The Nifty and the Sensex opened the day on a positive note backed by momentum in automobile and PSU stocks.
Join us as we follow the top business news through the day.
Indian shares end higher, state-run lenders climb on capital infusion
A good day for stocks after yesterday's losses.
Reuters reports: "Gains in metal and auto stocks helped Indian shares rise more than 1% on Thursday, while capital infusion by the government in some state-run lenders lifted public-sector banks.
The blue-chip NSE Nifty 50 index closed 1.2% higher at 14,867.35, while the benchmark S&P BSE Sensex gained 1.1% to 50,029.83.
"Commodity prices have gone up, so metals are doing well, said Samrat Dasgupta, chief executive of Esquire Capital Investment Advisors in Mumbai.
He added that the market was also seeing short-covering ahead of the weekly expiry of derivatives contracts and a long weekend.
Indian markets will be closed for a holiday on Friday. They booked a weekly gain of 2%, after declining 1.6% last week.
Leading the charge on Thursday, the Nifty metals index and the Nifty auto index advanced 5.33% and 1.6%, respectively.
Ashok Leyland, Tata Motors and Mahindra and Mahindra gained between 1.5% and 3.8% after posting strong March sales numbers.
The Indian government on Wednesday infused a total of 145 billion rupees ($1.98 billion) in state-run lenders Indian Overseas Bank, Bank of India, Central Bank of India and UCO Bank. Shares of Indian Overseas Bank jumped 6%, Central Bank rose 5%, while Bank of India and UCO Bank gained 3% and 4.1%, respectively.
Meanwhile, India rolled back its decision to lower interest rates on the small savings scheme, Finance Minister Nirmala Sitharaman said.
World stocks also ran higher as U.S. President Joe Biden's sweeping $2.3 trillion plan to rebuild America's crumbling infrastructure lifted sentiment."
Apple’s renewable energy practices power up with 110-plus suppliers, including those from India
On March 31, Apple announced that more than 110 of its manufacturing partners around the world are moving to 100% renewable energy for their Apple production, with nearly 8 gigawatts of planned clean energy set to come online. Once completed, these commitments will avoid over 15 million metric tons of carbon dioxide equivalent (CO2e) annually — the equivalent of taking more than 3.4 million cars off the road each year, and a major energy storage project in California will pilot new solutions for renewable infrastructure.
“We are firmly committed to helping our suppliers become carbon neutral by 2030 and are thrilled that companies who’ve joined us span industries and countries around the world, including Germany, China, the US, India, and France,” says Lisa Jackson, Apple’s Vice President for Environment, Policy, and Social Initiatives, in a statement. “In a year like no other, Apple continued to work with a global network of colleagues, companies, and advocates — including the communities most impacted by climate change — to help further our efforts to make everything we do a force for good in people’s lives and the environment.”
India's Future Retail to offer quick online deliveries in bet on e-commerce
More competition in the e-commerce space.
PTI reports: "India's Future Retail will deliver groceries and clothes from its main retail stores within two hours, it said on Thursday, as the company expands in an e-commerce sector dominated by the likes of Amazon.com Inc .
Future will allow customers to order goods from its popular hypermarket "Big Bazaar" stores in Mumbai, Bengaluru and New Delhi and later expand the service to 150 cities, the company said in a statement. There are 285 Big Bazaar outlets in India.
Future, the country's second-largest brick-and-mortar retailer, has only had small e-commerce presence so far, but plans to use faster deliveries to expand in India's fast-growing e-commerce market, which is seen growing by 30% a year to $200 billion by 2026.
Popular online grocery service BigBasket, in which India's Tata Group is seeking to acquire a majority stake, and Amazon both offer quick online deliveries in India.
Asked about the competitive landscape, Future Group executive Kamaldeep Singh said during a media briefing the company would have an edge over other players as it aims to deliver a wider array of goods from its stores - including food, fashion and kitchen utilities - within two hours.
Retail companies as well as consumer goods makers in India are focusing on bolstering their e-commerce prowess as shoppers increasingly move online to order everything from clothes to groceries.
Future's plans come as its businesses struggled in recent months due to the COVID-19 pandemic, forcing it to sell its retail assets to Reliance Industries for $3.4 billion. The transaction is currently being reviewed by India's Supreme Court after Amazon accused Future of breaching some contracts.
