Business Live: Stocks drop in early trade; IMF backs Centre's farm laws

People walk past the Bombay Stock Exchange (BSE) building in Mumbai, India.   | Photo Credit: AP

The Nifty and the Sensex opened the day on a  negative note, witnessing a correction amid the record rally.

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

2:00 PM

Gold edges up on Biden's stimulus proposal

Inflation worries are boosting gold.

Reuters reports: "Gold rose on Friday as U.S. President-elect Joe Biden unveiled a massive stimulus plan, while U.S. Federal Reserve Chair Jerome Powell's commitment to keep monetary policy dovish further boosted the metal's appeal.

Spot gold rose 0.2% to $1,850.36 per ounce by 0042 GMT, while U.S. gold futures were flat at $1,852.20. Biden unveiled a $1.9 trillion stimulus package proposal on Thursday designed to jump-start the economy and speed up the U.S. response to the coronavirus pandemic.

With the U.S. economy still far from its inflation and employment goals it is too early for the Federal Reserve to discuss changing its monthly bond purchases, Powell said on Thursday.

The number of Americans filing first-time applications for unemployment benefits surged last week, confirming a weakening in labor market conditions with a worsening COVID-19 pandemic.

America will be in uncharted territory when the U.S. Senate meets as soon as next week for the second impeachment trial of Donald Trump, after the House of Representatives impeached Trump on Wednesday on charges of incitement one week after his supporters rampaged in the Capitol.

SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, said its holdings fell 0.9% to 1,161.00 tonnes on Thursday from 1,171.21 tonnes on Wednesday.

Silver rose 0.5% to $25.65 an ounce. Platinum eased 0.2% to $1,116.52, while palladium shed 0.1% to $2,406.99."

1:00 PM

Maruti rolls out online finance platform in Arena dealerships across 30 cities

Maruti continues to expand its range of offerings.

PTI reports: "Maruti Suzuki India (MSI) on Friday said it has launched an online financing platform at its Arena dealerships across 30 plus cities.

With the launch of Smart Finance platform, 24 out of 26 steps in the customer vehicle purchase journey have been digitised, the auto major said in a statement.

The digital platform allows customers to choose the best-suited loan product, completion of all finance related formalities and disbursal of loan, with just a few clicks, it added.

The company's website will act as a facilitator between the customer and the financier providing real time status updates and in turn provide a hassle free and transparent financing solution, MSI said.

The carmaker said it has currently partnered with 12 financiers including  State Bank of India, HDFC Bank, Mahindra Finance, ICICI Bank, IndusInd Bank, Bank of Baroda, Cholamandalam Finance and Kotak Mahindra for the initiative.

Subsequently, the company plans to rope in other key financiers, it noted.

"We are overwhelmed with the response to our Smart Finance platform from our NEXA customers. Now, we want to extend the ease of a car buying journey for our ARENA customers as well," MSI Executive Director (Marketing & Sales) Shashank Srivastava said.

The pandemic situation in the country has further increased the usage of digital platforms and with Smart Finance, the company aims to reach out to a larger audience, assist them and make every stage of the loan process transparent, he added.

The Smart Finance service is now available for Arena customers in 30+ plus cities including Delhi, NCR, Jaipur, Ahmedabad, Pune, Mumbai, Bangalore, Chennai, Hyderabad, Lucknow, Indore and Kolkata.

Other cities being,  Cochin, Chandigarh, Guwahati, Bhubaneswar, Bhopal, Coimbatore, Surat, Vadodara, Ranchi, Raipur, Nagpur, Trivandrum, Visakhapatnam, Udaipur, Kanpur, Vijayawada , Dehradun, and Goa.

MSI sells products like Alto and Vitara Brezza from Arena sales network while models like Baleno, Ciaz and XL6 are retailed from Nexa dealerships."

12:30 PM

India fifth largest market; focussed on meeting language needs, enhancing ease of access: Wikipedia

Online encyclopedia Wikipedia has a long-term commitment to India and is focussing on bringing more users to its platform by meeting language needs and introducing tools to ease access, a top Wikimedia Foundation executive said.

Wikipedia, which is operated by non-profit organisation Wikimedia Foundation, already counts India as its fifth largest market. It gets about 750 million page views a month from the Indian audience.

