The benchmark stock indices have started the week with a strong rally on the back of gains in the index heavyweight Reliance which hit a new high.

Join us as we follow the top business news through the day.

Reliance Industries becomes first Indian firm to hit USD 150 billion market cap

Another milestone for the index heavyweight which has been in the news a lot off late.

PTI reports: "Reliance Industries on Monday became the first Indian firm to hit a market valuation of USD 150 billion helped by a continuous rally in its share price.

In morning trade, the company’s market valuation jumped Rs 28,248.97 crore to Rs 11,43,667 crore (USD 150 billion) on the BSE.

The heavyweight stock surged 2.53 per cent to a record high of Rs 1,804.10 on the BSE.

On the NSE, it rose by 2.54 per cent to an all-time high of Rs 1,804.20.

Reliance Industries on Friday became the first Indian company to cross the Rs 11 lakh crore market valuation mark.

Its market valuation crossed Rs 11 lakh crore in the previous session as its share price rallying over 6 per cent after chairman Mukesh Ambani announced that his oil-to-telecom conglomerate had become net debt-free.

Ambani announced that Reliance Industries had become net debt-free after raising a record Rs 1.69 lakh crore from global investors and a rights issue in under two months.

Reliance Industries raised Rs 1.15 lakh crore from global tech investors by selling a little less than a quarter of the firm’s digital arm, Jio Platforms, and another Rs 53,124.20 crore through a rights issue in the past 58 days.

Taken together with last year’s sale of 49 per cent stake in fuel retailing venture to BP Plc of UK for Rs 7,000 crore, the total fund raised is in excess of Rs 1.75 lakh crore, the company said.

Reliance Industries had a net debt of Rs 1,61,035 crore as on March 31, 2020.

“With these investments, RIL has become net debt-free,” it said.

On Thursday, Reliance Industries said it has sold a 2.32 per cent stake in its digital unit to Saudi Arabia’s Public Investment Fund (PIF) for Rs 11,367 crore.

So far this year, the company’s stock has gained over 19 per cent."

S&P 500 in terms of gold price

Petrol nears Rs 80 mark, diesel at new high after 16th price hike in a row

The government continues to raise domestic fuel prices as it tries to plug revenue losses from other sources.

PTI reports: "Petrol price on Monday was hiked by 33 paise per litre and diesel by 58 paise to take retail rates to record high as the oil companies increased prices for the 16th day in a row.

In 16 days, petrol price has been hiked by Rs 8.3 per litre and diesel by Rs 9.46 - a record increase in rates of the fuel in any fortnight since pricing was deregulated in April 2002.

Petrol price in Delhi was hiked to Rs 79.56 per litre from Rs 79.23 while diesel rates were increased to Rs 78.55 a litre from Rs 78.27, 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 value added tax (VAT).

The increase in rates since June 7 is the highest in any fortnight. When petrol and diesel pricing was deregulated in April 2002, oil companies revised rates every fortnight in line with the cost. They switched to daily price revision in May 2017 to allow cost to reflect instantaneously in retail rates.

According to pricing data, the maximum rates have increased in any fortnight was Rs 4-5 per litre.

The 16th daily increase in rates, since oil companies on June 7 restarted revising prices in line with costs after ending an 82-day hiatus in rate revision, has taken diesel prices to fresh highs. Petrol price too is at a two-year high.

Prior to the current rally, the peak diesel rates had touched was on October 16, 2018, when prices had climbed to Rs 75.69 per litre in Delhi. The highest-ever petrol price was on October 4, 2018, when rates soared to Rs 84 a litre in Delhi."

‘Consumer demand needs a financing fix’

Two years ago, when the going seemed good, Srivats Ram, MD, Wheels India Ltd., had said his industry was cyclical and that what goes up typically comes down. In the midst of a pandemic, he takes a tempered view, suggesting that things could look up soon. Excerpts from an interview:

This slowdown seems to have hit the industry pretty hard. Did you expect the downturn to be this severe?

I can’t profess to have predicted that the downturn would have been as bad as it was in FY20. But it is the nature of the industry to be cyclical and it was anticipated at some point, although the extent of the slowdown is much more than what I expected. I do not think that companies who have been in existence for 50 years and more have ever experienced a month of zero sales. To that extent, iIt is totally unprecedented.

