The benchmark stock indices opened the day on a positive note ahead of the RBI's address linked to pandemic relief.
Join us as we follow the top business news through the day.
Banks, pharma lift Indian shares after cenbank unveils relief measures
Stocks recovered well on a volatile day.
Reuters reports: "Financial and healthcare stocks pushed Indian shares higher on Wednesday after the central bank announced measures to help the sectors tide over a ferocious coronavirus wave in the country.
Reserve Bank of India Governor Shaktikanta Das announced relief to individual borrowers and small businesses by including one-time debt restructuring for loans, and unveiled a special liquidity window of up to 500 billion rupees ($6.76 billion) for banks to lend to the healthcare sector.
"Small businesses and financial entities at the grassroot level are bearing the biggest brunt of the second wave of infections," Das said, as he announced a slew of other measures to enhance liquidity.
India's healthcare system has been worn down by a massive surge in coronavirus cases and several states have been forced to enter lockdowns. The country accounted for nearly half of the COVID-19 cases reported worldwide last week, the World Health Organization said on Wednesday.
However, the RBI governor said the second COVID-19 wave was not "insurmountable" and that the future remained "bright".
"Given the extent of the second wave of the pandemic and the suffering it has caused, the Reserve Bank of India has announced some timely liquidity measures that will provide relief to the most vulnerable by ensuring credit flow to individuals, small businesses and MSMEs...," Shanti Ekambaram, group president – consumer banking, Kotak Mahindra Bank, said in a note.
On Wednesday, the blue-chip NSE Nifty 50 index closed 0.84% higher at 14,617.85, while the benchmark S&P BSE Sensex advanced 0.88% to 48,677.55.
The Nifty Bank Index rose 1.59%, while the Nifty PSU Bank Index, which tracks state-run banks, gained 1.47%.
Pharmaceutical stocks got the biggest boost from the RBI's measures, with the Nifty Pharma index closing 4.12% higher.
Sun Pharmaceutical Industries jumped 5.9% and was the biggest percentage gainer on the benchmark Nifty 50.
India's benchmark 10-year bond yield saw a low of 5.9602% during the RBI governor's address and ended down 3 bps on day at 5.98%, while the rupee was slightly weaker at 73.91 against the dollar."
Institutional investment in warehousing dips 44% to $868 million in 2020: Report
Another cost of the pandemic.
PTI reports: "Institutional investment in Indian warehousing fell 44 per cent to USD 868 million in 2020 due to the COVID-19, but the long-term outlook remains attractive on rising demand from e-commerce players, according to US-based property consultant Vestian.
In its report 'Institutional Investment in Warehousing: Renewing Prospects', Vestian mentioned that the warehousing sector has garnered a total institutional investment of USD 6.2 billion in the last five years (2016-2020).
"With the economic slowdown and COVID-19 crisis taking precedence, 2020 saw a substantial decline in warehousing investment, to the tune of 44 per cent, over the previous year," Vestian said in the report.
Investments in the segment almost dried up, particularly during the first half of 2020, as investors turned cautious due to the pandemic, it added.
According to the data, the warehousing sector attracted USD 125 million in 2016, USD 1,933 million in 2017, USD 1,731 million in 2018, USD 1,543 million in 2019 and USD 868 million during the 2020 calendar year.
"Interest in investment in warehousing has gained momentum since 2017... Propelled by 'infrastructure status' allocated to the sector, the year 2017 witnessed a flurry of large-sized investment, tipping the scales at almost USD 2 billion," the report said.
However, investments have slowed down post-2017, largely due to a lack of mature, good quality rent-yielding warehousing assets.
With the COVID-19 significantly impacting businesses and the economy worldwide, Vestian noted that consumers have shifted consumption activity to online transactions, which will further lead to the growth of the e-commerce sector.
Going forward, the consultant said warehousing demand is likely to be driven by FMCG, e-commerce and 3PL (third party logistics) players.
