The benchmark stock indices have opened the day on a positive note once again, marking what could probably turn out to be the eighth straight day of gains.
The return of normalcy in economic activity is helped fuel demand mount a strong recovery in September.
Join us as we follow the top business news through the day.
Why the study of war matters
Sensex pares early gains, ends modestly higher
A weak day for stocks despite significant gains at open.
PTI reports: "Equity benchmark Sensex pared early gains but managed to end 84 points higher on Monday following the finance minister’s announcements to revive festive demand in the economy.
After rallying nearly 400 points in morning trade, the 30-share BSE index pared most gains to end 84.31 points or 0.21 per cent higher at 40,593.80.
Similarly, the NSE Nifty rose 16.75 points or 0.14 per cent to close at 11,930.95.
ITC was the top gainer in the Sensex pack, spurting over 2 per cent, followed by Infosys, Asian Paints, HCL Tech, Maruti, PowerGrid, ICICI Bank and TCS.
On the other hand, Bharti Airtel, ONGC, HDFC Bank, IndusInd Bank and Bajaj Auto were among the laggards.
Traders said benchmark indices traded with a positive bias through the day, but market participants turned cautious after Finance Minister Nirmala Sitharaman’s press conference to announce the stimulus measures.
In a bid to stimulate consumer demand during the festival season and boost the economy, Sitharaman on Monday announced a payment of cash in lieu of LTC and Rs 10,000 festival advance to government employees.
She also announced additional capital spending and Rs 12,000 crore, 50-year interest-free loan to states to boost the economy that has been battered by the pandemic and the resulting lockdowns.
According to Arjun Yash Mahajan, Head Institutional Business at Reliance Securities, the government’s effort to stimulate consumers demand by offering advances and cash voucher schemes looks to be short-term in nature and lacks commitment to have a sustainable growth.
“This may lead to a kind of destocking led demand improvement ahead of festivals or fiscal end. However, it may not necessarily result in a sustainable recovery. This may not entice the market,” he said.
Meanwhile, on the global front, bourses in Shanghai, Hong Kong and Seoul ended on a positive note, while Tokyo was in the red.
Stock exchanges in Europe were largely trading with gains in early deals.
International oil benchmark Brent crude was trading 1.38 per cent lower at USD 42.26 per barrel.
In the forex market, the rupee snapped its three-session winning run, slipping 12 paise to close at 73.28 against the US dollar."
CREDAI seeks fiscal sops for realty sector to complete projects, prevent job losses
A real estate lobby demands a bailout for the sector.
PTI reports: "Realtors’ apex body CREDAI on Monday said the industry is going through a lot of pain due to the COVID-19 pandemic and urged the government to take fiscal measures for improving the liquidity position of cash-starved developers.
The industry body, which represents more than 20,000 builders from across India, has sought financial support in the form of interest waiver and extension of moratorium period till March 2021 for the real estate sector that has been badly impacted by the coronavirus pandemic.
The Confederation of Real Estate Developers’ Associations of India (CREDAI) fears job losses as well as delays and defaults in delivering the projects to homebuyers if the government does not come to the rescue.
“There is a pain in the industry because of the cash flow issues. The sector deserves a little sympathetic look and industry need to be supported,” said Irfan Razack, the past Chairman of CREDAI, in an interview with PTI.
Razack, who is the CMD of the country’s leading realty firm Prestige group, said the industry does not want any loan waiver but some rebate in interest and interest on interest so that developers can make up for the losses incurred during the lockdown period.
“Home deliveries have to happen. People have put their life saving in buying their dream homes,” he said.
Razack urged the government to take a “compassionate” view for survival of the industry as it provides huge number of white collar jobs as well as employment to labourers.
CREDAI’s Maharashtra chapter CREDAI-MCHI had filed a petition in the Supreme Court seeking waiver on interest as well as interest on interest during the moratorium period on term loans.
CREDAI-MCHI has suggested that the interest and interest on interest should be waived for March- August 2020 period on all loans and advances given to all borrowers engaged in real estate sector who are not declared as NPA till February end.
It also demanded that the moratorium policy be extended by the RBI till March next year.
