The benchmark stock indices have opened the day with significant gains as hopes of a vaccine for Covid-19 helped boost stocks across the world.
Former Reserve Bank of India Governor has warned that there could be an unprecedented rise in NPAs in the Indian banking system over the next 6 months due to the coronavirus-induced lockdown.
Join us as we follow the top business news through the day.
Wipro shares rally over 19% after Q1 earnings
Wipro's results surprised the Street, leading to a massive intra-day rally.
PTI reports: "Shares of Wipro on Wednesday jumped over 19 per cent after the company posted an increase in consolidated profit to Rs 2,390.4 crore for the quarter ended on June 30, 2020.
The stock zoomed 17.70 per cent to Rs 264.90 on the BSE.
On the NSE, it jumped 19.42 per cent to Rs 268.70.
The company had posted a consolidated profit, attributable to equity holders, of Rs 2,387.6 crore in the same period a year ago.
Total income of Wipro was almost flat at Rs 15,571.4 crore at the end of the first quarter of 2020-21 compared to Rs 15,566.6 crore in the corresponding quarter of the fiscal year 2019-20.
The marginal increase in Wipro’s performance surprised the market as the country’s largest software services firm TCS on Thursday reported a 13.8 per cent decline in June quarter consolidated net profit at Rs 7,008 crore on revenues being impacted by the coronavirus crisis.
“Margins surprise positively, still appears circumspect of growth recovery unlike TCS. The company avoids providing a formal revenue outlook for the September quarter and unlike TCS, remains circumspect about seeing a recovery in the near term,” Emkay Global Services said.
According to a report by Motilal Oswal Institutional Equities, while full impact of the COVID-19 pandemic on pricing and working capital cycle is yet to play out, Wipro’s outlook on managing margin stability and healthy cash conversions are impressive."
Maruti recalls 1,34,885 units of WagonR, Baleno to fix faulty fuel pumps
The financial impact of the recall is not yet clear.
PTI reports: "The country’s largest carmaker Maruti Suzuki India (MSI) on Wednesday said it is recalling 1,34,885 units of WagonR and Baleno models to inspect and replace faulty fuel pumps.
The company is voluntarily undertaking a recall for WagonR (1 litre) manufactured between November 15, 2018, and October 15, 2019, and Baleno (petrol) manufactured between January 8, 2019, and November 4, 2019, MSI said in a regulatory filing.
The recall will cover 1,34,885 vehicles of both these models, it added.
“The company will inspect 56,663 units of WagonR and 78,222 units of Baleno for a possible issue with the fuel pump. Faulty part will be replaced, free of cost,” the auto major said.
Owners of the suspected vehicles under this recall campaign will be contacted by the company authorised dealers in due course of time, it added."
US real interest rates drop below zero
Oil climbs after sharp drop in U.S. crude stocks; OPEC committee meeting in focus
The oil rally resumes as supply concerns overwhelm worries about the virus.
Reuters reports: "Oil prices rose on Wednesday following a sharp drop in U.S. crude inventories, with the market waiting for next steps from a meeting later in the day on the future level of output cuts by OPEC and its allies.
Brent crude futures were up 19 cents, or 0.4%, at $43.09 a barrel as of 0343 GMT, and U.S. West Texas Intermediate (WTI) crude futures rose 17 cents, or 0.4%, to $40.46 a barrel.
Reflecting a recovery in fuel demand despite the coronavirus pandemic, U.S. crude inventories fell by 8.3 million barrels in the week to July 10, beating analysts' expectations for a decline of 2.1 million barrels, according to data from industry group the American Petroleum Institute.
Official numbers from the U.S. Department of Energy's Energy Information Administration (EIA) are due on Wednesday.
“API numbers released overnight, have provided some support to the market in early morning trading today,” ING Economics said in a note.
On supply, the market will be closely watching for news from a meeting of the Joint Ministerial Monitoring Committee (JMMC) of the Organization of the Petroleum Exporting Countries (OPEC) later on Wednesday.
“The market will be eager to see if deeper cuts will be rolled over for an additional month, or whether the group will stick to the original plan, and start trimming cuts,” according to ING Economics.
“Most indications suggest that it will be the latter, with more focus on compliance and compensatory cuts.”
Key members of OPEC and allies including Russia, collectively known as OPEC+, are set to decide whether to extend output cuts of 9.7 million barrels per day (bpd) that end in July or ease them to 7.7 million bpd.
“Oil prices are likely to be traded in a range of $40, with the market paying close attention to today's JMMC results,” said Kim Kwang-rae, commodity analyst at Samsung Securities in Seoul."
Rupee surges 14 paise to 75.28 against US dollar in early trade
The bullish sentiment in domestic equities has helped the rupee this morning.
PTI reports: "The rupee appreciated 14 paise to 75.28 against the US dollar in early trade on Wednesday tracking weakness in the greenback and gains in the domestic equity market.
Forex traders said, investor sentiment strengthened after the human clinical trials for COVID-19 vaccine were initiated in India.
