Today's top business news: Deposit Insurance limit; RBI rate setting committee meets; LIC staff union and more

News updates from the world of economy, markets, and finance

4:50 PM

DFS approves raising deposit insurance to Rs 5 lakh: Fin Secretary

The government has started implementing Budget announcements with Department of Financial Services (DFS) conveying the approval of the Centre to DICGC for raising the insurance cover on saving deposits to Rs 5 lakh per depositor, Finance Secretary Rajiv Kumar said on Tuesday.

The move will help boost confidence of people in the banking system which has been shaken after a scam last year in Punjab and Maharashtra Cooperative Bank (PMC Bank) which affected lakhs of customers.

At present, bank depositors get an insurance cover of Rs 1 lakh on their amount by the Deposit Insurance and Credit Guarantee Corporation (DICGC) if a bank fails.

“Work has begun on Budget announcement. Department of Financial Services has given approval for raising deposit insurance cover from Rs 1 lakh to Rs 5 lakh. The change is being done after a gap of 27 years,” Kumar said in a tweet.

Accordingly, he said, the banks will pay a premium of 12 paise against 10 paise per Rs 100 deposited.

Finance Minister Nirmala Sitharaman in her Budget speech on Saturday said a robust mechanism is in place to monitor the health of all scheduled commercial banks and that depositors’ money is safe. PTI

4:30 PM

Sensex skyrockets 917 pts to settle around pre-budget level

Returning to its pre-budget level, market benchmark Sensex zoomed 917 points on Tuesday, helped by hectic buying across the board as investors seemed relieved sensing stability in global markets.

The 30-share BSE Sensex settled 917.07 points, or 2.30 per cent, higher at 40,789.38. It hit an intra-day high of 40,818.94.

Similarly, the broader NSE Nifty soared 271.75 points, or 2.32 per cent, to 11,979.65.

Titan was the biggest gainer in the Sensex pack, rallying 7.97 per cent, followed by ITC, HDFC, Bajaj Finance, and Tata Steel.

On the other hand, Bajaj Auto and HUL were on the losing side.

Analysts said efforts to contain the deadly coronavirus and a significant drop in global crude oil prices in recent days helped improve investor sentiment. PTI

4:00 PM

Gold drops Rs 388 amid sell-off in global prices, rupee appreciation

Gold prices on Tuesday dropped by Rs 388 to Rs 41,270 per 10 gram in the national capital in line with sell-off in global prices and rupee appreciation, according to HDFC Securities.

Likewise, silver also fell by Rs 346 to Rs 47,080 per kg from Rs 47,426 per kg in the previous trade.

Gold had on Monday closed at Rs 41,658 per 10 gram.

“Spot gold for 24 Karat in Delhi plunged by Rs 388 in line with sell-off in global gold prices and rupee appreciation. Spot rupee was trading around 18 paise stronger against the dollar during the day,” HDFC Securities Senior Analyst(Commodities) Tapan Patel said.

In opening trade on Tuesday, the rupee appreciated by 19 paise to 71.19 against the US dollar.

In the international market, gold was quoting lower at USD 1,570 per ounce, while silver was ruling flat at USD 17.73 per ounce.

“Gold prices declined as global markets bounced back with stable Chinese indices after China central bank infused liquidity,” he added. PTI

3:45 PM

Moody's says nominal GDP growth projections ambitious given structural challenges

Moody’s Investors Service on Tuesday said economic growth projections made by Finance Minister Nirmala Sitharaman in her Budget for 2020-21 appear ambitious given the structural and cyclical challenges facing the Indian economy.

The Budget expects nominal GDP growth of 10% in the next fiscal , followed by 12.6% and 12.8% in FY22 and FY23, respectively.

“These forecasts appear ambitious given the combination of structural and cyclical challenges that the Indian economy faces,” it said.

Even before the significant slowing in economic expansion in 2019, nominal GDP growth had averaged about 11% over the five years from 2014 to 2018.

