The benchmark stock indices have opened with gains this morning on positive global cues. The rupee has followed suit by appreciating against the US dollar.
Meanwhile, oil prices are steady as the surge in fresh coronavirus cases puts a cap on the ongoing rally.
Join us as we follow the top business news through the day.
How the stock indices behaved before the World Wars
Sensex rallies 548 points; Reliance, HDFC Bank spurt nearly 4%
It was a good day for the benchmark stock indices that were lifted by heavyweights Reliance and HDFC Bank.
PTI reports: "Equity benchmark Sensex rallied 548 points on Friday, buoyed by gains in index-heavyweights Reliance Industries, HDFC twins, ICICI Bank and HUL.
After trading on a positive note through the day, the 30-share BSE Sensex ended 548.46 points, or 1.50 per cent, higher at 37,020.14.
Similarly, the NSE Nifty surged 161.75 points, or 1.51 per cent, to close at 10,901.70.
ONGC was the top gainer in the Sensex pack, rallying 5.52 per cent, followed by Titan, Reliance Industries, HDFC Bank and Bajaj Finance.
On the other hand, TCS, Nestle India, Infosys, HCL Tech and Axis Bank were the laggards.
According to traders, stock-specific buying in key index majors drove the market during the session amid positive sentiment in most overseas markets.
Bourses in Shanghai, Hong Kong and Seoul ended in the green, while Tokyo closed with losses.
In Europe, stock exchanges in Germany and the UK were trading with gains, while those in France witnessed losses in early deals.
Meanwhile, international oil benchmark Brent crude futures fell 0.97 per cent to USD 42.95 per barrel.
In the forex market, the rupee appreciated 16 paise to close at 75.02 against the US dollar."
States’ market borrowings skyrocket 76% to Rs 1.93 lakh cr so far this fiscal: Report
The lockdown is set to dent state finances further.
PTI reports: "The states, reeling from massive revenue losses due to coronavirus lockdowns, have front-loaded their borrowings by a whopping 76 per cent so far this fiscal to Rs 1.93 lakh crore, says a report.
Front-loading of market loans has been on the back of the Centre relaxing the ways and means advances norms to manage cash-flow mismatches due to the pandemic, says a report by Care Ratings.
In addition, the Centre has also relaxed the fiscal deficit target from 3 to 5 per cent.
“Between April 1 and July 14, the states’ market borrowings have jumped to Rs 1.93 lakh crore, which is 76 per cent higher than the corresponding period last fiscal year, says the report.
The aggressive borrowings will further shoot up the outstanding debt of all the states which has more than doubled to Rs 52.6 lakh crore in FY20, growing at an annual rate of 14.3 per cent between FY15 and FY20, notes the report.
The outstanding debt has almost doubled in the last five years to Rs 52.6 lakh crore and the annual spike rate is much faster than the Centre’s outstanding internal debt which clipped at 10 per cent during the same period.
Outstanding debt of the states includes market borrowings, power sector-specific Ujwal DISCOM Assurance Yojana (UDAY) bonds, funds borrowed from the National Social Security Fund, banks, and other financial institutions, ways and means advances, loans from the Centre, provident funds, reserve funds and other contingency funds.
The ratio of states’ outstanding debt to total internal debt, which is the combined debt of the Centre and the states has increased from 30.9 per cent in FY15 to 35.1 per cent in FY20, says the agency’s chief economist Madan Sabnavis.
States are facing a dual challenge of addressing the current health crisis and simultaneously managing their finances amidst the pandemic as the nationwide lockdowns and the extended state-level lockdowns have adversely impacted their revenues, he said without quantifying how much is the revenue loss.
“The cumulative effect of this is likely to increase the overall outstanding debt of all the states which stood at Rs 52.6 lakh crore in FY20, he warned.
There was a steep double-digit growth of 19 per cent in FY16 followed by 18.4 per cent in FY17 and this can be ascribed to funds raised by a few states through the UDAY bonds, which was applicable during FY16 and FY17, along with the aggressive borrowing to the tune of over 40 per cent from banks and financial institutions, according to the agency.
