Today's top business news: Stocks snap six days of gains, gold falls below $1,900 level, UK's Q2 GDP contracts 20%, and more

A view of the Bombay Stock Exchange building in Mumbai.

A view of the Bombay Stock Exchange building in Mumbai.   | Photo Credit: PTI

The benchmark stock indices have opened the day with losses after clocking gains in the last two days.

Gold is experiencing a sharp correction, falling below the $1,900/oz level. The yellow metal earlier traded well above the $2,000/oz level.

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

4:30 PM

UK's Q2 GDP contracts 20%

 

4:00 PM

Sensex, Nifty end marginally lower; HCL Tech rallies over 4%

The benchmark indice managed to stage a recovery after from their morning losses.

PTI reports: "Equity benchmarks Sensex and Nifty ended with marginal losses on Wednesday, weighed down by Kotak Bank, Reliance Industries and HDFC Bank, despite largely positive cues from global peers.

After touching a low of 38,125.81 during the day, the BSE Sensex pared most losses to end 37.38 points or 0.10 per cent lower at 38,369.63.

On similar lines, the NSE Nifty slipped 14.10 points or 0.12 per cent to close at 11,308.40.

Kotak Bank was the top loser in the Sensex pack, dropping over 2 per cent, followed by Sun Pharma, Bajaj Finserv, L&T, Bajaj Finance, HUL and Titan.

On the other hand, HCL Tech rallied over 4 per cent. SBI, Tech Mahindra, Maruti and PowerGrid were among the other gainers.

According to traders, market sentiment was weak following lacklustre macroeconomic data and concerns over rising coronavirus cases.

India’s industrial production declined by 16.6 per cent in June, on account of disruption in normal business activity following the outbreak of coronavirus pandemic, government data showed on Tuesday.

The number of cases around the world linked to COVID-19 has crossed 2.02 crore, with India breaching the 23-lakh mark.

Bourses in Hong Kong, Tokyo and Seoul ended with gains, while Shanghai settled in the red.

Most stock exchanges in Europe were trading on a positive note in early deals.

Global oil benchmark Brent crude was trading 1.48 per cent higher at USD 45.16 per barrel.

In the forex market, the rupee slipped 5 paise to close at 74.83 against the US dollar. PTI ANS ABM ABM 08121556"

3:40 PM

Fuel demand dips 11.7% in July

Mini-lockdowns are stopping fuel demand from rising to normal levels.

PTI reports: "India’s fuel demand is beginning to flatline after showing signs of returning to life, as consumption dipped 11.7 per cent in July, official data showed.

Fuel consumption, a barometer of economic activity in the country, had slumped by over 45 per cent in April as nationwide lockdown halted most vehicular traffic and shut industries. However, with easing of lockdown restrictions, the demand picked up in May and June with month-on-month increase in consumption numbers.

However, mini-lockdowns imposed by states to contain the spread of coronavirus seemed to have stopped this recovery, with fuel demand falling 3.5 per cent in July over the previous month.

Fuel demand fell to 15.67 million tonnes in July, 11.7 per cent lower compared with 17.75 million tonnes consumption in the same month a year ago, and 3.5 per cent lower than the June sale of 16.24 million tonnes.

Consumption of diesel, which accounts for about two-fifth of India’s overall fuel usage and is the most used fuel for transportation and irrigation, fell 19.25 per cent to 5.52 million tonnes in July from a year earlier, data released by the Petroleum Planning and Analysis Cell (PPAC) of the Oil Ministry showed.

Diesel usage in July was lower than 6.3 million tonnes consumption in June.

Petrol demand fell 10.3 per cent from a year earlier to 2.26 million tonnes, and by 0.8 per cent from 2.28 million tonnes in June.

On Tuesday, government data showed slump in factory output easing in June to 16.6 per cent from 30 per cent contraction seen in May and over 50 per cent fall in April.

Naphtha demand fell 12.3 per cent to 1.28 million tonnes in July from a year earlier, but rose 10 per cent from June. Sale of bitumen, used for making roads, slipped 4.4 per cent on an annual basis to 3,89,000 tonnes, and by about 45 per cent month-on-month.

Cooking gas LPG is the only fuel that has seen rise post-outbreak of the COVID-19 pandemic, mostly because the government doled out free cylinders to poor to minimise hardships caused by the pandemic.

LPG sales rose 2.3 per cent in July to 2.27 million tonnes."

3:10 PM

Rupee settles 5 paise lower at 74.83 against US dollar

The rupee slipped 5 paise to close at 74.83 (provisional) against the US dollar on Wednesday tracking muted domestic equities.

The local unit opened at 74.78 at the interbank forex market, then lost ground and finally settled at 74.83 against the US dollar, down 5 paise over its last close of 74.78.