Reliance is also fast expanding into e-commerce operations with its JioMart online platform."
Consumers spent $32 billion on apps in first three months of 2021: report
Global consumer spending on apps across Apple App Store and Google Play reached $32 billion in the first three months of 2021 alone, according to data by app analytics firm App Annie.
The smartphone app ecosystem showed tremendous growth last year, and weekly time spent on apps grew over 20% in the first three months last year.
Consumer spending is an app metric that includes spending on in-app purchases, subscriptions and premium app downloads.
The rise in consumer spending is up 40% compared with the same period last year. Smartphone users are also said to have spent $9 billion in Q1 2021 than they did in Q1 2020.
Niti Aayog suggests policy measures to ensure subsidised foodgrains supply to needy
PTI reports: "Niti Aayog has suggested policy measures to the food ministry that envisages various scenarios to ensure supply of subsidised foodgrains to the needy without "pinching" the union government's fiscal resources, according to a senior official.
The scenarios, that have been constructed keeping in mind the National Food Security Act, 2013, have been made after the ministry had sought the advice of Niti Aayog amid increasing demand for subsidised foodgrains in certain states in view of rising population.
"The food ministry told us that states are asking to enhance the allocation of foodgrains because the population has increased in all the states.
"...the concern the ministry raised was that the food subsidy is rising at a very rapid rate. So, what kind of policy measure we should think (about), so that this food subsidy bill remains affordable. It does not become pinching on our fiscal resources," Niti Aayog Member (Agriculture) Ramesh Chand told PTI.
He, however, added that the Food Ministry did not say that it wants to reduce the coverage of subsidised foodgrains under the National Food Security Act 2013.
NFSA, passed in 2013, provides for the supply of subsidised foodgrains through ration shops to up to 75 per cent of the rural population and up to 50 per cent of the urban population, which as per Census 2011, comes to a maximum of 81.35 crore persons.
At present, NFSA is operational in a seamless manner in all states and Union Territories, with an intended coverage of 81.35 crore persons across the country. Overall, NFSA caters to 67 per cent of the total population.
"So, Niti Aayog as a think tank just constructed different scenarios... Ok, one scenario is you continue with 2/3 (subsidised foodgrains to 67 per cent population).
"If you feel that between 2013 and now 2021, per capita income of people has increased by 40-50 per cent, then obviously the economic condition of many people have improved. So, we just looked at it from that angle," Chand noted.
Coverage under the Act is provided under two categories -- Antyodaya Anna Yojana (AAY) households to the extent specified by the central government and the remaining households as Priority Households.
The AAY households are entitled to 35 kg of foodgrains per household per month, while Priority Households are entitled to 5 kg of foodgrains per person per month at Rs 1-3 per kg through ration shops.
According to the Niti Aayog member, the second scenario is that, if it (coverage of people under NFSA) is brought down, then what will be its implication.
"So, it was an exercise done like that. Not that we made any recommendation," Chand asserted.
He said that even in the meeting, the Chief Economic Adviser (CEA) Arvind Subramanian had suggested that whatever scenario the Niti Aayog is proposing, the Aayog should also give a rationale that why this scenario should be adopted.
"The CEA said if this scenario, which you are building... please give a strong argument that what should be the rationale, what should be the norm which we did not touch as yet. We may touch it in future," Chand explained.
According to the latest government data, food subsidy rose sharply to Rs 4,22,618.14 crore in the RE of 2020-21 from Rs 1,15,569.68 crore in the BE. For the next fiscal, food subsidy is estimated at Rs 2,42,836 crore.
The Niti Aayog Member pointed out that if one has to link coverage of population under NFSA to poverty, major changes will be required based on what is the current state of poverty.
Asked to comment on the Economic Survey 2021 suggestion that the government should increase the selling price of foodgrains provided through ration shops, Chand said that between 2013 and 2021, minimum support prices (MSP) on several crops have increased, even doubled in some cases.
"You know that the value of Rs 2 is not the same as what it was in 2013. In 8 years, what was Rs 2 has become Rs 5 or Rs 6.