That apart they also borrowed 20 per cent more from the markets in FY16 and FY17, it said."
Rupee settles 16 paise higher at 75.02 against US dollar
The rupee managed to gain against the US dollar despite foreign selling.
PTI reports: "The rupee appreciated 16 paise to close at 75.02 (provisional) against the US dollar on Friday tracking positive domestic equities and weakening American currency.
At the interbank forex market, the domestic unit had opened on a weak note but soon recouped the losses amid high volatility and finally settled for the day at 75.02 against the US dollar, gaining 16 paise over its previous close.
It had settled at 75.18 against the US dollar on Thursday.
During the session, the rupee witnessed an intra-day high of 74.98 and a low of 75.25 against the US dollar.
The USD/INR spot traded in the broader range of 74.85-75.50. Traders kept a wary eye on China’s trade relations with the United States and this caution will limit the fall in USD/INR, said Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services.
Gupta further said that “corporate dollar inflows and government fiscal stimulus package through coronavirus outbreak will keep the risk appetite intact“.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.13 per cent to 96.22.
On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 306.35 points higher at 36,778.03 and broader NSE Nifty rose 89.20 points to 10,829.15.
Foreign institutional investors were net sellers in the capital market as they offloaded shares worth Rs 1,091.08 crore on Thursday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, fell 0.67 per cent to USD 43.08 per barrel."
Britannia Industries Q1 profit jumps over two fold to Rs 542.68 crore
Demand for biscuits during the lockdown may have helped Britannia Industries.
PTI reports: "Britannia Industries on Friday reported over two-fold increase in consolidated profit at Rs 542.68 crore for the quarter ended June 30, 2020, on the account of higher income.
The company had posted a profit of Rs 248.64 crore in the corresponding quarter of the previous fiscal.
Total income during the period under review stood at Rs 3,514.35 crore, up 26.97 per cent, as against Rs 2,767.8 crore in the year-ago quarter, Britannia Industries said in a regulatory filing.
Britannia Industries Managing Director Varun Berry said: The quarter posed an uphill task for the economy in wake of COVID-19 and caused significant disruptions due to lockdowns imposed to curtail its spread. Factories, depots, transport and vendors across the supply chain were impacted.
As soon as the lockdown was eased, he said the company focussed on getting distribution back to the pre-COVID-19 levels and increasing its rural and hinterland reach.
On the cost front, we witnessed moderate inflation in the prices of key raw materials and expect the prices to be stable going forward given the positive outlook on monsoon and harvest, he said.
Berry stated that given the dynamic nature of the pandemic and associated uncertainty, the company was quick to resort to cost efficiencies through extraction of supply chain efficiencies, reduction in wastages and fixed costs leverage.
We also rationalised media spends considering the constraints of inventories due to higher market demand, he said, adding that the company is diligently studying the impact of COVID-19 on short-term and long-term changes in consumer preferences, distribution models and are confident of overcoming challenges with agility.
Shares of Britannia were trading 1.43 per cent lower at Rs 3,798.55 apiece on BSE."
‘Retail inflation likely to remain elevated in coming months’
Retail inflation is likely to remain at elevated levels in the next few months on account of supply constraints driven by labour shortage, rather than due to fiscal deficit or other external factors, according to a State Bank of India report.
The ‘Ecowrap’ also said the Ministry of Statistics and Programme Implementation (MOSPI) should take into account online prices of products while computing retail inflation as more and more people are relying on online stores, especially after the outbreak of COVID-19.
It further said that MOSPI appeared to have underestimated retail inflation by including some items including services, unmindful of the fact that their consumption fell drastically on account of COVID-19 and the subsequent lockdown.
Gold steadies near $1,800 on virus fears, U.S.-China spat
Gold seems to be consolidating as economic uncertainties prevail.