“We expect the economy to rebound at a more modest pace, with nominal GDP growth rising to around 8.7% in fiscal 2020 and 10.5% in fiscal 2021, from about 7.5% in fiscal 2019,” it said. PTI

3:30 PM

Oil Min moves Cabinet note for splitting GAIL; pipeline business may be sold later

The Oil Ministry has moved a cabinet note seeking approval for hiving off state-owned gas utility GAIL (India) Ltd’s pipeline business into a separate entity for a possible sale to a strategic investor at a later date, sources privy to the development said.

GAIL is India’s biggest natural gas marketing and trading firm and owns more than 70% of the country’s 16,981-km pipeline network, giving it a stranglehold on the market.

Users of natural gas have often complained about not ‘fairly’ getting access to GAIL’s 12,160-km pipeline network to transport their fuel.

Sources said to resolve the conflict arising out of the same entity owning the two jobs, bifurcating GAIL is being considered.

GAIL’s core business after the bifurcation would be the marketing of natural gas and petrochemical production. It will have to hire capacity on pipelines from the subsidiary and pay regulator approved traffics for the same.

It will continue to execute the gas sales agreements it has already signed and will be responsible for the discharge of the obligation under purchase pacts including for import of LNG.

The Ministry last month floated a note for consideration of the Union Cabinet for transferring the pipeline business into a 100% subsidiary. PTI

3:20 PM

Truecaller turns profitable, crosses 200 mn monthly user-base globally

Phone directory app Truecaller on Tuesday said it has achieved profitability over the last four months with India contributing significantly to the growth.

The Stockholm-based company has also crossed the 200 million monthly active users (MAUs)-mark globally. Of this, 150 million were from India.

“The aggressive growth in advertising sales and premium subscriptions in India have been a driving force in revenue generation,” Truecaller said in a statement.

Premium subscriptions have grown immensely since it was launched a year back, it added.

“It has already crossed the 1-million mark and projected to grow by another 50 per cent in coming months,” according to the statement.

Sandeep Patil, Managing Director at Truecaller, said the company has been profitable for the last several months while simultaneously growing revenues at over 70 per cent annually. PTI

3:00 PM

RBI’s rate setting panel starts meeting amid rising inflation, slowing GDP

Reserve Bank of India Governor Shaktikanta Das headed six-member rate setting panel started its three-day brainstorming meeting on Tuesday in the backdrop of Union Budget projecting a widening of fiscal deficit amid slowing economy and hardening inflation.

The Monetary Policy Committee (MPC), which announces the benchmark lending rate (repo) on bi-monthly basis, has been tasked by the government to tame retail inflation based on Consumer Price Index (CPI) at 4 per cent (+,- 2 per cent).

The retail inflation that for several months remained in the comfort zone of the central bank has started inching up and crossed the 7 per cent mark during December 2019, mainly due to spiralling prices of vegetables.

Experts said the MPC members are going to have a tough time as slowing economy makes the case for reduction in repo rate, while rising inflation and higher fiscal deficit will require the central bank to either hike the rate or maintain a status quo.

The sixth bi-monthly monetary policy statement for 2019-20 will be announced at 1145 hours on Thursday.

The government has estimated India’s gross domestic product (GDP) at 5 per cent in the current financial year owing to both domestic as well as global factors amid weakening consumption demand in the country. PTI

2:40 PM

Gold futures slump Rs 262 to Rs 40,482 per 10 gm

Gold prices on Tuesday fell by Rs 262 to Rs 40,482 per 10 gram in futures trade as participants cut down their positions in line with a weak trend overseas.

On the Multi Commodity Exchange, gold prices for delivery in April fell by Rs 262, or 0.64 per cent, to Rs 40,482 per 10 gram in a business turnover of 18,019 lots.

Analysts said subdued overseas cues mainly influenced market sentiments here.

Globally, gold was trading 0.54 per cent lower at USD 1,573.90 an ounce in New York. PTI

2:20 PM

European shares rise in early trade; resources lead

European shares opened higher on Tuesday, extending their recovery from a sharp selloff last week that was driven by concerns over a virus outbreak in China, with the basic resources sector leading gains.

The pan-European STOXX 600 index rose 0.6% by 0803 GMT, having ticked up slightly on Monday after logging its worst week in six months.

Stock markets in Asia, particularly in China, gained after steep falls on Monday, although headlines about the coronavirus outbreak are expected to sway markets in the near term.

