The benchmark stock indices have opened the day with modest gains after the mild losses suffered yesterday.
Retail price inflation rose to well over 6% as fod prices shot up.
Join us as we follow the top business news through the day.
Eicher Motors shares tank nearly 5% on weak Q1 numbers
Looks like there is no light at the end of the tunnel yet for the auto sector.
PTI reports: "Shares of Eicher Motors on Friday tanked nearly 5 per cent after the company reported a consolidated net loss of Rs 55 crore for the first quarter ended June 30.
The stock tumbled 4.54 per cent to Rs 20,686.05 on the BSE.
At the NSE, it plunged 4.57 per cent to Rs 20,682.
Eicher Motors on Thursday reported a consolidated net loss of Rs 55 crore for the first quarter ended June 30, as sales were adversely hit due to COVID-19 pandemic.
The company had posted a net profit of Rs 452 crore in April-June period of last fiscal.
Total revenue declined 66 per cent in first quarter to Rs 818 crore, as compared with Rs 2,382 crore in the same period of 2019-20, Eicher Motors said in a statement.
“The previous quarter put forth unprecedented challenges for the industry and for Eicher Motors. However, we believe that the long term potential for both Royal Enfield and VECV is very promising,” Eicher Motors Managing Director Siddhartha Lal said."
Consumers supported small businesses during lockdown: Survey
Local retail seems to have found support from consumers during COVID-19 with 60% preferring to engage with small businesses and online retailers over national retailers, and 75% saying that they support small businesses in their respective capacities, a survey released on Wednesday by Adobe conducted in Asia Pacific Region said.
“Among all countries surveyed, Indian consumers (88%) were the most likely to support small businesses,” it added.
During the lockdown, 58% of consumers increased their online shopping frequency while three quarters (74%) cited an intention to change their future shopping habits with Indian and Singaporean consumers reporting the strongest intention, the findings said.
Chinese household debt hits record high
Mutual fund SIP inflows hit 22-month low in July at ₹7,831 crore
Investments in mutual funds through Systematic Investment Plans (SIPs) hit a 22-month low of ₹7,831 crore in July amid market volatility.
Inflows through SIP have slowed down in the past four months but experts believe the route still continues to be the preferred one for retail investors to invest in mutual funds as it helps them reduce market timing risk.
Besides, equity mutual funds, which mainly depend on SIP for flows, saw a withdrawal of ₹2,480 crore, data from Association of Mutual Funds in India (Amfi) showed.
This was the first outflow in more than four years.
Rupee inches 3 paise higher to 74.81 against US dollar in early trade
The rupee has opened with gains despite stock paring some opening gains.
PTI reports: "The rupee inched 3 paise higher against the US dollar to 74.81 in opening trade on Friday tracking positive domestic equities and sustained foreign fund inflows.
At the interbank forex market, the domestic unit opened at 74.85 against the US dollar, gained ground and touched 74.81 against the US dollar, registering a marginal rise of 3 paise over its previous close of 74.84.
“Asian currencies were trading mixed against the US dollar this morning ahead of the meeting between US and Chinese officials this weekend,” Reliance Securities said in a research note.
Markets participants will also track Wholesale Price Index (WPI) data, and trade data scheduled to be released later in the day for further cues, traders said.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.10 per cent to 93.23.
On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 110.52 points higher at 38,421.01 and broader NSE Nifty advanced 30.15 points to 11,330.60.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 416.28 crore on Thursday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, rose 0.33 per cent to USD 45.11 per barrel."
Retail inflation rises to 6.93% in July
Retail inflation rose to 6.93% in July, mainly on account of higher prices of food items, government data showed on Thursday.
The food inflation, according to the Consumer Price Index (CPI) data, increased to 9.62% in July.
The retail inflation in June was 6.23%, while the food inflation stood at 8.72%.
It is for the second consecutive month that the retail inflation has been above the RBI’s comfort level. The government has mandated the central bank to restrict the inflation at 4% (+, - 2%).
Sensex surges over 200 points in early trade; RIL leads gains
A good start to the day for stocks.
PTI reports: "Domestic equity benchmark Sensex jumped over 200 points in early trade on Friday led by gains in index-heavyweights Reliance Industries, Infosys and L&T amid sustained foreign fund inflow.
