The benchmark stock indices have opened the day flat with some minor gains.
The oil market continues to face pressure as demand remains lackluster even as a supply glut persists.
Join us as we follow the top business news through the day.
Pandemic may force govt. to borrow more
Revenue shortfalls in India, the major economy hardest hit by the COVID-19 pandemic, are likely to force the Centre to borrow more, but it will only consider monetising its deficit as a last resort, sources familiar with discussions told Reuters.
Borrowing plans for the second half of the financial year, will be reviewed by government and Reserve Bank of India (RBI) officials later this month, the five sources said.
The officials have already discussed the possibility of monetising the debt, whereby the central bank prints money to bridge the fiscal deficit, but they were in no hurry to return to a bad habit India kicked in 1997.
“There will definitely be higher borrowing in the current year but whether we will print money, that is not yet decided. We will have to have patience and see how things go,” a senior official said. A senior government official said debt monetisation was “not the preferred option right now”.
Passenger vehicle sales in India increase 14% in August: SIAM
Some signs of greenshoots in the auto sector.
PTI reports: "Passenger vehicle sales in India increased by 14.16 per cent in August to 2,15,916 units as against 1,89,129 units in the same month last year, auto industry body SIAM said on Friday.
According to the latest data by the Society of Indian Automobile Manufacturers (SIAM), two-wheeler sales also rose 3 per cent at 15,59,665 units, as compared to 15,14,196 units in the same month last year.
Motorcycle sales were at 10,32,476 units as against 9,37,486 units in August 2019, up 10.13 per cent.
Scooter sales were, however, down 12.3 per cent at 4,56,848 units as against 5,20,898 units in the same month last year."
Eurozone Target2 imbalances worsen
Yes Bank pays ₹50,000-cr. dues to RBI
Yes Bank has fully repaid the ₹50,000 crore provided by RBI as a special liquidity facility (SLF) amid the crises faced by the lender earlier this year, its chairman Sunil Mehta said.
He further said FY21 will be a year of transition for the bank, which has just come out of an unprecedented ₹10,000 crore bailout led by SBI after setbacks received under the founding team.
The government and the RBI had replaced the entire board of the lender in March and also stopped depositors from accessing their funds for a few days.
Rupee slips 9 paise to 73.55 against US dollar in early trade
Flat, choppy trading in the stock indices isn't helping the rupee this morning.
PTI reports: "The rupee depreciated 9 paise to 73.55 against the US dollar in opening trade on Friday tracking muted domestic equities.
The local unit opened at 73.50 at the interbank forex market, then lost ground and touched 73.55 against the US dollar, down 9 paise over its last close of 73.46.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.07 per cent to 93.26.
Forex traders said India-China border standoff dampened investor sentiment. Moreover, a roadblock in coronavirus vaccine trials also weighed on the local unit.
India and China have agreed on a five-point roadmap including quick disengagement of troops and avoiding any action that could escalate tensions for resolving the four-month-long face-off in eastern Ladakh.
Meanwhile, Serum Institute of India on Thursday said it is putting on hold clinical trials of an experimental COVID-19 vaccine for which it has been enlisted to manufacture a billion doses.
India’s COVID-19 caseload sprinted past 45 lakh and the death toll climbed to 76,271 with a record 96,551 infections and 1,209 fatalities being reported in a day, while the recoveries crossed 35 lakh on Friday, according to the Union Health Ministry data.
On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 15.97 points higher at 38,856.29 and the broader NSE Nifty rose 5.15 points to 11,454.40.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 838.37 crore on a net basis on Thursday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, fell 0.40 per cent to USD 39.90 per barrel."
Oil extends losses as stockpile rise amid weakening demand
Supply gluts and lack of demand continue to clobber oil.
Reuters reports: "Oil prices fell for a second day on Friday, pressured by a surprise rise in U.S. stockpiles as the coronavirus pandemic continues to erode demand for fuels.
Brent crude was down 18 cents, or 0.5%, at $39.88 a barrel by 0337 GMT, after falling nearly 2% on Thursday, while U.S. crude dropped 14 cents, or 0.4%, to $37.16 a barrel, having fallen 2% in the previous session.
Both major benchmarks are down around 6.5% for the week and headed for a second week of declines, as hopes dim for a steady recovery in fuel demand amid signs of second-wave coronavirus outbreaks.
In the United States, stockpiles rose last week, against expectations, as refineries slowly returned to operations after production sites were shut down due to storms in the Gulf of Mexico and wider region.
“While U.S. crude oil production continues to recover following Hurricane Laura, the numbers show that refineries further reduced run rates over the last week,” ING Economics said in a note.
U.S. crude inventories rose 2.0 million barrels, compared with forecasts for a 1.3 million-barrel decrease in a Reuters poll.
In a further bearish sign, traders were starting to book tankers again to store crude oil and diesel, amid a stalled economic recovery as the COVID-19 pandemic continues unabated.
Onshore storage remains near capacity as supplies continue to outpace demand, so the use of so-called floating storage is back in vogue as cheap financing costs and the spread between contracts for delivery now and later months makes it favourable for traders to hold oil for later sale.
Increasing stockpiles are likely to be a subject at a meeting on Sept. 17 of the market monitoring panel of the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+.
The grouping has been withholding supply to reduce stockpiles but analysts say the meeting is likely to focus on compliance among members, rather than seek deeper cuts."
Sensex rises in early trade; Nifty above 11,450
Domestic equity benchmark Sensex jumped over 100 points in early trade on Friday tracking gains in index majors Reliance Industries, HDFC Bank and Kotak Bank amid fresh foreign fund inflow.
The 30-share BSE index was trading 114.64 points or 0.30% higher at 38,954.96; while the NSE Nifty rose 32.45 points or 0.28% to 11,481.70.
Titan was the top gainer in the Sensex pack, surging around 3%, followed by SBI, Maruti, TCS, HDFC Bank, Kotak Bank, ITC and UltraTech Cement.
On the other hand, HCL Tech, IndusInd Bank, Nestle India and Asian Paints were among the laggards.
Crisil now sees GDP shrinking 9% in FY21
Crisil Research on Friday said India’s Gross Domestic Product (GDP) would shrink 9% in FY21, wider than its May estimate of a 5% contraction. This rate of fall has not been seen since the 1950s, it added.
“With the pandemic’s peak not yet in sight and the government not providing adequate direct fiscal support, the downside risks to our earlier forecast have materialised,” Crisil Research said.