The benchmark stock indices have opened this morning with modest gains after yesterday's minor losses.
The Asian Development Bank has some bleak data to offer about developing Asian economies.
Join us as we follow the top business news through the day.
Zombie companies at 2000 peak
Sensex rallies 288 points; Nifty tops 11,500
The stock indices managed to hold on to their morning gains.
PTI reports: "Domestic equity benchmark Sensex surged 288 points on Tuesday, tracking strong buying sentiment in banking counters amid positive cues from global markets.
The 30-share BSE index ended 287.72 points or 0.74 per cent higher at 39,044.35. The broader NSE Nifty rose 81.75 points or 0.71 per cent to 11,521.80.
IndusInd Bank was the top gainer in the Sensex pack, rallying over 4 per cent, followed by Bharti Airtel, Axis Bank, ICICI Bank, Bajaj Finance, Sun Pharma, HDFC and Kotak Bank.
On the other hand, Titan, Maruti, ITC, Asian Paints, HCL Tech and Bajaj Auto were among the laggards.
Domestic equities traded a positive note through the day tracking firm cues from global markets and sustained foreign fund inflow, traders said.
Foreign institutional investors bought equities worth Rs 298.22 crore on a net basis on Monday, exchange data showed.
Bourses in Shanghai, Hong Kong and Seoul ended with gains, while Tokyo slipped in the red.
Stock exchanges in Europe were trading on a positive note in early deals.
Meanwhile, global oil benchmark Brent crude was trading 1.49 per cent higher at USD 40.20 per barrel.
In the forex market, the rupee tumbled 16 paise to close at 73.64 against the US dollar."
Multiplex association appeals to govt to reopen cinemas, says jobs are at stake
A plea from one of the few industries that remain locked down by the government.
PTI reports: "Appealing to the government to allow theatres to reopen on an urgent basis , the Multiplex Association of India on Tuesday said the movie exhibition sector that provides employment to lakhs of people had lost an estimated Rs 9,000 crore in the last six months.
The cinema body, which represents all the multiplex chains, including, PVR, INOX and Cinepolis, said the sector directly employs more than two lakh people and provides employment to lakhs indirectly.
Describing movies as the soft power of India and cinemas the main form of entertainment for millions of Indians, the association said close to 10,000 cinema screens across the country had been shut for close to six months. The movie exhibition sector has suffered financially and is now staring at job losses unless the government allows theatres to reopen, it said.
The appeal, with the hashtag UnlockCinemaSaveJobs, was published as full page advertisements in some newspapers and also posted on Twitter.
Due to countrywide lockdown, the cinema exhibition industry has run into an extremely adverse and hostile situation; it was the first sector to be shut down and the last sector to reopen.
Given the dire economic impact of the epidemic on our sector and livelihoods of people we sincerely urge the government of India to allow reopening of cinemas on an urgent basis, the statement said, estimating that the sector had suffered a monthly loss of Rs 1,500 crore in the last six months, amounting to Rs 9,000 crore.
More than 84 countries, including China, Korea, UK, France, Italy, Spain, UAE, and the US, have already opened cinemas to the public while maintaining the highest degree of safety protocols and have seen encouraging response, it said.
The film body said malls, airlines, railways, retail, restaurants, gyms and many such services have already restarted as part of ‘Unlock India’ In the fourth phase of unlocking, bars and metro services also opened up.
The association, which in July introduced several SoPs such as paperless tickets, seat distancing, staggered intervals, regulated entry and exit and regular sanitisation to make cinemas a safe place to visit, reiterated that it is equipped with better abilities to ensure crowd management in “stringent hygienic environments while maintaining applicable social distancing norms“.
PVR Pictures, the biggest cinema chain in India, tweeted the appeal with a message on the joy of watching movies in theatres.
The joy of watching stories unfold on the big screen: the clapping, laughing and tears. We miss it. Can’t wait to have you back at the movies! #UnlockCinemaSaveJobs, the chain captioned the appeal.
Millions work behind the scenes, to make dreams come to life on the big screen. Their jobs are at stake. Please reopen cinemas immediately, INOX Leisure Ltd said while sharing the appeal.
Filmmaker Anurag Kashyap also backed the MAI’s appeal on Twitter."
US bans import of five Chinese goods produced using “forced labour”
The US has banned the import of five goods from China, including computer-parts, cotton and hair products, alleging that they are produced in forced labour camps in the restive Muslim-majority Xinjiang province.