During the session, the domestic unit witnessed an intra-day high of 74.77 and a low of 74.93 against the greenback.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.03% to 93.59.

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2:45 PM

Indian villagers tire of coronavirus rules just as rural cases surge

People continue to grow tired of lockdowns.

Reuters reports: "Harmahan Deka doesn't wear a mask anymore to avoid the novel coronavirus nor does he try to keep a safe distance from others.

For the 25 men and women he works with in his construction materials business near the small town of Baihata Chariali in India's Assam state, life is more or less as it used to be, Deka says.

“The virus can't attack me, it's weakened,” the 50-year-old diabetic said. “I often hang out at a busy neighbourhood grocery store - without masks, nothing. Both the store owner and I are fine. Maybe we've had it already without symptoms.”

In two dozen small towns and villages visited by Reuters reporters in recent weeks, people have largely given up on social distancing and masks after months of sticking to the rules, believing the virus is not such a serious threat.

The change in behaviour in rural India - where two-thirds of its 1.3 billion people live, often with only the most basic health facilities - has come as infections in the countryside have surged.

Health officials are exasperated.

“Sometimes people take it too lightly, as if nothing will happen to them just because they're breathing fresh air and eating fresh vegetables,” said Rajni Kant, a member of a rapid response team of the state-run Indian Council of Medical Research (ICMR) set up to fight the pandemic.

“Health infrastructure is poor in rural areas, that's why they have to strictly follow social distancing norms, wear masks, avoid crowded areas and keep washing hands. Otherwise they'll suffer.”

But for many villagers, it seems the reality has not hit home as they've not seen the virus kill anyone they know.

Deka in Assam, for example, said he'd not heard of any deaths or even infections. He said that made him confident that some sort of herd immunity had been reached.

But the numbers tell a different story.

More than 2.3 million people have been infected with the novel coronavirus in India, the third highest number in the world after the United States and Brazil, and more than 46,000 have died.

Besides the impact on public health, the spread of the virus in the countryside could dash hopes for what the central bank projects will be a “robust” recovery of the rural economy, buoyed by good rains for summer crops.

In a sign of how the virus is infiltrating the countryside, the share of infections of the top three urban districts in seven states - among the worst affected in the country - fell from 60% at the end of June to 45% a month later, according to data analysed by Reuters.

“Our concern at the moment is that the disease, in moving into more rural areas that don't necessarily have the same strength in their health system, that we would see increased spread and potentially increased mortality,” World Health Organization emergencies chief Mike Ryan said about India last week."

2:30 PM

HDFC raises over ₹14,000 crore via QIP issue

The country’s largest mortgage lender HDFC Ltd. raised more than ₹14,000 crore on Tuesday through a qualified institutional placement (QIP) issue of equity shares, warrants and bonds.

HDFC raised the amount through the issue and allotment of 5,68,18,181 equity shares of face value of ₹2 each at a price of ₹1,760 per equity share to qualified investors. The issue has been oversubscribed overall and the shares and warrants offered were subscribed by 326 diverse institutional funds, the company said in a statement.

The issue price is at a discount of 1% to the closing price of its equity shares on the BSE/NSE prior to the launch of the issue, it said. The company's shares ended 1.48% up at ₹1,825.35 per piece on BSE on Tuesday.

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2:00 PM

ABN Amro quits trade and commodity financing in corporate bank overhaul

Dutch bank ABN Amro said on Wednesday its investment bank will end all trade and commodity financing operations in a major overhaul as the unit's focus turns solely to Northwest Europe.

The move will end ABN's presence in the United States, Asia, Australia and Brazil, except for clearing, and relates to around 45% of the corporate bank's client loans, worth €18 billion.

Around 800 employees are expected to lose their jobs as the operations are wound down in the next three to four years, the bank said.

The move follows several earlier attempts to increase profitability and reduce risks at ABN's corporate bank, as ongoing difficulties in the offshore energy markets saddled it with large impairments.

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1:30 PM

Oil rises after bigger-than-expected drop in inventories

The oil rally is finding its feet with signs of tightening supply.

Reuters reports: "Oil prices moved higher on Wednesday after an industry report showed that U.S. inventories of crude fell more than analysts expected, bolstering hopes that fuel demand in the world's biggest economy can weather the coronavirus pandemic.

Brent crude was up 52 cents, or 1.2%, at $45.02 a barrel by 0648 GMT, after falling around 1% on Tuesday.

West Texas Intermediate oil was up 49 cents, or 1.2%, at $42.10 a barrel, having dropped 0.8% in the previous session.

The American Petroleum Institute said on Tuesday that crude stocks fell by 4 million barrels last week, more than analysts' expectations of draw of 2.9 million barrels. Official government data is due later on Wednesday.

