Today's top business news: Shares drop after Wall Street selloff, oil falls 1% on lacklustre demand, traders brace for tech turbulence, and more

Updates from the world of economy, markets, and finance

September 04, 2020 09:27 am | Updated 04:11 pm IST

Stock broker reacts has he watches share prices of BSE sensex in Mumbai | File

Stock broker reacts has he watches share prices of BSE sensex in Mumbai | File

The benchmark stock indices have dropped by over 1% this morning after the overnight sell-off in US stocks.

Finance Minister Nirmala Sitharaman has urged public sector banks to roll out loan resolution schemes by 15 September.

Join us as we follow the top business news through the day.

4:30 PM

Traders brace for tech turbulence

 

4:00 PM

Sensex plunges 634 points; Nifty cracks below 11,350

It was a bad day for stocks with a downtrend persisting through the day.

PTI reports: "Domestic equity benchmark Sensex crashed 634 points on Friday, tracking losses in index majors Reliance Industries, HDFC and Infosys amid a selloff in global equities.

The 30-share BSE index ended 633.76 points or 1.63 per cent lower at 38,357.18.

The NSE Nifty plunged 193.60 points or 1.68 per cent to close at 11,333.85.

Axis Bank was the top loser in the Sensex pack, shedding over 4 per cent, followed by Tata Steel, SBI, NTPC, Bharti Airtel, ITC and ICICI Bank.

On the other hand, Maruti and TCS finished with gains.

According to traders, domestic markets followed the massive selloff in global equities.

Stock exchanges on Wall Street ended with heavy losses in overnight session led by a carnage in technology stocks.

Following suit, bourses in Shanghai, Hong Kong, Tokyo and Seoul ended up to 1.25 per cent lower.

On the other hand, stock exchanges in Europe opened on a positive note.

Through the week, the market remained cautious on weaker-than-expected GDP number and lacklustre GST collections even though PMI and auto sales showed some improvement, said Sanjeev Zarbade, VP PCG Research, Kotak Securities.

Indo-China border tensions, rising cases of infections, global market correction and valuations are the key risks to the domestic market, he added.

In the forex market, the rupee appreciated 33 paise to close at 73.14 against the US dollar.

Meanwhile, global oil benchmark Brent crude was trading 0.91 per cent higher at USD 44.47 per barrel."

3:30 PM

L&T Defence bags significant contract from Ministry of Defence

The defence arm of Larsen & Toubro (L&T) has announced receiving a “significant” contract from the Indian Ministry of Defence (MoD) for the supply of four regiments of Pinaka Weapon Systems.

The contract involves supply of Pinaka Launchers, Battery Command Posts and associated Engineering Support Package (ESP). The company did not quantify the value of the contract and the delivery time frame.

The Pinaka Launch system has been indigenously developed by L&T as part of Pinaka development program of Defence Research & Development Organization (DRDO, ARDE) and functions as a high-tech, all weather, long range, area fire artillery weapon system.

 

3:00 PM

Oil falls 1% on lacklustre demand, set for biggest weekly drop since June

The oil rally seems headed for further resistance.

PTI reports: "Oil futures slipped 1% on Friday, with prices on both sides of the Atlantic heading for their biggest weekly drops since June, as lacklustre demand and ample fuel supplies offset support from a weaker dollar.

Brent crude fell 44 cents to $43.63 a barrel by 0325 GMT, while U.S. West Texas Intermediate was at $40.94 a barrel, down 43 cents and set for its first weekly drop in five weeks.

The volume of crude arriving in China, the world's largest crude importer, is set to slow in September after rising for five straight months as its refiners gradually digest bloated inventories, according to data on Refinitiv Eikon.

In the United States, refiners awash in diesel inventory are unlikely to boost output soon.

“Soft margins are likely to cap further crude rallies and we anticipate further run cuts this fall to expedite the rebalancing of product stocks,” RBC Capital analyst Mike Tran said in a note.

Production cuts led U.S. gasoline inventories to fall at a ”manic” pace in the past two months, even though U.S. mobility indicators suggest that driving patterns have largely plateaued over the past 6-8 weeks, he added.

Middle distillates inventories at Asia's oil hub Singapore have also soared above a 9-year high.

FGE analysts said rising coronavirus cases worldwide and renewed lockdowns would dash hopes of a drawdown in oil stocks for some time. The pressure remains on refiners to keep operating rates low, FGE said."

2:40 PM

Rupee settles 33 paise higher at 73.14 against US dollar

Interesting divergence between Indian stocks and the rupee today.

PTI reports: "Snapping the two-day losing streak, the rupee rebounded by 33 paise and settled at 73.14 (provisional) against the US dollar on Friday, even as the domestic equity market was trading with significant losses.