“India is not just the fifth largest Wikipedia source of traffic for us, it is a country of hundreds of millions of people who have real clear needs for knowledge, and to themselves have knowledge that should be shared and represented with the world...we see the multiplicity of languages as both a opportunity and a challenge,” Wikimedia Foundation CEO Katherine Maher said.

She added that certain language communities are much more active than others, and the organisation is looking at ways to support the different language needs across the country given how large and diverse those needs actually are.

Read more
 

12:00 PM

Indian bond yields rise in absence of OMO announcement

The central bank may not step in to prop up debt.

Reuters reports: "India's benchmark bond yield rose on Friday to a three-week high as a lack of an open market operation announcement disappointed investors ahead of a debt sale and variable rate reverse repo auction later in the day.

The Reserve Bank of India last week said it would conduct a variable rate reverse repo auction for 2 trillion rupees ($27 billion) on Jan. 15 on review of the evolving liquidity and financial conditions.

"It has been decided to restore normal liquidity management operations in a phased manner," the RBI said.

Markets read the release as an indication that the RBI was looking to roll back the massive cash surplus in the banking system despite its reiteration that it will ensure availability of ample liquidity.

"The market is confused about what the RBI is trying to do. A lot of times it feels like the RBI doesn't realise the fallout of its actions and then tries to balance it out," said a senior debt trader at a private bank.

The benchmark 10-year bond yield was trading at 5.95% versus 5.93% on Thursday and off the day's high of 5.96% - its highest since Dec. 24.

Traders said the absence of a special OMO announcement for next week after three consecutive weeks of such auctions also dented demand for bonds, adding that they expected yields to rise further if there was no announcement by end of day.

Results of the 220 billion rupees worth bond sale and the variable reverse repo rate cut-off will be also monitored.

"The RBI has taken the first step towards reverting to pre-COVID liquidity management operations in a phased manner," Upasna Bhardwaj, economist at Kotak Mahindra Bank, wrote in a recent note.

"The rate up to which the RBI will be comfortable accepting bids in the variable rate reverse repo auction will provide a key signal on its intent and, consequently, the interest rate trajectory.""

11:30 AM

Signal to ramp up hiring after WhatsApp controversy drives download surge

Messaging app Signal has seen "unprecedented" growth following a controversial change in rival WhatsApp's privacy terms and is looking to hire more staff as it seeks to bolster the service and supporting infrastructure, the head of its controlling foundation said on Wednesday.

Along with another encrypted app, Telegram, Signal has been the main beneficiary of online outrage around the changes announced last week, which require WhatsApp users to share their data with both Facebook and Instagram.

Telegram said on Wednesday it had surpassed 500 million active users globally.

Brian Acton, who co-founded WhatsApp before selling it to Facebook and then co-founding the Signal Foundation, declined to give equivalent data for Signal but said that the expansion in recent days had been "vertical".

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11:00 AM

Rupee slips 3 paise to 73.07 against US dollar in early trade

The rupee opened on a flat note and depreciated 3 paise to 73.07 against the US dollar in opening trade on Friday tracking the muted opening in domestic equities.

At the interbank forex market, the domestic unit opened at 73.07 against the US dollar, registering a fall of 3 paise over its previous close.

On Thursday, the rupee had settled at 73.04 against the American currency.

"The rupee is sustaining below 73.20 levels indicating a negative momentum may continue in the today's session. Support is at 72.95 – 72.80 levels for the spot pair. Resistance for the pair is 73.20," said Kshitij Purohit, Product Manager, Currency and Commodities at CapitalVia Global Research.

Traders said most of the Asian currencies are trading weak against the US Dollar as the dovish comments from the US Fed Chief Jerome Powell weighed on the greenback and could keep gains in check.

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10:30 AM

Farm bills have potential to represent significant step forward for agriculture reforms in India: IMF

The IMF backs the farm bills.

PTI reports: "The IMF believes the farm bills passed by the Indian government have the potential to represent a significant step forward for agricultural reforms, but a social safety net is needed to protect those who might be adversely impacted during the transition to the new system, a spokesperson of the global lender said here.

Gerry Rice, Director of Communications at the International Monetary Fund (IMF), said the new measures will reduce the role of the middlemen and enhance efficiency.

