The benchmark stock indices opened the day in the green on positive global cues.
A SBI report has made an initial estimate of the economic brunt of the virus lockdown.
Join us as we follow the top business news through the day.
Why did gold plunge even as inflation shot up?
Sensex rallies 478 points; Nifty tops 11,350
It was a good day for Indian stocks despite global markets stalling.
PTI reports: "Equity benchmark Sensex rallied 478 points on Tuesday, driven by gains in index majors Reliance Industries, HDFC Bank and ICICI Bank amid positive cues from global markets and sustained foreign fund inflows.
The BSE Sensex ended 477.54 points or 1.26 per cent higher at 38,528.32, while the NSE Nifty surged 138.25 points or 1.23 per cent to 11,385.35.
UltraTech Cement was the top gainer in the Sensex pack, rising over 3 per cent, followed by Kotak Bank, ICICI Bank, Asian Paints and Tata Steel.
Reliance Industries and HDFC Bank added most to the gains on the index.
On the other hand, Tech Mahindra, HCL Tech, Bajaj Auto and Power Grid were among the laggards.
According to traders, buying in index heavyweights led benchmarks higher amid sustained foreign fund inflows.
Foreign institutional investors bought equities worth Rs 332.90 crore on a net basis on Monday, provisonal exchange data showed.
Largely positive cues from global markets too supported domestic indices, they said.
Bourses in Shanghai and Hong Kong ended on a positive note, while Tokyo and Seoul were in the red.
Stock exchanges in Europe were trading with significant gains in early deals.
Global oil benchmark Brent crude was trading 0.37 per cent lower at USD 45.20 per barrel.
In the forex market, the rupee settled 12 paise higher at 74.76 against the US dollar."
It's no longer a “bear market rally” - BofA survey
Wall Street sentiment turns bullish on stocks.
Reuters reports: "Investors are their “most bullish” on financial markets since February, when world stocks hit a record high, a Bank of America fund manager survey showed, as hopes of a COVID-19 vaccine and a steady revival of economic activity boost confidence.
A net 46% of investors surveyed by BofA said “it's a bull market”, up from 40% the previous month. A secular bull market is one where the prevailing trend is for higher prices, with short corrections interrupting it.
World stocks have bounced back by 51% from their mid-March lows, adding $24 trillion in value in five months as investors bet on a rapid rebound in economic activity after record plunges.
Of the 181 survey participants, who manage half-a-trillion dollars in assets, a net 79% expect a stronger economy, the strongest reading since December 2009.
“Asset allocation stubbornly skewed toward U.S. growth stocks,” BofA said. But it added “green shoots” were appearing for inflation assets and rotation into Europe and emerging market equities, which have lagged tech-heavy U.S. stocks.
The survey found that the “most crowded” trade for the fourth month running was a long position in U.S. tech and growth stocks, the ultimate beneficiaries of pandemic-led transformations in the way people work, study and shop.
The long gold trade was the second most crowded, with a net 31% saying the metal was “overvalued”, the most since 2011 after no participants said they considered it to be so last month. Gold rose above $2000 an ounce for the first time earlier this month.
As global equities near record highs again, strategists told Reuters that the quickfire bear-to-bull switch was not only justified but deserves to go further.
But evidence of a fresh rise coronavirus infections in some countries has led to caution and the survey showed that a ”second wave” of the pandemic was still seen as the biggest risk to markets for the fifth straight month."
Axis Securities launches platform to enable Indian customers to invest in US stock mkts
Yet another Indian broker capitalizes on the speculative mania.
PTI reports: "Axis Securities on Tuesday announced the launch of a platform -- Global Investing -- that will provide an opportunity to its customers to invest in the US stock markets.
For this, Axis Securities has partnered with Vested Finance, an online investment platform, the brokerage house said in a statement.
Investors can buy or sell shares of companies like Facebook, Apple, Netflix and Google or invest in theme-based baskets or ETFs, it added.
“India has witnessed a significant increase in demand for international investments, particularly from tech-savvy millennials. With our Global Investing, we aim to empower investors to be shareholders of the most innovative global companies and businesses,” said B Gopkumar, MD and CEO, Axis Securities.
The platform empowers the customers to invest as low as USD 1 for high priced shares by making investments in less than one stock. Besides, customers can make and manage investments in more than 1,000 stocks and ETFs through this platform.
