The benchmark stock indices have opened the day with significant gains on positive global cues.
Former Niti Aayog Vice-Chairman Arvind Panagariya has weighed in favour of a demand-side stimulus to help the economy recover.
Join us as we follow the top business news through the day.
Gates Foundation backs plan to sell vaccine for $3/dose in India
Sensex rises 142 points; L&T spurts over 4%
A decent day for stocks which managed to hold on to most of their initial gains made in the morning.
PTI reports: "Equity benchmark Sensex jumped 142 points on Monday, tracking gains in L&T, ICICI Bank and HDFC twins amid positive cues from global markets.
After rallying 390.12 points during the day, the 30-share BSE benchmark pared some gains to end 141.51 points or 0.37 per cent higher at 38,182.08. The NSE Nifty climbed 56.10 points or 0.50 per cent to close at 11,270.15.
L&T was the top gainer in the Sensex pack, rallying over 4 per cent, followed by M&M, Sun Pharma, NTPC, Tech Mahindra, ICICI Bank and ITC.
On the other hand, Reliance, Asian Paints, Maruti, Bajaj Finserv and Bajaj Finance were among the laggards.
According to traders, market sentiment was positive amid firm cues from global indices and consistent foreign fund inflows.
Exchange data showed that foreign institutional investors bought equities worth Rs 397.32 crore on a net basis on Friday.
Bourses in Shanghai and Seoul ended on a positive note, while Hong Kong settled in the red. Markets in Tokyo were closed for a holiday.
Stock exchanges in Europe were also trading with gains in early deals.
Global oil benchmark Brent crude was trading 0.97 per cent higher at USD 44.83 per barrel.
In the forex market, the rupee settled with gains of 3 paise at 74.90 against the US dollar."
Reliance Industries’ asset monetisation to boost credit quality: S&P
More kudos to RIL from a ratings agency.
PTI reports: "S&P Global Ratings on Monday said that Reliance Industries Ltd’s sizable proceeds from asset monetisation over the past four months should significantly improve its credit quality.
“RIL’s deleveraging could exceed our expectations, given the extent and magnitude of its asset monetisation,” the rating agency said in a statement.
The asset monetisation was despite operations that are trending weaker than anticipated for the fiscal year ending March 31, 2021.
The oil-to-telecom conglomerate has amassed Rs 2.1 lakh crore in investment proceeds since Facebook announced its investment in its digital unit Jio Platforms Ltd (JPL) in April 2020.
The proceeds include Rs 1.52 lakh crore investments into JPL, a Rs 53,124 crore rights issuance, and Rs 7,600 crore from BP PLC for the fuel retail joint venture.
“The developments suggest that RIL’s adjusted debt could be less than Rs 1 lakh crore by the end of fiscal 2021. This is better than our base case, which already assumes a sharp decline in adjusted debt to Rs 1.7 lakh crore by fiscal 2023, from Rs 2.7 lakh crore in fiscal 2020,” it said.
As a result, S&P believes RIL’s credit quality will improve over the next two to three years, even if the company’s fiscal 2021 earnings are well below forecasts.
“Our sensitivity analysis indicates that RIL’s debt-to-EBITDA ratio will be resilient to earnings volatility, implying material buffer for its current financials,” it said.
RIL’s first-quarter (April-June) earnings were resilient despite weaknesses shown by its peers.
Consolidated EBITDA fell 12 per cent year-on-year to Rs 21,600 crore as the COVID-19 pandemic and lockdowns, both globally and locally, weighed on the company’s oil refining and petrochemicals as well as retail businesses. The digital division was a bright spot, however.
“Although earnings recovery could be slow, we expect RIL’s fundamentals to remain supported by ongoing strength in the digital division and the gradual improvement in its energy segment. We continue to forecast resilient fiscal 2021 results, with EBITDA remaining flat year on year at about Rs 90,000 crore. In our view, RIL’s first-quarter results demonstrate the benefits of having diversified businesses during volatile times,” it said.
Stating that the possibility of sizable acquisitions was a risk to its underlying view on RIL, the rating agency said this was particularly so in the current environment where the company’s financial buffer could see substantial improvement."
Rupee settles 3 paise higher at 74.90 against US dollar
The rupee didn't appreciate much against the US dollar after opening flat this morning.
PTI reports: "The rupee settled with gains of 3 paise at 74.90 (provisional) against US dollar on Monday tracking positive domestic equities.
