The Nifty and the Sensex opened the day on a negative note as investors' attention turned towards the US Fed's meet.
Join us as we follow the top business news through the day.
RBI likely to maintain status quo in August policy: SBI report
SBI not very optimistic on further rate cuts.
PTI reports: "With retail inflation witnessing significant uptick in May, the Reserve Bank of India (RBI) is likely to maintain status quo in its August monetary policy review, according to a report.
According to the SBI's research report- Ecowrap, inflation may remain elevated in the coming months due to several global and domestic factors.
"We expect a status-quo in August. We believe RBI would still try to find a marriage of convenience of regulatory and developmental measures and monetary policy in August policy," the research report said on Wednesday.
It further noted that "the die has been cast, but the RBI can still hold out with a firm message of ratcheting up inflationary pressures in the August policy statement." The Consumer Price Index (CPI)-based inflation hit a six-month high of 6.3 per cent in May, from 4.3 per cent in April. The inflation reading has breached the RBI's target range of 2-6 per cent.
In the second bi-monthly monetary policy announced on June 4, the central bank left the repo rate unchanged at 4 per cent.
The next Monetary Policy Committee (MPC) meeting is scheduled from August 4 to 6.
The report said rising food and commodity prices, as well as localised lockdowns, have led to a sharp increase in headline numbers. The core inflation also increased to 6.55 per cent in and the last time it was seen around this level was in June 2014.
It further noted that inflation may remain elevated going forward and this is likely to raise anxiety levels in the RBI and the MPC.
"We are now revising our CPI average for FY22 to 6.1 per cent and core inflation is likely to print at 6.4 per cent," the report said.
It said ravages after the second wave of the pandemic and location-specific lockdowns in major Indian states have further dislocated supply chains even in rural areas which are going to manifest in rising prices on essentials.
Cumulatively, this could significantly ratchet up core inflation, it said.
Once that happens on a durable basis, it would be impossible for the MPC to look through inflation pressures and remain supportive of growth, given its primary mandate of ensuring price stability, it said.
"If the RBI has to ultimately increase interest rates / change its stance to combat inflation, it may impact any incipient signs of recovery; on the other hand, being a mute spectator can seriously impair RBI's credibility in fighting inflation," the report added.
The report also said the country must meaningfully vaccinate a large segment of the rural population in the second quarter so that it can effectively beat the new mutant strain in the town."
Indian shares end lower on losses in financials; Fed in focus
A poor day for stocks.
Reuters reports: "Indian shares ended lower on Wednesday, hurt by losses in heavyweight Reliance Industries and financial stocks, ahead of U.S. Federal Reserve's policy statement due later in the day.
The blue-chip NSE Nifty 50 index fell 0.64% to 15,767.55 and the benchmark S&P BSE Sensex was down 0.51% to 52,501.98 at close. Both the indexes ended at a record high on Tuesday.
Reliance Industries Ltd, HDFC Ltd and ICICI Bank Ltd were among the top drags on the Nifty 50, shedding between 0.8% and 1.7%. Shares of Reliance have gained in the last five trading sessions out of eight.
The Nifty Bank Index and the Nifty Private Bank Index, which have fallen between 0.10% and 0.13% so far this week, ended more than 0.68% lower each.
The Nifty Metal Index fell the most among other sub-indexes, ending 2.85% lower, dragged by Tata Steel Ltd and JSW Steel Ltd, which fell 2.7% each.
China announced plans on Wednesday to release industrial metals from its national reserves to curb commodity prices.
Globally, stock markets treaded water near record highs as investors watched for any hawkish signals from the conclusion of the Federal Reserve's two-day policy meeting.
Many investors expect the Fed to maintain its dovish stance, while some Fed board members have said the central bank should start discussing tapering its bond-buying.
Among other notable stock moves in India, Adani Ports and Special Economic Zone Ltd fell 7.2% in the seventh consecutive session of losses. The company earlier this week rejected a media report that said accounts of three foreign investor funds that own Adani Group stocks had been frozen.
Indian fertilizer stocks including National Fertilizers Ltd and Chambal Fertilisers and Chemicals Ltd closed up 3.9% and 6.9%, respectively, after the Indian government approved additional 147 billion rupees ($2 billion) for fertilizer subsidies."
I-T Department notifies cost inflation index for FY22 for computing long-term capital gains
The Income Tax Department has notified the cost inflation index for current fiscal beginning April 2021 for calculating long-term capital gains arising from sale of immovable property, securities and jewellery.
The cost inflation index (CII) is used by taxpayer to compute gains arising out of sale of capital assets after adjusting inflation.