The US-China relations have deteriorated after the COVID-19 outbreak, with President Donald Trump squarely blaming Beijing for allowing the disease to spread across the world. The relations have further worsened over allegations of human rights abuses in Xinjiang province, autonomy of Hong Kong, Tibet, and technology theft.
In a statement on Monday, the Department of Homeland Security (DHS) said the products subject to the import ban are cotton, apparel, computer parts, and hair products. The fifth ban is on all products made with labour from the Lop County Number 4 Vocational Skills Education and Training Center in Xinjiang.
India’s rank slips to 54th in terms of rise in housing prices: Report
Yet another ranking in which India is losing places to other countries.
PTI reports: "India’s rank slipped 11 places to 54th in terms of appreciation in residential prices, as housing rates declined nearly 2 per cent during June quarter compared with the year-ago period, according to property consultant Knight Frank.
India is at 54th spot amongst the 56 countries and territories tracked in terms of appreciation in residential real estate prices, the consultant said.
As per the ‘Global House Price Index Q2 2020’, housing prices in India declined 1.9 per cent year-on-year (YoY).
“As compared to Q1 2020, India moves down 11 spots in the global index, from 43rd rank to 54th rank in Q2 2020,” Knight Frank said.
The Index tracks the movement in mainstream residential prices across 56 countries and territories worldwide using official statistics.
In the 12-month percentage change for the period Q2 of 2019 to Q2 of 2020, Turkey led the annual rankings with prices up 25.7 per cent YoY, followed by Luxembourg at 13.9 per cent and Lithuania with 12.4 per cent.
Hong Kong was the weakest-performing territory in Q2 2020, with home prices falling to 2.8 per cent.
“Mainstream residential prices across 56 countries and territories worldwide rose at an annual rate change of 4.7 per cent on average, compared to Q1 2020 at 4.4 per cent,” the consultant said.
According to the report, 9 per cent of the surveyed global countries and territories registered a decline in a yearly price growth.
European countries occupy eight of the top 10 rankings in Q2 2020, which provides representations from the Baltic and Central and Eastern European nations as well.
From the Asia Pacific region perspective, New Zealand and South Korea, which were initially seen to have effectively handled the pandemic, have registered mixed results. New Zealand slumped from second to 11th place in the rankings between March and June. However, the country recorded an annual price growth of 9 per cent, making it the top-performing market of the Asia Pacific region.
South Korea has seen an annual price growth pick up to 1.3 per cent in Q2 2020.
Knight Frank India CMD Shishir Baijal said: “The residential sector has been impacted by low demand across most markets in India. Further, the slowdown due to the pandemic in the global economy has adversely affected the real estate sector and the purchasing power of homebuyers.”
The current softening of prices can be beneficial for the end users to make their purchase decisions, he said, adding that lower home loan interest rate could provide the right motivation for house purchase."
YouTube jumps onto short-video bandwagon, launches ‘Shorts’ in India
The entertainment space is heating up.
PTI reports: "Competition in the short-video space in the country continues to intensify with YouTube being the latest entrant in the segment with its ‘Shorts’ offering as the Google-owned platform attempts to fill the void created after the ban of TikTok in India. In a blogpost, YouTube said it is building YouTube Shorts, a new short-form video experience (15 seconds or less), for creators and artists who want to shoot short, catchy videos using their mobile phones.
“Over the next few days in India, we’re launching an early beta of Shorts with a handful of new creation tools to test out. This is an early version of the product, but we’re releasing it now to bring you — our global community of users, creators and artists — on our journey with us as we build and improve Shorts,” it added.
YouTube said it will continue to add more features and expand to more countries in the coming months as it learns from users’ feedback.
On June 29, the Indian government banned 59 mobile apps with Chinese links, including the popular short video platform TikTok, terming these apps prejudicial to sovereignty of the country. Since then, a number of homegrown apps have been launched in the country, including Roposo, Chingari, Josh (Dailyhunt) and Moj (ShareChat).
Facebook’s Instagram, too, has launched ‘Reels’ within its app to cash in on the spurt in usage of such platforms after the TikTok ban.
According to analysts, while the ban has opened up opportunities for players to accelerate growth, they need to ensure good user experience and engagement on their platforms to be successful.
YouTube said over the years, its platform has enabled creators to share their voice, who have found an audience of more than two billion people.
“User-generated short videos were born on YouTube starting with our first upload, a short 18-second video ‘Me at the zoo’ As technology advances, creators and artists can now take advantage of the incredible power of smartphones to easily create and publish high-quality content wherever they are in the world,” it said.