During this extended period, CREDAI-MCHI wants that simple interest should be charged at a rate equivalent to rate of interest offered by banks on fixed deposit. The interest so charged be capitalised by extending the residual tenure of loans.
Getamber Anand, the past Chairman of CREDAI and chairman of ATS group, said the loan restructuring mechanism announced by the RBI would not benefit many players and demanded that all those loan accounts which were not NPA on March 1 this year should be restructured.
He said the industry is facing working capital challenge as demand has gone down.
Highlighting the importance of the sector and need for a financial package to revive the industry, Kunal Vajani, Head of Chambers - BlackRobe Chambers, said the real estate sector contributes about 5-6 per cent of the GDP and is the second largest employer as well as supports 270 ancillary industries.
Vajani, who is fighting this case on behalf of CREDAI-MCHI, said relief package for the real estate industry has been announced in more than 15 countries."
Rupee logs 1st drop in four sessions, down 12 paise against USD
The downtrend in stocks since open this morning hasn't helped the rupee.
PTI reports: "The rupee snapped its three-session winning run on Monday, slipping 12 paise to close at 73.28 against the US dollar amid weakening Asian peers against the greenback.
Starting off on a bullish note, the Indian currency touched the day’s high of 73.06 before losing momentum. It swung 25 paise during the session.
Clocking its first loss in four sessions, the domestic unit finally settled 12 paise lower at 73.28 against the American currency.
Analysts said the rupee came under pressure in view of strengthening US dollar against Asian currencies, though easing crude oil prices lent some support to the Indian unit.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, gained 0.11 per cent to 93.15.
Global crude oil benchmark Brent was trading 1.52 per cent lower at 42.17 a barrel.
On the domestic equity market front, the BSE Sensex was trading marginally higher by about 20 points at 40,529; while the NSE Nifty was down 6 points at 11,908.
Foreign investors had offloaded Indian equities worth a net Rs 39.39 crore on Friday, exchange data showed."
Focus on your needs while buying an insurance plan
Reading up on insurance gives us many answers. It also gives rise to many new questions in the mind. We realise that there is much we don’t know and need to understand. These questions lead us to the right product and the right insurance company.
Once you have researched your needs and the products available at the site of Insurance Web Aggregators (IWAs), which we saw in detail in the earlier instalment of Cover Note, you can make inquiries on their websites.
Following this, the insurance company/companies concerned will reach out to you and take you through the process of answering your questions and finalising the sale.
You can also contact any agent or the representative of a corporate agency or an insurance broker to take the process forward.
At this stage, you will face a lot of hard sell and pressure to make up your mind. Do take your time and be convinced you have all the information you need before finalising your insurance purchase.
Food delivery volumes in India reach pre-COVID-19 peaks: Zomato CEO
More promising signs of economic recovery.
PTI reports: "The food delivery volumes in India have reached pre-COVID-19 peaks, Zomato Founder and CEO Deepinder Goyal said on Monday.
He also said it is anticipated that the food delivery sector will continue to grow at around 15-25 per cent month-on-month for the foreseeable future.
“Happy to share that India food delivery volumes have reached pre-COVID peaks. A number of cities are now at over 120 per cent of pre-COVID peaks,” Goyal said in a tweet.
In a series of tweets, he added that food delivery is one of the safest recreational options available to the customers during the pandemic.
“Going forward, we anticipate the food delivery sector to continue to grow at around 15-25 per cent m-o-m for the foreseeable future,” he added.
“Since March 23rd, 2020, we have delivered a total of 9.2 crore orders — and there have been zero reported cases of COVID transmission through food delivery, or our food delivery agents,” Goyal said.
A few weeks ago, WHO also categorically stated that people should not fear food, or food packaging, or processing or delivery of food. People should feel comfortable and safe, he added.
“The last few months have been full of shocks and surprises. We salute the hard work of our delivery partners, along with thousands of our restaurant partners who demonstrated great agility in implementing world class safety practices to ensure that our customers stay safe,” Goyal said.
In September, Goyal had said in a blog post that with the ongoing IPL season and the subsequent festive season, “we expect food delivery in both metros and smaller cities to make a full recovery soon — and resume growing over pre-COVID levels.”"