"India warehousing story looks extremely attractive from a long-term demand-supply perspective," said the report, authored by Avijit Mishra ( Assistant Vice President - Investment and Consultancy Services) and Sangeeta Sharma (Director- Investment & Consultancy Services), Vestian.
Indian warehousing segment has a total stock of 215 million square feet of Grade A space. The average vacancies are 8-10 per cent and average Grade A rentals at Rs 20.5 per square feet, the report highlighted.
Commenting on the outlook, Ramesh Nair, real estate expert and former CEO JLL India, said: "The huge demand from the e-commerce sector driven by shoppers need for quick delivery resulting in a need for higher inventory will drive warehousing demand in India in 2021".
The country still has a very limited number of compliant logistics parks, Nair added."
SpiceJet's freighter arm airlifts 3,100 oxygen concentrators from Beijing
Budget carrier SpiceJet's freighter arm on Wednesday airlifted 3,100 oxygen concentrators from Beijing.
The airline used its B767 and A330 wide-body aircraft to airlift these concentrators from Beijing, with the first consignment arriving in New Delhi at 9.10 a.m. on Wednesday and the second one scheduled to arrive later in the afternoon, SpiceJet said.
The airline has airlifted more than 9,950 oxygen concentrators from the US, Hong Kong, Singapore and China in the last two weeks.
SpiceJet Chairman and Managing Director Ajay Singh had recently said that his company was looking at bringing about 20,000 oxygen concentrators in the coming days from across the globe to meet the acute shortage of medical oxygen in the country.
Media Industry leaders see huge headroom for growth
Media giants remain optimistic.
PTI reports: "Notwithstanding the pandemic-led disruptions, Indian media industry captains are optimistic and see huge headroom for growth in the sector.
Though the industry witnessed a 25 per cent drop in TV advertising revenue in the pandemic-impacted 2020, the leaders, while participating at the recently organised Future of Video India conference by the Asia Video Industry Association’s (AVIA), were confident of the growth potentials, a statement said.
President and Head of Disney+ Hotstar Sunil Rayan said the platform is eyeing local expansion with their next stage for growth primed at developing their product for India, with pricing and content made for the local market.
As India is a mobile-first market that drives individual viewing, over-the-top (OTT) content needs to be far more engaging for individual viewing.
"Fundamentally, we do not believe in a one-size-fits-all approach for India because there are multiple Indias within India," said Rayan.
Megha Tata, MD of South Asia for Discovery Communications India said there is a sentiment of diversity and positive co-existence between the platforms.
"India lives in several centuries at the same time," commented Tata adding it is still a long way away before the demise of the TV and a differentiated content and product offering remains a key focus.
Advisory and consulting services provider Media Partners Asia (MPA) said pay TV subscriptions in India will grow both in - value and volume terms and continue to offer scale for the traditional media players, though there would be a structural decline in the traditional cable TV.
With a current presence of over 60 online video services in India, the total addressable market will continue to expand, said MPA in a statement quoting its VP, India Mihir Shah.
"With learnings from the last year and economic resurgence picking up in certain sectors, MPA predicts that in the next 5 years, with every new incremental dollar in the region, India will have 35 per cent share, almost evenly divided between television and online video," he said.
Monika Shergill, VP of Content for Netflix India, shared that premium storytelling was a new space in India, as Indian audiences were open to experimentation and yet gravitating towards highly local tastes.
Archana Anand, Chief Business Officer of ZEE5 Global said it best when she said, “It is the decade of video.”"
RBI relaxes KYC norms, tells banks not to impose any restriction till Dec-end
The Reserve Bank on Wednesday asked banks and other regulated financial entities not to impose any punitive restriction against customers for failure to update KYC till December end, in view of the second wave of coronavirus cases.
The RBI has also decided to extend the scope of video KYC (know-your-customer) or V-CIP (video-based customer identification process) for new categories of customers such as proprietorship firms, authorised signatories and beneficial owners of legal entities.
