Losing streak persists

Nifty50: 18,129 ▼ 51 (-0.28%)
Sensex: 61,431 ▼ 128 (-0.21%)

Hello, friends!

Guess what? Today is National Notebook Day! While the stationery enthusiasts among you may already be aware of this, most regular folks might find themselves scratching their heads in confusion. Nevertheless, this day holds significance as it aims to raise awareness about the mental health benefits of journaling. The act of regularly writing down one's thoughts and experiences has been proven to promote emotional well-being, enhance problem-solving abilities, and foster creativity.

So, go ahead and take some notes today, pour your thoughts onto paper, or even indulge in writing some cringey poetry – it's all worthwhile. Speaking of notes, now let's delve into some of the most notable and noteworthy happenings in the markets today.

• Markets were on a losing streak for the third straight day; close below 18,150
• In all, 34 of the Nifty50 stocks closed in the red
• Gold prices were flat in early trade as markets focused on the U.S. debt ceiling negotiations

Among the Nifty sectoral indices, Financial Services (0.3%) and Bank (+0.1%) were top gainers, while Realty (-2.3%) and Pharma (-1.2%) were the top losers.

What’s trending

⭐ ITC reports profit growth

ITC (-2.0%) reported a net profit of ₹5,087 crore in Q4FY23, a growth of 21.4% YoY from ₹4,191 crore last year. Its revenue for the quarter rose 6.1% YoY to ₹17,224 crore from ₹16,227 crore last year. The revenues from the Hotels and FMCG segments grew 100.6% and 16.2%, respectively. The company has recommended a total dividend of ₹15.50 per share.

⭐ SBI’s Q4 net profit zooms

Public sector lender, SBI (-1.7%), reported a stellar growth of 83.1% YoY in its net profit for Q4FY23 to ₹16,695 crore compared to ₹9,114 crore last year. Its net interest income (NII) for the quarter grew by 29.4% to ₹40,393 crore, while its net NPA ratio improved during the same period to 0.67% versus 1.02% for Q4FY22. The bank has declared a dividend of ₹11.30 per share.

⭐ GAIL’s net profit plummets

Public sector natural gas company GAIL (-3.6%) reported a drop of 77.5% in its standalone net profit to ₹603.5 crore in Q4FY23 from ₹2,683 crore in the comparable quarter last year. However, its revenue from operations did see a growth of 21.8% YoY to ₹32,858 crore.

⭐ Zydus Lifesciences' net profit down

Pharma company, Zydus Lifesciences (-2.0%), reported a decline of 25.3% in its consolidated net profit for Q4FY23 to ₹296.6 crore from ₹397.4 crore in the corresponding quarter last year. The drop in profits is attributed to an exceptional expense of ₹601.3 crore in Q4 caused by the impairment of goodwill relating to Sentynl Therapeutics and the cessation of operations at one of Zydus’ facilities. Its revenue from operations for the quarter stood at ₹5,010.6 crore, up 31.6% YoY. The company’s board has recommended a final dividend of ₹6 per share.

⭐ Crude oil prices were up overnight

Crude oil prices gained 2.5% overnight on optimism over oil demand and the US debt ceiling. Brent crude futures were up $2.05 trading at $76.96 a barrel and U.S. crude was up $1.97 trading at $72.83 a barrel. The IEA Oil Market Report for May 2023 expects oil demand to rise by 2.2 million barrels per day (YoY) in 2023 to an average of 102 million barrels per day.

In Focus

Jubilant's partnership with ONDC

ONDC, India's Open Network for Digital Commerce, might end up shaking up the food delivery market with lower commission rates, seamless transactions, and increased transparency. Domino's Pizza, operated by Jubilant FoodWorks, is set to join ONDC, intensifying competition against Zomato and Swiggy.

Is it a threat to Zomato and Swiggy?

Operated by Jubilant FoodWorks, Domino's Pizza is setting the stage to join the ONDC network. This move signals an impending challenge to the entrenched duopoly of Zomato and Swiggy, as other large fast-food chains might follow suit.

Why is Jubilant turning to ONDC?

By joining ONDC, Jubilant stands to save significantly on commission fees, aligning with its broader strategy of digital expansion and operational cost reduction.

Changing the game with quick deliveries

Beyond its ONDC partnership, Jubilant is challenging the status quo with Domino's 20-minute pizza deliveries. Currently piloting in Bengaluru, the initiative will soon expand to other major cities.

Impact on unit economics

The lower commission rates offered by ONDC present a golden opportunity for businesses to improve their unit economics. This attractive proposition could make ONDC a preferred platform for food establishments looking to optimise costs.

A slowdown in the food delivery market

Zomato reported a sequential decline in orders in Q3FY23, with new customer additions also showing a marginal drop. This transition phase for the food delivery market, spurred by Domino's impending shift to ONDC, presents both challenges and opportunities for all players in the market.

What's next for Zomato and Swiggy?

As Jubilant's Domino's begins its transition to ONDC, Zomato and Swiggy will undoubtedly be forced to reassess their strategies. How they react to this market shift – whether by adjusting their commission rates, enhancing their service, or innovating in other ways – remains to be seen.

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Phrase of the day

Going Long

When you buy a stock, futures or an option contract with the hope that its price will rise, it is called going ‘long’.  When should you go long, find out from this chapter What does going Long mean? 

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