The Nifty and the Sensex opened the day on a dull note with minor losses as coronavirus cases continue to surge in India.
Join us as we follow the top business news through the day.
IL&FS addresses debt of Rs 43,000 cr; raises recovery estimate to Rs 61K cr
News on the troubled lender.
PTI reports: "Infrastructure Leasing and Financial Services (IL&FS) on Thursday said it has addressed aggregate group debt of Rs 43,000 crore so far and expects to cross Rs 51,000 crore by September 2021.
The debt-laden group has further enhanced its estimates of aggregate debt recovery to Rs 61,000 crore beyond September 2021.
In October last year, the group had targeted to address Rs 50,300 crore of its overall debt by March 2021 and over Rs 56,000 crore by FY2022. The group's overall debt stood at Rs 99,000 crore, as of October 2018.
The aggregate addressed debt of Rs 43,000 crore comprises Rs 26,800 crore basis completed entity monetisation initiatives and accrued cash balance, IL&FS Group said in a release.
The amount also includes Rs 14,350 crore of additional net recovery expected from resolution and restructuring applications filed with and awaiting approval of the NCLT (Mumbai) and NCLAT and Rs 1,926 crore from Supreme Court verdict passed in favour of Rapid Metro Gurgaon, it said.
“The Group has further enhanced its estimates of aggregate debt recovery to Rs 61,000 crore – an increase of Rs 5,000 crore over its earlier estimate of Rs 56,000 crore,” IL&FS said.
The upgrade in potentially addressable debt by Rs 5,000 crore (to Rs 61,000 crore) has been largely on account of improved valuations, better operating performance and enhanced recoveries from non-group exposures, it said.
The increased estimate represents resolution of nearly 62 per cent of overall fund based and non-fund based group debt, it said.
The group said the aggregate debt of Rs 43,000 crore addressed till date represents nearly 71 per cent of the overall revised targeted recovery value of Rs 61,000 crore and 44 per cent of the overall debt of over Rs 99,000 crore (as of October 2018).
Out of total 347 entities under IL&FS Group (as of October 2018) a total of 186 entities stand resolved till date, while the remaining 161 entities are under various stages of resolution, it said."
Sensex jumps 260 points; Nifty tops 14,550
A volatile day comes to an end.
PTI reports: "Equity benchmark Sensex ended 260 points higher after a volatile session on Thursday, tracking gains in index majors HDFC twins, TCS and ICICI Bank amid largely positive cues from global markets.
After gyrating 877 points during the day, the 30-share BSE index ended 259.62 points or 0.53 per cent higher at 48,803.68.
Similarly, the broader NSE Nifty advanced 76.65 points or 0.53 per cent to 14,581.45.
TCS was the top gainer in the Sensex pack, rising around 4 per cent, followed by ONGC, ICICI Bank, HDFC Bank, Dr Reddy’s, HDFC and HCL Tech.
On the other hand, Infosys, Maruti, IndusInd Bank, Nestle India and Bajaj Finance were among the laggards.
"Domestic equities looked to be resilient amid high volatility. Benchmark indices recovered sharply from today’s low mainly led by rebound in financials and pharma indices," said Binod Modi, Head - Strategy at Reliance Securities.
Auto stocks were worst hit mainly due to wider economic restrictions imposed in Maharashtra, which contributes over 20 per cent of automobiles production of the country, he said, adding that Infosys witnessed heavy profit booking after missing the street's estimates in 4QFY21 earnings.
However, strong buying was seen in other IT majors due to sustained growth prospects, he noted.
Elsewhere in Asia, bourses in Shanghai and Hong Kong ended in the red, while Seoul and Tokyo settled with gains.
Stock exchanges in Europe were trading on a positive note in mid-session deals.
Meanwhile, international oil benchmark Brent crude was trading 0.63 per cent lower at USD 66.34 per barrel."
Elevated public debt in FY21 matter of concern: Report
The worrying debt binge amid the pandemic.
PTI reports: "As the fiscal position of the country worsens due to the pandemic, there are concerns over the elevated public debt and also higher fiscal deficit at 11.8 per cent in 2020-21, brokerage UBS Securities India said. A report by UBS has also warned of a downgrade risk in the sovereign ratings by one of the three rating agencies in the next 12-18 months.
This is despite both the direct and indirect tax mop-up crossing the revised estimates for the year. While net direct tax mop-up stood at Rs 9.45 lakh crore in 2020-21, which is almost 5 per cent more than the revised estimate, indirect tax collection jumped over 12 per cent to Rs 10.71 lakh crore, even as goods and services tax mop-up declined by 8 per cent.
