Domestic fuel prices continue to rise, for the 12th day in a row now, as the government tries to mop up some revenue.
Join us as we follow the top business news through the day.
P-note investment rises to over Rs 60,000 crore till May-end
The popularity of P-notes continues to rise with the easing of regulations.
PTI reports: "Investments through participatory notes (P-notes) in the domestic capital market rose to Rs 60,027 crore till May-end, making it the second consecutive monthly increase.
P-notes are issued by registered foreign portfolio investors (FPIs) to overseas investors who wish to be part of the Indian stock market without registering themselves directly. They, however, need to go through a due diligence process.
According to Sebi data, the value of P-note investments in Indian markets -- equity, debt, hybrid securities and derivatives -- stood at Rs 60,027 crore until May, while the same was at Rs 57,100 crore at the end of April.
The investment level had fallen to an over 15-year-low of Rs 48,006 crore at the end of March.
The figure at March-end was the lowest level of investment since October 2004, when the total value of P-note investments in Indian markets stood at Rs 44,586 crore.
Fund inflow through the route stood at Rs 68,862 crore, Rs 67,281 crore and 64,537 crore at the end of February 2020, January 2020 and December 2019, respectively. However, it was at Rs 69,670 crore at November-end last year.
Arjun Mahajan, head of institutional business, at Reliance Securities said the P-note is now not a preferred route for investing in India as Sebi has made registration easier and also desirable for FPIs. However, due to certain taxation laws in India, FPIs still want to explore this route of investing.
Another aspect that may be considered in the current uncertain environment is that certain FPI investors, who don’t have an FPI licence, and who may not want to invest in India for long term and just invest to either capitalise on easy liquidity and also attractive valuations (when compared to historic peaks), may prefer P-note route as it gives them the option to invest for however long they want, make their target returns and go away, he added."
Fitch Ratings revises India’s outlook to negative from stable
Fitch Ratings on Thursday revised India’s outlook to ‘negative’ from ‘stable’, stating that the coronavirus pandemic has significantly weakened the country’s growth prospects for the year and exposed the challenges associated with a high public-debt burden.
The move comes after another rating agency Moody’s earlier this month downgraded India’s sovereign rating by a notch to lowest investment grade of ‘Baa2’ for the first time in 22 years.
“Fitch Ratings has revised the outlook on India’s long-term foreign-currency issuer default rating (IDR) to negative from stable and affirmed the rating at ‘BBB-’,” the rating agency said in a statement.
Rupee rises 7 paise to 76.09 against US dollar in early trade
The sentiment in the currency market is turning out to be similar to that in the stock bourses.
PTI reports: "The rupee appreciated 7 paise to 76.09 against the US dollar in early trade on Thursday tracking weak US dollar and gains in the domestic equity market.
Forex traders said rupee was trading in a narrow range as positive domestic equities and weak US currency supported the local unit, while rising coronavirus cases, border tension with China and foreign fund outflows capped the gains.
The rupee opened at 76.17 against the US dollar, gained further ground, and touched 76.09 against the US dollar, up 7 paise over its previous close.
It had settled at 76.16 against the greenback on Wednesday.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.16 per cent to 97.
The 30-share BSE benchmark Sensex was trading 92.12 points higher at 33,600.04 and broader NSE Nifty rose 37 points to 9,918.15.
Foreign institutional investors were net sellers in the capital market as they sold shares worth Rs 486.62 crore on Wednesday, according to provisional exchange data."
Developing Asia to “barely grow” in 2020; India’s GDP to contract by 4% this fiscal: ADB
More gloomy forecast of growth in the emerging economies of Asia.
PTI reports: "The Asian Development Bank on Thursday said countries in Developing Asia will “barely grow” in 2020, while India’s economy is forecast to contract by 4 per cent this fiscal due to the adverse effect of the coronavirus pandemic.
Developing Asia will barely grow in 2020, as containment measures to address the coronavirus disease (COVID-19) pandemic is expected to hamper economic activity and weaken external demand, ADB said in a supplement to its Asian Development Outlook (ADO).
‘Developing Asia’ refers to a group of over 40 countries that are members of the ADB.
Excluding the newly industrialised economies of Hong Kong, China; the Republic of Korea; Singapore; and Taipei, China, Developing Asia is forecast to grow 0.4 per cent this year and 6.6 per cent in 2021, it said.
Hit hard by COVID-19, South Asia is forecast to contract by 3 per cent in 2020, compared to 4.1 per cent growth predicted in April. Growth prospects for 2021 are revised down to 4.9 per cent from 6 per cent, it said.
“India’s economy is forecast to contract by 4 per cent in fiscal year (FY) 2020, ending on 31 March 2021, before growing 5 per cent in FY2021 (to be ending March 2022),” according to the ADO supplement.
