up its market value by Rs.61,600 crore. ICICI Bank also saw its market cap rising by Rs.26,500 crore even as HDFC rallied its market value by Rs.24,700 crore during the week. Reliance, HUL, ITC and Kotak Bank were the other stocks that added to their market heft. Bharti fell post the promoter stake sale and TCS took a sharp cut on lower tech spending.
In a surprising move, Donald Trump wants the G7 Summit to be moved to a later date considering the uncertainty in the world economic situation. Interestingly, while his suggestion to postpone the Summit to September was called for, Trump also asked for inclusion of Russia, South Korea, Australia and India as possible additions to the group as he felt that the G7 consisting of Canada, France, Germany, Italy, the US, UK and Japan was not representative. This also appears to be Trump’s ploy to cut down China’s influence in world matters. Trump has alleged that China was responsible for the spread of COVID-19.
For the fourth quarter of fiscal 2020, Shipping Corporation of India (SCI) announced an 83% growth in net profits to Rs.111 crore. Its total income for the quarter also surged by over 30% to Rs.1391 crore. For the full year, SCI reported a net profit of Rs.332 crore as against a loss of Rs.62 crore in the previous fiscal year. The improvement in performance was largely led by an improvement in top line for SCI as well as better cost control. The expenses grew at a slower rate compared to the total revenues leading to an improvement in profits. The stock quotes at a reasonable value of Rs.47 per share on the NSE.
Foreign Portfolio investors (FPIs) remained net sellers for the third month in succession. During the month of May, FPIs infused Rs.14,569 crore in equities but withdrew Rs.21,935 crore in debt resulting in net FPI outflows of Rs.7366 crore. Earlier, FPIs had withdrawn Rs.15,403 crore in April and a whopping Rs.115,000 crore in March. The selling in debt was more due to concerns over falling bond yields as well as worries over the stability of the currency. There has been risk-off selling in EM debt across Asia and India has been no exception. However, the May numbers would have actually been much lower if close to Rs.30,000 crore of FPI money had not come in the form of block deals into stocks like Hindustan Unilever, Bharti Airtel and Kotak Bank. These block deals enabled positive equity flows in May-20.
IDBI Bank reported net profits of Rs.135 crore in the fourth quarter of FY20. This is significant because it comes after 13 consecutive quarters of losses. The net loss for the full year reduced sharply on a YOY basis to Rs.12,887 crore. This is despite the Rs.247 crore provision made by IDBI Bank in the Mar-20 quarter. During the fiscal year FY20, IDBI Bank had raised Rs.745 crore through the issue of Tier-2 bonds. In September 2019, the government approved Rs.9300 crore capital infusion into IDBI Bank of which Rs.4743 crore was brought in by parent company, LIC, and the balance by the government.