“This product will promote overseas investments and provide an outstanding capability to the investors to invest directly in the US stock market,” said Viram Shah, co-founder and CEO, Vested Finance.
On Monday, ICICI Securities said it has joined hands with Interactive Brokers LLC to offer its customers a facility to invest in the US markets."
E-shopping fever spurs rise in delivery openings
An unprecedented increase in online shopping and running errands has pushed up the need for an army of delivery staff in the country.
Hirers say more than one lakh such positions are currently available with e-tailers, e-restaurants, e-grocers and errand runners such as Dunzo, Swiggy and Wefast for immediate placements.
A quick check by The Hindu among half a dozen top hirers confirmed the country requires a large number of e-commerce delivery executives, fulfillment centre staff and warehouse management personnel.
Manpower Group, a workforce solutions firm, has a mandate for 5,000 delivery and warehouse staff from various e-commerce players. The demand for such profiles is expected to increase by up to 20%, as per the company.
Gold jumps 1% to surpass $2,000/oz as dollar dips
Gold is showing some strength after plunging below the $2,000 mark.
Reuters reports: "Gold prices climbed 1% to surpass the $2,000-mark on Tuesday, as the dollar weakened to a more than two-year low, with traders also focusing on minutes from the U.S. Federal Reserve's last policy meeting set to release this week.
Spot gold rose 0.7% to $1,999.26 per ounce by 0717 GMT, having earlier hit a one-week high of $2,007.19. U.S. gold futures were up 0.5% at $2,007.60.
“The fragile currency environment and the weak economic numbers in the United States are stealing the dollar's safe-haven appeal,” said Vandana Bharti, assistant vice-president of commodity research at SMC Comtrade. Safe-haven buying in gold should continue given the amount of stimulus measures and an increase in novel coronavirus cases, she added.
A softer dollar, which makes gold cheaper for those holding other currencies, underpinned prices on Tuesday. This added to the bullion's 32% jump this year following massive global stimulus measures that fuelled inflation and currency debasement fears. On Monday, gold jumped as much as 2.4%, with further impetus from Warren Buffett's Berkshire Hathaway buying a stake in major gold miner Barrick Gold Corp .
Meanwhile, eyes are also on the minutes from the Fed's last meeting due on Wednesday. “Traders are getting the last kick at the can ahead of the FOMC minutes where the view is for the Fed to have talked about YCC (yields curve control) or inflation-targeting which is bad for the dollar and good for gold,” said Stephen Innes, chief market strategist at financial services firm AxiCorp.
Lower yields and interest rates decrease the opportunity cost of holding non-yielding assets such as gold. Adding to the pandemic-induced hit to the global economy was increasing Sino-U.S. friction with the Trump administration announcing it will further tighten restrictions on Huawei Technologies Co . Silver climbed 2.1% to $27.97 per ounce, and platinum gained 1.5% to $963.29. Palladium fell 0.4% to $2,190.20."
Japan’s record economic plunge guts Abe era gains
Japan was hit by its biggest economic slump on record in the second quarter as the pandemic emptied shopping malls and crushed demand for cars and other exports, bolstering the case for bolder policy action to prevent a deeper recession.
The third straight quarter of declines knocked the size of real gross domestic product (GDP) to decade-low levels, wiping out the benefits brought by Prime Minister Shinzo Abe’s ‘Abenomics’ stimulus policies deployed in late 2012.
While the economy is emerging from the doldrums after lockdowns were lifted in late May, many analysts expect any rebound to be modest as a renewed rise in infections keeps consumers’ purse-strings tight.
“The big decline can be explained by the decrease in consumption and exports,” said Takeshi Minami, chief economist at Norinchukin Research Institute.
Bandhan Bank shares gain over 2% after RBI lifts all restrictions
Some long-awaited relief for investors in Bandhan Bank is here.
PTI reports: "Shares of Bandhan Bank on Tuesday gained over 2 per cent after the company said the Reserve Bank has fully withdrawn the restrictions imposed on the private sector lender for high promoter holding, nearly two years after imposing them.
The stock rose by 2.47 per cent to Rs 294.40 on the BSE.
At the NSE, it jumped 2.47 per cent to Rs 294.40.
The restrictions included seeking prior approvals for network expansion, and also freezing managing director and chief executive Chandra Shekhar Ghosh’s remuneration.