FM Nirmala Sitharaman announces new measures to stimulate demand
Highlights from Finance Minister Nirmala Sitharaman's press address:
* Pandemic has affected economy; to unveil new proposals to stimulate demand
* To stimulate demand, expenditure will be front-loaded; new schemes include LTC cash voucher scheme and special festival advance
* Govt to give cash to employees in lieu of LTC ticket fare component for buying items attracting 12 pc or more GST
* Central govt payout on cash-in-lieu-for-LTC will be Rs 5,675 cr and Rs 1,900 cr for PSUs and banks
* Govt to give Rs 10,000 special festival advance all its employees as one-time measure to stimulate demand in the economy
* Govt to give Rs 12,000 crore interest-free 50-year loan to states for capital projects as part of plan to boost economic activities
* Govt to provide Rs 25,000 cr in addition to Rs 4.13 lakh crore budgeted for roads, defence infra, water supply, urban development
Relief on loans up to ₹2 crore addresses borrowers’ distress, RBI tells Supreme Court
The Reserve Bank of India (RBI) has told the Supreme Court that the Centre’s resolve to shoulder the cost of ‘interest on interest’ for MSME loans and personal loans up to ₹2 crore addresses pandemic-induced financial distress among borrowers.
The RBI termed it additional relief. The central bank reasoned that a complete waiver, on the other hand, of compound interest (interest on interest) chargeable during the six-month moratorium would destabilise “broader financial stability” and irreparably dent the banks.
“A long moratorium exceeding six months can also impact credit behaviour of borrowers and increase the risks of delinquencies post resumption of scheduled payments. It may result in vitiating the overall credit discipline, which will have a debilitating impact on the process of credit creation in the economy. It will be the small borrowers who may end up bearing the brunt of the impact, as their access to formal lending channels is critically dependent on the credit culture,” the RBI told the Supreme Court in an affidavit filed late on October 9.
Vedanta plummets over 24% after delisting fails
Things didn't go as planned for Vedanta.
PTI reports: "Shares of Vedanta on Monday plummeted over 24 per cent after the company’s delisting went from almost-a-success to failure on account of a large quantity of unconfirmed orders.
The stock tanked 23 per cent to Rs 94 on BSE. On NSE, it tumbled 24.37 per cent to Rs 92.15.
In a regulatory filing, Vedanta said its buyback offer is deemed to have failed as per the terms of the delisting regulations after promoter Vedanta Resources did not receive the required number of shares to delist the firm.
A large number of unconfirmed bids and some technical glitches in the tender process are likely to have contributed to the failure.
The BSE on October 9 evening showed 137.74 crore shares, out of a total 169.73 crore shares held by the public, to have been offered for sale to promoters, larger than the threshold of 134.12 crore.
Some bids, however, were pending confirmation from custodians.
Reconciliation of data led to the number of shares offered for sale being trimmed to 125.47 crore.
This, Vedanta said, was “less than the minimum number of offshore shares required to be accepted by the acquirers in order for the delisting offer to be successful.”
“Accordingly, the acquirers will not acquire any equity shares tendered by the public shareholders in the delisting offer and the equity shares of the company will continue to remain listed on the stock exchanges,” it said.
All equity shares tendered in the delisting offer shall be returned, it added."
Mumbai power outage: BSE, NSE functioning normally
The stock bourses remained unaffected by the surprise power outage in Mumbai.
PTI reports: "Leading stock exchanges BSE and NSE on Monday said said they were functioning normally, amid a major power outage in large parts of Mumbai.
“There is a power failure in south Mumbai. Exchange is working normally. The listing ceremony was concluded successfully for Mazagon Shipbuilders today morning,” a BSE spokesperson said.
The NSE too said it is functioning normally.
Large parts of the financial capital reported a major power outage on Monday morning due to a technical failure.
In a tweet, Brihanmumbai Electricity Supply and Transport (BEST) said “the electric supply is interrupted due to TATAs incoming electric supply failure“.
Multiple operators, including the state-run BEST, Adani Electricity and Tata Power supply power to the city."
GST Council to discuss compensation issue for third time in a row on October 12
The GST Council in its meeting on Monday is likely to discuss the suggestion of non-BJP ruled States of setting up a ministerial panel to develop consensus on the issue of compensation, sources said.