“Keeping in view the COVID-related restrictions in various parts of the country, Regulated Entities are being advised that for the customer accounts where periodic KYC updating is due/pending, no punitive restriction on operations of customer account(s) shall be imposed till December 31, 2021,” RBI Governor Shaktikanta Das said while announcing steps to deal with the COVID pandemic.
‘Bulk tea firms may see a financial slump in FY22’
North Indian bulk tea players may witness contraction in financial performance in FY22 due to interim wage enhancement of plantation workers and a likely decline in prices in the second half of the year, according to a report.
The Assam government had notified an interim enhancement of wages for tea plantation workers by ₹50 a day with effect from February 22, 2021, till the finalisation of the revised minimum wages proposed earlier, ICRA said in a report.
However, the wage rate increase was stayed by the Gauhati High Court on March 16, while hearing a petition filed by the Indian Tea Association and several other bulk tea companies. The court also allowed the tea companies to set the enhancement until the final hearing was concluded.
Based on these instructions, the Indian Tea Association, by end-March, decided to increase the daily wages in Assam by ₹26 per day, in line with the wage rate increase announced in West Bengal in January.
Biden undecided on COVID-related TRIPS waiver, as Republican lawmakers oppose India's proposal at WTO
U.S. President Joe Biden said on Tuesday that he had not made a decision on whether the U.S. would support an Indian and South African initiative at the World Trade Organisation (WTO) to waive Trade Related Intellectual Property Rights (TRIPS) to facilitate the production of COVID-19 related vaccines and therapeutics around the world.
“Well, we’re going to decide that as we go along, I haven’t made that decision yet,” Mr. Biden said on Tuesday afternoon at the White House, after he delivered remarks on the U.S.’s vaccination campaign. His administration would move as quickly as possible to get as many doses of Pfizer and Moderna’s vaccines to export to the rest of the world, Mr Biden said. The U.S. government has already ordered 100 million additional doses of these vaccines through July 31.
A group of nine Democratic senators and Bernie Sanders (an independent) had called on Mr Biden last month to support a temporary IP waiver. U.S. Trade Representative (USTR) Katherine Tai had discussed the issue with the U.S. heads of vaccine makers Pfizer and AstraZeneca last week.
RBI allows loan restructuring for individuals, MSMEs hit by fresh COVID-19 wave
More relief measures from the central bank.
PTI reports: "Reserve Bank on Wednesday announced a slew of measures including loan restructuring for individual and small businesses hit hard by fresh COVID-19 wave.
To augment supply of goods for COVID care, the central bank opened Rs 50,000 crore on-tap window to ease access to emergency health services to boost provision of immediate liquidity for ramping up COVID-19 related healthcare infrastructure and services in the country.
This liquidity window is being opened till March 31, 2022, he said, adding that under the scheme, banks can provide fresh lending support to a wide ranging of entities including vaccine manufacturers, importers and suppliers of vaccine and medical devices, hospitals and dispensaries and suppliers of oxygen and ventilators importers and also patients for treatment.
"Banks are being incentivised for quick delivery of credit under the scheme, through extension of priority sector classification to such lending... and these loans will continue to be classified under priority sector till repayment or maturity, whichever is earlier," he said an unscheduled press briefing.
With regard to restructuring he said, borrowers that are individuals and micro, small and medium enterprises (MSMEs) having an aggregate exposure of up to Rs 25 crore would be considered for the new scheme.
This would be for those who have not availed restructuring under any of the earlier frameworks, including the Resolution Framework 1.0 of RBI dated August 6, 2020, and who are classified as standard as on March 31, 2021, shall be eligible for the Resolution Framework 2.0, he said.
Under the proposed framework, bank may be invoked up to September 30, and shall have to be implemented within 90 days after invocation, he added.
RBI has also introduced Rs 10,000-crore special long-term repo operation for small finance banks.
Under this, loans up to Rs 10 lakh to MSMEs will be considered as priority sector lending, Das said.
