Market rally comes to a halt

Nifty50: 15,767 ▼-101 (-0.6%)
Sensex: 52,501 ▼-271 (-0.5%)

After a subdued opening, markets continued to skid lower for most part of the day. The market breadth was negative with 41 of Nifty50 stocks closing in red. 

Amongst the sectoral indices, Metal (-2.8%) and Realty (-1.3%) were top losers, whereas defensive FMCG (+0.5%) and IT (+0.2%) were the only sectors that closed positively. 

Here are the top stories of the day.

Jubilant Pharmova-Ocugen tie up for vaccine

• Pharmaceutical and contract research company Jubilant Pharmova’s subsidiary entered into an agreement with US-based Ocugen to produce Covaxin for the US and Canadian markets. In February, Bharat Biotech and Ocugen had decided to co-develop and sell Covaxin in the US. 
• However, it’s important to note here that the USA FDA last week refused emergency use authorization for Covaxin, asking Ocugen to conduct an additional trial. Shares of Jubilant Pharmova were up 0.5% today. 

KIMS IPO receives strong traction

• Krishna Institute of Medical Sciences (KIMS) raised ₹956 crore from 43 anchor investors ahead of its IPO launch. Domestic and foreign investors such as HDFC Trustee, Axis Mutual Fund and Nomura Funds took up stakes in KIMS. 
• The healthcare group, which operates nine multi-speciality hospitals in Andhra Pradesh and Telangana, is open for subscription from today. Around 21% of KIMS’ shares were subscribed on Wednesday. You can click here to apply for the KIMS IPO on Upstox. 

ENIL drops on large impairment provision

• Shares of FM radio broadcasting major ENIL fell 8.6% today. It took a large ₹97.5 crore impairment in two of its businesses viz. Mirchi Love and Kool, due to pandemic induced stress. This led to an overall loss of ₹66 crore in Q4 compared to a ₹18 crore profit in Q3.
• Its revenues grew 17% QoQ to ₹99 crore. The management has said that advertisers are returning to the radio medium. ENIL is pivoting from being a radio dependent business to a multiple platform based solutions company. Its shares have gained 27% so far this fiscal. 

Truck rentals rise in June

• Truck rentals are up by an average 12% in June as transportation demand rises post unlocking and due to last year’s low base, according to the reports. The street also believes that part of the rise could be to cover up for higher diesel prices.
• The fleet utilization has also improved to 65% from about 50% last month. While the greenshoots are visible on ground, shares of major commercial vehicle majors–Tata Motors (-1.2%), Ashok Leyland (-2.4%)–were down today. 

Closing bell

The upward rally in the markets took a pause today. The benchmark indices fell ahead of the US Fed’s interest rate decision, that will be announced later in the evening. Meanwhile, Nifty Metal index corrected by nearly 3% today on the back of weakness in prices of key commodities such as copper. Falling commodity prices to a certain extent suggest decreasing demand or easing supply. In either case, the trickle-down of lower prices could lead to inflation being under check, going forward. 

Good to know

What is impairment of assets?

An impairment of an asset happens when its market value drops below its original value. An asset can become impaired due to several reasons including physical wear-off, legal issues and market conditions. If an asset is impaired, then it needs to be written off on the balance sheet and recorded as a loss in the income statement. A company must annually test its assets for impairment. Otherwise, they may be overstated on the balance sheet.

Yay 👍 or Nay 👎?

We'd love your thoughts on this market recap.

Haven't tried out Upstox yet? Click here to open your account now!

To catch our latest educational videos, join our Telegram channel here.

Disclosures and Disclaimer

Investment in securities markets is subject to market risks; please read all the related documents carefully before investing. The securities quoted are exemplary and are not recommendatory. Past performance is not indicative of future results. Details provided in the above newsletter are for educational purposes and should not be construed as investment advice by RKSV group. Investors should consult their investment advisor before making any investment decision.