At the interbank forex market, the rupee opened weak at 74.96, then recovered the lost ground and finally settled at 74.90 against the greenback.
During the day, the domestic unit witnessed an intra-day high of 74.85 and a low of 74.96 against the American currency.
The rupee had settled at 74.93 against US dollar on Friday.
Forex traders said, the rupee traded in a narrow range as positive domestic equities and foreign fund inflows supported the rupee, while strong US dollar and rise in crude oil prices weighed the local unit.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.17 per cent to 93.59.
On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 136.86 points higher at 38,177.43 and the broader NSE Nifty rose 54.60 points to 11,268.65.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 397.32 crore on Friday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, rose 1.10 per cent to USD 44.89 per barrel.
Meanwhile, the number of cases around the world linked to COVID-19 has crossed 1.98 crore; and in India, the number of infections touched 22,15,074."
Are US corporate bond yields the next to turn negative?
Equity MFs see first outflow in over 4 years in July on profit-booking
Interesting changes in the capital markets.
PTI reports: "Equity mutual funds witnessed an outflow of Rs 2,480 crore in July, making it the first withdrawal in more than four years, primarily on profit-booking by investors.
Overall, the mutual fund industry witnessed a net inflow of 89,813 crore across all segments last month, much higher than Rs 7,265 crore seen in June, data by Association of Mutual Funds in India showed on Monday.
This inflow could be attributed to infusion in liquid funds and low duration funds.
As per the data, outflow from equity and equity-linked open ended schemes was at Rs 2,480.35 crore in July as compare to an inflow of Rs 240.55 crore in June.
Such schemes had attracted Rs 5,256 crore in May, Rs 6,213 crore in April, Rs 11,723 crore in March, Rs 10,796 crore in February and Rs 7,877 crore in January.
July 2020 saw the first outflow since March 2016, when equity schemes witnessed a pull out of Rs 1,370 crore.
In July this year, except for equity linked saving schemes (ELSS) and focused fund categories, all the other equity categories witnessed net outflow.
Association of Mutual Funds in India (Amfi) Chief Executive N Venkatesh attributed the outflow from equity-oriented funds to withdrawal from multi-cap and large cap funds due to profit booking by investors.
“Equity-oriented mutual funds witnessed their first major monthly net outflow in a long time. Multi-cap fund category was the worst hit followed by mid-cap and value fund categories, said Himanshu Srivastava, Associate Director — Manager Research at Morningstar India.
This could be largely attributed to investors booking profit given the surge in the equity markets, across market segments, in the recent times, he added.
Multi-cap, midcap, value fund and multi-cap saw outflows to the tune of Rs 1,033 crore, Rs 579 crore, Rs 549 crore and Rs 365 crore, respectively, during the month under review.
However, focussed funds attracted Rs 535 crore, while the same for ELSS was Rs 279 crore.
Apart from equity funds, overall hybrid funds saw an outflow of Rs 7,301 crore.
With equity markets doing well and stable scenario in the fixed income markets, hybrid schemes too witnessed significant net outflows, with viewing this scenario as a good exit opportunity, Srivastava said.
Within the hybrid schemes, balanced hybrid or aggressive hybrid fund, whose mandate is to invest between 65-80 per cent of assets in equities, witnessed a net outflow of Rs 2,196 crore in July."
Platform that helps MSMEs raise funds, sees 20% jump in registrations from Tamil Nadu
Receivables Exchange of India Ltd (RXIL), a trade Receivables Discounting System Exchange Platform, which helps micro, small and medium enterprises (MSMEs) auction their receivables and raise capital, has seen a 20% increase in registrations from Tamil Nadu during the lockdown period.
Trade Receivables Discounting System (TReDS) is an electronic platform that facilitates the financing and discounting of trade receivable of MSMEs, which are due from corporates and other buyers, including government departments and public sector undertakings. MSMEs auction the receivables and raise capital through multiple financiers. At present, there are three TReDS platforms -- RXIL, M1xchange and A.TReDS.
“We have enabled close to 400 MSMEs from across engineering, textile and automotive sectors in Tamil Nadu and are noticing an uptick from MSMEs requesting to be part of the platform,” Ketan Gaikwad MD & CEO, Receivables Exchange of India Limited (RXIL) said.
Cipla shares rally 10% after Q1 earnings
The benchmark indices are sustaining their gains with help from pharma stocks such as Cipla.
PTI reports: "Shares of drug firm Cipla on Monday jumped 10 per cent after the company reported a 26.58 per cent rise in its consolidated net profit for the quarter ended June.
