Today's top business news: Shares rise on robust IT earnings, monsoon rains forecast to be average in 2021, second wave of COVID-19 poses risk to economic recovery, and more

A man wears a mask and walks past the BSE building, as the Sensex crashed by nearly 3000 points, in Mumbai, Friday, March 13, 2020.   | Photo Credit: PTI

Highlights
  • coronavirus
  • lockdown
  • sensex
  • oil
  • gold
  • nifty

The benchmark stock indices opened the day on a positive note boosted by robust earnings reported by IT companies.

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

4:30 PM

Gold, silver marginally up

Gold prices rose marginally by ₹ 9 to ₹ 46,431 per 10 gram in the national capital on Friday, according to HDFC Securities.

In the previous trade, the precious metal had closed at ₹ 46,422 per 10 gram.

Silver also gained ₹ 53 to ₹ 67,460 per kg from ₹ 67,407 per kg in the previous trade.

In the international market, gold was quoting higher at USD 1,764 per ounce and silver was flat at USD 25.87 per ounce.

"Gold prices rallied supported by dollar decline and fall in US bond yields," according to HDFC Securities, Senior Analyst (Commodities), Tapan Patel.

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4:00 PM

Sensex, Nifty end marginally higher

A mute day for stocks which continue to be range-bound.

PTI reports: "Equity benchmarks Sensex and Nifty ended marginally higher after a volatile session on Friday amid positive cues from global markets.

The 30-share BSE Sensex ended 28.35 points or 0.06 per cent higher at 48,832.03.

Similarly, the broader NSE Nifty rose 36.40 points or 0.25 per cent to 14,617.85.

Asian Paints was the top gainer in the Sensex pack, rising over 2 per cent, followed by UltraTech Cement, ONGC, Sun Pharma, HCL Tech and Nestle India.

On the other hand, ICICI Bank, Bajaj Finance, L&T, TCS, Infosys and Reliance Industries were among the laggards.

A continued surge in second wave of COVID-19 cases in the country, which already crossed 2 lakh daily cases, has certainly posed a risk to sustainability of rebound of earnings momentum, said Binod Modi, Head-Strategy at Reliance Securities.

While the government's strong effort to expedite vaccination progress and absence of complete lockdown in Maharashtra and Delhi offered some comfort to equities, the risk of other states taking steps of wider economic restrictions continues to persist, which may continue to weigh on investors’ sentiments in the near term, he noted.

"Unlike last year, states seem to be reluctant this time for complete lockdown due to wider ramification on economic activities.

"Further, current level of mobility restrictions imposed at different states and government's focus to improve supply of vaccine in the country should be helpful to contain outbreak in coming weeks and essentially should not lead to large economic damage," he stated.

Elsewhere in Asia, bourses in Shanghai, Hong Kong, Seoul and Tokyo ended on a positive note.

Stock exchanges in Europe were also trading with gains in mid-session deals.

Meanwhile, international oil benchmark Brent crude was trading 0.40 per cent higher at USD 67.21 per barrel."

3:30 PM

Second wave of COVID-19 poses risk to economic recovery; Q4 GDP to be hit: Report

The risk to growth coming from the second wave.

PTI reports: "The spike in coronavirus cases poses a risk to economic recovery, and the GDP is unlikely to achieve the earlier projected 3 per cent growth for March quarter 2020-21, Wall Street brokerage Bank of America (BofA) Securities said on Friday.

Noting that a month-long nationwide lockdown can shave off 100-200 basis points off the GDP, the brokerage said growth is still weak, amplified by the steep fall in key economic activity indicators and the anaemic loan growth, and the surging pandemic cases is only increasing the worries on the growth front.

However, the report by BofA Securities did not offer a likely GDP number for the March quarter 2020-21.

The seven-component BofA India activity indicator slowed to 1 per cent in February from 1.3 per cent in January, the report said, as 4 of the 7 constituents of the India activity index slowed in February over the previous month.

The report also pointed out that this poses risks to their 3 per cent real GVA growth forecast for the March quarter. The index had first time in 2020-21 turned positive in December 2020 after declining for nine straight months.   Spike in pandemic cases poses a rising risk to recovery. "We estimate that a month of national lockdown costs 100-200 bps of GDP," the report warned.

The pandemic caseload in India has been surging hitting new records everyday for the past fortnight. The latest official number puts the daily infections at 2.17 lakh in the past 24 hours and 1,185 deaths-- both are the highest in the world and more than the combined numbers of the second and the third most affected countries-- Brazil and the US.

The report said it remains to be seen if the second wave subsides without a national lockdown and noted that Maharashtra, which contributes over 16 per cent of national GDP is already under lockdown till the end of the month as the state has more than half of the new cases.

