The benchmark stock indices have made a decent start to the day with modest gains.
China has surprised the world by reporting significant positive growth despite being hit hard by the coronavirus pandemic.
Join us as we follow the top business news through the day.
US government may need to inflate its way out of debt
Sensex rallies 420 points; Infosys soars 10%
Stocks witnessed a late rally after trading range bound for most of the day.
PTI reports: "Equity benchmark Sensex rallied 420 points on Thursday, led by stellar gains in Infosys, even as global markets faced selling pressure amid spiking coronavirus cases.
After a highly volatile session, the 30-share BSE Sensex settled 419.87 points, or 1.16 per cent, higher at 36,471.68.
Similarly, the NSE Nifty surged 121.75 points, or 1.15 per cent, to 10,739.95.
Infosys rallied around 10 per cent after the IT major posted a stronger-than-expected 12.4 per cent rise in the first quarter consolidated net profit to Rs 4,272 crore, helped by large deals, and said its FY21 revenue is likely to grow by up to 2 per cent.
M&M, Nestle India, IndusInd Bank, Kotak Bank, HCL Tech and Axis Bank were the other gainers.
On the other hand, Tech Mahindra, ITC, NPTC, PowerGrid, Titan and ONGC finished with losses.
According to traders, rally in IT stocks led by Infosys kept investor sentiment positive, but massive selloff in Chinese stocks and concerns over recovery amid rising COVID-19 cases induced volatility in the session."
FinMin not for slashing GST on sanitisers
The Union Finance Ministry on Wednesday said reducing GST on hand sanitisers and similar products from 18% would lead to an inverted duty structure and put domestic manufacturers at a disadvantage vis-à-vis importers.
The Ministry added that lower GST rates helped imports by making them cheaper, that this was against the policy on Atmanirbhar Bharat and, consumers would also eventually not benefit from lower rates if domestic manufacturing suffered due to an inverted duty structure.
Rupee settles 3 paise down at 75.18 against US dollar
The rupee managed to recover some of its opening losses by the end of the day.
PTI reports: "The rupee settled 3 paise lower at 75.18 (provisional) against the US dollar on Thursday tracking strengthening American currency amid worries over mounting COVID-19 cases.
Forex traders said rupee traded in a narrow range as strong dollar, foreign fund outflows and rising COVID-19 cases dragged the local unit down, while positive domestic equities supported the rupee and restricted the losses.
At the interbank forex market, the rupee opened at 75.23, and finally settled for the day at 75.18 against the US dollar, registering a loss of 3 paise over its previous close.
It had settled at 75.15 against the US dollar on Wednesday.
During the session, it swung between a high of 75.15 and low of 75.29 against the US dollar.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.06 per cent to 96.13.
On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 145.67 points higher at 36,197.48 and broader NSE Nifty rose 39.70 points to 10,657.90.
Foreign institutional investors were net sellers in the capital market as they offloaded shares worth Rs 221.70 crore on Wednesday, according to provisional exchange data."
Gold steady near nine-year peak as virus woes counter China data
The yellow metal is holding ground amid overall market unertainty.
Reuters reports: "Gold prices held steady near a nine-year peak on Thursday, as concerns over rising coronavirus cases and simmering U.S.-China tensions offset some silver linings from Chinese economic data.
Spot gold crept 0.1% lower to $1,809.62 per ounce by 0426 GMT but moved in a very tight range of about $5, just $8.09 shy of $1,817.71, its highest since September 2011, hit last week.
U.S. gold futures were mostly unchanged at $1,813.40.
China's economy grew 3.2% in the second-quarter from a year earlier, recovering from a record contraction as lockdown measures ended and policymakers stepped up stimulus.
Michael McCarthy, chief strategist at CMC Markets said the data was mixed and gold's elevated levels reflect ongoing concern from some segments of investors about the growth outlook for the rest of the year.
Separate data showed that while the country's industrial output beat expectations in June, retail sales unexpectedly fell again, pointing to waning consumer demand.
The positive readings from China failed to help risk sentiment, which was overshadowed by a growing Sino-U.S. rift over the control of advanced technologies and civil liberties in Hong Kong.
“Asset markets are trading in reasonably tight correlations, so the gold price is tracking behaviour in broader financial markets,” IG Markets analyst Kyle Rodda said.