The basic resources sector, which consists of several China-focused miners, was the best performer among EU regional subindexes, adding about 1.5%.

German stocks rose about 0.7% after data on Monday pointed to some recovery in the beleaguered manufacturing sector. However, an economic slowdown in China is likely to add more pressure. Reuters

2:00 PM

Reform of customary laws urged to protect India's indigenous land

C ustomary laws in the northeastern states of India are failing to protect indigenous lands and must be reformed to safeguard the property of women and poorer tribal people, land rights analysts said on Tuesday.

Customs related to indigenous tradition, including those on land use, are protected by the Indian constitution in four of the seven northeastern states, where land is owned and managed by tribal communities and clans without formal titles.

But some states have recently introduced laws to promote individual ownership of land and give governments greater power, thereby weakening customary laws and protections, according to Walter Fernandes, a senior fellow at the North Eastern Social Research Centre, an Indian think tank.

While customary laws prevents the sale or transfer of tribal land to non-tribals, there is no ban on the state acquiring such land, he added at the sidelines of a conference in Shillong in the northeastern state of Meghalaya.

Power also rests with tribal elites, who are usually men and can pressure women and poorer members to consent to commercial projects, or sell their land, Fernandes said.

“Customary law needs to be reformed, as it does not adequately protect the rights of women or community members from powerful members of their own community,” he said.

“Without adequate protection, the formalisation of land tenure - rather than the gradual evolution of the informal - has led to conflict and alienation of indigenous land,” he said.

The northeastern states are among the most heavily forested and resource-rich land in India, yet these rural areas have greater landlessness than the national average.

Last year, the Supreme Court ruled that indigenous people in Meghalaya - which has constitutional protections - have full rights over the land and its resources, and that only they can grant permission for mining.

Yet Arunachal Pradesh state in 2018 passed a law that granted individual ownership of land for the first time. Authorities said it would give enable tribal communities to use land as collateral for loans, and earn higher incomes. Reuters

1:45 PM

Pakistan will 'compensate' Malaysia by buying more palm oil after India withdraws: PM Khan

Pakistan will do its best to buy more palm oil from Malaysia after top buyer India put curbs on such imports last month amid a diplomatic row with the Southeast Asian nation, Prime Minister Imran Khan said on Tuesday.

India has put general restrictions on refined palm oil imports and informally asked traders specifically to stop buying from Malaysia, the world's second-biggest producer and exporter of the edible oil, in retaliation for Malaysia's accusation that recent Indian policies discriminate against Muslims.

India is a Hindu-majority country while Malaysia and Pakistan are mainly Muslim. Neighbours India and Pakistan have been mostly hostile to each other since the partition of British India in 1947, and have fought two of their three wars over competing territorial claims in Kashmir.

Malaysian Prime Minister Mahathir Mohamad said he discussed palm oil with Khan - in Malaysia on a state visit - and that Pakistan had indicated it would import more from Malaysia.

“That's right, especially since we noticed India threatened Malaysia for supporting the Kashmir cause, threatened to cut palm oil imports,” Khan told a joint news conference, referring to India's Muslim-majority region of Kashmir.

“Pakistan will do its best to compensate for that.”

Pakistan bought 1.1 million tonnes of palm oil from Malaysia last year, while India bought 4.4 million tonnes, according to the Malaysian Palm Oil Council.

India has repeatedly objected to Mahathir speaking out against its move last year to strip Kashmir's autonomy and make it easier for non-Muslims from neighbouring Muslim-majority Bangladesh, Pakistan and Afghanistan to gain citizenship. Reuters

1:30 PM

Recruiters indicate positive hiring outlook for H1 2020: Survey

Employers in India are bullish about their hiring outlook for the first half of this year, with 55 per cent of recruiters anticipating new jobs as well as replacement hiring to happen during the six-month period, a survey said on Tuesday.

The bi-annual survey, ‘Naukri Hiring Outlook January—June 2020’, that saw participation from over 2,400 recruiters across the country, projected an overall positive outlook.

Around 55 per cent recruiters anticipate new jobs as well as replacement hiring to happen in the first half of the year while 26 per cent predict only new jobs and 13 per cent expect to do replacement hiring only, the survey noted.