Das also announced relaxation in overdraft facility for state governments to enable them to better manage their fiscal situation in terms of their cash flows and market borrowing.
Now the maximum number of days of overdraft, that are only in a quarter, have been increased from 36 to 50 days.
RBI also announced rationalisation of certain components of the extent know-your-customer (KYC) norms for enhancing customer convenience.
These include extending the scope to video KYC known as video based customer identification process, he said.
Further, keeping in view the COVID-19 related restrictions in various parts of the country, RBI regulated entities have been asked that for the customer accounts were periodic KYC updating is new or pending, "no punitive restriction on operation of customer accounts" will be imposed till December 31, 2021, unless warranted, due to any other reason."
Rupee rises 5 paise to 73.80 against US dollar in early trade
The positive sentiment in stocks helps the rupee.
PTI reports: "The Indian rupee opened on a flat note and advanced by 5 paise to 73.80 against the US dollar in opening trade on Wednesday as investors focused on RBI Governor's speech.
At the interbank forex market, the local unit opened at 73.80 against the US dollar, reflecting a rise of 5 paise over its last close. The local unit also touched a low of 73.86 in initial deals.
On Tuesday, the rupee had settled at 73.85 against the American currency.
The dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.09 per cent to 91.20.
Investors are focusing on the RBI Governor press conference. RBI has been in the process of assessing the exact impact of the COVID second wave, Kshitij Purohit, Lead International Products & Commodities at CapitalVia Global Research, said.
Governor Shaktikanta Das said RBI will continue to monitor situation from the resurgence of COVID-19 cases and will deploy all resources. "We have to marshal our resources for fighting the virus with vigour," he said.
The Governor also announced Rs 50,000 crore priority lending by banks for hospitals and oxygen suppliers, among others by March 31, 2022.
A record 3,780 fresh COVID-19 fatalities were registered in a single day in India taking the death toll to 2,26,188, while 3,82,315 new coronavirus infections were recorded, according to the Union Health Ministry data updated on Wednesday.
Global oil benchmark Brent crude futures rose 0.71 per cent to USD 69.37 per barrel.
On the domestic equity market front, BSE Sensex was trading 169.95 points or 0.35 per cent higher at 48,423.46 while the broader NSE Nifty rose 52.10 points or 0.36 per cent to 14,548.60.
Foreign institutional investors were net sellers in the capital market on Tuesday as they sold shares worth Rs 1,772.37 crore, as per exchange data."
RBI announces ₹50,000 crore priority lending by banks for COVID-related healthcare infrastructure
Reserve Bank of India Governor Shaktikanta Das on Wednesday announced ₹50,000 crore priority lending by banks for hospitals, oxygen suppliers, vaccine importers, COVID drugs and other COVID-related health infrastructure till March 31, 2022.
In an unscheduled address, the Governor said that the situation in the country has reversed from being on foothills of strong economic recovery to facing a fresh crisis.
Restoring livelihoods has become an imperative, he said. “We do not expect any broad deviation in our projections,” Mr. Das added.
He said that the RBI will continue to monitor the COVID-19 situation in the country, and will deploy all resources under it for the benefit of citizens, business entities, and institutions affected.
India's services growth slowed further in April, input costs soared
Services sector follows manufacturing in the latest downturn.
Reuters reports: "Growth in India's dominant services sector eased to a three-month low in April but remained unexpectedly resilient even as the COVID-19 crisis intensified and cost pressures rose at the fastest pace in over nine years, a private survey showed.
The Nikkei/IHS Markit Services Purchasing Managers' Index fell to 54.0 last month from 54.6 in March, its lowest since January but still well above the 50-mark separating growth from contraction and outpacing expectations in a Reuters poll for a fall to 51.1.
"Firms foresee higher output volumes over the course of the coming year, but business sentiment was dampened by concerns surrounding the pandemic," noted Pollyanna De Lima, economics associate director at IHS Markit.