"The fiscal position has deteriorated after the pandemic and now we estimate fiscal deficit widened to 11.8 per cent of GDP in FY21, up from 7.8 per cent in FY20," UBS Securities India chief economist Tanvee Gupta Jain said in the report.
She attributed this to the pandemic-related relief measures, credible and transparent accounting of subsidies (for instance, the food subsidy was shifted onto the budget from the Food Corporation's balance sheet), and a significant revenue shortfall.
However, the report expects fiscal deficit to narrow going forward but remain elevated at 10 per cent (the Centre's 6.5 per cent, states' at 3.5 per cent), helped by a cyclical economic recovery and the rollback of relief measures.
She noted that the elevated fiscal deficit has also led to historically high public debt levels, flagging concerns on the steep jump in the public debt in 2020-21.
As a percentage of GDP, the same has risen from 72 per cent in 2019-20 to a whopping 89 per cent in 2020-21 she said, adding nominal GDP must grow at least 10 per cent annually to help stabilise public debt levels at the current high levels before bringing it down.
The rise in the primary deficit, which is fiscal deficit less interest payments, and the deterioration in the interest rate growth differential has raised debt sustainability concerns.
UBS estimates indicate that even if the gap between the two series (interest rate and growth) turned positive for a brief period in 2020-21, it will normalise in 2021-22.
A better measure of debt sustainability is the interest expense-to-GDP. "If the central bank can keep policy rates lower for longer, we believe rising public sector debt could become associated with stable debt service costs, as maturing debt is refinanced at still historically-low rates," UBS said.
According to UBS, among emerging markets, India will have the third highest public debt to GDP ratio, after Argentina and Brazil, in 2021. The key to debt sustainability is the ability and speed with which the government can deliver on budget promises, specifically with regard to aggressive divestment and also higher public capex to help support nominal GDP growth, Gupta Jain said.
She also said in the medium term government will have to work towards moving along the fiscal consolidation path at a pace in sync with the pace of growth rather than sticking to a more relaxed path as laid out in the budget.
On whether the rising fiscal deficit and public debt are a threat to the sovereign ratings, UBS said compared to other high-debt emerging markets , India's public debt is largely domestic-funded and a significant share is held by local banks and the central bank, reducing the risk in a distress.
However, the wide fiscal deficit leaves little room to absorb further adverse shocks without compromising credit ratings, increases risks of the private sector being crowded out, and slows debt portfolio flows from abroad, she warned.
She added India is not an outlier in this and any lags in policy execution and implementation of growth-supportive reforms to boost sustainable growth could lead to widening macro stability risks.
"We do see a risk of a downgrade in the sovereign rating by one of the three rating agencies in the next 12-18 months," warned the report."
Ramping production of Remdesivir to meet demand: Pharma firms
Several manufacturers of Remdesivir, that is being used in treatment of COVID-19, said they have ramped up production of the drug to meet its rising demand across the country.
In view of increased demand for the medicine due to a spike in COVID-19 cases, the centre on Sunday prohibited the export of Remdesivir injection and its active pharmaceutical ingredients (API) till the situation in the country improves.
A Zydus Cadila spokesperson said, "The current spike in COVID-19 cases has led to a higher demand of Remdesivir. We are currently producing Remdesivir at three of our facilities. To cater to the demand we have ramped up our production from the earlier 5-6 lakh vials a month to 10-12 lakh vials a month, which we will scale towards 20 lakh vials a month.” In a few weeks the supply situation will be a far more stable one, the company said.
‘India can be hardware manufacturing hub’
There is an opportunity for India to become a hardware manufacturing location as the world’s technology majors have been moving their supply chains out of China over the past 18 months, Microsoft president Brad Smith said.
Urging India and the U.S. to join the Paris Call for Trust and Security in Cyberspace that now has 75 countries on board to deal with new cybersecurity threats facing the world, he also emphasised the need to train more professionals to cope with these threats.
Terming the changing relationship between China and the U.S. and some other countries as one of the most significant geopolitical developments of this decade, the Microsoft official said the change was certainly impacting the technology sector.
Indian rupee hits 9-month low on growth worries; bonds await buyback results
The rupee tanks on rising economic worries.
Reuters reports: "The Indian rupee weakened to a nine-month low on Thursday while the benchmark 10-year bond yield rose, on mounting concerns that further stringent lockdowns to curb COVID-19 cases could impact economic growth and fuel inflation.
