The Sensex closed 469 points down at 30,690.02 while Nifty lost 1.30% to close the day at 8,993.85. Mid-cap and small caps also gave up on gains after making a positive start of the day. L&T (up 6.24% ), Hindalco (up 6.00%) and Bharti Airtel (up 4.81%) were the major gainers of the day while Bajaj Finance (Down 10.37% ), Zee (Down 8.44%) and Bajaj Finserv (Down 6.85%) were the major laggards.
PM Modi's address to the nation tomorrow will be the key event to learn about India's lockdown exit strategy. Although no official announcement from the PM has been made, Six states have already extended the lockdown until April 30th. These states account for 30% of India’s population and 38% of GDP. While one cannot undermine the value of human lives, now, there is a need for extensive focus on livelihood as well.
The World Bank has already scaled down India's GDP growth rate between 1.5-2.8% - the lowest since the 1991 crisis. Restoration of the basic manufacturing activities and lifting the lockdown in unaffected areas is an immediate requirement to stop the economy from falling into the recession altogether.
OPEC+ deal: What's in it for Indian companies? #Teji
OPEC+ in an effort aimed at stabilizing the market, pulled off a historic deal to cut global petroleum output by 9.7 mn barrels per day, putting an end to the devastating price war between Saudi Arabia and Russia. The deal announced by OPEC+ has a set of phased-out cuts and extension of this agreement would be reviewed in Dec 2021.
Key Takeaways: At a stock-specific level, upstream players like ONGC and Oil India would benefit from an increase in oil prices as a result of the production cuts. GAIL would also benefit through the better realization of LPG and HCs. RIL would benefit marginally through higher petrochemical margins while Oil Marketing Companies (OMCs) would benefit through inventory gains. However, marketing margins are expected to diminish. A rise in crude prices will hurt dependent sectors like Paint, Aviation, Railways and Electricity generation.
During the lockdown, staples, discretionary space battered alike #Mandi
Contrary to popular perception, consumption stocks have also been through their fair share of pain due to COVID-19. The market believed that panic buying will lead to increased consumption, however, quarterly updates paint a different story. Godrej Consumers has announced a possible high-teens revenue decline for the March quarter while the retail giant D-Mart's has shut 50% of its stores, with the rest selling only staples and groceries. Marico, which has indicated a lower single-digit decline in Q4 volume while Titan's revenue for the jewellery division declined by 5% after improving sales in Jan and Feb. The watches and wearables division grew by 1% but eyewear segment revenues declined 20% for the quarter.
Key takeaways: Consumer companies are facing unique challenges in the face of adversity. The companies are not just operating at half their capacities but distributing products in the market is also a challenge due to the unavailability of labourers, workers and truck drivers. These logistical challenges are expected to be resolved only by the end of June, once the winter crop is harvested and migrant workers return.
Teji Picks of the Day
Cadila Healthcare Limited (NSE: CADILAHC)
Granules India Limited (NSE: GRANULES)