▼ Nifty: 11,896 (-0.35%) ▼ Sensex: 40,558 (-0.37%)
The markets started the day on a weak note and remained negative throughout the day. The Nifty50 opened and closed at almost the same level, suggesting indecision in the markets. NTPC (+4.1%), Tata Motors (+3%) and Bharti Airtel (+2.8%) were the top Nifty gainers, whereas Hero MotoCorp (-3%), IndusInd Bank (-2.9%) and ICICI Bank (-1.6%) were the top losers.
Here are the top stories of the day.
Bajaj Auto posts weak Q2, pins hopes on festive sales
Bajaj Auto is the first among auto majors to declare Q2 results, and the numbers are disappointing. Its net profit for Q2 dropped 19% as compared to the same quarter last year due to a 10% decline in volumes, restrictions on export benefits and lower other income. Further, in Q2FY20, the company reported a one-time tax-related gain of ₹182 crore, which was not available in this year. Nonetheless, the company has improved its operating margin to 18.2% (versus 16.9% in Q2FY20) by optimising its fixed costs. The company’s market share in the two-wheeler segment was intact at 18.2% in H1FY21 compared to the same period last year. In the ongoing festive season, the company sees strong indications of a recovery in volumes. While shares of Bajaj Auto ended flat (-0.7%), Hero Moto (-3.0%) and TVS Motors (-0.5%) saw selling pressure today.
Aurobindo Pharma slips after USFDA warning letter
Shares of Aurobindo Pharma were down nearly 6% intraday after the company received a warning letter from the USFDA for its oral solid manufacturing facility at Dayton, Ohio. While the company believes that business from this facility will not be impacted, it has not provided any details of the content of the warning letter. The company’s shares ended 3.3% lower. A USFDA warning letter is considered informal and advisory in nature. Recently, the USFDA had also issued warning letters to Shilpa Medicare and Panacea Biotec, after which their shares fell 8.6% and 5.0%, respectively.
JK Tyre rides on strong operational performance in Q2
JK Tyre rose 10.7% today, buoyed by revenue growth of 6% and sharp jump in its operating profit by 21% on a year-on-year basis. The improvement in operating profits was on due to aggressive cost-cutting measures. Improvement in sales was supported by a recovery in the automotive sector. The company also saw strong demand from the replacement market, which is performing better than the overall industry. Investor interest has increased in the tyre sector, as major tyre stocks such as MRF (4.5%), Apollo Tyres (7.9%), Ceat (7.8%) and TVS Srichakra (8.6%) have outperformed the Nifty Auto index (-0.5%) in October 2020.
Closing bell
With the rise of daily Covid cases in India, most economists believe that it would take at least a year for the Indian GDP to reach pre-Covid levels. Further, rising inflation poses risks to economic recovery and the stock markets, if the interest rates are hiked. Currently, we are seeing stock-specific action during Q2 results, which are hinting at signs of recovery. Once most of the index heavyweights have announced their results, markets might focus on the macro picture. At the same time, there may also be more clarity on which side the US elections results (slated for 3 November 2020) are tilted.
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