When we have found a new normal in the post COVID phase later this year, volumes are likely to be a lot less than what it was last year. While this year will be a wash [out] compared to last year, if you look at FY22, you are probably going to have at least a month and a half of gain as compared to this year (that saw a lockdown in April and May) and thus there will be some kind of positive base effect next year.

Don’t assign risk weight on credit under ECLGS: RBI to lending institutions

In a big to nudge banks to lend under the emergency credit line scheme announced by the government, the RBI has brought in some crucial rule changes.

PTI reports: "The RBI on Sunday said lending institutions should assign zero per cent risk weight on the credit facilities extended under the Emergency Credit Line Guarantee Scheme to MSME borrowers announced by the government in the wake of COVID-19 pandemic.

The government in May introduced the Emergency Credit Line Guarantee Scheme (ECLGS) for providing 100 per cent guarantee coverage for additional working capital term loans (in case of banks and financial institutions) and additional term loans (in case of NBFCs) up to 20 per cent of their entire outstanding credit up to Rs 25 crore as on February 29, 2020.

The credit facility is guaranteed by the National Credit Guarantee Trustee Company (NCGTC).

“As credit facilities extended under the scheme guaranteed by NCGTC are backed by an unconditional and irrevocable guarantee provided by Government of India, it has been decided that Member Lending Institutions shall assign zero percent risk weight on the credit facilities extended under this scheme to the extent of guarantee coverage,” the RBI said in a notification.

Lending institutions include, banks, eligible NBFCs and HFCs, and All India Financial Institutions (SIDBI, NHB, NABARD, EXIM Bank).

In a separate release, the RBI said the central government has re-nominated Natarajan Chandrasekaran as a part-time non-official Director on the Central Board of Reserve Bank of India, for a further period of two years beyond March 3, 2020, or until further orders."

Sensex surges over 400 points in early trade; RIL hits fresh peak

A great start to the day for the benchmark stock indices.

PTI reports: "Equity benchmark Sensex jumped over 400 points in early trade on Monday led by gains in index-heavyweights Reliance Industries, ICICI Bank and HDFC, amid positive global cues and foreign fund inflow.

After touching a high of 35,170.08 in early trade, the 30-share index was trading 421.66 points, or 1.21 per cent, higher at 35,153.39.

Similarly, NSE Nifty surged 122.95 points, or 1.20 per cent, to 10,367.35.

Bajaj Finserv was the top gainer in the pack, rising around 7 per cent, followed by Bajaj Finance, Bajaj Auto, IndusInd Bank and ICICI Bank.

Reliance Industries jumped over 2 per cent, trading at its record high of Rs 1,804.10.

On the other hand, TCS, ONGC, M&M and Infosys were among the laggards.

In the previous session, the BSE barometer settled 523.68 points, or 1.53 per cent, higher at 34,731.73, and the broader Nifty surged 152.75 points, or 1.51 per cent, to 10,244.40.

On a net basis, foreign institutional investors bought equities worth Rs 1,237 crore in the capital market on Friday, provisional exchange data showed.

According to analysts, besides stock-specific action, fresh foreign fund inflows buoyed market sentiment here.

On the global front, bourses in Shanghai, Seoul and Tokyo were trading with gains in early deals, while those in Hong Kong were in the red.

International oil benchmark Brent crude futures rose 0.02 per cent to USD 42.20 per barrel."

Are stock specific SIPs better, or SIPs in MFs?

With the Systematic Investment Plan (SIP) route taking off for mutual funds, stock brokers are now offering SIPs for direct equity investments as well that allow you to dribble equal monthly sums into a stock of your choosing over several years. This strategy, many folks believe, helps retail investors build up sizeable positions in quality stocks that can turn huge wealth creators in future. But stock SIPs, for retail investors, are not as hot an idea as mutual fund SIPs. Before you sign up for them, here are some things to be aware of.

When plugging stock SIPs as a wealth creation tool, you are often provided examples of X or Y stock that transformed an investment of a few thousands into a few lakhs over a relatively short time frame. For instance, had you done a SIP of just ₹5,000 a month in the Hindustan Unilever stock over the last five years, you’d be sitting on shares worth ₹5.1 lakh today, against an investment of ₹3 lakh. But such examples tend to be coloured by survivorship bias. When showcasing the SIP route for stocks, intermediaries often pick companies that survived and delivered a hefty return over the last 5 or 10 years.