"We believe the farm bills do have the potential to represent a significant step forward for agricultural reforms in India," Rice said at a news conference in Washington on Thursday.

"The measures will enable farmers to directly contract with sellers, allow farmers to retain a greater share of the surplus by reducing the role of middlemen, enhance efficiency and support rural growth," he said.

"However, it is crucial that the social safety net adequately protects those who might be adversely impacted during the transition to this new system," the spokesperson said responding to a question on the ongoing protests by farmers against the laws in India.

This can be done by ensuring that the job market accommodates those that are impacted by the reforms, he said.

And of course, the growth benefits of these reforms will depend, critically, on the effectiveness and the timing of their implementation, so need to pay attention to those issues as well with the reform," Rice said.

Thousands of farmers, mostly from Punjab and Haryana, have been camping at several Delhi border points, demanding a complete repeal of the three farm laws and legal guarantee of minimum support price for their crops.

Enacted in September last year, the three laws have been projected by the Centre as major reforms in the agriculture sector that will remove middlemen and allow farmers to sell their produce anywhere in the country.

However, the protesting farmers have expressed their apprehension that the new laws would pave the way for eliminating the safety cushion of the Minimum Support Price (MSP) and do away with the "mandi" (wholesale market) system, leaving them at the mercy of big corporates."

10:00 AM

Sensex drops over 200 points in early trade; Nifty below 14,550

A slight correction in stocks.

PTI reports: "Equity benchmark Sensex dropped over 200 points in early trade on Friday tracking losses in index majors Infosys, HDFC Bank and TCS amid weak cues from global markets.

The 30-share BSE index was trading 246.16 points or 0.50 per cent lower at 49,338.

Similarly, the broader NSE Nifty fell 67.65 points or 0.46 per cent to 14,527.95 in opening deals.

Profit-booking at higher levels is keeping benchmark indices volatile, traders said.

UltraTech Cement was the top loser in the Sensex pack, shedding around 2 per cent, followed by Tech Mahindra, Infosys, Asian Paints, IndusInd Bank, Dr Reddy’s, HCL Tech and TCS.

On the other hand, Bharti Airtel, NTPC, Titan, Nestle India and ONGC were among the gainers.

In the previous session, Sensex ended at its new lifetime high of 49,584.16, up 91.84 points or 0.19 per cent, and Nifty rose 30.75 points or 0.21 per cent to finish at a record 14,595.60.

Foreign portfolio investors (FPIs) were net buyers in the capital market as they purchased shares worth Rs 1,076.62 crore on Thursday, as per exchange data.

According to Binod Modi Head-Strategy at Reliance Securities, domestic equities do not look to be encouraging at the moment.

"While the underlying strength of the market remains intact, it appears to be a bit tiring from the last couple of days and may see some amount of pullback in coming days.

"However, announcement of higher fiscal stimulus in the US and soft stance of global central bankers about their monetary policies along with a weak dollar will continue to attract FPIs to Indian equities," he said.

US markets ended with modest correction in the final hour of trade ahead of the announcement of the coronavirus relief plan by President-elect Joe Biden.

Elsewhere in Asia, bourses in Shanghai, Seoul and Tokyo were in the red, while Hong Kong was trading in the positive zone.

Meanwhile, the global oil benchmark Brent crude was trading 0.32 per cent lower at USD 56.24 per barrel."

9:30 AM

India’s medium-term growth to slow to around 6.5% after initial rebound: Fitch

The Indian economy will suffer lasting damage from the coronavirus crisis and after an initial strong rebound in FY22 (fiscal year ending March 2022) growth will slow to around 6.5% a year over FY23-FY26, Fitch Ratings said on Thursday.

“A combination of supply-side scarring and demand-side constraints — such as the weak state of the financial sector — will keep the level of GDP well below its pre-pandemic path,” it said in commentary on the Indian economy.

Fitch said India's coronavirus-induced recession has been among the most severe in the world, amid a stringent lockdown and limited direct fiscal support.

The economy is now in a recovery phase that will be further supported by the rollout of vaccines in the next months.

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Printable version | Mar 6, 2021 2:51:49 PM | https://www.thehindu.com/business/businesslive-15-january-2021/article33577290.ece

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