Bulls retreating

Nifty50: 18,266 ▼-152 (0.8%)
Sensex: 61,259 ▼-456 (0.7%)

The markets extended the decline and fell for the second consecutive day. Out of the Nifty50 pack, 39 stocks closed in the red.

Among the Nifty sectoral indices, only PSU Bank (+1.5) and Media (1.0%) posted gains. Whereas, Realty (-2.1%) and Metal (-2.0%) were the top losers.

For more updates on F&O, click here.

Here are the top stories of the day.

Jubilant Foodworks posts strong Q2 numbers

The Domino’s Pizza franchise holders and leading food service company’s standalone net profit rose by 58% year-on-year to ₹121 crore. In the same period, the company’s revenue also increased by 36.6% to ₹1,100 crore, which is also higher than the pre-pandemic levels. 

This strong growth in the top line was driven by delivery and takeaway channels. In the September quarter, the company also opened a record 60 stores. At the same time, the company’s same store growth was up 26.3% YoY. However, in the wake of inflationary challenges, its EBITDA margins took a minor dip from 26.7% last year to 26%. Meanwhile, shares of Jubilant Foodworks reversed most of the gains made last week and were down 8.7% today. 

Navin Fluorine’s weak Q2 affects chemical stocks 

Shares of Mumbai-based chemical maker Navin Fluorine plunged over 8% after the company posted a 7% year-on-year decline in its September quarter net profit to ₹63 crore. Its revenue from operations grew at a modest pace of 6% year-on-year to ₹339 crore. 

Higher employee and input costs impacted the company’s profitability. According to experts, Navin Fluorine’s weak results had a rub-off effect on other chemical companies for which results are expected soon. Shares of major chemical stocks Deepak Nitrate (-11.7%), Aarti Industries (-7.0%) and Balaji Amines (-7.2%) also closed in the red.

Mastek falls on muted September results 

In the September quarter, the digital services and software company’s net profit rose 1.6% quarter-on-quarter to ₹81 crore. Its revenue also rose by 3.4% to ₹533 crore. 

The company’s profitability was impacted by the increase in costs due to salary hikes and investments in sales and marketing. The EBITDA margin contracted by 71 bps to 21.1%. Meanwhile, the company added 45 new clients in this quarter with the 12-month order backlog at ₹1,154 crore. After the subdued performance, shares of Mastek were down 14.4% today.   

Closing bell

Nifty50 had given a bearish technical pattern yesterday and today’s fall confirmed the short-term bearishness in the market. Further, a higher number of stocks in the Nifty50 pack ended in red, compared to that seen yesterday which indicates broad-based weakness. The India VIX rose 5%, suggesting that traders expect volatility to rise in the coming weeks. Meanwhile, the Midcap 100 and Smallcap 100 indices fell over 2%, signaling sharper capitulation compared to large caps. Amid such weak sentiments, normally, expert traders use a rise in price to reduce their exposure.

Good to know

What is a covered call option strategy?

A covered call strategy works as a hedge for short to medium-term trading.This strategy can be deployed by traders who wish to hold a stock in cash or futures and minimise the risk of any price fall by selling its call option. Suppose a trader has a short term bearish view on a particular stock in his portfolio, then by deploying this strategy he can partially ‘cover’ the loss from the premium of the call sold. Hence the name covered call. Click here to understand a covered call strategy with an example. 

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