The Central Board of Direct Taxes (CBDT) on June 15 notified the cost inflation index for the current fiscal (2021-22).
“The Cost Inflation Index for FY 2021-22 relevant to AY 2022-23 & subsequent years is 317,” the Central Board of Direct Taxes said while notifying the CII number.
India slams Twitter for not complying with new IT rules
Twitter vs GoI continues.
Reuters reports: "India's technology minister said on Tuesday that Twitter Inc had deliberately defied and failed to comply with the country's new IT rules, which became effective in late May.
The new rules or the so-called Intermediary Guidelines, announced in February, are aimed at regulating content on social media firms such as Facebook, its WhatsApp messenger and Twitter, making them more accountable to legal requests for swift removal of posts and sharing details on the originators of messages.
The rules also require big social media companies to set up grievance redressal mechanisms and appoint new executives to coordinate with law enforcement.
India's technology ministry wrote to Twitter on June 5, warning the company of "unintended consequences" if it did not obey the rules, Reuters previously reported.
Prasad did not directly say on Tuesday whether Twitter had lost intermediary protections, but a senior government official told Reuters that Twitter may no longer be eligible to seek liability exemptions as an intermediary or the host of user content in India due to its failure to comply with new IT rules.
"There are numerous queries arising as to whether Twitter is entitled to safe harbour provision," Prasad tweeted. "However, the simple fact of the matter is that Twitter has failed to comply with the Intermediary Guidelines that came into effect from the 26th of May."
Twitter, Prasad added, had chosen the "path of deliberate defiance when it comes to the Intermediary Guidelines."
Twitter did not respond to a request for comment though it said on Monday it was keeping India's technology ministry apprised of the steps it was taking.
"An interim Chief Compliance Officer has been retained and details will be shared with the Ministry directly soon," it said. "Twitter continues to make every effort to comply with the new guidelines.
New Delhi-based digital advocacy group Internet Freedom Foundation said it was only up to courts, and not the government, to decide whether companies such as Twitter remained intermediaries for alleged non-compliance such as appointment of executives.
Growing tensions between India's government and U.S. big tech have riled firms that have spent millions of dollars to build hubs in their largest growth market, to the extent some are rethinking expansion plans, people close to the matter have told Reuters previously."
RBI restrains DHFL from taking deposits
The Reserve Bank of India (RBI) has revoked the deposit-taking status of Dewan Housing Finance (DHFL), the first financial services firm to go for bankruptcy proceedings.
The central bank had reclassified DHFL as a non-deposit taking housing finance company, before approving the Piramal Group’s bid to take over it towards the end of the resolution process.
This was revealed in the June 7 order of the NCLT Mumbai approving the ₹35,250-crore bid by Piramal Capital & Housing Finance, forcing a more than 65% haircut on creditors and just ₹1 to NCD holders to whom the firm owes more than ₹45,000 crore.
Power consumption grows 9.3% in first half of June
More signs of economic recovery.
PTI reports: "Power consumption in the country grew by 9.3 per cent in the first half of June to 55.86 billion units (BU), indicating a slow recovery in commercial and industrial electricity demand, according to power ministry data.
Power consumption was recorded at 51.10 BU in the first half of June last year (June 1 to 15), the data showed.
According to experts, the recovery in power consumption and demand was slow in the first half of June despite the low base of last year, which indicates a slow recovery in commercial and industrial demand.
In the entire June last year, power consumption slumped by nearly 11 per cent to 105.08 BU from 117.98 BU over the same month in 2019, mainly due to fewer economic activities amid COVID-induced restrictions.
Experts are of the view that the recovery in power demand and consumption in the rest of June is not likely to be robust because of the early onset of Monsoon.
In the first fifteen days of May (from May 1 to 15) this year, power consumption was 55.23 BU despite lockdown restrictions imposed by many states amid the second wave of COVID-19.
Thus, a month-on-month comparison indicates that power consumption grew marginally by 1.14 percent in the first half of June.
Peak power demand met or the highest supply in a day witnessed a growth of over 6.6 per cent in the first half of June at 174.09 GW (recorded on June 9), compared to 163.30 GW on June 11 last year.
Peak power demand met in the first half of June 2019 was 182.45 (recorded on June 14).
The peak demand in the entire June (2020) slumped to 164.98 GW from 182.45 GW in the same month in 2019.
Experts believe robust recovery in commercial and industrial power consumption as well as demand is likely from July onwards as many states are easing local restrictions amid a decline in number of daily new positive cases of COVID-19.