Earlier this month, the bank’s promoter Bandhan Financial Holdings sold shares worth USD 1.4 billion or over Rs 10,500 crore at a discount to reduce its stake by over 20 per cent to 40 per cent, the level acceptable for the regulator.
In September 2018, the RBI had imposed the restrictions, and did away with the condition of seeking approval for opening banking outlets in February this year.
The RBI, vide its communication dated August 17, 2020 has lifted the other regulatory restriction (on) ‘the remuneration of the MD and CEO of the bank stands frozen, at the existing level’, the bank said.
Consequent to the above, all the regulatory restrictions imposed by the RBI vide letter dated September 19, 2018, on the Bank are now withdrawn, it added."
Oil-producing nations need higher prices to balance budgets
Power output increases for first time in five months in August
India’s electricity generation in the first 15 days of August rose for the first time since early March, provisional government data show, as the country opened up industries and lifted curbs to control the spread of COVID-19.
Power generation rose 2.6% in the first 15 days of August compared with a year earlier, a Reuters analysis of daily load despatch data from federal grid operator POSOCO showed. This compares with a 1.8% fall in July.
In the second half of last month, electricity generation declined 3.1%. Power use has picked up from previous months when India was under a strict lockdown, mainly because of higher demand in the northern States and rising consumption in the highly industrialised States of Gujarat and Maharashtra. Industry and offices account for more than half of India’s annual power use.
Indian shares extend gains; auto stocks lead
An update on the stock indices.
Reuters reports: "Indian shares rose on Tuesday led by gains in auto stocks, following Asian cues and as hopes of government spending to help support the economy continued to lift investor sentiment.
The NSE Nifty 50 index was up 0.79% at 11,337.30 by 0515 GMT, while the S&P BSE Sensex was 0.76% higher at 38,345.76 - their second straight day of rise.
“There have been fundraising plans, improvement in margins, most companies have improved their efficiency post lockdown and this is helping sentimentally,” said Anita Gandhi, director at Arihant Capital Markets.
“Good rainfall progress is helping rural economy revival and metals and auto stocks are now seeing gains on hopes that there could be government spending for these sectors going forward.”
In domestic trade, the Nifty auto index rose over 1% and the Nifty metal index advanced 0.81%.
Other Asian markets gained with MSCI's broadest index of Asia-Pacific shares outside Japan rising 0.19%.
In India, top gas importer Petronet LNG Ltd surged as much as 5.31% after it logged a better-than-expected quarterly profit on Monday.
The Nifty realty index, which tracks real estate firms, jumped over 4% led by a 12.29% surge in Sunteck Realty Ltd.
Conglomerate Reliance Industries Ltd and refiner ONGC were among the top boosts on the Nifty 50 index, rising 1.62% and 2.71%, respectively.
Zee Entertainment Enterprises Ltd, down 1.73%, was the top loser on the Nifty 50 index ahead of reporting quarterly results.
Meanwhile, India continued to see a rise in coronavirus cases and deaths. As of Tuesday, the death toll stood at 51,797 and the number of infections crossed 2.70 million."
Chinese stocks dominate Hang Seng index
Competition for jobs posted doubles in first half: LinkedIn
Competition for jobs posted on LinkedIn in India has risen significantly with the average number of applicants per job doubling in the first six months of 2020, even as hiring sentiment was 15% lower than a year earlier at the end of June, the professional network’s ‘labour market update’ showed.
“Competition for jobs has doubled compared to six months ago, with the average number of applications per job posted on LinkedIn increasing from around 90 in Jan, to 180 in June,” Pei Ying Chua, Senior Economist and APAC Lead - LinkedIn Economic Graph, wrote in a blog. She added that in India, ‘hiring declines’ reached a low of below (-)50% year-on-year in April, before starting to slowly recover.
“As risks of second wave of infections emerge, some States have begun lockdowns again. Given all this uncertainty, we expect recovery to remain fairly flat in the coming weeks,” she said.
Consumer sentiment improving, revival stronger among lower-income segments, small cities: Report
Signs of greenshoots in the economy.
PTI reports: "Consumer sentiment has started to get “a little better”, even though the COVID-19 pandemic has continued to worsen, said a report by the Boston Consulting Group (BCG).
