The benchmark stock indices opened the day on a positive note with gains of close to 1%
The economy has shown some strength with increased foreign fund inflows in the last few months.
Join us as we follow the top business news through the day.
Two wheeler volumes to contract 16-18% this fiscal due to COVID-19 situation: ICRA
An estimate on what's likely to be the impact of the pandemic on two-wheeler sales.
PTI reports: "Rating agency ICRA on Wednesday said it expects 16-18 per cent contraction in two wheeler volumes in the current fiscal.
“ICRA continues to maintain its expectation of 16-18 per cent year on year contraction in two-wheeler volumes in FY2021, amid an evolving COVID-19 situation and economic uncertainties,” the rating agency said in a statement.
While the overall consumption and investment demand is expected to remain subdued for an extended period, some growth off-shoots are visible in rural markets, it added.
The rating agency noted that buoyed by healthy rabi yields, timely kharif sowing, progressive government support schemes and relatively lower COVID-19 impact, rural and semi-urban demand has enabled a sequential growth in sales since the unlocking in May 2020.
In addition, a shift towards personal mobility in urban areas continues to augur well for demand, it said.
“In August and September, the industry recorded a 22 and 19 per cent sequential growth and a year on year 3 per cent and 12 per cent growth in wholesale volumes, respectively,” ICRA Vice President Shamsher Dewan said.
While inventory restocking before the forthcoming festive season kept the OEM (original equipment manufacturer) dispatches strong, the onset of Shraadh in mid-August, slowed down the retail volume growth, he added.
Nonetheless, September witnessed a 13 per cent sequential growth in retail volumes, hinting towards a strong festive season off-take, dewan said."
Sensex rises 163 points; Nifty tops 11,900 level
A decent day for stocks which clocked gains despite a mid-day sell-off.
PTI reports: "Extending its gains for the fourth session, equity benchmark Sensex ended 163 points higher on Wednesday, led by index majors HDFC twins and ICICI Bank.
After gyrating 825.54 points in a highly volatile session, the 30-share BSE index ended 162.94 points or 0.40 per cent higher at 40,707.31.
Similarly, the broader NSE Nifty rose 40.85 points or 0.34 per cent to finish at 11,937.65.
PowerGrid was the top gainer in the Sensex pack, surging over 4 per cent, followed by Bharti Airtel, Tata Steel, NTPC, HDFC Bank, UltraTech Cement and Kotak Bank.
On the other hand, TCS, Nestle India, Reliance Industries and HCL Tech were among the laggards.
“Domestic indices managed to close in the green, but not without its share of hiccups over rumours on waiver of interest on loans,” said S Ranganathan, Head of Research at LKP Securities.
Banks and metals provided support even as several stocks saw profit booking during afternoon trade, he added.
Bourses in Hong Kong, Tokyo and Seoul ended on a positive note, while Shanghai was in the red.
Stock exchanges in Europe opened on a negative note after the UK government reported that its borrowing rose to the highest level on record in the first half of the financial year.
Meanwhile, international oil benchmark Brent crude was trading 1.14 per cent lower at USD 42.67 per barrel.
In the forex market, the rupee pared its initial gains and depreciated 9 paise to close at 73.58 against the US dollar."
Fitch affirms Kerala rating at ‘BB’ with stable outlook
The state's fiscal outlook remains stable despite funding troubles.
PTI reports: "Rating agency Fitch on Wednesday affirmed its rating for Kerala at ‘BB’ with a stable outlook.
The BB rating is for the long-term foreign currency and local currency issuer default ratings of the state, the agency said in a statement.
“The BB rating affirmation with stable outlook” is based on a ‘mid-range’ assessment of the state’s risk profile and a moderate ‘bbb’ debt-sustainability assessment, Fitch said, adding that Kerala is a ‘type A’ government as it can incur structural deficits.
The agency has assessed the state’s revenue robustness as ‘stronger’ and the standalone credit profile in ‘BB’ category, reflecting a combination of the mid-range risk profile.
The state’s gross regional product (GRP) rose 11.4 per cent in FY19 at current prices to Rs 7.8 lakh crore, which is compound annual growth rate (CAGR) of 10.4 per cent in the immediate past four years (FY15-FY19).