The rupee opened at 75.35 against the US dollar, then gained further ground and touched 75.28 against the US dollar, up 14 paise over its previous close.
It had settled at 75.42 against the greenback on Tuesday.
The Indian Council of Medical Research (ICMR) on Tuesday said human clinical trials for a potential vaccine for COVID-19 had been initiated in the country with approximately 1,000 volunteers participating in the exercise for each of the two indigenously developed vaccine candidates.
The Drugs Controller General of India (DCGI) has permitted two vaccines -- one developed by Bharat Biotech International Limited in collaboration with ICMR and another one by Zydus Cadila Healthcare Ltd -- to go in for the first and second phase of human clinical trials.
The number of cases around the world linked to the disease has crossed 1.32 crore and the death toll has topped 5.77 lakh.
In India, the death toll due to COVID-19 rose to 24,309 and the number of infections spiked to 9,36,181, according to the health ministry.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.05 per cent to 96.21.
The 30-share BSE benchmark Sensex was trading 516.58 points higher at 36,549.64 and broader NSE Nifty rose 148.65 points to 10,756.00."
NPAs may witness unprecedented increase in 6 months: Rajan
Insights from a wide-ranging interaction with the former RBI Governor.
PTI reports: "Sounding a note of caution, former RBI governor Raghuram Rajan on Tuesday said non-performing assets of the banking sector are likely to witness unprecedented increase in the next six months and the sooner the problem is recognised the better it would be.
The outbreak of COVID-19 and subsequent lockdown to curb the spread of disease has hit businesses hard and many of them are facing difficulty in servicing debt.
“The level of the NPAs is going to be unprecedented in six months from now if we really recognise the true level of NPAs...We are in trouble and sooner we recognise it, better it is because we really need to deal with the problem, Rajan said during a session at the India Policy Forum 2020 organised by NCAER.
Referring to the article titled Bold decisions, strong political will: Economic reforms are sustained, deep and pronounced under PM Modi by Finance Minister Nirmala Sitharaman published on Tuesday, he said it talks about Jan Dhan success but some economists have contrary views on this.
“We have difficulty in targeting transfers to people. We are still talking about universality because we can’t target. (as highlighted by Vijay Joshi, Oxford University) Jan Dhan does not really work as advertised,” Rajan said.
He, however, said one positive factor for Indian economy is that the agriculture sector is doing well.
“Certainly, the government has come up with reforms. These are reforms which have been talked about for a long time. They certainly can be beneficial for a significant portion of our economy if implemented,” Rajan said.
As part of the reform process for the farm sector, the government amended the six-and-a-half-decade-old Essential Commodities Act to deregulate food items, including cereals, edible oil, oilseeds, pulses, onion and potato.
The amendment, besides deregulating production and sale of food products, will provide for no stock limit to be imposed on any produce.
Last month, the government approved an ordinance to allow barrier-free trade in agriculture produce outside the notified APMC mandis."
Sensex rallies over 400 points in early trade; Nifty tops 10,700
Domestic equities have opened with gains in line with global stocks.
PTI reports: "Equity benchmark Sensex rallied over 400 points in early trade on Wednesday led by gains in index-heavyweights Infosys, Reliance Industries and TCS amid largely positive trend in global markets.
After touching a high of 36,465.34, the 30-share BSE Sensex was trading 423.11 points, or 1.17 per cent, higher at 36,456.17.
Similarly, the NSE Nifty surged 120.15 points, or 1.13 per cent, to 10,727.50.
Shares of Infosys rallied around 3 per cent ahead of its quarterly earnings. Axis Bank, Tech Mahindra, Bajaj Finance, Tata Steel, HCL Tech and IndusInd Bank were among the other gainers.
On the other hand, Bharti Airtel, ITC and Kotak Bank were the laggards.
In the previous session, the BSE barometer ended 660.63 points or 1.80 per cent lower at 36,033.06; while the NSE Nifty closed 195.35 points or 1.81 per cent down at 10,607.35.
Foreign institutional investors were net sellers in the capital market on Tuesday, offloading equities worth Rs 1,565.62 crore, provisional exchange data showed.
According to traders, domestic benchmarks followed US equities which rallied on hopes of a COVID-19 vaccine."
Mukesh Ambani to detail post-COVID business plan at AGM; focus on leveraging tech partnerships
Billionaire Mukesh Ambani is likely to announce plans of leveraging recent partnerships with global technology giants such as Facebook as well as a vision to maximise oil to chemical conversion at his flagship Reliance Industries’ annual shareholder meeting on Wednesday, analysts said.
Mr. Ambani, 63, may at the company’s first online AGM also give a sneak preview of his vision for decarbonisation of energy molecules to create value-added products with almost no carbon emissions.
Strategic direction post-COVID-19 and further details on asset monetisation are key expectations from the 43rd AGM of RIL, analysts said.
The AGM is “expected to report on progress on asset monetisation (INViTs and stake sale in O2C business), more details on strategic partnerships in digital business, growth plans on financial vertical, oil to chemical integration progress and new technologies,” Morgan Stanley said.