“From a technical point of view, support at $1,800 is holding well and indicates that the price is still committed to its uptrend.”
Safe-haven gold has risen over 19% so far this year, also benefiting from low interest rates and widespread stimulus as it's seen as a hedge against inflation and currency debasement, although market participants were still divided on the outlook for inflation."
Housing sales in Jan-Jun plunge to decade low at 59,538 units across 8 major cities
Some figures that show the gloom in the real estate sector.
PTI reports: "Housing sales in eight major cities of the country declined 54 per cent during January-June period to 59,538 units — the lowest in 10 years — as demand crashed after the imposition of the coronavirus pandemic-led lockdown late March, according to property consultant Knight Frank.
In its flagship report - India Real Estate: H1 2020 - released on Thursday, Knight Frank India said that housing sales fell 27 per cent in January-March to 49,905 units across eight major cities - Delhi-NCR, Mumbai, Kolkata, Chennai, Bengaluru, Pune, Hyderabad and Ahmedabad.
The sales plunged 84 per cent in April-June to 9,632 units as the lockdown affected demanded badly. Delhi-NCR, Chennai and Hyderabad had near-zero sales during the second quarter of the calendar year.
“After two years of steady demand, the home sales in top eight cities of India declined by a significant 54 per cent year-on-year (YoY) to a decadal low of 59,538 units during H1 2020 with sales mostly concentrated in the first quarter of calendar year,” Knight Frank India said.
Housing sales in H1 of 2019 stood at 1,29,285 units.
New home launches reported a drop of 46 per cent to 60,489 units during January-June period of this year.
The weighted average prices have also fallen across most cities in H1 2020 with NCR, Pune and Chennai saw the most correction at 5.8 per cent YoY, 5.4 per cent YoY and 5.5 per cent YoY, respectively.
Information technology sector driven markets of Hyderabad and Bengaluru witnessed price growth of 6.9 per cent and 3.3 per cent during the same period.
About 47 per cent of home sales in January-June 2020 were in below Rs 50 lakh pricing category."
With inflation in India ticking higher it may be time for RBI to pause Reuters
Investors expecting further rate cuts from the RBI may be disappointed as inflation makes a comeback.
Reuters reports: "With India's economic growth sputtering, the Reserve Bank of India was expected to maintain a rate-cutting cycle, but an uptick in near-term inflation could give the central bank's Monetary Policy Committee reason to pause for now.
Having cut its key lending rate by an aggressive 115 basis points (bps) in 2020, on top of 135 bps cuts in 2019, the RBI so far has had little success in spurring credit growth amid varying degrees of lockdowns across India.
Some economists and market insiders argue it may be prudent for the MPC, the policy committee, to hold its fire when it meets early next month.
“It's probably too early to administer a demand stimulus. The RBI still has room to cut rates, but we probably want to be more cautious of the timing,” said Venkat Pasupuleti, portfolio manager at Dalton Investments.
“Maybe they should wait a quarter to see how things pan out once the lockdown situation is eased further.”
Market participants have factored in at least a 25 bps rate cut by the MPC on August 6 while analysts are predicting a total 50-75 bps cuts over the rest of the fiscal year that runs to March 31.
The spike in the retail inflation rate above the RBI's mandated 2%-4% target range is another reason for the central bank to take a breather, analysts say.
Annual retail inflation rose to 6.09% in June, compared to 5.84% in March and sharply above a 5.30% median forecast in a Reuters poll of economists.
Rahul Bajoria, an economist at Barclays, said the spike in both consumer and wholesale prices “could lead to a tempering in enthusiasm for material front-loaded policy support from here on.”
Almost all economists however agreed the RBI cannot move away from its accommodative stance or call an end to the rate cutting cycle just yet.
India's economy grew at 3.1% in the March quarter - an eight year low - and some economists have predicted a contraction of more than 20% in the June quarter and a contraction of up to 5% in the fiscal year."
Indian pharma industry capable of producing COVID-19 vaccines for entire world: Bill Gates
A pat in the back for the Indian pharmaceutical industry.
PTI reports: "India’s pharmaceutical industry will be able to produce COVID-19 vaccines not just for the country but also for the entire world, according to Microsoft co-founder and philanthropist Bill Gates.
A lot of “very important things have been done” in India and its pharma industry is doing work “to help make the coronavirus vaccine building on other great capacities that they have used for other diseases”, said the Co-Chair and Trustee of Bill and Melinda Gates Foundation.