“We estimate FY20 GRP at Rs 8.7 lakh crore. Kerala’s total revenue increased at a four-year (FY15-FY19) CAGR of 12.5 per cent, faster than its GRP,” it said.
The state has stable revenue sources, as its tax and non-tax revenue accounted for 67 per cent of operating revenue in FY19, higher than the all-state average of 55 per cent.
Tax composition is goods and services tax at 41 per cent, sales tax and value-added tax at 38 per cent, vehicle tax at 7 per cent, and stamp duty and registrations at 7 per cent, Fitch said.
“We expect GST to stabilise, which will augment the state’s revenue capacity as the tax base expands with greater efficacy. GST compensation, which is the transfer from the Centre to cover potential losses in tax revenue, will also smooth state finances,” the agency added.
As much as 63 per cent of the FY19 transfer comprised centrally collected taxes such as corporate and income tax, it noted.
The Fourteenth Finance Commission increased the states’ share in Central taxes to 42 per cent for FY15-FY20, from 32 per cent, the biggest increase in decades.
The lockdowns following the pandemic have damaged the state’s economic and fiscal performance, with tax and non-tax revenue dropping in FY21, Fitch said, adding that it expects a recovery to start in FY22.
Kerala’s FY20 budget increased tax on new motorcycles, cars and private-service vehicles by 1 per cent and tax on sale of foreign liquor by 2 per cent.
Kerala shares around 2.5 per cent of all Central taxes, based on a formula that is tied to India’s overall economic and fiscal growth momentum, it said.
Kerala has been leading other states in demographic and human development indicators relating to health, education, and gender equality."
Jio, Qualcomm successfully test 5G solutions
Leveraging Qualcomm’s technology, Jio has indigenously developed a 5G RAN (Radio Access Network) product that has achieved ultra-high throughputs, and the product is already tested by a Tier-1 carrier in the US, Mathew Oommen, president, Reliance Jio Infocomm said.
Speaking at the Qualcomm 5G Summit, Mr. Oommen said, “I am excited to announce that with Qualcomm’s technology and support, Jio has indigenously developed a 5G RAN product that has achieved over 1 Gbps throughput...in fact joining the gigabit throughput clock, the product is already tested and validated by a Tier-1 carrier in the US.”
This latest move signifies the entry of Jio and India into the 5G product club. At present, only a handful of nations, including the US, South Korea, Australia, Switzerland and Germany are able to showcase 1 Gbps speeds for 5G customers.
Rupee pares early gains, settles 9 paise lower at 73.58 against US dollar
The sell-off in stocks in the afternoon badly affected the rupee.
PTI reports: "The rupee pared its initial gains and depreciated 9 paise to settle at 73.58 (provisional) against the US dollar on Wednesday, as heavy selling in domestic equities weighed on investor sentiment.
At the interbank forex market, the domestic unit witnessed a highly volatile trading session. It opened at 73.39, pared the gains and finally closed at 73.58 against the greenback, registering a decline of 9 paise over its previous close of 73.49.
During the session, the local unit saw an intra-day high of 73.36 and a low of 73.62 against the American currency.
“Market sentiments are hinged on to the US fiscal stimulus negotiations. There is a potential for a stimulus bill but at the same time there is a lot of caution on the back of it,” said Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services.
Gupta further said that “the election event volatility is yet to begin and the USD-INR spot is respecting the strong support of 73. Until it trades above that, prices will remain in between 73-73.60“.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.34 per cent down at 92.74.
On the domestic equity market front, the BSE benchmark Sensex was trading 339.45 points lower at 40,204.92, and the broader NSE Nifty fell 106.80 points to 11,790.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 1,585.07 crore on Tuesday, according to exchange data.
Brent crude futures, the global oil benchmark, fell 1.44 per cent to USD 42.54 per barrel."
HUL net rises 9% on rural sales
Fast Moving Consumer Goods (FMCG) major Hindustan Unilever Ltd. (HUL) reported a 9% increase in second-quarter net profit to ₹2,009 crore, aided by a robust performance in rural markets while demand in urban areas, especially in metropolitan cities, remained muted.
Sales climbed 16% to ₹11,276 crore. However, excluding the impact of the merger of GSK Consumer Healthcare and the acquisition of ‘VWash’ (a hygiene product), turnover rose by 3%.