Reuters reports: "Gold steadied near the psychological level of $1,800 on Friday after a sharp fall in the previous session, as worries over surging coronavirus cases and U.S.-China tensions underpinned its safe-haven appeal, although a stronger dollar capped gains.
Spot gold was up 0.1% at $1,799.18 per ounce by 0710 GMT. U.S. gold futures were steady at $1,799.90.
“Gold is being held up due to rising geopolitical uncertainty, and a resurgence of coronavirus cases in the United States as well as across the world,” said National Australia Bank economist John Sharma, adding, a stronger USD has kept gold in check.
The dollar held firm against its rivals, also benefiting from safe-haven inflows. The United States reported at least 70,000 new COVID-19 cases on Thursday, a record daily increase for the seventh time this month, according to a Reuters tally.
New York Fed President John Williams said it could take a few years for the U.S. economy to recover from the damage caused by the pandemic, and it was not yet the time to think about raising interest rates.
“The bull's case for gold remains intact with real rates low and suppressed and which would be able to sustain the high price of gold. But with prices at yearly highs, buying the dips probably works out best for most traders as a trading strategy,” Phillip Futures said in a note.
Lower U.S. interest rates increase the appeal of non-yielding bullion."
COVID-19 | IndiGo allows reservation of two seats for single passenger
IndiGo launched a scheme on July 17 allowing passengers to book two seats for themselves as an additional safety measure amid the coronavirus pandemic.
“The charges for the extra seat will be effectively up to 25% of the original booking cost. This offer is effective travel starting July 24, 2020,” the airline said in a statement.
The low-cost carrier said the “6E double seat” scheme will not be available through travel portals, IndiGo call centre or airport counters. The scheme can only be availed using IndiGo’s website.
Lack of social distancing by other passengers is a top concern among flyers, according to a survey by IndiGo that was conducted online between June 20 and June 28 among 25,000 travellers.
HCL Technologies shares jump over 2% after Q1 earnings
Earnings reports of IT companies continue to impress investors.
PTI reports: "Shares of HCL Technologies on Friday rose over 2 per cent after the company posted 31.7 per cent rise in consolidated net profit for the June 2020 quarter.
The stock gained 2.28 per cent to Rs 642 on the BSE.
At the NSE, it rose by 2.22 per cent to Rs 641.70.
IT firm HCL Technologies on Friday posted 31.7 per cent rise in consolidated net profit at Rs 2,925 crore for the June 2020 quarter, and said that Shiv Nadar has stepped down from the Chairman’s role.
Nadar’s daughter, Roshni Nadar Malhotra, will succeed him with immediate effect.
The IT major had registered a net profit of Rs 2,220 crore in the April-June 2019 quarter (as per US GAAP), HCL Technologies said in a regulatory filing.
Its revenue grew 8.6 per cent to Rs 17,841 crore in the quarter under review, from Rs 16,425 crore in the corresponding quarter last year."
Tech bubble 2.0?
Rupee rises 5 paise against US dollar in early trade
The rupee appreciated 5 paise to 75.13 against the US dollar in opening trade on Friday tracking positive domestic equities and weakening of the American currency.
At the interbank forex market, the domestic unit slipped 7 paise to 75.25 against US dollar in opening trade, but soon recouped the losses amid high volatility and touched 75.13 against the US dollar, gaining 5 paise over its previous close.
It had settled at 75.18 against the US dollar on Thursday.
Forex traders said positive opening in domestic equities and weak American currency supported the rupee, while foreign fund outflows and rising COVID-19 cases weighed on the local unit down.
Oil prices steady as clouds gather over fuel demand, looser supply curbs
An update on the oil market.
Reuters reports: "Oil prices were unchanged on Friday, with trading marked by growing uncertainty about global recovery in fuel demand as new COVID-19 cases surge in several countries just as major producers get set to loosen production curbs.
U.S. West Texas Intermediate (WTI) crude futures rose 1 cent to $40.76 a barrel at 0204 GMT, while Brent crude futures were steady at $43.37 a barrel. Both were still on track to end the week up slightly.