In the ADO published on April 3, ADB had had projected that India’s economic growth rate will slip to 4 per cent in the current fiscal on account of the global health emergency created by the COVID-19 pandemic.
“Economies in Asia and the Pacific will continue to feel the blow of the COVID-19 pandemic this year even as lockdowns are slowly eased and select economic activities restart in a ‘new normal’ scenario,” said ADB Chief Economist Yasuyuki Sawada.
Sawada further said, “while we see a higher growth outlook for the region in 2021, this is mainly due to weak numbers this year, and this will not be a V-shaped recovery. Governments should undertake policy measures to reduce the negative impact of COVID-19 and ensure that no further waves of outbreaks occur.”
As per ADB forecast, risks to the outlook remain on the downside."
Sensex, Nifty open on tepid note; financial stocks drag
Another day of lukewarm opening for the stock bourses.
PTI reports: "Equity benchmark Sensex dropped over 100 points in early trade on Thursday tracking weakness in index-heavyweights ICICI Bank, HDFC Bank and TCS amid muted cues from global markets and unabated foreign fund outflows.
After opening at 33,371.52, the 30-share index turned choppy to trade 52.46 points, or 0.16 per cent, lower at 33,455.46.
Similarly, NSE Nifty slipped 13.45 points, or 0.14 per cent, to 9,867.70.
ONGC was the top laggard in the pack, shedding around 2 per cent, followed by ICICI Bank, Axis Bank, NTPC, Kotak Bank and HDFC Bank.
On the other hand, Infosys, PowerGrid, Tata Steel, Bajaj Finance and Reliance Industries were among the gainers.
In the previous session, the BSE barometer settled 97.30 points, or 0.29 per cent, lower at 33,507.92, while the broader Nifty settled 32.85 points, or 0.33 per cent, down at 9,881.15.
On a net basis, foreign institutional investors sold equities worth Rs 486.62 crore in the capital market on Wednesday, provisional exchange data showed.
According to analysts, mixed global cues combined with the latest updates on India-China tension, rising COVID-19 cases and unabated foreign fund outflows kept market mood sombre."
Insurance premium collection in March, April affected: PwC study
With India becoming one of the worst-hit countries in the COVID-19 pandemic, the insurance sector has also been impacted as reduced consumption and workforce productivity as well as a heavy financial impact are emerging as some of the major concerns for the insurance industry, according to a survey conducted by PwC.
In a study titled ‘COVID-19 Impact on the Indian Insurance industry,’ PwC said, “The two productive months for the insurance industry — March for life insurance and April for non-life corporate renewals — have both seen a significant hit and the difficulty continues in the month of May in mobilising the distribution channels.” The report said the immediate focus needs to be on the business continuity plan, employee safety and well-being and stakeholder communication, among others.
Petrol price hiked by 53 paise/litre, diesel by 64 paise; 12th straight day of increase
Looks like there's no stopping fuel prices from shooting to the sky.
PTI reports: "Petrol price on Thursday was hiked by 53 paise per litre and diesel by 64 paise a litre, the 12th straight day of increase in rates that now totals to Rs 6.55 for petrol and Rs 7.04 for diesel.
Petrol price in Delhi was hiked to Rs 77.81 per litre from Rs 77.28, while diesel rates were increased to Rs 76.43 a litre from Rs 75.79, according to a price notification of state oil marketing companies.
Rates have been increased across the country and vary from state to state depending on the incidence of local sales tax or VAT.
This is the 12th daily increase in rates in a row since oil companies on June 7 restarted revising prices in line with costs, after ending an 82-day hiatus in rate revision.
In 12 hikes, petrol price has gone up by Rs 6.55 per litre and diesel by Rs 7.04 a litre.
The freeze in rates was imposed in mid-March soon after the government hiked excise duty on petrol and diesel to shore up additional finances.
Oil PSUs Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) instead of passing on the excise duty hikes to customers adjusted them against the fall in the retail rates that was warranted because of fall in international oil prices to two decade low.
International oil prices have since rebounded and oil firms are now adjusting retail rates in line with them."
Freeze rates, depositors tell Reserve Bank
The All-India Bank Depositors’ Association (AIBDA) has voiced concern over the growing demand for waiver of interest on loans under moratorium in the context of the lockdown.
They fear that the banks would pass on the burden of any waiver to the depositors by lowering deposit rates even further. “We are greatly perturbed about the likely ramifications of the loan interest waiver on the banking sector, and on the prudential financial discipline of the borrowers. The most severely hit would be the bank depositors, as banks would inevitably seek to cover their potential or actual loss of interest income through further cut backs in the deposit interest rates,” the association said in a statement.