“Health, hygiene and nutrition, forming about 80% of our portfolio, grew in double digits [during the quarter],” the company said in a regulatory filing.
“In the context of a challenging economic environment, our growth has been competitive and profitable,” said CMD Sanjiv Mehta.
Gold gains on renewed hopes of U.S. stimulus deal, weaker dollar
The yellow metal launches a recovery after falling in recent weeks.
Reuters reports: "Gold rose on Wednesday as optimism that U.S. lawmakers could reach an agreement on a pre-election coronavirus relief package weakened the dollar and bolstered bullion's appeal as a hedge against inflation.
Spot gold gained 0.5% to $1,916.61 per ounce by 0550 GMT, after hitting a one-week high earlier in the session. U.S. gold futures were up 0.2% at $1,919.90 per ounce.
The White House and Democrats in the U.S. Congress moved closer to agreement on Tuesday as President Donald Trump said he was willing to accept a large aid bill despite opposition from his Republican Party. The news lifted appetite for equities and sent the dollar index to a one-month low.
“The falling U.S. dollar is the main contributor to gold's rally ... Gold may eventually complete this consolidation period and trend upwards,” said Margaret Yang, a strategist with DailyFx, which covers currency, commodity and index trading.
“A very accommodative monetary and fiscal policy environment, low interest rates and uncertainties surrounding the virus and presidential elections” could push prices to $2,000 and above by end-2020, Yang added. Gold has been range-bound near the psychologically important $1,900 level in the past few sessions, as investors tracked developments on the U.S. stimulus. But prices have gained more than 26% this year, helped by near zero-interest rates globally and unprecedented stimulus to ease the economic blow from a worsening pandemic, bolstering non-yielding bullion's appeal as a hedge against inflation or currency debasement.
The market needs more certainty on the stimulus front before taking a position, IG Markets analyst Kyle Rodda said. Gold may test a resistance at $1,935 per ounce, a break above which could open the way towards $1,967, according to Reuters technical analyst Wang Tao. Elsewhere, silver rose 1.2% to $24.94 per ounce, platinum was up 0.6% at $875.95. Palladium was 0.1% higher at $2,402.22."
Recovery in markets after pandemic shock is broad-based: Sebi chief
The SEBI Chief chimes in on the stock market recovery.
PTI reports: "As criticism mounts about there being a disconnect between the equity markets and the economy, Sebi chairman Ajay Tyagi on Wednesday said there are some positive aspects as well in it, and termed the recovery in the capital markets as broad-based.
We have observed that recovery has been broad-based. It is not just large caps but the mid and small cap shares have also recovered, Tyagi said.
It can be noted that after a massive correction after the WHO announced COVID-19 as a pandemic, markets have recovered swiftly and are near their all-time highs of January 2020.
Even within the indices, the recovery is not just in heavyweight stocks but across the board, Tyagi said, adding that 90 per cent of the stocks on the NSE have yielded positive returns in 2020.
He acknowledged that there have been talk of the market movements being fuelled by liquidity and there being a disconnect between the economy and the markets.
In the April-September period, 63 lakh new demat accounts were opened as against 27.4 lakh which is a 130 per cent increase, while the foreign portfolio investors’ (FPIs) flows stood at a net USD 11 billion in the same period even as other emerging markets were in the negative territory.
After the outflows in March, especially in debt schemes, we have seen inflows of Rs 1.47 lakh crore in the first half of the fiscal.
Total funds raised by corporates from rights issues, initial public offers (IPOs) or follow-on public offers stood at Rs 1.54 lakh crore, which is just a shade lower than the Rs 1.58 lakh crore in the year-ago period, he said.
Over Rs 3.8 lakh crore has been raised in the debt markets which is 25 per cent higher than the year-ago period, he said.
Sebi’s measures during the COVID-19 pandemic have helped the capital markets and the regulator will continue to be vigilant to respond to any rapid movements, he said.
The corporate bond market needs to become more robust because there is an urgent need to diversify funding requirements from the banking sector, Tyagi said, stressing that this is important to achieve the infrastructure investment targets set by the government.
Tyagi said Sebi has seen a jump in independent directors’ resignations in the last two years and urged them to come forward and share details if concerns related to corporate governance have resulted in the decision.
The independent directors are representatives of the minority shareholders, he said, adding that the independent directors are a puzzle for the capital markets regulator.