A bit of good news is that real lending rates are falling thanks to the steady RBI easing and normalization of core WPI and these factors should push 2021-22 loan growth to 12 per cent from 5.6 per cent in the last fiscal year. Real interest rates are a proxy for pricing power.

Falling real lending rates will push up loan growth. Despite some spike in inflation, the nominal marginal cost of funds based lending rate (MCLR) is now down 145 basis points since March 2019 and the real MCLR is lower by 506 basis points since then. And so are the nominal and real weighted average lending rates.

In sum, "an anemic loan growth only buttresses our view of a weak recovery," the report concluded."

3:00 PM

Exports rise to USD 13.72 bn during Apr 1-14: Commerce Ministry data

Some signs of improvement on the external front.

PTI reports: "The country's exports have increased to USD 13.72 billion during April 1-14 this year on account of healthy growth rate in sectors such as engineering and gems and jewellery, according to the provisional data of the Commerce Ministry.

Exports during April 1-14 last year were aggregated at USD 3.59 billion.

In April 2020, the outbound shipments had contracted by a record 60 per cent due to COVID-19 related lockdown.

Imports during the period under review swelled to USD 19.93 billion as against USD 6.54 billion during April 1-14 last year, the data showed.

The final figures for April 2021 would be released during mid-May by the ministry.

Exports have surged by 60.29 per cent to USD 34.45 billion in March, even as the outbound shipments contracted by 7.26 per cent during the full 2020-21 fiscal to USD 290.63 billion."

2:30 PM

Maruti Suzuki hikes model prices by up to ₹ 22,500 to offset rise in input costs

The country's largest carmaker Maruti Suzuki India (MSI) on Friday said it has hiked prices of most of its models by up to ₹ 22,500 with immediate effect to partially offset the impact of the rise in input costs.

Barring Celerio and Swift, all the models of the company will be covered under the price increase exercise.

"The company is increasing the price for select models owing to increase in various input costs," the auto major said in a regulatory filing.

The weighted average price increase in ex-showroom prices (Delhi) across models is 1.6 %, it added.

The new prices are effective from Friday, MSI said.

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2:00 PM

India's monsoon rains forecast to be average in 2021 - weather office

No surprise expected this year on the weather front.

Reuters reports: "India is likely to receive an average amount of rain in the 2021 monsoon, the state-run weather office said on Friday, raising expectations of higher farm and economic growth in Asia's third-biggest economy, which is reeling from a surge in coronavirus cases.

Monsoon rainfall is expected to total 98% of the long-term average, M. Rajeevan, secretary at the Ministry of Earth Sciences, told a virtual news conference.

The state-run India Meteorological Department (IMD) defines average, or normal, rainfall as between 96% and 104% of a 50-year average of 88 cm (34 inches) for the entire four-month season beginning June.

In the midst of the coronavirus pandemic, agriculture has been a bright spot in India's economy, and a good monsoon would help the sector and the countryside, said Radhika Rao, economist at DBS Bank in Singapore.

The monsoon, the lifeline of the country's $2.9 trillion economy, delivers nearly 70% of rains that India needs to water farms and recharge reservoirs and aquifers.

Nearly half of India's farmland, without any irrigation cover, depends on annual June-September rains to grow crops such as rice, corn, cane, cotton and soybeans.

Farming accounts for nearly 15% of India's economy but sustains more than half of India's 1.3 billion people.

Monsoon rains lash the southern tip of Kerala state around June 1 and retreat by September.

"Most models show that La Nina conditions will convert to neutral conditions, and there is a very low chance of El Nino's development during the monsoon season," Rajeevan said.

A strong El Nino, marked by a warming of the sea surface on the Pacific Ocean, can cause severe drought in Australia, Southeast Asia and India.

A strong El Nino triggered back-to-back droughts in 2014 and 2015.

La Nina is an abnormal cooling of ocean temperatures in the eastern and central Pacific, triggering above average rains."

1:00 PM

Ajay Seth takes over as new Economic Affairs Secretary

Some churn at the top echelons of the bureaucracy.

PTI reports: "Ajay Seth, a 1987 batch IAS officer of Karnataka cadre, on Friday assumed charge as Secretary Economic Affairs at a time when the economy which was showing signs of recovery is being threatened by the second wave of COVID-19.

Seth replaces Tarun Bajaj, who moved as Revenue Secretary in the Ministry of Finance.

"Ajay Seth takes charge as the new Secretary of Department of Economic Affairs (DEA), Ministry of Finance, in New Delhi today," the Finance Ministry said in a tweet.

Appointments Committee of the Cabinet headed by the Prime Minister on April 6 appointed Seth as the new Economic Affairs Secretary.

"Shri Seth is a 1987 Batch Indian Administrative Service officer of Karnataka Cadre. Mr Seth previously held charge as Managing Director of Bangalore Metro Rail Corporation Limited," another tweet said.

