The old business is struggling, but the new one is worth the wait
On the first Monday of November 2020, Indian equity markets prepared to open higher, carried by a gentle tailwind from Asian markets and a festive surge in automobile sales — yet beneath the surface, the day's story was one of contradiction. Reliance Industries posted a steep profit decline even as its newer divisions flourished; banks reported results that defied easy interpretation; and the auto sector's record-breaking October numbers had, paradoxically, failed to lift the very stocks that earned them. Markets, as ever, were not measuring the past so much as wagering on which version of the future would arrive first.
- SGX Nifty's 0.47% pre-market rise and green screens across Hong Kong and Australia set a cautiously hopeful tone for Indian traders arriving at their desks.
- RIL's 32.5% profit collapse in its core refining and petrochemicals business created a fault line running through an otherwise promising earnings report, with Jio and Retail growing strongly but unable to mask the weight of the legacy business.
- Banking results sharpened the sense of dissonance — ICICI Bank's six-fold profit surge was met with a sell-off, while IndusInd's 53% profit decline and rising bad loans signaled that the sector's recovery remains fragile and uneven.
- Auto sales told a story of genuine festive-season momentum — Maruti up 19%, Hero MotoCorp at all-time monthly highs, Tata Motors at a near-decade peak — yet most auto stocks closed Friday in the red, suggesting the market had already priced in the good news.
- The unresolved Amazon-Future Retail arbitration continued to cast a shadow, with RIL provisioning ₹1,500 crore for potential exposure and Future Retail contesting the Singapore court's authority, leaving investors to price an outcome no one could predict.
Monday morning arrived with modest promise for Indian equity markets. The SGX Nifty had edged up 0.47% before the opening bell, and Asian peers in Hong Kong and Australia were trading in positive territory. The setup favored buyers — but the earnings season had left a complicated ledger for investors to work through.
Reliance Industries sat at the center of the day's attention. Its quarterly results were a study in contrast: standalone net profit had fallen sharply — down 32.5% year-on-year to ₹6,546 crore — as weakness in refining and petrochemicals, the company's traditional revenue engine, weighed heavily. Yet Jio grew 32% and Reliance Retail surged 42%, and markets had responded by pushing RIL shares up 2% on Friday, choosing to bet on the growth divisions rather than mourn the old ones. Separately, RIL set aside ₹1,500 crore against its exposure to the ongoing Amazon-Future Retail arbitration dispute, a legal conflict that Future Retail was actively contesting, arguing that a Singapore court's interim order carried no binding force in India.
The banking sector offered its own version of dissonance. ICICI Bank's standalone net profit had leapt more than six-fold to ₹4,251 crore — a result that might ordinarily have been celebrated — yet the stock fell 1.60% on Friday. IndusInd Bank moved in the opposite direction narratively but not in price: a 53% profit decline and a slight uptick in bad loans sent its shares down 0.59%. Axis Bank, meanwhile, restructured its deal with Max Life Insurance after the Reserve Bank blocked its original acquisition plan, agreeing instead to a 19% stake purchase through subsidiaries.
The auto sector provided the clearest good news of the day, even if markets were slow to reward it. Maruti Suzuki sold nearly 182,500 vehicles in October, up 19% year-on-year. Hero MotoCorp posted its highest-ever monthly sales figure, with domestic wholesales rising 35%. Tata Motors recorded its best performance in roughly eight years, with volumes up 80%. Mahindra & Mahindra was the exception, with commercial vehicle weakness dragging overall sales down 14.5%. Paradoxically, Maruti and Hero both closed 3% lower on Friday despite their record numbers — the market, it seemed, had already moved on.
As trading prepared to begin, the day's question was whether Asia's optimism and the auto sector's momentum could hold against the uneven picture in oil and banking. The SGX Nifty's modest rise suggested investors were willing to lean forward — but carefully, and with one eye on the exits.
Monday morning was shaping up as a day of gains for Indian equities. The SGX Nifty had climbed 0.47% by 7:50 am, a signal that the Nifty50 would open higher when trading began. Across Asia, the mood was broadly positive—Hong Kong's Hang Seng was up 0.64%, and Australian markets were trading in the green. The setup suggested a day when buyers would have the upper hand.
