Market Recap for 1st September 2020

Here are the top stories of the day.After the GDP shocker yesterday (-23.9% contraction in Q1), the purchasing managers index (PMI) data for manufacturing gave a breather to the markets. The manufacturing PMI, which is an indicator of manufacturing activity in the country, stood at 52 for August, the best performance since the country went under lockdown. A reading above 50 indicates expansion of the manufacturing sector. Among the sectoral indices, the Nifty Metal index was the top performer, gaining +3.1%. The defensive sectors saw buying interest amid the volatility, with Nifty Pharma (+2.3%) and Nifty FMCG (+1.2%) ending in the green.

Tractors drive August auto sales

M&M and Escorts reported strong tractor sales, which grew +69% and +79%, respectively, in August 2020 as compared to the last year. Plentiful monsoon rains, better kharif sowing, and good rural cash flows are helping the demand from the rural sector. The tractor manufacturing companies are upbeat about the demand during the upcoming festive months. In fact, the farm sector GDP growth of +3.4% was the sole bright spot in the Q1 GDP numbers released yesterday. Meanwhile, Maruti's domestic passenger car sales grew +20% over last year. The resurgence in demand could be attributed to festive season stocking, easing of the supply chain, and realisation of pent-up demand. Overall, auto stocks gained, with Maruti (+1.1%), M&M (+0.5%) and Escorts (+2.5%) edging higher.

Allowed to pay AGR dues over 10 years, telcos see mixed reactions 

The Supreme Court, today, allowed telecom operators to pay dues related to adjusted gross revenue (AGR) over a period of 10 years, starting with a 10% payment next year. This comes as a tighter timeline as compared to the expectation of 15–20 years. The Supreme Court verdict could put pressure on the beleaguered Vodafone Idea, which has to pay AGR dues, invest in infrastructure and spectrum, and also ensure that its existing customers do not port to other networks. Vodafone Idea's stock was down -13.7%. The companies may consider increasing tariffs, after Bharti Airtel's Sunil Mittal has recently hinted at a tariff hike citing unsustainably low data rates in India. Bharti Airtel closed +7.1% higher.

BEML rises +3.1% on ₹842 crore defence order 

India's leading defence equipment manufacturer, BEML announced receiving an order worth ₹842 crore from the Ministry of Defence. The order is for the supply of 330 high-mobility vehicles for the Pinaka (a multi-barrel rocket launcher) Project. The company will supply these vehicles to the Ministry over a period of three years. In a bid to increase indigenisation in the military sector, the defence ministry is preparing the second negative arms import list, which is likely to be issued by the end of this year. That’s definitely a step towards a more 'Atma Nirbhar Bharat'. BEML was up +3.1% for the day. Defence stocks are expected to see action in the months ahead.

Closing bell

In the last hour of the trade, the Nifty50 rose +0.4% mainly supported by late buying seen in stocks of the Nifty Pharma (+1.5%) and Nifty FMCG (+1.0%) indices.