The company said its team is focused on building its foundation across three main areas - create, getting discovered and watching.
YouTube said it is starting to test new tools for creators and artists with its early beta in India. This includes a multi-segment camera to string multiple video clips together, the option to record with music from a large library of songs, speed controls, and a timer and countdown to easily record, hands-free.
“We also recently rolled out a prominent new spot for the create icon on Android, starting in India. We’ll continue to expand to iOS devices and in more countries soon. You can also expect more creation features in the coming months,” it added."
Retail inflation eases to 6.69% in August
Retail inflation softened slightly to 6.69% in August, even as food prices continued to rule high, official data showed on Monday.
The government has revised downwards the retail inflation for July to 6.73% from the earlier estimate of 6.93%. Food inflation during the month stood at 9.62%.
Food inflation in August fell marginally to 9.05%, according to the Consumer Price Index (CPI) data.
The retail inflation, mainly taken into account by the RBI to arrive at its policy decisions, has been above the regulator’s comfort level.
Indian economy to shrink 9% in FY21: ADB
Yet another forecast about India's 2020-21 growth rate.
PTI reports: "India’s coronavirus-battered economy will shrink by 9 per cent this fiscal, the Asian Development Bank (ADB) predicted on Tuesday saying growth outlook remains highly vulnerable to either a prolonged outbreak of the pandemic or a resurgence of cases.
This will be the first time in four decades that the Indian economic growth will contract.
In its Asian Development Outlook (ADO) 2020 Update, ADB forecasts a strong recovery for the economy in FY2021, with gross domestic product (GDP) growing by 8 per cent as mobility and business activities resume more widely.
“India imposed strict lockdown measures to contain the spread of the pandemic and this has had a severe impact on economic activity,” said ADB Chief Economist Yasuyuki Sawada.
Sawada further noted that “it is crucial that containment measures, such as robust testing, tracking, and ensuring treatment capacities, are implemented consistently and effectively to stop the spread of COVID-19 and provide a sustainable platform for the economy’s recovery for the next fiscal year and beyond.”
With lockdowns stalling private spending, ADB said GDP will shrink by 9 per cent in April 2020 to March 2021, sharply down from its June’s forecast of (-) 4 per cent.
“The growth outlook remains highly vulnerable to either a prolonged outbreak or a resurgence of cases, with the country now having one of the highest number of COVID-19 cases globally,” It said.
Other downside risks include increasing public and private debt levels that could affect technology and infrastructure investment, as well as rising non-performing loans caused by the pandemic that could further weaken the financial sector and its ability to support economic growth.
ADB joins a chorus of international agencies that have predicted a contraction in the Indian economy in the current fiscal.
S&P Global Ratings on Monday slashed its FY21 growth forecast for India to (-) 9 per cent, from (-) 5 per cent estimated earlier, saying that rising COVID-19 cases would keep private spending and investment lower for longer.
Last week, two other global rating agencies Moody’s and Fitch projected the Indian economy to contract 11.5 per cent and 10.5 per cent respectively in the current fiscal. However, Goldman Sachs has estimated the contraction at 14.8 per cent.
India Ratings and Research expects contraction at 11.8 per cent, while Crisil estimates the contraction at 9 per cent.
For the 2021-22 fiscal, S&P expects economic growth at 10 per cent.
ADB said Government initiatives to address the pandemic, including the rural employment guarantee program and other social protection measures, will aid rural incomes protecting the vulnerable people, but private consumption may continue to suffer.
Investment is also expected to contract as investors remain deterred by heightened risks and uncertainties. The fiscal deficit is expected to rise significantly in FY2020 as government revenues fall and expenditures rise."
‘Awareness of immunity driving chicken prices up’
Chicken prices at the farm gate across India have returned to pre-COVID-19 levels of ₹85-90 a kg, as consumption of poultry has risen again as an immunity booster to counter the virus , according to major poultry firms.
Following rumours in February linking poultry with COVID-19, chicken prices had crashed to ₹5-10 a kg, forcing poultry farmers to release the birds into the open as they could not afford their maintenance.
“March and April were the [worst],” said S. Vignesh, ED, Suguna Foods, a large poultry player in the south with a market share of over 16%. “Production was severely impacted as maize producers could not supply feed due to the lockdown and demand was [affected] following rumours,” he added. “So, prices had crashed to ₹5-10 a kg from ₹85-90 in December,” he said. “Farm gate prices have bounced back to pre-COVID-19 levels and demand has returned to 70% of the pre-pandemic time. “Chicken is now consumed at least twice a week because people have started taking it as source of protein and an immunity builder.”
