Market closes lower, IT stocks close deep in the red

Trendlyne Analysis

Nifty 50 falls over 430 points to close over 2.65% lower with the Indian volatility index, India VIX rising by 10%. Asian indices closed sharply lower following the US indices which closed in the red on Wednesday. S&P 500 fell over 4% and registered its biggest daily drop in over two years. The tech-heavy index NASDAQ 100 also plunged over 5% loss amid high inflation concerns and hawkish commentary from the US Federal Reserve chairman Jerome Powell. Investors continue to monitor the prevailing high inflation levels all over the world. UK’s consumer price index or CPI rose 9% in April hitting a 40-year high while Canadian CPI rose 6.8% in April. European indices follow the global trend and trade lower than Wednesday’s levels.

Nifty Next 50 and Nifty Smallcap 100 closed in the red, following the benchmark index. Nifty Metal and Nifty Energy closed lower than Wednesday’s levels. Nifty IT falls over 5.5%, following the NASDAQ 100, which fell over 5% on Wednesday.

Nifty 50 closed at 15,805.05 (-435.3, -2.7%), BSE Sensex closed at 52,792.23 (-1,416.3, -2.6%) while the broader Nifty 500 closed at 13,547.80 (-370.4, -2.7%)

Market breadth is moving down. Of the 1,855 stocks traded today, 291 were in the positive territory and 1,542 were negative.

Dhani Services, Nuvoco Vistas Corporation, Westlife Development, and City Union Bank are trading with higher volumes as compared to Wednesday.
Nifty 50 sees a short build-up in its May 26 futures series as its open interest rises 15.2% with put to call ratio at 0.73.
Realty stocks like Godrej Properties, Oberoi Realty, Phoenix Mills, and Sunteck Realty, among others are falling in trade. The broader sectoral index Nifty Realty is also trading in the red.
Bosch is falling as its Q4FY22 net profit falls 27.3% YoY to Rs 350.9 crore and revenue marginally rises 2.1% YoY to Rs 3,403.6 crore on rising inventory and employee costs. Revenue growth is led by the power tools segment, rising 34.5% YoY to Rs 480.9 crore.
Dr Reddy’s is rising despite its Q4FY22 net profit falling by 83.5% YoY to Rs 97 crore. The fall in net profit is mainly due to impairment losses of Rs 930 crore. Revenue rises 15.4% YoY to Rs 5,596.8 crore on the back strong demand in its global generic products. Net profit rises 11.8% YoY to Rs 2,182.5 crore and revenues rise by 13.9% to Rs 22,029.6 crore.
Ethos’ Rs 472- crore IPO gets bids for 44% of the available 39.8 lakh shares on offer on the second day of bidding. The retail investor quota gets bids for 68% of the available 19.6 lakh shares on offer.
Paradeep Phosphates’ Rs 1,501.7-crore IPO gets bids for 1.7X of the available 26.8 crore shares on offer on the final day of bidding. The retail investor quota gets bids for 1.4X of the available 13.1 crore shares on offer.
Edelweiss maintains a ‘Buy’ rating on Vinati Organics with a target price of Rs 2300, indicating an upside of 13%. The brokerage anticipates the company’s profitability to improve in FY23 on the back of robust demand, new product launches, and capacity expansion. The brokerage expects the company’s net profit to grow at a 24.1% CAGR over FY23-25
Finolex Industries is rising as its Q4FY22 net profit rises 65.7% YoY to Rs 495.1 crore and revenue rises 28.2% YoY to Rs 1,619.3 crore. Maximum revenue growth comes from the PVC pipes and fittings segment, rising 41.6% YoY to Rs 1,276.9 crore. However, EBITDA margin falls by 16 percentage points YoY to 17% on the cost of materials consumed rising 14.9% YoY to Rs 913.5 crore.
Axis Securities maintains a ‘Buy’ rating on Abbot India with a target price of Rs 20,000, indicating an upside of 14%. The brokerage is positive about the company on the back of its strong growth in gasteroinsteinal and hormone segments. The brokerage expects the company’s revenue to grow at a CAGR of 10.9% over FY22-FY24.
JK Lakshmi Cement is trading with more than 21 times its weekly average trading volume. Lupin, Manappuram Finance, Dhani Services, and Westlife Development are trading at more than three times their weekly average trading volumes.
JPMorgan sees revenue growth for IT companies to slow down and EBIT margins taking a hit because of rising inflation globally. The brokerage downgrades its stance on IT sector to ‘Underweight’ and target multiples by 10-15%. It downgrades Tata Consultancy Services, HCL Technologies, Wipro, and L&T Technology Services to ‘Underweight’ from ‘Neutral’.
Mahindra & Mahindra and Volkswagen ink a pact to collaborate on MEB electric components like electric motors, battery system components and battery cells. The main objective of the companies is to electrify the Indian automotive market and decarbonize the mobility sector. Mahindra & Mahindra stands to gain from Volkswagen’s technology, innovation, and vertical integration of supply chains for their next project called “Born Electric Platform”. The binding supply contract will conclude by end of 2022.
Media Stocks like Network 18 Media & Investments, TV18 Broadcast, Sun TV Network, Saregama India and Zee Entertainment Enterprises, among others are falling in trade. The broader sectoral index Nifty Media is also trading in red.
Nestle India touches a 52-week low of Rs 16,006. Stock falls for two consecutive sessions. However, ITC touches a 52-week high of Rs 279.3. Stock rises for three consecutive sessions.
Manappuram Finance slumps as its Q4FY22 net profit falls 44.3% YoY to Rs 261 crore as the company shifts its sales from high-yielding gold loans to low-yielding gold loans. Revenue from gold loans falls 17.5% YoY to Rs 1,109.2 crore. The NBFC's net interest income fell 10.2% to Rs 986.5 crore. The board approves the payment of an interim dividend of Rs 0.75 per share.
Pidilite Industries falls in trade as its Q4FY22 net profit falls 16.9% YoY to Rs 254.3 crore, despite its revenue rising 11.8% YoY to Rs 2,518.2 crore. Profit falls due to the cost of materials consumed rising 30.1% YoY to Rs 1,413.9 crore on high input costs. In FY22, net profit rises 6.7% YoY to Rs 1,207.6 crore and revenue rises 35.1% YoY to Rs 9,957.3 crore.
Lupin is falling as it posts a loss of Rs 518 crore in Q4FY22 against a profit of Rs 460 crore in the same quarter previous year. However, revenues increase by 2.8% YoY in Q4FY22 to Rs 3,864.5 crore. The company posted losses mainly due to deferred tax expenses and one-time expenses of Rs 193.2 crore regarding its Metformin and Oseltamivir drugs.
Arvind's Q4FY22 profit rises 58.2% YoY to Rs 84.2 crore and revenue rises 32% YoY to Rs 2,213.3 crore. In FY22, the company makes profit of Rs 238.2 crore as against a loss of Rs 16.5 crore in FY21.
Route Mobile is falling as its Q4FY22 profit falls 1.8% QoQ to Rs 45.7 crore. However, revenues increase by 11.8% QoQ to Rs 634.5 crore. Net profit falls as employee benefits expense rises 51.1% QoQ to Rs 39.9 crore in Q4FY22. Net profit rises 24.6% YoY in FY22 to Rs 166.2 crore and revenues increase by 42.2% to Rs 2,022.1 crore.
ITC’s Q4FY22 net profit rises 11.6% YoY to Rs 4,259.6 crore as gross revenue from the sale of goods and services increases 14.9% to Rs 17,569.7 crore. The maximum revenue growth came from the hotels segment with a 34.8% YoY rise to Rs 407.4 crore. Agri business grows 29.3% YoY to Rs 4,375.4 crore and FMCG-Cigarettes grew 10.3% to Rs 7,177 crore as GST on cigarettes remains the same, driving cigarette sales. The board recommends a final dividend of Rs 6.25 per share for FY22.