Last year, the government had imposed a lockdown on March 25 to contain the spread of coronavirus.
The lockdown was eased in a phased manner, but had hit the economic and commercial activities and resulted in lower commercial and industrial demand for electricity in the country.
Power consumption in April 2021, saw year-on-year growth of nearly 38.5 per cent. The second wave of COVID-19 started in the middle of April this year and affected the recovery in commercial and industrial power demand as states started imposing restrictions in the latter part of the month.
Power consumption in the country witnessed a 7.9 per cent year-on-year growth in May at 110.17 billion units (BU) despite a low base in the same month of 2020.
In May this year, peak power demand met or the highest supply in a day touched the highest level of 168.78 GW and recorded a growth of over 1.5 per cent over 166.22 GW (peak met) recorded in the same month in 2020.
Power consumption in February this year (leap year) was recorded at 103.25 BU compared to 103.81 BU a year ago.
In March this year, power consumption grew nearly 22 per cent to 120.63 BU, compared to 98.95 BU in the same month of 2020.
After a gap of six months, power consumption had recorded a 4.6 per cent year-on-year growth in September 2020 and 11.6 per cent in October 2020.
In November 2020, the power consumption growth slowed to 3.12 per cent, mainly due to the early onset of winters.
In December 2020, it grew by 4.5 per cent, while this was 4.4 per cent higher in January 2021."
Jubilant FoodWorks shares jump nearly 5% after Q4 earnings
Today's big-moving stock.
PTI reports: "Shares of Jubilant FoodWorks Ltd on Wednesday zoomed nearly 5 per cent after the company reported over three fold jump in its consolidated net profit for the fourth quarter ended March 2021.
The stock rose by 4.92 per cent to Rs 3,331.85 -- its 52-week high -- on the BSE.
At the NSE, it jumped 4.93 per cent to its one-year peak of Rs 3,332.70.
Jubilant FoodWorks Ltd, which operates fast-food chains Domino's Pizza and Dunkin' Donuts, on Tuesday reported over three fold jump in its consolidated net profit at Rs 105.30 crore for the fourth quarter ended March 2021.
The company had posted a net profit of Rs 32.53 crore in the January-March quarter a year ago, Jubilant FoodWorks Ltd (JFL) said in a regulatory filing.
Its revenue from operations was at Rs 1,037.85 crore, up 14.21 per cent, during the quarter under review, as against Rs 908.75 crore in the corresponding quarter of fiscal year 2019-20.
Meanwhile, in a separate fling, JFL informed its board in their meeting held on Tuesday approved recommendation of a final dividend of 60 per cent, which is Rs 6 per equity shares of the face value of Rs 10 each for the financial year 2020-21."
Mandatory gold hallmarking to come into force from Wednesday, initially in 256 districts, says govt.
The Centre on Tuesday said mandatory hallmarking of gold jewellery and artefacts will come into force from June 16 in a phased manner and initially will be implemented in 256 districts of the country.
A decision in this regard was taken after a meeting chaired by Consumer Affairs Minister Piyush Goyal with industry stakeholders.
In November 2019, the government had announced that hallmarking of gold jewellery and artefacts would be made mandatory across the country from January 15, 2021.
But the deadline was extended for four months till June 1 and later till June 15 after the jewellers sought more time in view of the pandemic. Gold hallmarking is a purity certification of the precious metal and has been voluntary in nature so far.
Indian shares fall further ahead of Fed meeting outcome
An update on stocks.
Reuters reports: "Indian shares declined further on Wednesday, weighed down by heavyweight Reliance Industries and financial stocks, with investors eyeing the U.S. Federal Reserve's policy statement due later in the day.
The blue-chip NSE Nifty 50 index fell 0.43% to 15,804.20 and the benchmark S&P BSE Sensex was down 0.29% to 52,620.97 by 0457 GMT. Both the indexes closed at a record high on Tuesday.
"The market might be reluctant to push higher ahead of the Fed meeting. The possibility of further upsides depends heavily on the continuation of liquidity. If the Fed were to tighten the screws on interest rates, there is a possibility that markets may not see that as favourable," said Anand James, chief market strategist at Geojit Financial Services.
If the Fed signals an idea of interest-rate hikes, the Indian market could expect the Reserve Bank of India to follow suit due to the country's higher inflation reading. This may not be positive, especially as more states ease curbs, he said.
In Mumbai trading, Reliance Industries Ltd and HDFC Ltd were the top drags on the Nifty 50, shedding 0.9% and 0.6%, respectively. Shares of Reliance have gained in the last five trading sessions out of eight.