Oil slips as bleaker demand outlook weighs on sentiment
Demand remains a huge concern for oil investors.
Reuters reports: "Oil prices slipped on Tuesday as worries over slow recovery in global fuel demand were reinforced by warnings by major oil producers, but short-covering ahead of a meeting later this week of OPEC and its allies, known as OPEC+, limited losses.
Brent crude was down 5 cents, or 0.1%, at $39.56 a barrel by 0407 GMT, while U.S. West Texas Intermediate (WTI) crude futures were down 3 cents, or 0.1%, at $37.23 a barrel.
Both contracts ended slightly lower the previous day.
“Sentiment in oil markets remained gloomy due to bleak demand outlook by oil producers and as a resurgence in COVID-19 cases in many countries fuelled concerns over slower pick-up in global fuel demand,” said Chiyoki Chen, chief analyst at Sunward Trading.
“Brent and WTI are likely to stay between $35 and $40 a barrel until U.S. demand for heating oil starts picking up as the peak driving season has ended,” he said.
Major oil industry producers and traders are forecasting a bleak future for worldwide fuel demand, due to the pandemic's ongoing assault on the global economy, with OPEC downgrading its oil demand forecast and BP citing demand might have peaked in 2019.
World oil demand will tumble by 9.46 million barrels per day (bpd) this year, the Organization of the Petroleum Exporting Countries (OPEC) said in a monthly report, more than the 9.06 million bpd decline expected a month ago.
Worries over an increase in global supply after Libyan commander Khalifa Haftar committed to ending a months-long blockade of oil facilities also dented risk appetite.
“Still, some investors moved to cash in profitable short positions ahead of the OPEC+ meeting,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
Investors look to the joint ministerial monitoring committee (JMMC) by OPEC+ on Thursday to discuss compliance with deep cuts in production, although analysts do not expect further reductions to be made despite Brent prices falling below $40 per barrel in recent days.
Concerns over supply disruptions in the United States from an impending storm also provided some support.
Energy companies, ports and refiners raced on Monday to shut down as Hurricane Sally grew stronger while lumbering toward the central U.S. Gulf Coast, the second significant hurricane to shutter oil and gas activity in the past month.
“Still, the support is limited as oil prices came off quickly after the first hurricane passed, with energy companies being able to make proper preparations ahead of time,” Sunward's Chen said.
Meanwhile, China's crude oil throughput in August rose from a year ago, reaching the second-highest on record, as refineries worked to digest record imports brought in earlier this year."
GST compensation due to States is ₹1.51 lakh crore
The GST collection during April-August declined on account of the COVID-19 induced lockdown, and the compensation due to States stands at over ₹1.51 lakh crore, Minister of State for Finance Anurag Singh Thakur said on Monday.
The provisional GST compensation due to States and Union Territories (UTs) for 2020-21 was highest for Maharashtra at ₹22,485 crore, followed by Karnataka (₹13,763 crore), Uttar Pradesh (₹11,742 crore), Gujarat (₹11,563 crore) and Tamil Nadu (₹11,269 crore).
The total provisional GST compensation due to 31 States and UTs for 2020-21 put together stands at ₹1,51,365 crore, as per data shared in a written reply to a question in the Lok Sabha.
Mr. Thakur said the issue of pending compensation and future course of action to meet the shortfall was discussed in the 41st GST Council meeting on August 27 wherein States were given two options to meet their GST compensation shortfall for current fiscal year from market borrowing.
Apple's market cap beats that of the FTSE-100 index
Rupee rises 15 paise to 73.33 against US dollar in early trade
The bullish sentiment in stocks has helped the rupee this morning.
PTI reports: "The rupee strengthened by 15 paise to 73.33 against the US dollar in opening trade on Tuesday as weak American currency and positive domestic equities strengthened investor sentiment.
At the interbank forex market, the domestic unit opened at 73.33 against the US dollar, registering a rise of 15 paise over its previous close.
On Monday, the rupee had settled at 73.48 against the US dollar.
Forex traders said news related to coronavirus vaccine and sustained foreign fund inflows aided to positive sentiment.
“Global risk sentiment is holding up on hopes of a vaccine becoming available by the end of 2020. US equities ended the session with gains of around 1 per cent,” said Abhishek Goenka, Founder and CEO, IFA Global.