On the concerns being expressed by FPIs on faster settlement of trades to T+1, Tyagi said such a move is in everybody’s interest, but acknowledged that there are concerns being expressed by some. Sebi is yet to finalise its decision and will do so after consultations with all the stakeholders, he said."
Fortunes of China’s internet tycoons soar amid pandemic
Jack Ma, founder of e-commerce giant Alibaba, held onto his status as China’s richest tycoon this year as surging demand for online shopping and other services during the coronavirus pandemic swelled the fortunes of internet entrepreneurs, according to a survey released Tuesday.
Ma’s fortune rose 45% over 2019 to $58.8 billion, according to Hurun Research Institute, which follows the country’s wealthy.
Ma Huateng, founder of Tencent, which operates the popular WeChat messaging service, was No. 2 at $57.4 billion, up 50%. Debuting at No. 3 was Zhong Shanshan, chairman of bottled water brand Nongfu Spring, with $53.7 billion following his company’s Hong Kong stock market debut in September.
Rising share prices created an average of five new Chinese entrepreneurs worth at least $1 billion every week over the past year, according to Hurun’s founder, Rupert Hoogewerf.
Cathay Pacific cuts 8,500 jobs, shutters regional airline
Hong Kong airline Cathay Pacific Airways said Wednesday it would cut 8,500 jobs and shut a regional airline as it grapples with the plunge in air travel due to the coronavirus pandemic.
About 5,300 employees based in Hong Kong and another 600 elsewhere will likely lose their jobs, and 2,600 unfilled positions will be cut. The cuts are about 24 per cent of the company’s workforce, Cathay Pacific said in a statement.
The company will also shut down Cathay Dragon, its regional airline unit, with operations ceasing from Wednesday. It will seek regulatory approval for most of the routes to be operated by Cathay Pacific and its budget airlines subsidiary HK Express.
The restructuring is aimed at reducing Cathay Pacific’s cash burn to 500 million Hong Kong dollars (USD 64.5 million) a month, from about 1.5 billion Hong Kong dollars (USD 193.5 million) to 2 billion Hong Kong (USD 258 million) dollars currently, Cathay Pacific CEO Augustus Tang said in a statement.
FDI up 16% to USD 27.1 bn in Apr-Aug: Govt data
Some positive signs on the external economic front for India.
PTI reports: "Foreign direct investment (FDI) in India has increased by 16 per cent year-on-year to USD 27.1 billion during April-August this year, the Commerce and Industry Ministry said on Tuesday.
During April-August last year, India had received FDI worth USD 23.35 billion.
The ministry said that the total FDI, which includes reinvested earnings, grew by 13 per cent to USD 35.73 billion.
“It is the highest ever for the first 5 months of a financial year and 13 per cent higher as compared to the first five months of 2019-20 (USD 31.60 billion),” it added.
It also stated that the total FDI inflow grew by 55 per cent from USD 231.37 billion in 2008-14 to USD 358.29 billion in 2014-20.
“India is preferred destination for Foreign Direct Investment under PM @NarendraModi ji’s leadership,” Commerce and Industry Minister Piyush Goyal tweeted.
FDI inflow rose 55 per cent in last six years. During April-August 2020, despite COVID-19, FDI inflow increased 13 per cent, the highest ever for the first five months of a financial year, he added.
“FDI is a major driver of economic growth and an important source of non-debt finance for the economic development of India. It has been the endeavour of the government to put in place an enabling and investor friendly FDI policy. The intent all this while has been to make the FDI policy more investor friendly and remove the policy bottlenecks that have been hindering the investment inflows into the country,” the ministry said.
It said that the steps taken in this direction during the last six years have borne fruit as is evident from the ever increasing volumes of FDI inflows being received into the country.
“Measures taken by the government on the fronts of FDI policy reforms, investment facilitation and ease of doing business have resulted in increased FDI inflows into the country. The following trends in India’s FDI are an endorsement of its status as a preferred investment destination amongst global investors,” the ministry said."
Metals rise on supply-chain disruptions
Rupee rises 13 paise to 73.36 against US dollar in early trade
The strength in the stock indices has aided the rupee's rise this morning.