Despite the new business sub-index holding at the same level as in March and business expectations remaining positive, sentiment towards prospects for the year-ahead fell to a six-month low.
That chimed with a Reuters poll last week that found although economic growth forecasts have not yet been much impacted by the record-setting COVID-19 second wave, further downgrades were likely.
India's tally of coronavirus infections surged past 20 million on Tuesday, boosted by 357,229 new cases over the last 24 hours, while deaths rose 3,449 for a toll of 222,408.
At least 11 states and regions have ordered curbs on movement to stem infections, but Prime Minister Narendra Modi's government, widely criticised for allowing the crisis to spin out of control, is reluctant to announce a national lockdown, concerned about the economic impact.
Adding to pressure on services companies, input costs, which have risen for 10 consecutive months on higher food and fuel prices, rose at the fastest rate since December 2011. The strongest increase was seen in consumer services.
Yet the Reserve Bank of India was not expected to raise interest rates this fiscal year, instead supporting growth as the country grapples with the coronavirus.
"Services firms noted the steepest rise in overall expenses in over nine years as global shortages of inputs and higher transportation costs continued to exert upward pressure on outlays," De Lima added.
"The gap between rates of inflation for input prices and charges was one of the widest since the global financial crisis."
Selling prices rose mildly as very few firms passed on the cost burden to clients, with 98% of respondents leaving fees unchanged to secure orders and remain competitive.
Firms lowered headcount for the fifth consecutive month, albeit slightly. Just 3% of the companies shed jobs.
The new export business sub-index was further below the breakeven mark than in March as travel restrictions added to the fall in international demand which has been on a downtrend since the onset of the pandemic in March 2020.
Manufacturing activity growth picked up slightly in April, but the fall in the services reading pulled the composite PMI down to 55.4 from 56.0 in March."
Indian shares rise ahead of central bank address
Investors turn their attention towards the RBI.
Reuters reports: "Indian shares opened higher on Wednesday, led by heavyweight financials, as market participants waited for an unscheduled address by the central bank governor where more pandemic relief measures are expected to be announced.
Local media, citing sources, has reported that banks have requested the central bank to allow another moratorium on loan repayments, or a relaxation in the recognition and provisioning for bad loans, to protect lenders and creditors during the ferocious second wave of coronavirus infections in the country.
Reserve Bank of India Governor Shaktikanta Das will give an address at 0430 GMT, the central bank said on its Twitter account, without providing any further details.
The blue-chip NSE Nifty 50 index rose 0.43% to 14,558 and the benchmark S&P BSE Sensex climbed 0.42% to 48,453.87 by 0351 GMT.
Both indexes had closed at their lowest level in more than a week on Tuesday, as domestic coronavirus cases surged past the grim milestone of 20 million.
Many states have imposed curfews and lockdowns, while the country's main opposition political party has called for a national lockdown.
In Mumbai trading, the Nifty Bank Index rose 0.45%, while the Nifty PSU Bank Index gained 0.82%.
HDFC Bank Ltd rose 0.6% and was the top boost to the Nifty 50.
Broader Asian shares were flat, following an overnight sell-off in technology stocks on Wall Street, while talk of rising U.S. interest rates also dented sentiment."
MFIs flag rural borrower distress to RBI
The pandemic’s second wave is affecting rural households far more than last year, with a large number of microfinance staffers, borrowers and their families hit by COVID-19, impacting many more livelihoods than during the first wave.
The trend, which poses a higher risk of loan delinquencies if the rising infections don’t taper off by the end of May along with mobility restrictions, was flagged by microfinance institutions (MFIs) to the Reserve Bank of India Governor Shaktikanta Das on Monday, according to two industry representatives who attended the meeting.
Urging the central bank to grant forbearance for borrowers unable to pay instalments with some flexibility for the MFIs to restructure affected loans, industry representatives observed that while collections had been normal till early April -- in the wake of the gradual recovery -- they had slowed down since then.