At the interbank forex market, the domestic unit opened on a strong note at 73.38 against the US dollar, then gained further ground and closed at 73.14 against the American currency, registering a gain of 33 paise over its previous close.

During the trading session the local unit witnessed high volatility and touched an intra-day high of 73.01 and a low of 73.47 against the greenback.

On Thursday, the rupee slumped 44 paise to close at 73.47 against the US dollar as rise in demand for the American currency from oil importers weighed on currency market sentiment.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.03 per cent higher at 92.77.

On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 429.77 points lower at 38,561.17, and the broader NSE Nifty fell 127.65 points to 11,399.80.

Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 7.72 crore on Thursday, according to exchange data.

Brent crude futures, the global oil benchmark, rose 0.52 per cent to USD 44.30 per barrel."

2:00 PM

RBI releases revised priority sector lending guidelines

The Reserve Bank of India (RBI) on Friday released revised priority sector lending (PSL) guidelines to augment funding for COVID-19 impacted companies.

This has come after a comprehensive review of the PSL guidelines “to align them with emerging national priorities and bring sharper focus on inclusive development, after having wide ranging discussions with all stakeholders,” the RBI said.

The revised guidelines will enable better credit penetration to credit deficient areas, increase lending to small and marginal farmers and weaker sections, boost credit to renewable energy, and health infrastructure, it said.

Bank finance for start-ups (up to ₹50 crore), loans to farmers for installation of solar power plants for solarisation of grid connected agriculture pumps and loans for setting up Compressed Bio Gas (CBG) plants have been included as fresh categories eligible for finance under the priority sector.

 

1:30 PM

Tech moguls lose $44 billion in a day

 

1:00 PM

Gold gains as stocks retreat; U.S. jobs data in focus

The volatility in stocks in playing in favor of gold.

Reuters reports: "Gold prices rose on Friday, as U.S. Treasury yields fell and a pullback in global equities bolstered demand for the safe-haven metal ahead of U.S. non-farm payrolls data, but a strong dollar put bullion on track for a weekly decline.

Spot gold was up 0.2% at $1,935.10 per ounce by 0651 GMT, off a near one-week low hit on Thursday. Bullion prices have declined 1.5% so far this week. U.S. gold futures rose 0.2% to $1,941.

“It's a bit of a flight to safety right now that we are seeing in gold, because the stock markets are lower,” said Edward Meir, an analyst at ED&F Man Capital Markets. “What also could be helping gold is the sharp slide we are seeing in U.S. yields.”

Asia's stock markets slipped, following the steepest Wall Street sell-off since June, while benchmark 10-year U.S. Treasury yields were on track for their biggest weekly decline in nearly three months. Lower bond yields reduce the opportunity cost of holding non-interest bearing gold. All eyes are now on U.S. non-payroll figures due out at 1230 GMT for the latest indication of how the coronavirus-hit economy is faring.

The data is expected to show payrolls grew by 1.4 million in August, compared to the 1.763 million jobs created in the previous month. Gold is expected to be rangebound between $1,930 and $1,950 ahead of the non-farm payrolls report, said Stephen Innes, chief market strategist at financial services firm AxiCorp. “The reason for gold not sort of firing higher right now is because the dollar is picking up steam,” he added.

Limiting gold's advance, the dollar index held steady against its rivals and was on track for its best week since mid-May. Elsewhere, silver gained 0.3% to $26.72 per ounce but shed 3% for the week so far. Palladium climbed 0.5% to $2,296.52. Platinum rose 0.6% to $894.30 but was on track for its worst week since mid-March, down over 4%."

 

12:30 PM

Indian auto industry facing one of the toughest times in history, needs govt support: Kenichi Ayukawa

One more plea for help from the auto industry which has been hit by trouble for a few years now.

PTI reports: "The Indian auto industry is facing one of the toughest times in history and needs government support through reduction of GST and incentive-based scrappage policy, Maruti Suzuki India Managing Director and CEO Kenichi Ayukawa said on Friday.

Ayukawa, who is the president-elect of auto industry body SIAM, said the sector has been “set back by many years” by a combination of the coronavirus pandemic and the slowdown that has been going on since last fiscal.

As the global health crisis broke out, he said, the auto industry in India also played its part by getting into manufacturing of ventilators, Personal Protective Equipment (PPEs) and importing testing kits from abroad to fight the virus although sales have been hit hard.

“In August we can say we just came back on our feet to achieve performance comparable to last year. Also last year is not a good comparison as the industry saw negative growth of 15-25 per cent. This negative growth has set back the industry by many years,” Ayukawa said at the 60th annual convention of Society of Indian Automobile Manufacturers (SIAM) conducted online.

