The benchmark stock indices have opened the day with moderate gains after suffering losses for four consecutive sessions.
The Centre's finance seem to be in a precarious situation with a report pointing to far greater dependence on external financing and a burgeoning deficit.
Join us as we follow the top business news through the day.
Manufacturing facilities working at up to 70% capacities amid pandemic: Asian Paints
India Inc continues to operate below capacity as the lockdown impact ensues.
PTI reports: "Asian Paints on Tuesday said its manufacturing facilities are working at up to 70 per cent capacities due to the impact of COVID-19 pandemic and resultant lockdowns.
The company said its business has picked up progressively in tier 2, 3, 4 cities where the demand conditions were better, while in metros and some tier 1 cities, the pace of recovery is slow.
“All the operations which were disrupted since early March 2020 have seen resumption since early May, 2020. The company has been able to open all manufacturing plants after taking requisite Government permissions, Asian Paints said in a regulatory filing.
The permissions are for running the plants across all the businesses to a limited capacity or even to a full capacity in some geographies, it said, pointing out that manufacturing facilities of the company are working at approximately 60-70 per cent levels.
Asian Paints business divisions include decorative, home improvement and industrial operations.
The business in India saw improvement in demand conditions over May and June after a complete washout in April, 2020, it said.
The company has re-opened approximately 95 per cent of sales offices with full precautions on safety, social distancing and hygiene drills and it is continuously monitoring the situation and will resume operations in remaining workplaces basis the situation and necessary government permissions.
“July has been challenging in terms of sporadic lockdowns across various states. Till now the indications seem to be positive and the company believes that it will tide through this crisis by focusing on its core strengths, understanding the changing customer requirements and fulfilling these requirements through innovative market approach,” the company said.
Asian Paints had reported a 67.32 per cent decline in consolidated net profit to Rs 219.61 crore for the first quarter ended June 30, due to complete washout of business in April.
The company had posted a net profit of Rs 672.09 crore during April-June quarter of the previous fiscal.
Its revenue from operations was down 42.74 per cent at Rs 2,922.66 crore during the quarter under review as against Rs 5,104.72 crore in the same period previous fiscal.
Shares of Asian Paints were trading 1.67 per cent higher at Rs 1,733.35 apiece on the BSE."
Moody’s upgrades Yes Bank ratings
Moody’s Investors Service has upgraded Yes Bank’s long-term foreign currency issuer rating to B3 from Caa1. It has also upgraded the bank’s long-term foreign and local currency bank deposit ratings to B3 from Caa1, and its foreign currency senior unsecured MTN program rating to (P)B3 from (P)Caa1.
Sweden escapes economic brunt of virus
Rupee declines 16 paise to 75.17 against US dollar in early trade
The positive sentiment in stocks isn't spilling over into the currency market at the moment.
PTI reports: "The rupee depreciated 16 paise to 75.17 against the US dollar in opening trade on Tuesday tracking weakness in Asian peers even as domestic equities started on a positive note.
The rupee opened weak at 75.13 at the interbank forex market, then lost further ground and touched 75.17 against the US dollar, down 16 paise over its previous close of 75.01.
Forex traders said, while firm start of the equity market and foreign fund inflows supported the rupee, factors like weak Asian currencies and rising COVID-19 cases dragged down the local unit.
“Asian currencies were weak against the US dollar this morning and weighed on the domestic unit,” Reliance Securities said in a research note.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.07 per cent to 93.48.
On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 356 points higher at 37,295.60 and broader NSE Nifty rose 100.30 points to 10,991.90.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 7,818.49 crore on Monday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, fell 0.79 per cent to USD 43.80 per barrel.
Meanwhile, the number of cases around the world linked to COVID-19 has crossed 1.82 crore and in India, the number of infections touched 18,55,745."
Manufacturing contracts for fourth straight month: July PMI
India’s manufacturing sector activity contracted at a slightly faster pace in July as demand conditions remained subdued amid prolonged closures, following which firms reduced both staff numbers as well as purchasing activity, a monthly survey showed on Monday.
The headline seasonally adjusted IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) stood at 46 in July, down from 47.2 in June.
This is the fourth straight month of contraction for the Indian manufacturing sector. In April, the index had slipped into contraction mode, after remaining in growth territory for 32 consecutive months. In PMI parlance, a print above 50 means expansion, while a score below that denotes contraction.
Indian shares inch higher; U.S. manufacturing data props sentiment
Some respite for Indian stocks after four straight sessions of losses.
Reuters reports: "Indian shares opened higher on Tuesday after four sessions of losses, led by auto and financial stocks after strong U.S. manufacturing data lifted global sentiment, though gains were capped by fears over rising coronavirus cases at home.
The NSE Nifty 50 index rose 0.17% to 10,910.50 by 0400 GMT, while the S&P BSE Sensex was 0.15% higher at 36,996.35.
An industry gauge released overnight indicated U.S. manufacturing activity accelerated to its highest level in nearly 1-1/2 years in July, lifting Asian shares.
In Mumbai trading, shares of automakers Hero MotoCorp Ltd and Maruti Suzuki India Ltd were among the top gainers on the Nifty 50 index, rising as much as 1.9% and 1.1%, respectively.
The Nifty financials index rose 0.71%, with ICICI Bank Ltd and Axis Bank Ltd gaining over 1% each.
Meanwhile, coronavirus cases in the world's second-most populous country jumped to over 1.80 million by Monday morning, including 38,135 deaths, health ministry data showed. The country has the world's third highest caseload after the United States and Brazil.
IT stocks were largely unchanged after reports U.S. President Donald Trump on Monday signed an executive order preventing federal agencies from contracting or subcontracting foreign workers, mainly those on H-1B visa."
Share of external financing of fiscal deficit soars to 4.5% in Q1 this fiscal: Report
Some very worrying news on the fiscal front.
PTI reports: "The share of external financing has jumped to 4.5 per cent in Q1 FY21 from 1.6 per cent in the same quarter last fiscal, which in terms of the quantum has skyrocketed by 325 per cent Y-o-Y, says a report analysing the fiscal numbers of the government.
The government has run 83 per cent of its borrowing target as of June, according to official numbers released on July 31, due to the impact of the pandemic that crippled the economy.
The massive spike in the share of external source of funding the fiscal deficit comes even as it has been continuing financing primarily through domestic sources -- as much as 96 per cent, according to an analysis by CARE Ratings.
“The share of external financing in the current financial year has jumped from 1.6 per cent as of Q1 of FY20 to 4.5 per cent in Q1 of the current fiscal. In terms of the quantum of external financing, this is a massive 325 per cent higher year-on-year during the first quarter,” says the report without quantifying the actual numbers.
When it comes to domestic financing of the fiscal deficit too, there has been a near 50 per cent increase in Q1 year-on-year. Domestic financing is mainly met through market borrowing, which has touched as much as 83 per cent so far, which is a full 117 per cent increase over the same period last fiscal, says the report.
The higher dependence on debt is due to the lockdown which created an unprecedented financial stress for the government due to the sharp decline in income and an increase in expenditure.
However, in an encouraging sign, despite the massive revenue shortfalls there has been an increase in capex.
The fiscal deficit in Q1 stood at Rs 6.62 lakh crore, which is 53 per cent more than a year ago; and as a percentage of the budget estimates it is 83 per cent as of June 2020 as against 61 per cent a year ago.
Government’s total expenditure has risen 13 per cent in Q1 led by an increase in capex; and of this revenue expenditure accounted for 89 per cent, which is up 11 per cent Y-o-Y.
The total capex has jumped a full 40 per cent in Q1, in spite of its income falling 47 per cent."