The BSE Sensex was trading 206.45 points or 0.54 per cent higher at 38,516.94; while NSE Nifty was up 56.10 points or 0.50 per cent at 11,356.55.
L&T was the top gainer in the Sensex pack, rising around 2 per cent, followed by Sun Pharma, Reliance Industries, UltraTech Cement, NTPC, Asian Paints, TCS and Infosys.
On the other hand, HCL Tech, PowerGrid, ONGC, ITC, Axis Bank and Maruti were among the laggards.
In the previous session, the Sensex had settled 59.14 points or 0.15 per cent lower at 38,310.49, and the Nifty slipped 7.95 points or 0.07 per cent to finish at 11,300.45.
Exchange data showed that foreign institutional investors bought equities worth Rs 416.28 crore on a net basis on Thursday.
According to traders, buying in index majors led benchmarks higher despite weak cues from global markets.
Sustained foreign fund inflow also supported key indices in morning session, they said.
Bourses in Shanghai, Hong Kong and Seoul were trading with losses in mid-day deals, while Tokyo was in the positive territory.
Stock exchanges on Wall Street ended on a mixed note in overnight trade.
Global oil benchmark Brent crude was trading 0.20 per cent higher at USD 45.05 per barrel."
Special market operations can be useful in facilitating monetary policy transmission, says article in RBI Bulletin
RBI may have to use unconventional tools as monetary policy transmission through banks remains weak.
PTI reports: "RBI’s special market operations such as Operation Twist (OT) and Long Term Repo Operations (LTRO) can be useful in facilitating monetary policy transmission when the regular transmission mechanism does not perform as expected, according to an article published in the central bank’s bulletin.
The Reserve Bank of India (RBI) initiated two special market operations -- OT and LTRO since December 2019 and February 2020, respectively. They were designed to ensure comfortable liquidity in the financial system and to facilitate monetary policy transmission.
“Our analysis indicates that special operations such as OT and LTRO, which directly intervene in the bond market can be useful tools in facilitating transmission of monetary policy when the regular mechanism of transmission does not perform as expected,” the article published in the RBI Bulletin for August said.
The article, prepared by Satadru Das, Saurabh Ghosh, and Vidya Kamate of the Strategic Research Unit, analysed the impact of these two sets of special operations on money and Government Securities (GSECs) markets.
OT involves buying of GSECs with longer term maturities -- ten years and five years -- and selling of shorter term GSECs of original/ residual maturities of one and three years.
LTROs are repurchase agreements collateralised by government securities, by which the central bank lends money to the banks for one to three years at the policy repo rate.
“As such, they would facilitate monetary transmission by reducing the cost of funds (in case of LTRO) and reducing the term premia (with OT),” the article said.
While the cost of funds channel may facilitate credit offtake, the reduction in the term premia may manifest through lower rates across the term structure of the financial market spectrum.
In totality, the objectives of both these operations is to ensure that comfortable liquidity is available to the system to facilitate the transmission of monetary policy, it said.
Another article titled ‘Onshoring the Offshore’, published in the bulletin, said that several currencies in recent years, particularly those of Emerging Market Economies (EMEs), have emerged as candidates for internationalisation.
The article has been prepared by Abhishek Kumar and Rituraj of Financial Markets Regulation Department, RBI.
As per the article, over the last three years, EME currencies’ turnover, driven to an extent by the rise of Non-Deliverable Forwards (NDF) markets, outpaced global turnover in foreign exchange markets, boosting their global share.
“Among the EMEs, as per the BIS Triennial Central Bank Survey, 2019, trading in Indian Rupee (INR) has almost doubled in the last three years,” it noted.
Recognising the linkages between onshore and offshore markets, and the possible impact of offshore markets on price discovery onshore, RBI is engaged in developing a deep and liquid onshore foreign exchange market, the article said.
The article also said RBI, in January 2020, also permitted exchanges in the GIFT City International Financial Services Centre (IFSC) to offer INR derivative contracts with settlement in foreign currency.
Banks in India were permitted by RBI to participate in NDF markets from June 1, 2020. Several banks have started participating in the market with steady increase in average daily turnover by banks in India.
The volumes have been almost entirely concentrated in the interbank segment, although there are indications that interest from global funds and corporates is slowly growing, it said.
“The participation of Indian banks in the NDF market has increased avenues for interbank risk management and, going forward, could help bring down hedging cost for customers,” it added."