The company’s stock zoomed 9.99 per cent to Rs 801.45 -- its 52-week high -- on the BSE.
It rose sharply by 9.99 per cent to its one-year high of Rs 801.50 on the NSE.
The drug firm on Friday reported a 26.58 per cent rise in its consolidated net profit to Rs 566.04 crore for the quarter ended June on the back of robust sales.
The company had posted a net profit of Rs 447.15 crore for the corresponding period of the previous fiscal, Cipla said in a BSE filing.
Total revenue from operations for the quarter under consideration stood at Rs 4,346.16 crore. It was Rs 3,989.02 crore for the same period year ago, it added.
“During the quarter, our businesses actively re-imagined their operating models to drive strong growth across markets of India, South Africa, the US and focused execution on cost optimization helped drive the quarter EBITDA to 24 per cent,” Cipla MD and Global CEO Umang Vohra said.
The company is also at the forefront in combating COVID-19 through its strategic partnerships and a spectrum of offerings in its portfolio, he added."
Big Tech is eating the world
Gold dips as dollar holds onto gains; U.S.-China spat in focus
The yellow metal is cooling down after a record rally this year.
Reuters reports: "Gold prices fell on Monday as the dollar held onto gains made after better-than-expected U.S. payrolls data, while investors kept a close eye on Sino-U.S. relations ahead of scheduled trade talks.
Spot gold was down 0.3% to $2,028.90 per ounce by 0336 GMT. U.S. gold futures rose 0.6% to $2,039.20. Japanese and Singapore markets were closed for public holidays. Gold hit a record high of $2,072.50 on Friday before retreating nearly 2% as the dollar bounced on data showing U.S. nonfarm payrolls increased 1.763 million in July.
“The stronger dollar narrative is weighing on investors' decisions, along with the fact that people will be more (prone) to profit-taking after such a big run-up,” said Stephen Innes, chief market strategist at financial services firm AxiCorp. “A correction is very possible here. It really depends on how market views the overall dollar, with U.S.-China trade escalation sort of favourable to the dollar.”
The dollar has, on occasion, been the favoured safe haven amidst flare-ups in tensions between Washington and Beijing. Last week, U.S. President Donald Trump took steps to ban two popular Chinese apps. “There is room here for people to unwind some of their gold exposure,” said DailyFx currency strategist Ilya Spivak, since it appears the U.S. Federal Reserve might start “to take their foot off the gas” on aggressive stimulus after recent better economic data.
Speculators reduced their bullish positions in COMEX gold and silver contracts in the week to Aug. 4. But gold's appeal as a safe haven has been underpinned by the uncertainty driven by the coronavirus pandemic, with resultant widespread global stimulus also fuelling concerns of inflation, helping bullion surge over 33% so far this year.
In the United States, which has marked a grim milestone of 5 million cases, Trump signed executive orders on Saturday partly restoring enhanced unemployment payments to millions of Americans. Elsewhere, silver fell 1.2% to $27.96 per ounce, while platinum rose 0.7% to $968.56 and palladium climbed 0.6% to $2,188.83."
Frequent earthquakes prompting people to look for home insurance: Survey
Interesting change in people's behavior as earthquake frequency rises.
PTI reports: "Frequent low-intensity earthquakes are prompting people living in the National Capital Region (NCR) to look for home insurance, says a survey conducted by the e-insurance platform Policybazaar.com.
The company said it surveyed more than 11,000 insurance buyers who visited the mobile application of the company between July 17 and 21, 2020. The survey was carried out to apprehend the perception and understanding of people towards home insurance and to gauge their understanding of the benefits home insurance.
According to the online survey, five out of ten respondents in Delhi said that earthquakes have made them anxious to think about buying home insurance.
“In an already uncertain time, the anxiety about earthquakes has triggered nearly 42 per cent of respondents’ pan-India and in Delhi, who don’t have a home insurance yet, to consider buying home insurance in the near future,” Policybazaar.com said.
Pan-India, nearly every fifth person who took the survey admitted to already having home insurance while in the National Capital Region, 35 per cent of the respondents have home insurance, it said.
It further noted that “unfortunately, home insurance is certainly not the first insurance product” on most people’s list as 73 per cent of the respondents across India and 57 per cent in Delhi (NCR) said that they have so far not considered buying home insurance.