The “fall in U.S. API crude inventories ... the third sizeable weekly fall in a row, has supported prices today,” said Jeffrey Halley, senior market analyst at OANDA.

Still, growing uncertainty over a stalemate in Washington in talks for a stimulus package to support recovery from the deepest impact of the pandemic may weigh on prices looking ahead.

In India, demand for fuel in July dropped 10.8% from a year earlier, the fifth month of year-on-year declines, government data showed on Tuesday as a rise in coronavirus cases and floods in many parts of the country restricted economic activity."

12:30 PM

Narendra Modi to launch ‘Transparent Taxation - Honouring the Honest’ platform tomorrow

Prime Minister Narendra Modi will on Thursday launch a new platform, “Transparent Taxation — Honouring the Honest”, which will carry forward the journey of direct tax reforms, an official statement said here.

The virtual event will be witnessed by various chambers of commerce, trade associations, chartered accountants’ associations and “eminent” taxpayers, the statement issued on Wednesday said.

Union Finance Minister Nirmala Sitharaman and Minister of State for Finance and Corporate Affairs Anurag Singh Thakur will also be present, it said.

The Central Board of Direct Taxes (CBDT) has carried out several major tax reforms in direct taxes in the recent years, the statement pointed out.

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12:00 PM

Nifty snaps six days of gains as metals, banks slip

The winning streak in stocks over the last six days is coming to an end.

Reuters reports: "Indian shares edged lower and the Nifty 50 ended six straight sessions of gains on Wednesday as metals and banking stocks fell, while mounting uncertainties about U.S. stimulus dented global risk appetite.

The NSE Nifty 50 index was down 0.47% at 11,270.10 by 0445 GMT, while the S&P BSE Sensex fell 0.45% to 38,233.49.

Indian equities have seen broad-based gains in the last few sessions and the Nifty 50 had gained nearly 4% over the last six sessions.

“Domestically, I don't see any reason for a strong correction and we should be back on track to making gains once there is clarity on the global front,” said Ajit Mishra, vice president, research at Religare Broking Ltd in New Delhi.

In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.76% and U.S. stocks closed lower over worries about lack of clarity about whether U.S. lawmakers would sign off on a fiscal stimulus deal.

“We are reflecting global markets, investors were anticipating fiscal stimulus but there has been some delay,” Mishra said.

In Mumbai trading, the Nifty private banking index slipped as much as 1.26% and the Nifty metal index fell 2.1%, easing from a more than five-month high.

The Nifty pharmaceutical index extended losses and was down 1.38%, led by a 3.4% drop in drugmaker Lupin Ltd .

Meanwhile, coronavirus infections in India reached 2.33 million on Wednesday after rising by more than 60,000 over the previous day. The death toll increased to 46,091.

India's small-cap and mid-cap shares were also trading lower, falling 0.14% and 0.59%, respectively.

Among the gainers, the Nifty PSU Bank index rose as much as 3.9%, led by a 5.2% jump in Bank of Baroda. State Bank of India was up 3.9%."

11:30 AM

Gold falls below $1,900 level as U.S. dollar, yields rise

The gold rally is witnessing some serious challenge from the bears at the moment.

Reuters reports: "Gold fell below the $1,900 per ounce level on Wednesday as a resurgent dollar prompted investors to reassess their positions after a record-breaking price rally.

Spot gold declined as much as 2% to a near three-week low of $1,872.19, resuming its free fall after a brief hiatus in early trade. It was down 1.1% to $1,889.59 by 0330 GMT, extending losses after a 6% plunge on Tuesday.

U.S. gold futures slid 2.4% to $1,900. Silver too joined the slide, falling 2.8% to $24.11 per ounce after a 15% slump in the previous session.

“It looks like some of the euphoria is coming out of the gold market,” with a test of support around $1,800 now looking possible, IG Markets analyst Kyle Rodda said. “A lot hinges on U.S. yields and the factors driving them at the moment. Also, dollar's strength will be something very important to watch over the next few days and weeks.”

A jump in U.S. Treasury yields helped the dollar extend its winning streak, making gold more expensive for those holding other currencies. Higher yields also increase the opportunity cost of holding non-yielding gold. Gold suffered its biggest one-day drop in more than seven years on Tuesday as equities surged and the dollar firmed. However, growing uncertainty about a U.S. stimulus deal weighed on Asian stocks on Wednesday.

Bullion's gains for the year now stood at about 25%, as investors buy the metal as a hedge against a coronavirus-driven slowdown and fears of currency debasement as central banks flood the economy with money to ease the blow.

With central bank policies likely to remain “loose for the foreseeable future,” gold could move back towards $2,000, said ING analyst Warren Patterson. Platinum lost 1% to $920.86 and palladium eased 0.4% to $2,082.90."