Meanwhile, retail inflation softened slightly to 6.69 per cent in August as price rise in some food items eased.
“Domestic consumer prices rose 6.69 per cent in August, lower than market expectations but still higher than the RBI upper limit of its tolerance band of 4-6 per cent. Since a higher print was already expected, the bond market should take the data in its stride,” Goenka said.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.18 per cent to 92.88.
On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 141.59 points higher at 38,898.22, and the broader NSE Nifty advanced 43 points to 11,483.05.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 298.22 crore on a net basis on Monday, according to exchange data.
Brent crude futures, the global oil benchmark, fell 0.08 per cent to USD 39.58 per barrel."
'Developing Asia' to shrink for first time in nearly six decades: ADB
The economic impact of the pandemic brings the Asian growth story to a halt.
Reuters reports: "The coronavirus pandemic will cause economic output in “developing Asia” to shrink for the first time in nearly six decades in 2020 before it bounces back next year, the Asian Development Development Bank said on Tuesday.
“Developing Asia”, which groups 45 countries in Asia-Pacific, is expected to contract 0.7% this year, the ADB said, forecasting the first negative quarterly figure since 1962. The ADB's previous forecast in June had reckoned on 0.1% growth.
For 2021, the region is forecast to recover and grow 6.8%, still below pre-COVID-19 predictions, the ADB said in an update of its Asian Development Outlook report. The updated forecasts show the damage brought by the pandemic was greater than previously thought, with about three-quarters of the region's economies forecast to slump this year.
“Most economies in the Asia and Pacific region can expect difficult growth path for the rest of 2020,” ADB Chief Economist Yasuyuki Sawada said in a statement. “The economic threat posed by the COVID-19 pandemic remains potent, as extended first waves or recurring outbreaks could prompt further containment measures,” Sawada said.
While the pandemic remains the biggest downside risk to the region's outlook, Sawada said in a separate media briefing ”worsening geopolitical tensions” that include the trade and tech war between U.S. and Beijing, could also dent growth.
China, where the coronavirus surfaced in December, is seen bucking the trend as the ADB kept its 2020 growth forecast at 1.8%. The world's second largest economy is expected to rebound strongly to 7.7% in 2021, the ADB said.
India's economy is expected to contract 9.0% this year, ADB said, a far worse outcome than the 4.0% contraction previously forecast, ADB said. But it also expected India to bounce back with 8.0% growth next year. As the pandemic took a toll on Southeast Asian economies, the sub-region is projected to suffer a 3.8% slump this year, before picking up next year.
Latest forecasts suggest a more protracted “L” shaped recovery for “developing Asia”, Sawada said. Depressed demand and lower oil prices allowed the ADB to keep its inflation forecast for developing Asia at 2.9%, and it is predicted to slow further to 2.3% in 2021."
Indian shares open higher on inflation data, IT boost
A good start to the morning for the stock indices that were lackluster yesterday.
Reuters reports: "Indian shares opened higher on Tuesday, after data showed the country's annual retail inflation eased slightly in August, with gains in IT stocks also offering support.
The blue-chip NSE Nifty 50 index rose 0.48% to 11,494.70 and the benchmark S&P BSE Sensex 0.50% to 38,950.43 by 0350 GMT.
India's retail inflation in August of 6.69% was lower than the 6.73% recorded in July, though it remained above the upper end of the Reserve Bank of India's (RBI) medium-term target for the fifth straight month.
In domestic trading, the Nifty IT index jumped 0.84%, with IT major Tata Consultancy Services Ltd rising as much as 1.4%.
Broader Asian markets were up on positive China industrial data and optimism around COVID-19 vaccines, with eyes on the U.S. Federal Reserve's two-day policy meeting that starts later in the day."
Govt. looks to spend ₹2.35 lakh crore more
The Centre has sought Parliament approval for a gross additional expenditure of ₹2.35 lakh crore, including ₹20,000 crore for recapitalisation of public sector banks, for 2020-21.
Finance Minister Nirmala Sitharaman tabled the first batch of Supplementary Demands for Grants for this financial year in the Lok Sabha on Monday.
Out of the ₹2.35 lakh crore gross additional expenditure, the proposals involving net cash outgo add up to almost ₹1.67 lakh crore. The rest of the money will come either through savings or reallocation of funds allocated to other ministries.
The supplementary demand for grants is needed for government expenditure over and above the amount for which Parliamentary approval was already obtained during the Budget session.