Of those surveyed, 3 per cent indicated a scenario of “no hiring” at all while only 1 per cent of the total recruiters anticipated layoffs.

“Analytics emerges as one of the functional areas where 14 per cent recruiters indicate hiring apart from popular roles in IT, Sales and Marketing and Operations,” Pawan Goyal, Chief Business Officer, Naukri.com said.

Most of the hiring will be under five years of experience, as 62 per cent of recruiters will be hiring in the band of 3-5 years, while 51 per cent in the 1-3 years band, the survey said.

Around 30 per cent of recruiters indicated that hiring will happen for the experience band of 8-12 years, while 18 per cent said they will be recruiting for experience levels of over 12 years.

On attrition, the survey said, 40 per cent of recruiters expect attrition to stay over 10 per cent, while 26 per cent recruiters indicate that it should stay under 5 per cent. Further, highest attrition is expected in the 1-3 years experience band at 46 per cent.

According to the Naukri Hiring Outlook 2020, 32 per cent of companies indicated an increment between 5-10 per cent, and 7 per cent recruiters suggested an increment of under 5 per cent, while 28 per cent companies will stick to an average increment of 15 to 30 per cent.

The survey further noted that 40 per cent of recruiters expect talent crunch to stay high. This is highest at the band of 3-5 years experience at 47 per cent followed by 39 per cent in the 1-3 years band and 32 per cent in the 5-8 years experience band.

Naukri Hiring Outlook is a bi-annual survey conducted amongst recruiters and recruitment consultants aimed at gauging hiring trends across companies and industries. More than 2,400 recruiters and consultants representing more than 15 major industries participated in this edition of the survey. PTI

1:15 PM

UBS: Oil demand growth likely to take a hit from coronavirus

UBS:

* lowers its 2020 oil demand growth estimate to 0.9 million barrels per day (mbpd) from 1 mbpd previously

* says oil demand growth likely to take a hit from impact of coronavirus on transportation; demand concerns likely to trigger deeper cuts by opec and its allies

* expects OPEC+ to announce additional production cut of at least 500,000 barrels per day for 2q 2020; eventually extending cuts until end of the year. Reuters

1:00 PM

Attempts made to mislead people on Union Budget: Modi

Prime Minister Narendra Modi on Tuesday said attempts were made to mislead people on the Union Budget, however, even critics now accept that it is the best budget under the prevailing global economic scenario.

Speaking at the BJP parliamentary party meeting here, Modi hailed the Bodo accord and the agreement to settle the members of Bru-Reang tribe in Tripura, terming them “historic” successes of his government in this decade.

It will usher in an era of peace in the North East which has suffered decades of bloodshed and violence, he said.

Referring to the Union Budget, which was presented by Union Finance Minister Nirmala Sitharaman on Saturday, Modi said attempts were made to mislead people on it.

However, people have now realised that it is a very good budget and even critics have acknowledged that this is the best budget under the prevailing global economic scenario, he said.

BJP president J P Nadda, who attended the first parliamentary party meet after becoming the party chief, was felicitated by Modi and others.

Nadda expressed confidence about the BJP’s win in the February 8 Delhi Assembly polls and added that over 240 party MPs are spending several days in the poor colonies of the national capital to reach out to voters. PTI

12:45 PM

Shriram Transport Finance stock zooms nearly 13% post Q3 earnings

Shares of Shriram Transport Finance Company (STFC) on Tuesday zoomed nearly 13 per cent after the company reported 38.4 per cent rise in consolidated net profit for the third quarter ended December.

The scrip jumped 12.84 per cent to Rs 1,113.40 on the BSE.

At the NSE, it climbed 12.85 per cent to Rs 1,114.95.

Shriram Transport Finance on Monday reported 38.4 per cent rise in consolidated net profit at Rs 879.16 crore for the third quarter ended December.

The non-banking financial company (NBFC) had posted a net profit of Rs 635.45 crore in October-December 2018-19.

Total income during the quarter under review rose to Rs 4,288.26 crore from Rs 3,993.40 crore in the year-ago quarter.