 

11:00 AM

Debt revamp to prolong banks’ asset quality uncertainty: Fitch

A one-time debt restructuring allowed by India’s central bank to help lenders and borrowers amid the COVID-19 pandemic will prolong uncertainty about the banking sector’s asset quality, Fitch Ratings said on Tuesday.

The central bank said last week it will allow restructuring of corporate and personal loans to ease debt strains on companies and lenders.

“The policy could open a window for banks to build capital buffers while putting off full recognition of the coronavirus pandemic’s impact on loan portfolios, but is reminiscent of a strategy adopted over 2010-2016 that delayed and exacerbated problems for the banks,” Fitch said.

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10:40 AM

Rupee slips 6 paise to 74.84 against US dollar in early trade

The loss in equities is adding pressure on the rupee.

PTI reports: "The rupee depreciated 6 paise to 74.84 against the US dollar in opening trade on Wednesday tracking negative domestic equities and strengthening American currency.

The local unit opened at 74.78 at the interbank forex market, then lost ground and touched 74.84 against the US dollar, down 6 paise over its last close of 74.78.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.28 per cent to 93.89.

Forex traders said strong dollar, muted domestic equities and weak Index of Industrial Production (IIP) data weighed on investor sentiment.

India’s industrial production declined 16.6 per cent in June on account of disruption in normal business activity following the outbreak of coronavirus pandemic.

The decline in factory output was widespread across the sectors, including manufacturing, mining, power generation, capital goods and consumer durables, as per the data released by the Ministry of Statistics and Programme Implementation.

On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 153.56 points lower at 38,253.45 and the broader NSE Nifty fell 43.95 points to 11,278.55.

Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 1,013.66 crore on Tuesday, according to provisional exchange data.

Brent crude futures, the global oil benchmark, rose 0.36 per cent to USD 44.66 per barrel.

Meanwhile, the number of cases around the world linked to COVID-19 has crossed 2.02 crore and in India, the number of infections topped the 23-lakh mark."

10:20 AM

PC market declines 37%

India’s traditional PC market, including desktops, notebooks and workstations, registered a 37.3% decline year-on-year for the June 2020 quarter to 2.1 million units, according to research firm IDC.

The traditional PC market had registered a total shipment of 3.3 million units in the June 2019 quarter, the biggest quarter in the past five years as Lenovo had executed a mega deal of 1.1 million units for Electronics Corporation of Tamil Nadu (ELCOT).

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10:00 AM

Sensex falls over 200 points in early trade; Nifty below 11,300

A poor start to the day for stocks which are down about half a percent.

PTI reports: "Domestic equity benchmark Sensex fell over 200 points in early trade on Wednesday dragged by losses in index-heavyweights Reliance Industries, HDFC Bank and L&T amid negative trend in global markets.

The BSE Sensex was trading 243.24 points or 0.63 per cent lower at 38,163.77; while NSE Nifty was down 69.60 points or 0.61 per cent at 11,252.90.

Bajaj Finance was the top loser in the Sensex pack, dropping around 2 per cent, followed by L&T, Bajaj Finserv, Sun Pharma, Kotak Bank, HDFC Bank and Reliance Industries.

On the other hand, SBI, M&M, Maruti, Bajaj Auto and Titan were among the gainers.

In the previous session, the Sensex had settled 224.93 points or 0.59 per cent higher at 38,407.01, while the Nifty jumped 52.35 points or 0.46 per cent to finish at 11,322.50.

Exchange data showed that foreign institutional investors bought equities worth Rs 1,013.66 crore on a net basis on Tuesday.

According to traders, market sentiment weakened tracking losses in other Asian indices after US equities ended lower.

Further, weak domestic factory output data dampened investors’ mood, they said.

India’s industrial production declined by 16.6 per cent in June, on account of disruption in normal business activity following the outbreak of coronavirus pandemic, the government data showed on Tuesday.

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

Stock exchanges on Wall Street ended on a negative note in overnight trade.

Global oil benchmark Brent crude was trading 0.56 per cent higher at USD 44.75 per barrel."

 

9:30 AM

June industrial output shrinks 16.6%

India’s industrial output fell 16.6% year-on-year in June, shrinking for the fourth month in a row, though the monthly measure indicated some recovery in the COVID-19 pandemic-hit sector.

Analysts polled by Reuters had expected a contraction of 20% in June, compared to a revised 33.9% annual contraction in May, the data showed.

“With the lifting of restrictions in the subsequent periods, industrial activity is resuming,” the Ministry of Statistics and Programme Implementation said in a statement on Tuesday.

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Printable version | Sep 24, 2020 8:35:36 PM | https://www.thehindu.com/business/businesslive-12-august-2020/article32331901.ece

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