"... when we have adequate data by states on the required parameter and some sort of data like Socio Economic Caste Census (SECC) which is updated then from our side we will give final touches to this exercise," he opined.
Foodgrains via ration shops are supplied at highly subsidised rates of Rs 3 per kg for rice, Rs 2 per kg for wheat and Rs 1 per kg for coarse grains through Public Distribution System (PDS) as per NFSA.
"While it is difficult to reduce the economic cost of food management in view of rising commitment towards food security, there is a need to consider the revision of central issue price (CIP) to reduce the bulging food subsidy bill," the survey had said.
Wheat and rice prices have not been revised since the introduction of the Act in 2013, although the economic cost has increased every year."
Paytm Money opens new R&D centre in Pune
Online investment platform Paytm Money on Thursday said it has set up a new R&D facility in Pune, Maharashtra, which will drive product innovation, especially in the area of equity, mutual funds, and digital gold.
The company added that it plans to hire over 250 engineers and data scientists to build new wealth products and services.
“...Paytm Money has launched its ‘Technology Development & Innovation Centre’ in Pune. It also plans to hire over 250 front-end, back-end engineers & data scientists to build new wealth products and services,” the company, which is a wholly-owned subsidiary of One97 Communications that owns and operates Paytm, said in a statement.
Commodity market participants seek FM's intervention as volumes shrink in Feb-Mar
Liquidity troubles come to the fore.
PTI reports: "The Commodity Participants Association of India (CPAI) on Thursday met Finance Minister Nirmala Sitharaman and sought her immediate intervention and policy support following a sharp decline in the volumes of exchange-traded commodities.
During the meeting, the CPAI representatives expressed their concerns pertaining to current challenges and hurdles that the industry is facing, which are contributing to diminishing liquidity on Indian commodity exchanges. Commodity markets' average daily turnover (ADT) has shrunk further by 27 per cent between February and March 2021. Besides, equity markets have also seen a sharp fall of 19 per cent in ADT in this period, while equity futures volumes are down by 14 per cent.
Indian commodity exchanges are failing to recover from liquidity issues owing to existing challenges pertaining to IGST, peak margin and commodity transactions tax (CTT) and securities transactions tax (STT), CPAI, the pan-India apex association of commodity market participants, said in a statement.
"In today's pandemic times, when GoI (Government of India) is supporting industries with schemes like production-linked incentive (PLI), commodity market participants have also urged the MoF (Ministry of Finance) for policy support to improve market depth and liquidity, and enable India to emerge as a price setter of commodities," Narinder Wadhwa, President, CPAI, said.
"Implementing our suggestions will reduce the cost of hedging in commodity markets, bring ease of doing business," he added.
The CPAI has placed their concerns and sought the FM's intervention on three key issues -- rationalising the peak margin requirement to maintain market depth and turnover; rationalising cost of transactions and amending IGST Act owing to the challenges faced by market participants while delivering or receiving goods at the designated centres. Sebi implemented a peak margin requirement for all clients from December 1, 2020. Under the plan, clients were to be allowed reduced leverage on intraday positions in phases. In first phase from December 2020, the client was required to have 25 per cent of the peak margin available with the broker. In the next phase (Mar-May 2021), the peak margin that needs to be available with the broker is 50 per cent while in the third phase (June-August 2021), the client needs to have 75 per cent peak margin wih the broker. By September 2021, clients need to have 100 per cent peak margins. With margins slated to increase in phases, the CPAI said markets are likely to witness a significant drop in volumes and participation. "Our markets are already saddled with higher costs as compared to global markets. A large part of the costs is regulatory costs. Further with the increased margin requirements on day trades, overall liquidity and depth could go down further," it added.
The CPAI, therefore, urged the Finance Minister to help the industry for rationalising peak margin requirement to maintain market depth and turnover. On cost of transactions, CPAI said the cost of transaction started increasing from 2004 when STT was introduced and incidentally the turnover to market ratio fell more steeply when section 88E was withdrawn in 2008 and STT started getting treated as an expense instead of a tax.
Similarly, introduction of CTT in 2012 led to a sharp fall in commodity market volumes as well, it added.