STFC is the flagship company of Shriram Group. PTI

12:30 PM

LIC staff union to hold walk-out strike to protest against IPO

The employees’ union of Life Insurance Corporation (LIC) will stage an hour-long walk-out strike on Tuesday to protest against the government’s move to sell its stake in the state-run insurer through an initial public offering.

The walk-out will take place at all offices of the insurance behemoth across the country.

In the Union Budget announced on Saturday, Finance Minister Nirmala Sitharaman announced that the government, which holds 100 per cent stake in LIC, will sell a part of its holding through an initial public offering (IPO).

“As an immediate reaction to the proposal to list LIC, All India LIC Employees Federation will hold one-hour walk-out strike on February 4,” the union said in a statement.

Listing of LIC is against national interest as over the years it has been playing a pivotal role in nation building activities, it said.

On a capital base of Rs 5 crore, the union said LIC’s valuation surplus was Rs 53,211.91 crore, life fund stood at Rs 28.28 lakh crore and asset under management over Rs 31.11 lakh crore at the end of FY19.

Being one of the biggest financial institutions of the country, any move to privatise LIC will shake the confidence of the common man and will be an affront to our financial sovereignty. The very purpose of LIC to provide insurance coverage to socially and economically backward class at a reasonable cost will be defeated and motto will change from service to profit, the statement said.

Minister of State for Finance Anurag Thakur said the listing of LIC will help bring in greater transparency, public participation and also deepen the equity market.

Government came out with the idea (LIC listing). The details will follow and it will be in the interest of LIC and its policyholders. Interest of LIC and policyholders will be safeguarded, Thakur recently told PTI.

Finance secretary Rajiv Kumar on Sunday said the listing may be done in the second half of the next financial year. PTI

12:15 PM

Oil prices rebound, fuelled by hopes for OPEC+ supply cuts

Oil prices clawed back ground on Tuesday, rising 1% after the previous session's slump, amid hopes for new production curbs by OPEC and its allies to offset any drop in future fuel demand that might be triggered by China's coronavirus outbreak.

Brent crude was at $54.93 a barrel by 0615 GMT, up 48 cents, or nearly 0.9%, while U.S. West Texas Intermediate (WTI) crude was up 57 cents, or over 1%, at $50.68 a barrel.

Despite Tuesday's gains, an extended slide over the last two weeks on concern over the global economic impact of the coronavirus means prices are still close to 20% lower than this year's peak on Jan. 8. Monday's drop left crude prices at their lowest in more than a year.

People familiar with the matter told Reuters on Monday that the Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia, known as OPEC+, were considering cutting crude output by a further 500,000 barrels per day (bpd) due to the impact on demand from the coronavirus.

“A some half-a-million barrels (per day) cut is expected but we won't rule out an even deeper cut should the situation worsen,” said Margaret Yang, analyst at CMC Markets. “This expectation boosted oil trading today.”

Despite the return to calmer trading, mirroring other financial markets on Tuesday, Goldman Sachs warned that while it sees oil producers responding to the situation by cutting supply, the coronavirus outbreak's impact on demand is likely to keep volatility in spot prices elevated.

The coronavirus has now claimed more than 420 lives in China and resulted in deaths in the Philippines and Hong Kong.

“Oil prices are now at levels where we would expect a supply response from both OPEC and shale producers, and where China would likely seek to build crude inventories,” Goldman said in a note.

Still, other warned that any failure by OPEC+ to take what investors deem suitably robust action to limit the impact of the virus on oil markets could trigger further price drops. Reuters

12:00 PM

Bajaj Auto total sales dips 3% to 3,94,473 units in January

Bajaj Auto on Tuesday reported 3.1 cent decline in total sales at 3,94,473 units in January.

The firm had sold a total of 4,07,150 units in January 2019, Bajaj Auto said in a statement.

Total domestic sales were down 16.6 per cent at 1,92,872 units as compared to 2,31,461 units in the year-ago month, it added.

The two-wheeler sales in domestic market were at 1,57,796 units last month against 203,358 units in January 2019, down 22.4 per cent. PTI

11:45 AM

World Bank calls for global effort against virus

The World Bank has called for countries to step up programmes to fight the new coronavirus outbreak, and said it was considering mobilising its own resources against the disease.