“These numbers depict a major concern and this is because, according to a report by the National Disaster Management Authority, 59 per cent of India’s area is vulnerable to moderate-to-major earthquakes,” it said.
The country is divided into four seismic zones — II, III, IV and V — that signify an increasing order of intensity and frequency of occurrences of earthquakes, it added.
As per the survey, around 10 per cent of respondents who do not have a home insurance yet said that they were planning to buy home insurance in the near future, while over 30 per cent considered buying home insurance a possibility.
“It may be assumed that considering the given scenario and the frequency of earthquakes, people have slowly and steadily started to realise the importance of home insurance and are giving it a second thought for protecting their home and property,” said PolicyBazaar.com."
Rupee opens flat against US dollar
A flat opening for the rupee this morning despite some strngth shown by stocks.
PTI reports: "The rupee opened on a flat note against the US dollar on Monday tracking weakness in Asian peers even as domestic equities started on a positive note.
At the interbank forex market, the rupee opened weak at 74.96, down 3 paise over its previous close of 74.93.
The domestic unit, however, soon pared the losses and was trading 2 paise higher at 74.91 against the greenback.
Forex traders said, while firm start of the equity market and foreign fund inflows supported the rupee, factors like weak Asian currencies and rising COVID-19 cases dragged down the local unit.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.11 per cent to 93.32.
On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 315.34 points higher at 38,355.91 and broader NSE Nifty rose 98.90 points to 11,312.95.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 397.32 crore on Friday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, rose 0.97 per cent to USD 44.83 per barrel.
Meanwhile, the number of cases around the world linked to COVID-19 has crossed 1.98 crore; and in India, the number of infections touched 22,15,074."
Economy may need stimulus on demand side: Niti Aayog Vice-Chairman Arvind Panagariya
As India’s economic growth begins to pick up, the country is going to need perhaps ‘a little bit of stimulus’ on the demand side, noted economist and former Niti Aayog Vice-Chairman Arvind Panagariya said on Saturday.
Mr. Panagariya also said that he was more worried about the general trend of rising import tariffs in India.
“Down the road, as the economy is continuing to open up, if we see that inventories are accumulating rapidly then that would be a clear sign that there is a demand deficiency problem. At that point, I think stimulus would be very useful,” he said at CII’s India@75 virtual event.
Mr. Panagariya pointed out that even with the current level of intervention, India was staring at debt-to-GDP ratio rising from 72% to about 85% at least by the end of the current year.
Sensex surges over 300 points in early trade; Nifty tops 11,300
Another great to start to the week for stocks.
PTI reports: "Benchmark Sensex jumped over 300 points in early trade on Monday, led by gains in index majors HDFC twins, L&T and Kotak Bank amid sustained foreign fund inflow and positive cues from global markets.
The BSE Sensex was trading 317.68 points or 0.84 per cent higher at 38,358.25; while the NSE Nifty was up 92.05 points or 0.82 per cent at 11,306.10.
M&M was the top gainer in the Sensex pack, rallying over 4 per cent, followed by L&T, Kotak Bank, SBI, Bajaj Finance, Sun Pharma, ITC and HDFC duo.
On the other hand, Maruti, Tata Steel and Nestle India were the laggards.
In the previous session, the Sensex had settled just 15.12 points or 0.04 per cent higher at 38,040.57, while the Nifty rose 13.90 points or 0.12 per cent to finish at 11,214.05.
Exchange data showed that foreign institutional investors bought equities worth Rs 397.32 crore on a net basis on Friday.
According to traders, market sentiment was positive tracking firm cues from other Asian indices and consistent foreign fund inflow.
Bourses in Shanghai, Hong Kong and Seoul were trading on a positive note, while Tokyo was closed for a holiday.
Global oil benchmark Brent crude was trading 1.06 per cent higher at USD 44.87 per barrel."
Coal import drops 43% in July owing to high stockpile at pitheads, plants
India’s coal import fell 43.2% to 11.13 million tonnes (MT) in July this year on account of high stockpile of the dry fuel at pitheads, plants and ports.
The country had imported 19.61 MT of coal in July 2019, according to a provisional compilation, by mjunction services limited, based on the monitoring of vessels’ positions and data received from shipping companies.
mjunction — a joint venture between Tata Steel and SAIL — is a B2B e-commerce company that also publishes research reports on coal and steel verticals.
“Imports in July 2020 stood at 11.13 million tonnes (provisional)... Earlier, coal and coke imports in July 2019 stood at 19.61 MT,” it said.