India reported a record 200,000 new COVID-19 cases on Thursday and the financial hub of Mumbai entered a lockdown, as many hospitals treating coronavirus patients reported severe shortages of beds and oxygen supplies.
The partially convertible rupee was at 75.14/15 per dollar, as of 0710 GMT, after touching 75.32, its lowest since July 15 last year. The rupee had ended at 75.06 on Monday.
Forex and debt markets in India were closed on Tuesday and Wednesday for local festivals.
"The rupee is weakening as there are growth concerns emerging yet again with major cities getting locked down, but we did see some buying by state banks, possibly on behalf of the central bank," a senior trader at a private bank said.
HDFC Bank said it expected the rupee to trade in a range of 75-75.50 in the near-term on concerns over surging domestic COVID-19 cases and its economic impact.
Traders are also closely monitoring the results of the Reserve Bank of India's (RBI) first 250 billion rupees tranche of G-SAP, or government securities acquisition programme, under which it has committed to purchasing a total 1 trillion rupees worth of government papers during the April-June quarter.
The announcement of this programme has also been a key reason for the rupee's sharp fall in recent days as the RBI would in effect be printing more currency to buy these bonds.
The benchmark 10-year bond yield was at 6.04%, up 3 basis points from its previous close after March inflation data, but traders expect yields to fall depending on the cut-offs set by the RBI at the G-SAP auction.
India's retail inflation accelerated to a four-month high of 5.52% in March on higher food and transport costs amid rising coronavirus infection numbers and fears of a surge in some commodity prices due to lockdowns in some states.
"We expect a loss of sequential momentum in Q2 2021, even though we expect the medium-term growth upcycle to remain intact due to ongoing vaccinations, the lagged impact of easy financial conditions, frontloaded fiscal activism and strong global growth," Nomura economists wrote in a note.
Nomura now expects India's 2021/22 growth at 12.6%, compared with its earlier prediction of 13.5% but still higher than the RBI's 10.5% projection."
WPI inflation spikes to over 8-year high of 7.39% in March
Inflation creeps closer to double digits.
PTI reports: "The wholesale price-based inflation shot up to over 8-year high of 7.39 per cent in March on rising crude oil and metal prices.
Also, the low base of March last year, when the data was computed with a low response rate due to the nationwide lockdown, contributed to a spike in inflation in March 2021.
The WPI inflation was 4.17 per cent in February and 0.42 per cent in March 2020.
This is the third straight month of up-tick seen in the wholesale price index (WPI) based inflation.
"The annual rate of inflation stood at 7.39 per cent (provisional) for the month of March 2021 over March 2020," the Commerce and Industry Ministry said.
Such a high level of WPI was last recorded in October 2012, when inflation was 7.4 per cent.
Inflation in food articles in March was 3.24 per cent as prices of pulses, fruits and paddy hardened.
In vegetables, the rate of price rise was (-) 5.19 per cent, compared to (-) 2.90 per cent in the previous month.
Inflation in pulses was 13.14 per cent in March, while in fruits it was 16.33 per cent.
Inflation in the fuel and power basket was 10.25 per cent in March, against 0.58 per cent in February, mainly on account of rising prices of petrol and diesel.
"The prices of crude oil, petroleum products and basic metal substantially increased in March 2021 as compared to the corresponding month of last year. Also, due to nationwide lockdown, the WPI index for the month of March 2020 was computed with a relatively low response rate," the commerce ministry said while releasing the data.
Retail inflation, as per data released earlier this week, rose to a 4-month high of 5.52 per cent in March.
The RBI in its monetary policy earlier this month kept policy rates unchanged and said it will maintain an accommodative monetary policy stance to support growth and keep inflation at the targeted level.
It projected retail inflation at 5.2 per cent in the June quarter."
Indian shares give up early gains on record fresh virus cases, Maharashtra lockdown
Stocks pare early gains.
Reuters reports: "Indian shares reversed early gains to trade lower on Thursday, after the country reported a record spike in fresh COVID-19 cases and its richest state imposed a lockdown, stoking fears of further economic pains.
The NSE Nifty 50 index fell 0.5% to 14,432.0 by 0524 GMT, while the S&P BSE Sensex was 0.6% lower at 48,274.27, as the two indexes continued their retreat from record highs hit in mid-February amid surging virus cases.
Maharashtra, home to India's financial hub Mumbai, entered a lockdown starting midnight April 14 until the end of the month, while nationwide infections hit a new daily record of more than 200,000 over the last 24 hours.
"The rise in cases is a clear dampener... even though the lockdown was expected the market will see knee-jerk reactions and will take time to digest things as rumours are now news," said Mayuresh Joshi, head of equity research at William O'Neil & Co.