“We are calling on all countries to strengthen their health surveillance and response systems, which is essential to contain the spread of this and any future outbreaks,” the institution said in a statement on Monday.

“The World Bank Group is reviewing financial and technical resources that can be mobilised quickly to support affected countries,” and also “closely coordinating with international partners to accelerate the international response.”

Since breaking out in China, the virus has killed 425 people in the country, exceeding the 349 dead in the Chinese mainland from the Severe Acute Respiratory Syndrome (SARS) outbreak of 2002-03, which eventually killed nearly 800 globally.

The new virus has infected 17,200 people and spread to more than 20 countries amid fears it could paralyze China and harm the global economy.

The World Bank said it was “monitoring the wider economic and social impacts of this crisis,” and would support “China’s efforts to respond, including its efforts to maintain resilience in its economy.”

If the epidemic reaches the same severity as the Spanish flu in 1918, which killed 30 million people, it could cost the global economy between one percent and ten per cent of growth, World Bank President Jim Yong Kim said at the end of January.

International Monetary Fund chief Kristalina Georgieva said last week that negative impacts on the economy in the first half of 2020 were likely but “it would be irresponsible to offer any speculations around what may happen.” PTI

11:30 AM

China stocks off 12-month trough on central bank support

China stocks rebounded on Tuesday after policymakers stressed they will stabilise markets that took a hammering amid the coronavirus outbreak, with nearly $400 billion of market value erased from Shanghai's benchmark index in the previous session.

At the midday break, the Shanghai Composite index was up 0.2% at 2,752.44 points, jumping off a fresh one-year low hit at the open. The blue-chip CSI300 index was up 1.3%.

CSI300's financial sector sub-index rose 0.6%, the consumer staples sector was up 1.6%, the real estate index gained 0.6% and the healthcare sub-index was up 2.2%.

The smaller Shenzhen index climbed 0.5% and the start-up board ChiNext Composite index rose 3.7%.

The onshore yuan was trading 0.3% firmer at 7 per dollar, as of 0431 GMT.

Investors shed almost $400 billion in market value from Shanghai's benchmark index in the previous session - the first opportunity to reflect their anxiety over the epidemic after the extended Lunar New Year holiday. Reuters

11:15 AM

Opinion: Epidemic impact will simulate China mini-recession

The Wuhan virus could spark Chinas first recession-like experience. With quarantines depressing consumption, whole industries are at risk of severe hits. Officially GDP growth will stay positive, but for a generation that has never experienced a normal economic cycle, this downturn may provide a realistic simulation.

The Peoples Republic has weathered emergencies before, including the SARS epidemic in 2002 and the 2008 global financial crisis. In both cases, the country was able to outgrow the impact using state-driven investment.

As Beijing now confronts the coronavirus, its economy is more mature, more indebted and thus more vulnerable. Consumption, not exports, account for the bulk of GDP growth, while yields from infrastructure investment have naturally diminished. Chinas leading companies are domestic e-commerce operations run by tech giants such as Alibaba and Tencent.

Consumption is harder to kickstart with policy easing, especially when everything is under quarantine. UBS economist Wang Tao has cut her consumption growth estimate for this year to 5% from 6.8%; a government economist said the crisis could knock estimated growth down a full percentage point to 5% in the first quarter of 2020.

And thats the optimistic case. It could take months for health authorities to control the outbreak, and a year or more to discover and distribute a vaccine. In the meantime, the private sector, which creates four out of five jobs, is under duress. Jia Guolong, who runs the popular Xibei restaurant chain, told local media that his 400 stores are closed; he only has enough cash for three months, and called for tax amnesty and wage subsidies.

Layoffs are one big risk; real estate is another, directly and indirectly driving as much as a fifth of economic activity. But the coronavirus has frozen transactions, making it hard for developers to service their mountains of expensive debt. Local governments, for their part, need to sell land to developers to offset the fiscal impact of tax cuts, and to pay off their own bondholders. If buyers dont come back to market, the ensuing property cash would amplify the economic crisis.