In his previous stint at the Finance Ministry, Seth served as Deputy Secretary and Director in the Department of Expenditure and Department of Economic Affairs between 2000 and 2004. He served as Adviser to executive director Asian Development Bank during 2004-2008.

He has served as served as Secretary Budget and Resources in the state and also as commissioner Commercial Taxes Department."

12:30 PM

Oil steady climbs to four-week high on strong China data, demand revival

Some positive signs for the oil bulls.

Reuters reports: "Oil prices extended gains on Friday and were on course for a weekly gain of more than 6% with an improved oil demand outlook and strong economic recoveries in China and the United States offsetting concerns about spikes in COVID-19 infections.

Brent crude futures rose 13 cents, or 0.2%, to $67.07 a barrel at 0508 GMT, following a 36 cent rise on Thursday.

U.S. West Texas Intermediate (WTI) crude futures were 12 cents, or 0.2%, higher to $63.58 a barrel, after climbing 31 cents on Thursday.

China's 2021 net crude oil imports are forecast to grow 3.4% this year versus 2020 to about 11.2 million barrels per day, a unit of top oil and gas group China National Petroleum Company said.

China also reported a record 18.3% jump in economic growth in the first quarter from a coronavirus-induced slump earlier last year.

Strong economic recoveries around the world and supply curbs by OPEC and its allies, together called OPEC+, as well as a cautious response to higher prices by U.S. oil producers are supporting the market, said Westpac senior economist Justin Smirk.

"We still think there's a clear risk prices could rise up to $70 a barrel before we see a more meaningful pull back," Smirk said.

He said the longer prices stay elevated, the more supply is likely to return to the market, and the risks of COVID-19 cases spiking in places like India and Europe could eventually drive prices down.

Taking into account worsening coronavirus developments in some countries, "crude overshot to the upside this week and a pullback is now due," said Vandana Hari, energy analyst at Vanda Insights.

"India and major economies in Europe need to be reckoned with to complete the oil demand picture," said Hari.

India breached 200,000 daily infections for the first time on Thursday.

For the moment, a strong jump in U.S. retail sales, a drop in unemployment claims and signs of more cars on the road in the world's biggest economy buoyed the market.

"The reopening of the (U.S.) economy has already seen traffic levels increase in various states across the nation," ANZ analysts said in a note, adding that India and China are also showing "high levels of congestion".

Traders are looking ahead to a pick-up in traffic typical in the United States in June through August.

"With miles driven on the U.S. highways up for the first time since the pandemic outbreak, it means we are well on the way to a bountiful U.S. summer driving season that could come close to matching the summer of 2019," Axi chief global market strategist Stephen Innes said in a note."

12:00 PM

Amazon asks Indian court to not resume antitrust probe

Amazon.com Inc told an Indian court on Thursday a Reuters special report into thee-commerce giant's business practices should not be considered as evidence, as India's competition watchdog sought to lift an injunction on an anti-trust probe.

The Reuters report showed the U.S. firm gave preferential treatment to a small group of sellers on its platform, sidestepping foreign investment rules meant to protect India's small retailers from being crushed by e-commerce giants.

The Competition Commission of India (CCI) order of investigation into Amazon and Walmart's Flipkart in January 2020 followed a complaint from a trader group, but a court put it on hold in February last year after the companies argued there was no evidence they were harming competition.

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11:30 AM

Wipro shares jump nearly 10% after Q4 earnings 

Today's big-moving stocks.

PTI reports: "Shares of Wipro zoomed nearly 10 per cent in morning trade on Friday after the company posted a 27.7 per cent jump in consolidated net profit at Rs 2,972 crore for the March 2021 quarter, and exuded confidence of sustaining strong growth momentum in the coming quarters.

The stock jumped 9.51 per cent to Rs 472 -- its 52-week high -- on the BSE.

At the NSE, it rallied 9.67 per cent to Rs 472.35 -- its one-year high.

The results were announced after market hours on Thursday.

Wipro had registered a net profit (attributable to equity holders) of Rs 2,326.1 crore in the year-ago period, as per Indian Accounting Standards (Ind-AS).

Its revenue from operations rose by 3.4 per cent to Rs 16,245.4 crore in the reported quarter, from Rs 15,711 crore in the same period last fiscal.

Wipro -- which gets a bulk of its topline from IT services -- said it expects revenues from that unit to be in the range of USD 2,195 to USD 2,238 million in the June 2021 quarter. This translates into a sequential growth of 2-4 per cent.

Wipro's IT services segment revenue was at USD 2,152.4 million in the March quarter, a sequential growth of 3.9 per cent.

"Our Q4 performance was built on top of our momentum that we saw in the last quarter. We have reported a solid growth in revenue, healthy order booking and great execution, resulting in robust margins.

"This truly sets the stage for the next quarter and the next financial year," Wipro CEO and Managing Director Thierry Delaporte told reporters.