Speaking in a documentary -- COVID-19: India’s War Against The Virus -- to be premiered on Discovery Plus this (Thursday) evening, Gates said India also faces a huge challenge due to the health crisis because of its gigantic size and urban centres with a lot of population density.
Commenting on the strength of India’s pharma industry, he said, “India has a lot of capacity there -- with the drug and vaccine companies that are huge suppliers to the entire world. You know, more vaccines are made in India than anywhere-- starting with Serum Institute, that’s the largest.”
He further said, “But (there are) also Bio E, Bharat (Biotech), many others. They are doing work to help make the coronavirus vaccine, building on other great capacities that they have used for other diseases.”
Stating that India joined Coalition for Epidemic Preparedness Innovations (CEPI), which is a group working on a global basis to build vaccines platforms, Gates said, “I am excited that the pharmaceutical industry there will be able to produce not just for India but also for the entire world. (This is) What we need to reduce the deaths and make sure we are immune, which is how we end the epidemic.”
Gates said Bill and Melinda Gates Foundation is also a “partner with the government, particularly with the department of biotechnology, the Indian Council of Medical Research (ICMR) and the office of the principal scientific advisor provide advice and help about getting these tools going“."
Infosys shares soar 15% on stronger-than-expected Q1 earnings
IT stocks are on a roll on positive earnings releases.
PTI reports: "Shares of Infosys rallied 15 per cent on Thursday after the company posted a stronger-than-expected 12.4 per cent rise in the first quarter consolidated net profit.
The stock jumped 14.49 per cent to its one-year high of Rs 952 on the BSE.
On the NSE, it rose sharply by 14.98 per cent to its 52-week high of Rs 955.50.
It was the biggest gainer on the BSE 30-share Sensex and NSE 50-share Nifty.
“Infosys’s results beat estimates substantially (revenue/margins), but the key positive is the reiteration of revenue guidance growth of 0-2 per cent for FY21,” according to a report by Edelweiss Research.
Infosys on Wednesday posted 12.4 per cent rise in the first quarter consolidated net profit to Rs 4,272 crore, helped by large deals, and said its FY21 revenue is likely to grow by up to 2 per cent.
The Bengaluru-based company, which logged large deal wins worth USD 1.7 billion during the quarter, saw its digital revenues growing over 25 per cent to USD 1.38 billion (44.5 per cent of total revenues).
The company had posted a net profit (before minority interest) of Rs 3,802 crore in the June 2019 quarter. Revenue grew 8.5 per cent to Rs 23,665 crore in the quarter under review from Rs 21,803 crore in year-ago period.
While COVID-19 pandemic still presents challenges, the company is reinstating its guidance for the full financial year at 0-2 per cent in constant currency terms, Infosys CEO and Managing Director Salil Parekh said."
China's bond market is being starved off funds
Another pan-India lockdown will hit auto sector; affect workforce, capex plans: CARE Ratings
Words of a caution from a ratings agency.
PTI reports: "In the eventuality of another spell of a pan-India lockdown, the automobile sector will continue its downwards trajectory, which will seriously affect workforce and OEMs may have to further delay product launches and capex plans, CARE Ratings said in a report.
Several state governments have been announcing lockdown again in select areas for different time periods to check the COVID-19 pandemic amid rising numbers of infection cases in the country.
The automobile sector was already grappling with soft consumer demand in FY20. Additionally, the strict enforcement of government rules to adopt new emission standards led to original equipment manufacturers (OEMs) hiking their product prices which further deferred consumer purchases, Care Ratings said in the report on Wednesday.
Against this backdrop of an existing slowdown environment, the outbreak of COVID-19 in mid-March added to the woes of this industry.
Due to multiple lockdowns imposed in various states of the country in April and May, business and commercial activities came to a sudden standstill. The pandemic caused disruptions in supply chains and brought manufacturing activity to a halt for nearly 30 days, it said.
Due to the lockdowns, various OEMs, ancillaries and dealers located in containment zones witnessed almost zero activity in April and few days of May.
However, with gradual relaxations on restrictions in movement of people in June, manufacturing activity witnessed an improvement during the month, it said.
With this, automobiles production, sales as well as exports sequentially rose in June, after two consecutive months of decline, it added."