Riding High:

Largecap and midcap gainers today include ITC Ltd. (276.00, 3.45%), Abbott India Ltd. (18,129.90, 1.42%) and Adani Power Ltd. (298.75, 1.37%).

Downers:

Largecap and midcap losers today include Coforge Ltd. (3,665.00, -7.22%), Lupin Ltd. (634.95, -7.08%) and MphasiS Ltd. (2,462.45, -6.84%).

Crowd Puller Stocks

10 stocks in BSE 500 are trading on high volumes today.

Top high volume gainers on BSE included JK Lakshmi Cement Ltd. (430.45, 9.52%), Caplin Point Laboratories Ltd. (809.65, 9.06%) and ITC Ltd. (276.00, 3.45%).

Top high volume losers on BSE were Manappuram Finance Ltd. (94.40, -9.71%), Lupin Ltd. (634.95, -7.08%) and Route Mobile Ltd. (1,208.65, -6.18%).

Akzo Nobel India Ltd. (1,779.65, -0.08%) was trading at 11.0 times of weekly average. Dr. Reddy's Laboratories Ltd. (3,939.05, 0.85%) and Punjab & Sind Bank (15.65, 2.62%) were trading with volumes 5.7 and 5.4 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

2 stocks overperformed with 52-week highs, while 28 stocks hit their 52-week lows.

Stocks touching their year highs included - ITC Ltd. (276.00, 3.45%) and Mangalore Refinery And Petrochemicals Ltd. (90.75, 1.57%).

Stocks making new 52 weeks lows included - Astral Ltd. (1,679.65, -3.95%) and Aurobindo Pharma Ltd. (524.00, -6.36%).

4 stocks climbed above their 200 day SMA including Caplin Point Laboratories Ltd. (809.65, 9.06%) and Timken India Ltd. (1,951.30, 0.58%). 18 stocks slipped below their 200 SMA including Trent Ltd. (1,024.50, -5.58%) and VIP Industries Ltd. (557.75, -4.80%).