The financial impact of the SARS crisis was short-lived, but there was no trade war, nor was corporate debt 154% of GDP. Even if the coronavirus gets controlled quickly, it will deliver China a painful, but perhaps educational, economic experience. Reuters

11:00 AM

Rupee rises 19 paise to 71.19 against US dollar in early trade

The rupee appreciated by 19 paise to 71.19 against the US dollar in opening trade on Tuesday, driven by positive opening in domestic equities.

The rupee opened strong at 71.24 at the interbank forex market then gained further ground to touch 71.19 per dollar, displaying gains of 19 paise against the greenback.

Forex traders said concerns over fiscal slippage and rising coronavirus outbreak fears still remain.

The next trigger for the currency will be the Reserve Bank of India’s monetary policy meeting, as its commentary on inflation and well as growth forecast would be keenly watched, they said.

The Reserve Bank of India is scheduled to hold its Monetary Policy Committee (MPC) during February 4-6, 2020.

Meanwhile, rising crude prices, foreign fund outflows and strengthening of the American currency weighed on the local unit.

On Monday, the rupee had settled at 71.38 against the US dollar.

Foreign institutional investors sold equities worth Rs 1,200 crore on a net basis on Monday, according to provisional exchange data.

The benchmark BSE Sensex was trading with gains of 476.82 points, or 1.23 per cent to quote at 40,349.13 while the NSE Nifty was trading at 11,851.55, up 143.65 points, or 1.23 per cent.

Meanwhile, brent crude, the global benchmark, was trading at USD 54.57 per barrel higher by 0.40 per cent.

The 10-year government bond yield was at 6.50 per cent in morning trade. PTI

10:45 AM

Goldman: Oil market pricing at least -0.44% hit on GDP from Coronavirus

Goldman Sachs:

* says oil market pricing at least -0.44% hit on global gdp from coronavirus alone

* says “prices are now at levels where we expect a supply response from both opec and u.s. shale producers, pointing to only modest further downside potential”

* says uncertainty on the spread of the virus can keep spot price volatility elevated. Reuters

10:30 AM

China postpones high-level business forum amid virus outbreak

China has postponed a high-level business forum that is usually held in late March amid an outbreak of the new coronavirus that has killed more than 420 people.

China Development Forum, which is hosted by a foundation under the State Council, has delayed this year's meeting until further notice, a media representative of the forum told Reuters on Tuesday.

The forum is usually attended by high-level government officials and senior executives from multinational companies. Reuters

10:15 AM

Sensex rallies over 400 points; Nifty above 11,800

Market benchmark Sensex surged over 400 points in morning session on Tuesday led by gains in index-heavyweights Reliance Industries, HDFC twins and ITC amid firm global cues.

Reclaiming the 40,000 mark, the 30-share BSE index was trading 438.16 points or 1.10 per cent higher at 40,310.47.

Similarly, the broader NSE advanced 120.15 points, or 1.03 per cent, to 11,828.05.

In the previous session, Sensex rose 136.78 points or 0.34 per cent to settle at 39,872.31, and Nifty gained 46.05 points or 0.39 per cent to close at 11,707.90.

Meanwhile, on a net basis, foreign institutional investors sold equities worth Rs 1,200.27 crore, while domestic institutional investors purchased shares worth Rs 1,286.63 crore on Monday, data available with stock exchanges showed.

HDFC was the top gainer in the Sensex pack, rising up to 2.5 per cent, followed by Reliance Industries, UltraTech Cement, Hero MotoCorp, ITC, IndusInd Bank and HDFC Bank,

On the other hand, Bajaj Auto, HUL, Nestle India and Asian Paints were trading in the red.

According to analysts, market finding some ground after a disappointing Union Budget. Besides, manufacturing activity hitting an eight-year high eased investor concerns over economic recovery.

Further, positive opening of other Asian stocks too buoyed domestic benchmarks, traders said.

Bourses in Shanghai, Hong Kong, Tokyo and Seoul were trading with gains.

Brent crude oil futures rose 0.51 per cent to USD 54.73 per barrel.

The rupee appreciated 17 paise to 71.20 against the US dollar in morning session. PTI

10:00 AM

RBI seen holding rates, retaining dovish stance

India's central bank is likely to keep monetary policy accommodative without cutting interest rates at a policy meeting on Thursday, economists said, as inflation is above target and the economy has shown possible signs of recovery from its worst slowdown in more than a decade.