With regard to IGST, the association urged the FM to suitably amend the IGST Act in order to allow the seller of commodities to raise the tax invoice from the state where he is already registered. It also requested FM to do away with the need of obtaining a casual taxable person registration in the state where the accredited warehouse is located.
The CPAI further submitted that the place of supply of goods should be the registered address of buyer and not the physical location of the goods at the time of delivery-- either actual or constructive. All trades which result in delivery on the exchange platform are covered under IGST except for where the buyer and seller are located in the same state. If the buyer and seller are located in different states from the place of delivery, challenges are faced by market participants on IGST registrations, which increases their compliance burden, CPAI said."
Shares of four public sector banks jump up to 10% after capital infusion
A big boost for government banks.
PTI reports: "Shares of four public sector banks -- Indian Overseas Bank, Bank of India, Central Bank of India and UCO Bank -- on Thursday gained up to 10 per cent after the government infused Rs 14,500 crore to improve their financial health.
Indian Overseas Bank jumped 10 per cent, Bank of India surged 6.55 per cent, Central Bank of India gained 4.89 per cent and UCO Bank rose 4.64 per cent on the BSE.
The government has infused Rs 14,500 crore, mainly into banks that are under the RBI's prompt corrective action framework to improve their financial health.
Indian Overseas Bank, Central Bank of India and UCO Bank are currently under this framework that puts several restrictions on them, including on lending, management compensation and directors' fees.
Of the total infusion, Rs 11,500 crore has gone to these three banks while the remaining Rs 3,000 crore has been infused into Bank of India.
According to a government notification, Rs 4,800 crore has been provided to Central Bank of India, Rs 4,100 crore to Indian Overseas Bank and Kolkata-based UCO Bank has got Rs 2,600 crore.
The capital infusion will help these banks to come out of the Reserve Bank of India's prompt corrective action framework."
Do not agree with claim that Huawei will be blocked: Jay Chen
Amid uncertainty over the inclusion of China’s Huawei in the list of ‘trusted sources’ for purchase of telecom equipment, Jay Chen, the company’s Vice-President for the Asia-Pacific region, on Wednesday expressed confidence that Huawei will not be blocked, and instead will be welcomed by the Indian government.
The statement follows the Department of Telecom amending the licence conditions earlier this month, mandating that services providers procure telecom equipment only from ‘trusted sources’ as defined by the government. The move, which comes into effect from June 15, will also require service providers to take permission from the National Cyber Security Coordinator (NCSC) for upgradation of existing networks utilising equipment not designated as trusted products.
“...Not only 5G, but India as a market is very important for Huawei. We entered this market almost 20 years back and have the full operation function in India. We even put an international business centre here such as the network service centre in Bengaluru, which serves the global customer from almost 40 countries. So obviously India is very important,” Mr. Chen said while replying to a query during a virtual roundtable.
Toyota Kirloskar sells 15,001 units in March, its highest dispatch during March in 8 yrs
An important milestone for Toyota in India.
PTI reports: "Toyota Kirloskar Motor (TKM) on Thursday said it sold a total of 15,001 units in March, registering the highest ever domestic sales in the month of March since 2013.
The automaker had sold 7,023 units in March 2020, amid a nationwide lockdown due to the COVID-19 pandemic.
In February this year, the company had reported wholesales of 14,075 units.
"We have been able to sustain the growth momentum as we closed the last quarter registering a 73 per cent growth in domestic sales, when compared to the sales in the corresponding period last year (January-March 2020). In fact, last month witnessed the highest ever domestic sales in the month of March since 2013," TKM Senior Vice President Naveen Soni said in a statement.
The company's sales performance in the last quarter proved to be better than the sales in the festive season of the third quarter (October- December 2021), he added.
"The demand for personal mobility still continues to grow as we witness a surge in both enquiries and customer orders thereby registering a 7 per cent growth in domestic sales in March 2021 when compared to the sales in February 2021," Soni noted.
This reiterates the popularity of the brand amidst customers which has been further enhanced by the two new recent launches of the new Innova Crysta and the New Fortuner, as well as the Legender, he said."
NSE reduces mkt lot size for Nifty 50 derivative contracts
An important regulatory change.
PTI reports: "The National Stock Exchange (NSE) has slashed the market lot size for derivative contracts on Nifty 50, a move that will reduce the burden of excessive upfront margins for retail traders.