Reiterating the long pending demand of the auto industry to reduce Goods and Services Tax (GST) on automobiles by 10 per cent, Ayukawa said, “we are facing one of the toughest times in history. The industry needs your support“.

“We are eagerly waiting for GST reduction and scrappage incentive scheme. We believe that taxes on the increasing turnover will be more than the government expenditure on the scrappage scheme and GST reduction,” he said.

He thanked heavy industries minister Prakash Javadekar, who assured the gathering that he will take up the matter of GST reduction with Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman.

Ayukawa also said the growth witnessed in the last couple of months is on a very low base of last year and “we are also not sure whether this is sustainable in future” while festival demand is very important.

“So, at some point of time we definitely need some support from the government,” he said, adding the industry is waiting for a government decision to encourage demand.

Ayukawa said maximising production and increasing sales volumes of the auto industry can help in generating tax revenue, which the government can put to use for funding welfare initiatives.

In the next two years, he said the Indian auto sector will focus on “building the nation responsibly, through sound development of the industry“.

Sound development of industry would mean increase in production and sales volumes, exports, more localisation of parts, including electric vehicle components and make India self-reliant or Atmanirbhar Bharat."

12:00 PM

Office leasing in Bengaluru down by 60% in first half of 2020, says report

Office leasing activities in Bengaluru were down by more than 60% in the first half of 2020 compared to the corresponding period in 2019, according to a report by realty market research and advisory firm Savills India. During the first half of 2019, the city reported leasing of 8.5 million sq.ft of office space; this year, the demand dipped to 3.3 million sq.ft.

The lower demand, obviously, was on account of the business uncertainty during the period of complete lockdown. About 75% of the overall city-wide space absorption is concentrated across East Bengaluru, Whitefield, Brookefield, and Outer Ring Road areas, it said. “A few interesting trends emerged in the city in the first six months of the year. While over 70% of the leasing activity came from captive clients (mostly the U.S. and European MNCs), there was a drop in SEZ space offtake by about 85%,” noted the study.

 

11:30 AM

Unprecedented inverse correlation between GDP and stocks

 

11:00 AM

Modern slavery risks surge for Asian garment workers with coronavirus

Yet another unintended consequence of coronavirus lockdowns in the developing world.

Reuters reports: "The risk of modern slavery in Asian manufacturing hubs has surged and is set to worsen with the economic impact of the new coronavirus, increased labour rights violations and poor law enforcement, a global index found on Friday.

For the first time, India and Bangladesh were in the ”extreme risk” category, joining China and Myanmar in a group of 32 countries with the worst risk of slave labour, the Modern Slavery index by risk analytics company Verisk Maplecroft found.

The risks faced by workers in Cambodia and Vietnam also rose to their highest in four years, taking 32nd and 35th places in the ranking of 198 countries which identified North Korea, Yemen and Syria as the three worst nations for slave labour.

“What makes the situation even more alarming is that modern slavery risks are set to intensify as countries grapple with the economic fallout of the pandemic,” said Sofia Nazalya, a human rights Analyst at Verisk Maplecroft.

“As more workers are pushed into the informal sector, they will be at greater risk of facing more exploitative forms of work, some of which could amount to forced labour conditions,” she told the Thomson Reuters Foundation in emailed comments.

Asian garment workers supplying global fashion brands lost up to $5.8 billion in wages from March to May, the Clean Clothes Campaign pressure group said last month, as the COVID-19 pandemic led to store closures and cancelled orders.

About 60 million people work in Asia's garment industry and falling sales have put many jobs at risk. Laid-off workers are likely to turn to exploitative jobs or may put their children to work to cope with the loss of earnings, industry experts say.

“Even in the same jobs, the conditions have become more exploitative,” said Apoorva Kaiwar, Regional Secretary for South Asia at IndustriALL Global Union, a federation that represents workers in 140 countries.

“Our affiliates have reported wage cuts in existing jobs as well as removal of facilities such as transport and canteen with subsidised food. For those who have lost jobs, they are unable to find jobs with comparable wages and benefits.”

Travel restrictions and measures to reduce the spread of COVID-19 have made it harder for companies to carry out audits to ensure ethical working practices in their supply chains, said the slavery index, which aims to help businesses identify risk.

“The reputational risk to brands from association with modern slavery is ... now higher than at any other time over recent years,” said Nazalya."

10:40 AM

Rupee sees high volatility; rises marginally to 73.46/USD in early trade

Some increased volatility in the currency markets this morning that mirror moves in stocks.

PTI reports: "The rupee witnessed high volatility in opening session on Friday amid heavy selling in domestic equities and a rebound in the American currency.

At the interbank forex market, the domestic unit opened on a strong note at 73.38 against the US dollar, then gained further to quote at 73.35.