IT services heavyweight Infosys Ltd led losses on the benchmark index, after reporting a rise in quarterly profit and forecasting higher annual revenue for the year.
"The results (for Infosys) were priced in and we saw nothing from the company that was above expectations... we're seeing some knee jerk selling here," Joshi added.
The company's stocks dragged the wider IT services sector down about 0.6%.
Pharmaceutical companies, several of which make COVID-19 medication, advanced 1.6%, as demand for such drugs including remdesivir rises.
State-run banks fell 2.3% and were among the top losing sectors. The index has dropped over 6% so far this week.
Auto stocks were also about 2% lower, with Eicher Motors dropping over 3%.
Metal stocks advanced 0.3% as iron ore prices surged on strong demand.
Stronger metal prices and stable demand had helped metal stocks through the year, but a re-rating of prices may be on the horizon, Joshi said."
Working with govts to ensure openness of platform, protect users from harmful content: YouTube
YouTube on its regulatory efforts.
PTI reports: "YouTube is focused on working with governments to better shape regulations that allow the video streaming platform to preserve openness, while protecting communities from harmful content, YouTube Chief Product Officer Neal Mohan said.
The top executive noted that the platform has always had a robust set of community guidelines to protect the ecosystem of users, creators and partners from aspects like hate speech, misinformation and harmful content.
"...We want to work with government agencies, regulators...all over the world discussing ways that YouTube can play the role that it plays in a way that satisfies the framework that governments have... We've been doing that for years, for example, in India for the last 13 years and will continue to do so," he said during a session at the Raisina Dialogue.
He added that when the company establishes its community guidelines and rules, that is done in an open manner as well in consultation with people from across the political spectrum from all parts of the world.
"We publish those guidelines clearly on our site, and we try to enforce them in a way where we're not distinguishing between regions of the world, who the speaker is, we try to enforce them uniformly regardless of whether it's a private citizen, head of state, in a way that's transparent and clearly published on our platform," the executive said.
He further emphasised that YouTube understands its responsibility as an open platform that allows sharing of diverse points of view, and it does that in a way "that builds up things like election integrity, free functioning, democratic societies, as opposed to clamping down on them".
Mohan cited examples of how YouTube has been working on maintaining integrity on the platform during elections across the world. He explained that the platform has worked with political candidates across the political spectrum to make sure they have a presence on the platform and can share their opinions and thoughts.
YouTube had launched Fact Check Information panels ahead of the 2019 India Lok Sabha elections. Across Google and YouTube, it had also surfaced comprehensive information on contesting candidates and political parties.
He said various efforts - like bringing authoritative voices to the fore, making sure that there is reduced recommendation of misinformation and robust content policies are in place to actively pull down content harmful content - work in tandem to protect the integrity of elections and allow people to share a diversity of opinions and ideas in a "safe and protected" manner.
"...We work with regulatory bodies, political bodies to determine what the rules of the world should be, and how do we strike that balance in terms of an open diverse platform, and the frameworks that need to be in place, driven by regulatory bodies in terms of protecting users," Mohan further said."
Rupee falls 17 paise to 75.22 against U.S. dollar in early trade
The rupee slumped 17 paise to 75.22 against the U.S. dollar in opening trade on Thursday following losses in domestic equity markets amid concerns over rising COVID-19 cases.
Besides, foreign fund outflows also weighed on investors’ sentiment, forex traders said.
At the interbank foreign exchange, the domestic unit opened sharply lower at 75.19 against the dollar, and lost further ground to quote at 75.22, a fall of 17 paise over its previous close. In early deals, it touched a low of 75.23.
The rupee on Monday had closed at 75.05 against the U.S. dollar.
The forex market was closed on Tuesday and Wednesday on account of ‘Gudi Padwa’ and ‘Babasaheb Ambedkar Jayanti’, respectively.
India's Infosys falls over 5% on profit miss, attrition worries
A sharp fall in Infosys shares.
Reuters reports: "Infosys Ltd shares fell as much as 5.5% on Thursday, a day after the Indian software services firm reported quarterly net profit below analysts' estimates and on worries that a spike in voluntary attrition could squeeze margins.
The Bengaluru-headquartered company posted a 17.5% rise in net profit to 50.76 billion rupees ($675.4 million) in the three months to March 31. Analysts had estimated a profit of 51.93 billion rupees, according Refinitiv data.
The sharp increase in attrition is a cause of worry and could be a risk to the top end of margin guidance, Investec analysts said in a note.