The Nifty Bank Index and the Nifty Private Bank Index have so far risen more than 0.30% this week.
Tata Steel Ltd and JSW Steel Ltd were down 2.7% and 2.4%, respectively, driving the Nifty Metal Index 2.4% lower.
China has stepped up its campaign to rein in raw materials prices by expanding its oversight of commodities trading by state firms to overseas markets, Bloomberg News reported on Wednesday. https://bloom.bg/3gwgWLS
In the broader Asian market, shares were subdued ahead of the Fed's meeting."
India's fuel sales recover from lows in June, still lower than last year
Some recovery as lockdowns are lifted.
Reuters reports: "Domestic fuel sales by Indian state refiners recovered in the first half of June due to the easing of coronavirus lockdowns across the country but was still lower compared with last year, preliminary data showed on Wednesday.
Gasoline sales was 13% higher and diesel sales rose 12% over June 1-15, compared with the same period last year, data compiled by the state refiners showed."
Rupee opens on flat note, rises 5 paise to 73.26 against US dollar in early trade
A flat start to the day for the rupee.
PTI reports: "The Indian rupee opened on a flat note and inched higher by 5 paise to 73.26 against the US dollar in early trade on Wednesday ahead of the US Federal Reserve meeting outcome.
At the interbank foreign exchange, the domestic unit opened at 73.29 against the dollar, then inched higher to quote 73.26, a rise of 5 paise over its previous close of 73.31 on Tuesday.
The Indian Rupee started on a flat note this Wednesday against the greenback as investors await the important Fed meeting outcome for further cues, Reliance Securities said in a research note.
"Asian currencies have started weaker against the greenback this Wednesday morning and will weigh on sentiments. Additionally, investors will be wary of rising crude oil prices as well," the note added.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.03 to 90.50.
Global oil benchmark Brent crude futures rose 0.88 to USD 74.64 per barrel.
On the domestic equity market front, BSE Sensex was trading 160.88 points or 0.30 per cent lower at 52,612.17, while the broader NSE Nifty fell 64.65 points or 0.41 per cent to 15,804.60.
Foreign institutional investors were net buyers in the capital market on Tuesday as they purchased shares worth Rs 633.69 crore, as per exchange data."
Sensex, Nifty decline ahead of US Fed policy outcome
A poor start to the day for stocks.
PTI reports: "Equity benchmark Sensex fell over 90 points in early trade on Wednesday, tracking tepid global cues ahead of the US Federal Reserve's policy outcome.
The 30-share BSE index was trading 90.5 points or 0.17 per cent lower at 52,682.55 in initial deals. Similarly, the broader NSE Nifty slipped 23.55 points or 0.15 per cent to 15,845.70.
PowerGrid was the top loser in the Sensex pack, shedding around 1 per cent, followed by Dr Reddy’s, Titan, HDFC Bank, Asian Paints, Reliance Industries and Axis Bank.
On the other hand, ONGC, M&M, Bajaj Finserv, Hindustan Unilever, TCS and Infosys were among the gainers.
In the previous session, the BSE Sensex quoted higher by 221.52 points or 0.42 per cent at a new peak of 52,773.05. Likewise, the broader NSE Nifty rose 57.40 points or 0.36 per cent to settle at a fresh high of 15,869.25.
Elsewhere in Asia, bourses in Tokyo, Shanghai and Hong Kong were trading on a negative note in mid-session deals, while Seoul was trading with gains.
US equities finished lower in the previous session ahead of the outcome of the Fed policy meeting on Wednesday.
Foreign institutional investors (FIIs) emerged as net buyers in the capital market as they bought shares worth Rs 633.69 crore on Tuesday, as per provisional exchange data.
International oil benchmark Brent crude was trading 0.95 per cent higher at USD 74.69 per barrel."
Inflation spurs spike in bond yield; rupee hits 1-month low
India’s benchmark 10-year bond yield closed at its highest level in more than six weeks while the rupee ended at a one-month low on the back of a larger-than-expected surge in retail inflation.
The benchmark 10-year bond yield ended at 6.04%, after touching 6.05%, its highest since April 30 and up 4 basis points on the day.
Retail inflation rate rose 6.3% year-on-year in May, from 4.29% in April and sharply above analysts’ estimate of 5.3%. The wholesale price inflation rate rose 12.9%, its highest in at least two decades.
Traders are worried the spike in inflation beyond the RBI’s mandated target band of 2%-6% could force it to act sooner on inflation, but two senior sources said the growth focus will continue for the time being.