Reliance Industries, the oil and petrochemicals giant controlled by Mukesh Ambani, was among the stocks drawing attention. The company had just reported its quarterly results, and they told a story of uneven performance. Standalone net profit had fallen 32.5% year-on-year to ₹6,546 crore, a sharp decline driven by weakness in refining and petrochemicals—divisions that together account for more than three-quarters of the company's revenue. Yet within the same earnings report lay brighter spots. Jio, the telecom arm, had grown 32% year-on-year, and Reliance Retail had surged 42%. The market had responded by pushing RIL shares up 2% on Friday, betting that these growth engines would eventually offset the headwinds in traditional oil business. Separately, RIL had set aside ₹1,500 crore to cover potential costs from an ongoing arbitration dispute with Future Retail and Amazon, a legal tussle that showed no signs of resolution. Future Retail itself had filed statements with the stock exchanges arguing that Amazon had misinterpreted their agreement, and that a Singapore arbitration court's order should not be considered binding. Future Retail's shares had ended flat on Friday, caught between the uncertainty.
The banking sector presented a picture of sharp divergence. ICICI Bank had delivered a stunning earnings surprise, with standalone net profit jumping more than six-fold to ₹4,251 crore in the quarter ended September 30, compared to ₹655 crore in the same period a year earlier. Total standalone income had reached ₹23,650.77 crore. Yet the market had punished the stock, sending it down 1.60% on Friday. IndusInd Bank, by contrast, had reported a 53% decline in standalone net profit to ₹647.04 crore, with gross non-performing assets ticking up slightly to 2.21% of gross advances from 2.19% a year prior. Its shares had fallen 0.59%. Axis Bank had announced a revised deal with Max Financial Services, the promoter of Max Life Insurance, after the Reserve Bank declined to allow it to acquire a 17% stake directly. The bank would now acquire 19% along with its subsidiaries. Axis shares had slipped 0.58%.
The auto sector, by contrast, was riding a wave of festive-season strength. Maruti Suzuki, India's largest automaker, had sold 182,448 vehicles in October, a jump of nearly 19% compared to the same month the previous year. Hero MotoCorp had posted its highest-ever monthly sales, with domestic wholesales rising 35% to 7.91 lakh units. Tata Motors had achieved its best sales performance in at least 99 months, moving 80% more vehicles than it had a year earlier. The momentum was real and measurable. Mahindra & Mahindra, however, had stumbled, with sales down 14.52% year-on-year as the commercial vehicle segment continued to struggle. On Friday, Maruti and Hero had both closed 3% lower despite the strong sales numbers, while Tata Motors had gained 1% and M&M had edged up 0.47%.
As the market prepared to open, the day ahead would test whether the positive signals from Asia and the strength in autos could overcome the mixed earnings picture in oil and banking. The SGX Nifty's modest gain suggested cautious optimism, but the divergence in individual stock performance made clear that investors would be picking their spots carefully.
Notable Quotes
Future Retail argued that Amazon had entirely misconceived the agreement and that a Singapore arbitration court's order should not be considered by stock exchanges— Future Retail filing to BSE and NSE
The Hearth Conversation Another angle on the story
Why would ICICI Bank's shares fall when profits jumped six-fold?
Because the market had likely already priced in that recovery. A six-fold jump sounds enormous until you realize the bank had posted a very weak quarter the year before—₹655 crore is a depressed baseline. Investors may have been expecting even more, or they may have been spooked by what the earnings revealed about credit quality or margins.
And Reliance—32.5% profit decline but the stock went up?
Because the market was looking past the refining business, which is cyclical and beaten down. Jio and Retail are the growth stories, and they're growing fast. Investors were essentially saying: the old business is struggling, but the new one is worth the wait.
What's the Future Retail situation really about?
Amazon and Reliance are fighting over who gets to buy Future Group's retail assets. Future Retail is arguing that Amazon misread the contract, and that a Singapore court's decision shouldn't matter. It's a proxy war between two giants, and Future Retail shareholders are stuck in the middle, which is why the stock went nowhere.
The auto numbers look genuinely strong though.
They are. October was a festival month in India, and people were buying cars and motorcycles. But the stock prices didn't reflect that enthusiasm on Friday. Sometimes good news is already baked in, or traders are worried about what happens when the festive season ends.
So what's the real story for Monday?
It's a day of selective strength. Asia is up, autos are selling, but earnings are mixed and the banking sector is confused. The market will open higher on momentum, but investors will be careful about what they buy.