Rupee slips 12 paise to 75.27 against US dollar in early trade
The rupee is witnessing selling pressure after yesterday's rise.
PTI reports: "The rupee depreciated 12 paise to 75.27 against the US dollar in opening trade on Thursday tracking weakness in Asian peers and strengthening American currency.
The rupee opened at 75.23 at the interbank forex market, then lost ground and touched 75.27 against US dollar, down 12 paise over its last close.
It had settled at 75.15 against the US dollar on Wednesday.
Forex traders said positive opening in domestic equities supported the rupee, while factors like strong dollar, foreign fund outflows and rising COVID-19 cases dragged the local unit down.
“Cues from Asia remained weak as currencies in the continent were weak against the US dollar this morning,” Reliance Securities said in a research note.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.04 per cent to 96.11.
On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 282.22 points higher at 36,334.03 and broader NSE Nifty rose 60.20 points to 10,678.40.
Foreign institutional investors were net sellers in the capital market as they offloaded shares worth Rs 221.70 crore on Wednesday, according to provisional exchange data."
Sensex rises over 100 points in early trade; Infosys soars 12%
A good start to the day for the benchmark stock indices.
PTI reports: "Equity benchmark Sensex surged over 100 points in early trade on Thursday led by gains in index-heavyweight Infosys even as Asian peers traded with significant losses.
The 30-share BSE Sensex was trading 116.77 points, or 0.32 per cent, higher at 36,168.58. Similarly, the NSE Nifty rose 18.65 points, or 0.18 per cent, to 10,636.85.
Shares of Infosys rallied around 12 per cent after the IT major posted a stronger-than-expected 12.4 per cent rise in the first quarter consolidated net profit to Rs 4,272 crore, helped by large deals, and said its FY21 revenue is likely to grow by up to 2 per cent.
HCL Tech, TCS, Tech Mahindra and Sun Pharma were the other gainers.
On the other hand, ITC, HDFC, Titan, PowerGrid, NTPC and Tata Steel were among the laggards.
In the previous session, the BSE barometer ended 18.75 points, or 0.05 per cent, higher at 36,051.81, and the broader Nifty closed 10.85 points, or 0.10 per cent, up at 10,618.20.
Foreign institutional investors were net sellers in the capital market on Wednesday, offloading equities worth Rs 221.70 crore, provisional exchange data showed.
According to traders, rally in IT stocks led by Infosys kept investor sentiment positive, but concerns over rising COVID-19 cases capped the gains."
IMF chief warns global economy 'not out of the woods yet'
Words of caution from the new IMF chief.
AFP reports: "Despite some signs of recovery, the global economy faces continued challenges, including the possibility of a second wave of COVID-19, and governments should keep their support programs in place, IMF chief Kristalina Georgieva said Thursday.
Activity “has started to gradually strengthen... But we are not out of the woods yet,” Georgieva said in a message to G20 finance ministers ahead of their weekend meeting in Saudi Arabia.
The Washington-based crisis lender late last month downgraded its growth forecasts, and now expects global GDP to fall by 4.9 percent this year due to the deeper contraction during lockdowns than previously anticipated, and only a “tepid recovery is expected for next year.”
The $11 trillion in stimulus provided by the G20 nations helped to prevent a worse outcome, but “these safety nets must be maintained as needed and, in some cases, expanded,” Georgieva urged in a blog post.
She highlighted measures including paid sick leave for low-income families and access to health care and unemployment insurance.
But the recovery faces risks, she said, including the possibility of “a second major global wave of the disease could lead to further disruptions.”
While she acknowledged that the “substantial and rising debt levels are a serious concern,” Georgieva said, “At this stage in the crisis, however, the costs of premature withdrawal are greater than continued support where it is needed.”"
China’s economy grows 3.2% as virus lockdowns lifted
China’s economy rebounded from a painful contraction to grow by 3.2% over a year earlier in the latest quarter as anti-virus lockdowns were lifted and factories and stores reopened.
The expansion reported Thursday was a dramatic improvement over the previous quarter’s 6.8% contraction — China’s worst performance since at least the mid-1960s. But it still was the weakest positive figure since China started reporting quarterly growth in the early 1990s.
China, where the coronavirus pandemic began in December, was the first economy to shut down and the first to start the drawn-out process of recovery in March after the ruling Communist Party declared the disease under control.