The lot size has been reduced to 50 from the existing 75, NSE said in a circular on Wednesday.
The reduction in the lot size for NIFTY will reduce the margin requirements for futures trading by one-third, stockbroking firm FYERS CEO Tejas Khoday said.
Currently, traders need approximately Rs 1,73,000 to trade one lot, he said.
From July onwards, the margin requirement will reduce to approximately Rs 1,16,000 (at current Nifty prices). This is a great move by NSE to reduce the burden of excessive upfront margins for retail traders, he added.
"Only the far month contract i.e. July 2021 expiry contracts will be revised for market lots. Contracts with maturity of May 2021 and June 2021 would continue to have the existing market lots. All subsequent contracts (i.e. July 2021 monthly expiry and beyond) will have revised market lots," NSE said.
According to the bourse, the day spread order book will not be available for the combination contract of May-July 2021 and June-July 2021 expiries.
Contracts with August 2021 weekly expiry and beyond will have revised market lots.
"The lot size of all existing NIFTY long term options contracts (having expiry greater than 3 months) shall be revised from 75 to 50 after expiry of June 2021 contracts (i.e. June 25, 2021)," the exchange said."
In February, output of core sectors contracts by 4.6%
The output of eight core sectors declined by 4.6% in February, the steepest contraction in the last six months, which, experts said, could drag the overall industrial production in the month into the negative territory.
All the key segments, including coal, crude oil, natural gas, and refinery products, witnessed a decline in production, according to the official data released on Wednesday.
The growth rate of the eight infrastructure sectors — coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity — stood at 6.4% in February 2020.
Last time in August 2020, the sectors had recorded a negative growth of 6.9%. In January this year, the segments have registered a positive growth of 0.9%.
Government withdraws order on rate cut on small savings schemes
Hours after notifying significant cuts in small savings instruments’ returns for this quarter, the government has backtracked on these sharp cuts. This is the first time that the Centre has scrapped the notified interest rates on small savings schemes after switching to a quarterly interest rate setting system in April 2016.
The government appears to have had a rethink owing to a sharp backlash on social media about the middle class being squeezed. Retail inflation has been breaching the 6% mark and the government has also decided to tax Employees PF savings starting this year.
“Interest rates of small savings schemes of GoI shall continue to be at the rates which existed in the last quarter of 2020-2021, ie, rates that prevailed as of March 2021. Orders issued by oversight shall be withdrawn,” Finance Minister Nirmala Sitharaman said in a tweet early Thursday morning.
Indian shares rise as auto, PSU banks gain
The positive momentum continues for stocks.
Reuters reports: "Indian shares edged up on Thursday, led by auto stocks ahead of monthly sales data and gains in public sector banks after capital infusion by the government.
Meanwhile, India has rolled back its decision to lower interest rates on the small savings scheme, Finance Minister Nirmala Sitharaman said on Thursday.
The blue-chip NSE Nifty 50 index rose 0.6% to 14,772 and the benchmark S&P BSE Sensex gained 0.9% to 49,821, by 0417 GMT.
India's government on Wednesday infused a total of 145 billion rupees in four state-run banks including Indian Overseas Bank, Bank of India, Central Bank of India and UCO Bank.
The Nifty public sector bank index rose 1.7%, the IT index gained 1.3% and the Nifty auto index gained 1.2%
Auto companies will post their monthly sales data for March later in the day."
Govt. retains 4% inflation target for RBI’s rate panel for 2021-26
The Centre has decided to retain the inflation target of 4%, with a tolerance band of +/- 2 percentage points for the Monetary Policy Committee of the Reserve Bank of India for the coming five years, a top finance ministry official said on Wednesday.
“The inflation target for the period April 1, 2021, to March 31, 2026, under the Reserve Bank of India Act, 1924, has been kept at the same level as it was for the previous five years,” said Economic Affairs Secretary Tarun Bajaj. “So there’s no change,” he added.
He dismissed queries on whether the focus had shifted to core inflation or any other component of retail inflation and hinted that the framework would remain ‘the same’ as earlier.
Economists welcomed the continuity in the framework, despite the recent spate of high inflation prints beyond the 6% upper threshold of the inflation target.