The Reserve Bank of India's monetary policy committee (MPC) cut rates by 135 basis points over five straight meetings last year, before surprising markets in December by holding the policy repo steady at 5.15% due to growing concerns over inflation.

A Reuters poll of economists, conducted before the federal budget on Feb. 1, showed the central bank is expected to keep the repo rate unchanged until at least October, when it is seen resuming its easing path.

The RBI is now forecast to next cut rates by 25 basis points to 4.90% in the October-December quarter, though some analysts reckon the central bank will keep rates on hold for longer.

“Right now inflation is the main concern. We expect RBI to hold rates on Thursday and see them pausing in April as well,” said A. Prasanna, economist at ICICI Securities Primary Dealership.

“I think the stance will remain accommodative and MPC will keep the option of one more rate cut open,” he added.

Data released after the MPC's December meeting fuelled even more concern as annual retail inflation surged to 7.35% in December, mainly driven by food prices, its highest level in more than five years.

The RBI is mandated to keep the headline inflation rate within the broad range of 2%-6% while it targets medium term inflation at 4% levels.

Economists had previously drawn comfort from subdued core inflation, a figure they estimate for themselves as it is not given by the statistics department. Five economists spoken to immediately after the release of the December inflation data had put core inflation, which strips out volatile food and fuel prices, in a range or 3.7% to 4.2%.

But the government's economic survey, released on the eve of the budget, suggested they should pay most heed to the headline inflation figure.

“There is convergence of headline inflation towards core inflation,” the survey noted. “Owing to the large weightage of food and fuel in the consumption basket of consumers in India and the fact that demand-side pressures and not just supply side factors are important for food and fuel inflation, focus on headline inflation for monetary policy decisions may be warranted”.

Radhika Rao, economist with DBS Bank in Singapore, expected the policy rate to stay unchanged this year.

“Given the supply-driven nature of the price spurt and likelihood of a gradual pullback over the next two quarters, we expect the RBI to retain an accommodative stance while keeping rates on hold,” Rao said.

“Transmission of last year's cuts remains central to the policy direction, with directed special OMOs (open market operations) undertaken to temper the longer tenor bond yields.” Reuters

9:30 AM

Disinvestment proceeds to be used for creating infra for country: FM

Finance Minister Nirmala Sitharaman on Monday said the money raised through disinvestment will be used to develop infrastructure, which will have multiplier effect on the economy and not bridging revenue deficit.

The government set an ambitious disinvestment target of Rs 2.10 lakh crore for the next financial year, which includes selling stake in BPCL and insurance behemoth Life Insurance Corporation of India (LIC).

“We are showing clearly where each monies being raised will go. So, it’s not being raised to fill certain hole in the Consolidated Fund of India. The money being raised from disinvestment will go towards infrastructure.

“We are showing the direction. We are telling you where the money is going to be spent so that you can plan your investments and your investments and your expansion well in alignment with what government does... you will facilitate the government and we will equally facilitate the private sector,” she said while addressing industry chamber Ficci here.

Citing an example, she said import of those medical equipment which are not made in India will come at a duty, but duty collected will be utilised to fund creating medical infrastructure in aspirational districts where there are not good hospitals.

She said when the government puts money infrastructure, it has cascading effect and give rise to economic activity.

On criticism of the government selling family silver through disinvestment, she said the money is not going to bridge revenue deficit but for creating infrastructure which has multiplier effect on the economy.

”...money is not going to as fancy as revenue expenditure but going for creating infrastructure for the country which would probably have lot more multiplier effect in terms of economic activity than to keep an inefficient public sector largely. There are some efficient one also that are put on the block,” she said.

Recalling the past experience of government fiscal expansion during the global economic crisis, the Finance Minister said the government has learnt from the past experience and decided not to go on the splurge to boost economy.

“If I have to spend that kind of money, yes we are willing to do but we are clearly saying that we shall not repeat the mistakes of splurging whereas the money spent now with clear intention of asset creation, public asset creation...,” she said. PTI

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Printable version | Apr 7, 2020 6:55:33 AM | https://www.thehindu.com/business/businesslive-04-feb-2020/article30732255.ece

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