On Wednesday, Infosys Chief Executive Officer Salil Parekh said in a call with reporters that the company was targeting margins of 22% to 24% for the full year 2021-22.
Infosys reported a voluntary attrition rate of 15.2% for its IT services segment during the March quarter, up from 10% in the preceding quarter.
"Considering the strong deal momentum, a continued increase (in attrition) would require higher lateral additions and potentially meatier salary increases to retain talent," Investec said.
In addition to employee costs, Infosys will also have transition costs from large deals and return of some expenses which were saved because of the COVID-19 pandemic, Investec analysts said.
On Wednesday, Infosys forecast annual revenue growth of 12% to 14% in constant currency terms for the year to end-March 2022, buoyed by client demand for its digital services during the pandemic.
Quarterly revenue rose to 263.11 billion rupees from 232.67 billion rupees a year earlier.
The company recommended a final dividend for the year of 15 rupees per share, and approved a share buyback of up to 92 billion rupees.
Bigger rival Tata Consultancy Services on Monday posted a 15% jump in profit on cloud services demand, while smaller counterpart Wipro will report results later on Thursday."
‘Hiring for blue collar jobs resurges’
With the vaccination drive in full swing in the country and high optimism on economic recovery, the hiring of blue collar workers is resurging as 70% of employers polled in a survey said they had resumed recruitment.
Of the 70% employers polled in the second edition of OLX People Survey, nearly 16% said they were hiring 100% of capacity, while 54% are hiring up to 50% of capacity.
About 60% of employers stated they faced no challenges in availability of talent, despite the fact that a large number of gig workers had preferred to return to their native at the height of the pandemic.
Sensex drops over 200 pts in early trade; Nifty tests 14,450
A dull start to the day for stocks.
PTI reports: "Equity benchmark Sensex tumbled over 200 points in early trade on Thursday, tracking losses in index majors Infosys, ICICI Bank and M&M amid negative cues from domestic and global markets.
After opening over 200 points higher, the 30-share BSE index reversed all its gains to trade 216.73 points or 0.45 per cent lower at 48,327.33.
Similarly, the broader NSE Nifty slipped 62.55 points or 0.43 per cent to 14,442.25.
Infosys was the top loser in the Sensex pack, shedding over 3 per cent, followed by M&M, IndusInd Bank, Maruti, Bajaj Finance, UltraTech Cement and ICICI Bank.
On the other hand, ONGC, Sun Pharma, Dr Reddy’s and Kotak Bank were among the gainers.
In the previous session on Tuesday, Sensex closed 660.68 points or 1.38 per cent higher at 48,544.06, and Nifty surged 194 points or 1.36 per cent to finish at 14,504.80.
Foreign institutional investors were net sellers in the capital market as they offloaded shares worth Rs 730.81 crore on Tuesday, according to provisional exchange data.
Stock exchanges remained closed on Tuesday on account of Dr Baba Saheb Ambedkar Jayanti.
"Amidst the negative of an alarming rise in COVID-19 cases, a relief from the market perspective is that there is no large-scale lockdown," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
However, the massive restriction of activity in the economically significant state of Maharashtra is bound to have its impact on growth and earnings. The market knows this, but what is unknown is how long will this last and how quickly we can get ahead of the infection cases, he added.
Elsewhere in Asia, bourses in Shanghai, Hong Kong and Tokyo were in the red in mid-session deals, while Seoul was trading on a positive note.
Equities on Wall Street too ended on a negative note in overnight trade after Federal Reserve’s Beige Book survey on economic activity pointed to a moderate pace of pick-up in economic activities to start the year with a slight uptick in inflation.
Meanwhile, international oil benchmark Brent crude was trading flat at USD 66.58 per barrel."
Infosys net profit rises 17.5% to ₹5,076 crore in March quarter
IT services major Infosys on April 14 posted a 17.5% rise in net profit to ₹5,076 crore for the March quarter, and announced up to ₹9,200 crore buyback offer at a maximum price of ₹1,750 per share.
The Bengaluru-based company’s net profit (after minority interest) was ₹4,321 crore in the January-March 2020 quarter.
Its revenue grew 13.1% to ₹26,311 crore in the March 2021 quarter from ₹23,267 crore in the year-ago period, Infosys said in a regulatory filing.
The company’s FY21 net profit was up 16.6% to ₹19,351 crore, while revenue was higher by 10.7% to ₹1,00,472 crore compared to the previous fiscal.
Infosys expects FY22 revenue to grow 12-14% in constant currency.