PTI reports: "The rupee strengthened by 13 paise to 73.36 against the US dollar in opening trade on Wednesday, supported by positive domestic equities and weak American currency.
At the interbank forex market, the domestic unit opened at 73.39 and gained further ground to touch 73.36, registering a rise of 13 paise over its previous close.
On Tuesday, the rupee depreciated by 12 paise to close at 73.49 against the US currency.
“The risk sentiment continues to remain upbeat on Democrat leader Nancy Pelosi’s optimistic comments on the stimulus deal which seems to suggest Democrats and Republicans have reached a consensus on most aspects barring a couple of issues like state and local aid and assistance to working families,” said Abhishek Goenka, Founder and CEO, IFA Global.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.18 per cent down at 92.90.
On the domestic equity market front, the BSE benchmark Sensex was trading 396.23 points higher at 40,940.60, and the broader NSE Nifty rose 107.75 points to 12,004.55.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 1,585.07 crore on Tuesday, according to exchange data.
Brent crude futures, the global oil benchmark, rose 0.58 per cent to USD 42.91 per barrel."
Microsoft, Elon Musk's SpaceX tie up to woo space customers
Microsoft Corp is partnering with billionaire entrepreneur Elon Musk-led SpaceX and others as it expands its cloud-computing platform into space, the software giant said on Tuesday.
The partnership would allow Microsoft to connect its Azure cloud computing platform to SpaceX's network of low-Earth orbiting satellites, offering the software company an edge in its battle with the rival cloud platform from Jeff Bezos' Amazon.com Inc.
Cloud companies have seen a surge in demand this year as more businesses use their services for switching to work from home due to the COVID-19 pandemic.
Microsoft in recent months has tested its Azure cloud with satellites in space, and in September unveiled its Azure Space venture, tapping into the demand for data-heavy space services.
Sensex rallies over 400 points in early trade; Nifty tops 12K mark
Yet another bullish start to the day for stocks,
PTI reports: "Equity benchmark Sensex rallied over 400 points and the Nifty topped the 12,000 mark in opening trade on Wednesday tracking strong buying sentiment in index majors HDFC twins, ICICI Bank and Reliance Industries amid positive cues from global markets.
The 30-share BSE index was trading 404.42 points or 1 per cent higher at 40,948.79, and the broader NSE Nifty rose 113.55 points or 0.95 per cent to 12,010.35.
IndusInd Bank was the top gainer in the Sensex pack, surging around 3 per cent, followed by HDFC, Tata Steel, ICICI Bank, Axis Bank, SBI, Titan, Kotak Bank and Reliance Industries.
On the other hand, Nestle India, HUL and TCS were among the laggards.
In the previous session, Sensex settled 112.77 points or 0.28 per cent higher at 40,544.37. The broader NSE Nifty rose 23.75 points or 0.20 per cent to 11,896.80.
Exchange data showed that foreign institutional investors bought equities worth Rs 1,585.07 crore on a net basis on Tuesday.
According to Arjun Yash Mahajan, Head Institutional Business at Reliance Securities, Indian markets look to be firm on positive global cues.
2QFY21 corporate earnings so far have been good for the market as many companies exceeded consensus estimates and shared positive outlook. We expect Nifty to open on a positive note and trade in the range of 11,900-12,000. IT, auto and financials should remain in focus, he said.
He stated that US equities witnessed recovery as investors remained hopeful that a fiscal stimulus could happen before election.
Additionally, positive commentary from drug maker Moderna about possible availability of coronavirus vaccine for emergency use in December 2020 bolstered market sentiments.
Bourses in Hong Kong, Tokyo and Seoul were trading on a positive note in mid-session deals, while Shanghai was in the red.
Meanwhile, international oil benchmark Brent crude was trading 0.67 per cent lower at USD 42.87 per barrel."
Amazon extends work from home option till June
Amazon.com Inc on Tuesday told employees whose work can be done from home that they can do so until June, extending the timeline on a return to office due to the COVID-19 pandemic.
“Employees who work in a role that can effectively be done from home are welcome to do so until June 30, 2021”, an Amazon spokeswoman said in an emailed statement on Tuesday, adding the guidance is applicable globally.
Amazon had earlier allowed that option until January.
The development comes less than three weeks after the world's largest online retailer said more than 19,000 of its U.S. frontline workers contracted the coronavirus this year.