He added that revenue of 3.9 per cent in reported terms and 3 per cent in constant currency terms is at the top quartile of its guidance range."

11:00 AM

Indian shares rise as robust IT earnings give respite from virus-led slump

An update on the stock indices this morning.

Reuters reports: "India's main stock indexes rose on Friday after strong earnings from Wipro lifted shares of software services companies, helping investors look past a surge in the country's COVID-19 cases.

The NSE Nifty 50 index was up 0.5% at 14,659.70 by 0430 GMT, while the S&P BSE Sensex rose 0.3% at 48,954.21.

The Nifty 50 and the Sensex have fallen 5.5% and 7.1%, respectively, since hitting record highs in February, as a severe second wave of COVID-19 cases has threatened to derail a nascent economic recovery.

On Friday, India reported a record daily increase of 217,353 infections, its eighth daily record jump in the last nine days.

IT services company Wipro's shares jumped about 8% as the company reported a 28% rise in quarterly profit after market closed on Thursday, beating analysts' estimates.

"Results from TCS and Wipro point that the market (is) in a good direction as investors look forward to corporate India's numbers... there is a feeling that leading companies will not disappoint," Rusmik Oza, executive vice president (head of fundamental research) at Kotak Securities said.

Earlier this week, IT services heavyweight Tata Consultancy Services reported a 15% jump in quarterly profit, while smaller peer Infosys Ltd posted a 17.5% rise in its profit.

IT stocks advanced 1.7%, buoyed by Wipro's surge.

Auto stocks rose over 1%, with Tata Motors advancing 2.1%.

State-owned banks rose 0.9%, but were on track to lose over 6% for the week.

Metal stocks gained 0.8% as benchmark iron ore prices rose on strong demand."

10:30 AM

RBI sets up authority to review regulations

The Reserve Bank of India (RBI) has set up the Regulations Review Authority 2.0.

The authority will review regulatory prescriptions internally as well as by seeking suggestions from RBI-regulated entities for simplification and ease of implementation.

Deputy Governor M. Rajeshwar Rao has been appointed as the Regulations Review Authority. The authority would have validity for a period of one year from May 1, 2021, unless its tenure is extended by the RBI.

The RBI had set up a similar authority for one year from April 1,in 1999 for reviewing regulations, circulars, reporting systemsbased on the feedback from public, banks and financial institutions.

The recommendations enabled streamlining and increasing the effectiveness of several procedures, paving the way for issuance of master circular and reducing reporting burden on regulated entities, the RBI said.

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10:00 AM

Sensex jumps over 150 pts in early trade; Nifty tests 14,650

A positive start to the day for stocks.

PTI reports: "Equity benchmark Sensex advanced over 150 points in early trade on Friday, tracking gains in index majors HDFC twins, Asian Paints and HCL Tech amid largely positive cues from global markets.

The 30-share BSE index was trading 160.43 points or 0.33 per cent higher at 48,964.11.

Similarly, the broader NSE Nifty rose 63.35 points or 0.43 per cent to 14,644.80.

UltraTech Cement was the top gainer in the Sensex pack, rising over 2 per cent, followed by Asian Paints, HCL Tech, HDFC, Tech Mahindra and M&M.

On the other hand, ICICI Bank, Reliance Industries, Bajaj Finance and Axis Bank were among the laggards.

In the previous session, Sensex ended 259.62 points or 0.53 per cent higher at 48,803.68, and Nifty advanced 76.65 points or 0.53 per cent to 14,581.45.

Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 979.70 crore on Thursday, according to provisional exchange data.

"A continued surge in the second wave of COVID-19 cases in the country, which already crossed 2 lakh daily cases, has certainly dented investors' sentiments.

"However, the government's strong effort to expedite vaccination progress in the country by allowing multinational vaccines in domestic markets and absence of complete lockdown in Maharashtra and Delhi offered some comfort to equities," said Binod Modi Head-Strategy at Reliance Securities.

Elsewhere in Asia, bourses in Shanghai, Hong Kong and Tokyo were trading on a positive note in mid-session deals, while Seoul was in the red.

Equities on Wall Street too ended with gains in overnight sessions.

Meanwhile, international oil benchmark Brent crude was trading flat at USD 66.94 per barrel."

9:30 AM

Citi to exit retail banking in India, China

Citigroup announced it will exit 13 international consumer banking markets, shifting its focus to wealth management and away from retail banking in places where it is small.

Citigroup will focus its global consumer banking business on four markets: Singapore, Hong Kong, London and the UAE.

But Citigroup will depart China, India and 11 other retail markets, where “we don’t have the scale we need to compete,” said Citi chief executive Jane Fraser.

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Printable version | May 6, 2021 4:36:11 PM | https://www.thehindu.com/business/businesslive-16-april-2021/article34332405.ece

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