“Cautious living” is emerging as the new theme, where consumers beginning to feel that it is time that they need to resume their activities albeit with a lot of caution, said the report titled ‘COVID-19 Consumer Sentiment Research’
The revival is stronger among lower-income segments and lower-tier cities, said the report, which has covered around 3,000 respondents across metros and Tier I/II/III & IV cities from July 20 to August 2, 2020.
Around 44 per cent of consumers think their income in the next six months will be lower than pre COVID levels — significantly lower than 57 per cent in the last round conducted over May 18-23.
“Similarly, the sentiment about spending is beginning to look better. The latest round had 42 per cent consumers expecting their spends over the next six months to be lower compared to 53 per cent in the last round,” it said.
There is also a pick up in routine activities with 53 per cent consumers stating that they have been going out to work and 66 per cent consumers saying that they have been visiting friends in the latest round as against 15 per cent and 10 per cent respectively in the last round.
“Majority of the consumers, however, say that the frequency of most of these activities is still not at the pre-COVID levels,” it said.
This is the fifth round of survey, which assessed the overall changes in behaviour across a large set of categories and daily lifestyle. It also tracks overall consumer sentiment towards COVID-19.
Kanika Sanghi, Lead, Centre for Customer Insight for BCG India said, “We are beginning to see a change in the consumer sentiment. The overarching feeling in all the previous rounds of survey had been more around fear, worries about economy and their own incomes, whereas the latest round speaks much more about learning to live cautiously with the virus.
The extent of revival is much faster in smaller cities. Across metrics, Tier 2 and below towns show faster pick-up.
“For example, 52 per cent consumers in Metro and Tier 1 think their income will be lower, while only 41 per cent in Tier 2 and below think the same. Similarly, 36 per cent of small town consumers are going to local markets for essentials shopping as much as they used to pre COVID compared to 27 per cent in metro and tier I,” it said.
The spending sentiment has improved across many categories.
While essentials, health, in home entertainment continue to be winners, there is an uptick in sentiment across many semi-essentials like personal care, packaged food as well as discretionary items like apparel, cosmetics, auto, consumer electronics. Travel, out of home entertainment, on the other hand, continue to show little to no improvement.
The strong acceleration in e-commerce continues.
As per the survey, around 20 per cent new users have been added to the universe of online shoppers in the last 3-4 months. Many of the categories have seen an even faster acceleration — with fresh foods, staples seeing up to 40-50 per cent new users."
Sensex rises over 200 points in early trade; Nifty tops 11,300
A good start to the day for the stock indices that ended yesterday's session with slight gains.
PTI reports: "Domestic equity benchmark Sensex jumped over 200 points in early trade on Tuesday tracking gains in index-heavyweights Reliance Industries, ICICI Bank and Infosys amid sustained foreign fund inflow.
The BSE Sensex was trading 210.93 points or 0.55 per cent higher at 38,261.71; while NSE Nifty was up 65.30 points or 0.58 per cent at 11,312.40.
ONGC was the top gainer in the Sensex pack, rising around 2 per cent, followed by Reliance Industries, ICICI Bank, M&M, Infosys, Titan, Bajaj Finance and Bajaj Finserv.
On the other hand, Tata Steel, PowerGrid, IndusInd Bank, Axis Bank and SBI were among the laggards.
In the previous session, the Sensex had settled 173.44 points or 0.46 per cent higher at 38,050.78, while the Nifty ended 68.70 points or 0.61 per cent up at 11,247.10.
Exchange data showed that foreign institutional investors bought equities worth Rs 332.90 crore on a net basis on Monday.
According to traders, buying in index-heavyweights led benchmarks higher amid sustained foreign fund inflow.
Largely positive cues from global markets too supported domestic indices, they said.
Bourses in Shanghai and Hong Kong were trading on a positive note, while Tokyo and Seoul were in the red.
Stock exchanges on Wall Street ended with gains in overnight session.
Global oil benchmark Brent crude was trading 0.37 per cent lower at USD 45.20 per barrel."
India’s GDP to shrink 16.5% in Q1: SBI report
State Bank of India’s research report Ecowrap expects GDP to contract by 16.5% in the first quarter of the current fiscal.
Earlier in May, Ecowrap had estimated Q1 GDP contraction at over 20% and now pegs it lower, “though with the relevant caveats in the current uncertain scenario”, as per the report released on Monday.
Degrowth in corporate GVA had been significantly better than revenue degrowth in Q1 as far as the results of listed companies were concerned, it said.