The Council, chaired by Union Finance Minister Nirmala Sitharaman and comprising of State Finance Ministers, will for the third time in a row discuss the issue of funding the shortfall of Goods and Services Tax (GST) revenue of States.
While some Opposition ruled States are demanding that a Group of Ministers be set up to arrive at a decision on the mechanism for funding compensation shortfall, BJP ruled States, which have already opted for the borrowing option given by the Centre, are of the view that they should be given a go ahead so that they can get money quickly.
Covid-19 accelerates the fall of small businesses
Rupee edges 3 paise higher at 73.13 in opening trade
Slight gains for the rupee this morning amid a positive opening for stocks.
PTI reports: "The Indian rupee traded with moderate gains of 3 paise at 73.13 against the US dollar in the opening session on Monday, tracking softer crude oil prices and sustained buying in domestic equities.
The domestic unit started off the session on a strong note at 73.10, up 6 paise, but ceded some ground as trade progressed and quoted 73.13 a dollar at 1020 hours.
The domestic currency had settled 8 paise higher at 73.16 a dollar on Friday after the Reserve Bank kept key interest rates unchanged while retaining an accommodative stance.
On a weekly basis, however, the domestic currency had lost 3 paise to the US dollar.
Global crude oil benchmark Brent was trading 0.84 per cent lower at 42.46 a barrel.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, gained 0.02 per cent to 93.07.
On the domestic equity market front, the BSE Sensex was trading 246.06 points up at 40,755.55; and the NSE Nifty was 58 points higher at 11,972.
Foreign investors had offloaded Indian equities worth a net Rs 39.39 crore on Friday, exchange data showed."
Fuel demand rises in Sept. over August
Fuel demand in September rose month-on-month for the first time since June as easing coronavirus restrictions supported economic activity and travel, but consumption remained weaker than a year earlier, government data showed on Friday.
Consumption of refined fuels rose 7.2% in September from the prior month to 15.47 million tonnes, the first increase since June when demand rose to 16.09 million tonnes.
However, demand fell 4.4% from the same period a year earlier, posting its seventh consecutive year-on-year slide, data from the Petroleum Planning and Analysis Cell (PPAC) of the Ministry of Petroleum & Natural Gas showed.
Indian shares rally for eighth day as Infosys, private sector banks shine
Yet another good start to the day for the stock indices.
Reuters reports: "Indian shares rose on Monday for an eighth straight session, driven by gains in IT major Infosys Ltd and private-sector lenders, while investors also eyed inflation data due later in the day.
The NSE Nifty 50 index rose 0.6% to 11,989.00 as of 0346 GMT, while the S&P BSE Sensex was up 0.7 % at 40,798.97. IT major Infosys Ltd, due to report results later this week, was up 0.6%.
Shares in UTI Asset Management and Mazagon Dock Shipbuilders are set to make their debut on the exchanges later in the day, while consumer price inflation data is due at 1200 GMT.
India's central bank appealed to the country's top court to let banks classify loans as non-performing, saying a ban imposed to help borrowers in the COVID-19 pandemic could greatly harm the nation's financial system. That helped banking stocks, sending the Nifty banking sub index up 1%."
Perils of treading the PE path
Last week, I was interviewing a fresher. His enthusiasm for stock markets was infectious. He excitedly opened his mobile to show me the list of stocks he had filtered using online financial screeners.
He was going to start investing in, what he thought were, stocks that the rest of the market had not ‘discovered.’ And at prices that he thought were true ‘value.’ Not surprisingly, I found many of his low PE stocks were value traps or worthless.
If you are a new investor like him, running screeners through equity apps to pick your stocks, here’s what you need to know about the PE ratio.
PE ratio is nothing but the measure of the price of a company’s stock as a multiple of the earnings that a company generates/seeks to generate. The PE ratio is calculated either using the current earnings per share (annualised) or the trailing, four-quarter earnings or the expected earnings per share (forward PE).
Many stock market crash courses will teach you to ask yourself whether a company will grow at the rate of its PE. For example, when a stock’s PE is 35 times, the question you are required to pose is whether you expect a 35% growth in the company’s earnings.