The local unit, however, pared the initial gains and was trading at 73.46, up by just 1 paisa over its previous close.

On Thursday, the rupee slumped 44 paise to close at 73.47 against the US dollar as rise in demand for the American currency from oil importers weighed on currency market sentiment.

Forex traders said heavy selling in domestic equity markets and a rebound in American currency weighed on the rupee.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.04 per cent to 92.77.

On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 464.61 points lower at 38,526.33, and the broader NSE Nifty fell 130.30 points to 11,397.15.

Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 7.72 crore on Thursday, according to exchange data.

Brent crude futures, the global oil benchmark, fell 0.93 per cent to USD 43.66 per barrel."

10:20 AM

No such proposal before the board: VIL on reports of investment by Verizon, Amazon

The denial comes after reports yesterday that Amazon and Verizon may invest more than $4 billion in Vodafone-India.

PTI reports: "Amid reports suggesting that Verizon and Amazon may invest over USD 4 billion in the company, Vodafone Idea on Thursday said while it constantly evaluates various opportunities as part of corporate strategy, there is no such proposal currently before its board.

As and when various proposals are considered by the board warranting disclosures, the company will comply with the disclosure obligations under the SEBI rules, Vodafone Idea said in a regulatory filing.

“As part of corporate strategy, the company constantly evaluates various opportunities for enhancing the stakeholders’ value...Currently, there is no proposal as reported by the media that is being considered at the board,” VIL said.

The VIL filing came after BSE sought clarification from the company on Thursday over a media report suggesting that Verizon and Amazon could invest over USD 4 billion in Vodafone Idea.

“We wish to reiterate and clarify the company will comply with SEBI listing regulations and duly keep the stock exchanges informed of all the price sensitive information,” VIL added.

It is pertinent to mention here that the Vodafone Idea board is scheduled to hold a crucial meeting on Friday to consider fund-raising through various means.

The development comes following the Supreme Court verdict directing all telecom operators to pay 10 per cent of total Adjusted Gross Revenue (AGR)-related dues this year, and rest of the payments in 10 instalments starting from next fiscal year.

Vodafone Idea has AGR dues of over Rs 58,000 crore, of which the company has paid Rs 7,854 crore to the Department of Telecom so far.

In a filing earlier this week, the company had said that the board at its meeting will “consider and evaluate any and all proposals for raising of funds in one or more tranches by way of a public issue, preferential allotment, private placement, including a qualified institutions placement or through any other permissible mode and/or combination thereof...by way of issue of equity shares or by way of issue of any instruments.”

The board will also consider raising funds through securities including securities convertible into equity shares, global depository receipts, American depository receipts or bonds including foreign currency convertible bonds, convertible debentures, warrants, and/or non-convertible debentures including non-convertible debentures along with warrants, which may or may not be listed, it said."

10:00 AM

Indian shares drop after Wall Street selloff; financials weigh

A sharp fall in Indian stocks as volatility picks up in bourses across the world.

Reuters reports: "Indian shares fell sharply on Friday, tracking Asian peers that dropped after a selloff in high-flying technology stocks on Wall Street, with financials and conglomerate Reliance Industries Ltd also weighing on the markets.

By 0347 GMT, the blue-chip NSE Nifty 50 index fell 1.55% to 11,348.60, while the S&P BSE Sensex slid 1.49% to 38,413.36.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.6% after Wall Street' main indexes marked their deepest one-day declines since June.

In Mumbai, losses were broad based, with all stocks on the Nifty trading lower.

The Nifty bank index fell 2.3% after India's top court on Thursday directed banks not to declare any loans that were standard as of end-August as non-performing until further orders, raising uncertainty over recovery efforts. HDFC Bank Ltd was among the top drags on the Nifty, falling 1.8%

Also dragging the Nifty was India's most valuable company, Reliance Industries Ltd, which fell 1.2%."

 

9:30 AM

Nirmala gives banks September 15 deadline to roll out loan resolution schemes

Lenders must not use coronavirus ( COVID-19 ) related distress as a factor to determine borrowers’ creditworthiness, Union Finance Minister Nirmala Sitharaman told top bankers on Thursday. She directed them to roll out loan resolution schemes by September 15, aiming to maximise relief before the start of the festive season, according to a Finance Ministry statement.

Ms. Sitharaman’s meeting via video-conference with the heads of commercial banks and non-banking financial companies was aimed at reviewing their state of preparedness for implementing the loans resolution framework for COVID-19 related stress.

Last month, Reserve Bank of India gave permission for one-time restructuring of corporate and retail loans without classifying them as non-performing assets, in a bid to help borrowers tide over the pandemic-related economic crisis.

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