On Thursday, the United States reported at least 75,000 new COVID-19 cases, a new daily record. Spain and Australia reported their steepest daily jumps in more than two months, cases continued to soar in India and Brazil stepped up lockdown measures.
The two benchmark contracts fell 1% on Thursday after the Organization of the Petroleum Exporting Countries (OPEC) and allies, together known as OPEC+, agreed to trim record supply cuts of 9.7 million barrels per day (bpd) imposed earlier this year by some 2 million bpd from August.
But actual output additions will be closer to 1.1 million bpd, as countries like Iraq - which overproduced compared with their commitments to cut supply in May through July - agreed to bigger reductions in August and September.
Vivek Dhar, commodities analyst at Commonwealth Bank of Australia, said the market took some heart with the agreement for some to compensate for previous non-compliance with commitments at a time when there is uncertainty over demand growth.
“They're taking those precautions. That gives the market confidence that OPEC+ is looking quite closely at those conditions to make sure they don't push the market in the wrong direction,” he said.
Analysts expect the market to remain in the $40-45 a barrel range, with the looming return of some U.S. supply and uncertainty over fuel demand as new lockdowns may be needed to curb the resurgence of COVID-19 cases.
“The problem with the market right now is prices have got to a level where we're concerned U.S. supply is going to come back,” Dhar said."
Shiv Nadar steps down as HCL Chairman
IT firm HCL Technologies on Friday posted 31.7% rise in consolidated net profit at ₹2,925 crore for the June 2020 quarter, and said that Shiv Nadar has stepped down from the Chairman’s role.
Mr. Nadar’s daughter, Roshni Nadar Malhotra, will succeed him with immediate effect.
The IT major had registered a net profit of ₹2,220 crore in the April-June 2019 quarter (as per US GAAP), HCL Technologies said in a regulatory filing.
Its revenue grew 8.6% to ₹17,841 crore in the quarter under review, from ₹16,425 crore in the corresponding quarter last year.
Sensex jumps over 200 points in early trade; Nifty tops 10,800
The bourses have opened on a positive note this morning.
PTI reports: "Equity benchmark Sensex jumped over 200 points in early trade on Friday tracking gains in index-heavyweights HDFC twins, HUL, Reliance Industries and ICICI Bank.
The 30-share BSE Sensex was trading 217.95 points, or 0.60 per cent, higher at 36,689.63.
Similarly, the NSE Nifty rose 71.50 points, or 0.67 per cent, to 10,811.45.
Tata Steel was the top gainer in the Sensex pack, rallying around 4 per cent, followed by ONGC, HCL Tech, Bajaj Finance, HUL, HDFC duo, Reliance Industries and ICICI Bank.
On the other hand, Infosys, TCS, M&M and Tech Mahindra were among the laggards.
In the previous session, the BSE barometer ended 419.87 points, or 1.16 per cent, higher at 36,471.68, and the broader Nifty surged 121.75 points, or 1.15 per cent, to end at 10,739.95.
Foreign institutional investors were net sellers in the capital market on Thursday, offloading equities worth Rs 1,091.08 crore, provisional exchange data showed.
According to traders, positive earnings reports from key index components led to stock-specific buying, lifting benchmarks in early trade.
Gains were, however, capped as spike in coronavirus cases weighed on investor sentiment."
India needs holistic ecosystem to rebuild its API industry: PwC Study
India, in the short term, should focus on providing production incentives for critical active pharmaceutical ingredient (API) to encourage investments to achieve self sufficiency in API manufacturing, PwC India said in a study called “Reviving India’s API industry”.
Besides, India should provide subsidies in form of cheaper utilities like power and water, faster environment clearances and facilitate alternative sources of imports, it added.
It said the country needs a holistic and conducive ecosystem to rebuild its API manufacturing capabilities.
From a long term perspective, India needs to develop two to three large clusters and provide plug-and-play infrastructural support in dedicated zones for manufacturing APIs and encourage industry-academia initiatives, the study said.
