The Nifty and the Sensex opened the day on a negative note after HDFC Bank missed earnings expectations.
Join us as we follow the top business news through the day.
Sachin Banal's Navi Nifty 50 index garners Rs 100 cr in NFO
The latest index fund in the market reaches the 100 crore rupees mark.
PTI reports: "Navi AMC, part of Sachin Bansal's technology-driven BFSI group Navi, on Monday said its new fund has collected more than Rs 100 crore from over 17,000 investors in 10 days.
Navi Nifty 50 index -- whose new fund offer (NFO) was open during July 3-12 -- is now available for investments across all online investment channels or through financial advisors, the newly created fund house said in a statement.
The expense ratio offered by the fund at 0.06 per cent for its direct plan offering, which is the lowest in the index schemes category so far, has garnered significant traction from investors, as they recognise the substantial savings they make over the long term.
As per the industry's body Amfi June report, the overall passive fund folios are 13.5 lakh and Navi has gained 17,000 or approximately 1.3 per cent of this folio base during the NFO already.
NFO's generally span over 15 days, while Navi Nifty 50 Index Fund NFO hit the Rs 100 crore mark in just 10 days.
"The success of this launch is not only from the AUM of this NFO but also through the awareness that has spread across investors around Index Fund investing and expense ratio. This is visible through the 1.4 lakh users who visited our website during these 10 days.
"This is the beginning of a long-term partnership with our investors for wealth creation," Saurabh Jain, MD and CEO, Navi AMC said."
Retail sales down by 50% in June: RAI
Numbers confirm the massive impact of lockdowns on retail sales.
PTI reports: "Retail sales in India declined by 50 per cent in June due to the continued restrictions in the wake of the second wave of the coronavirus pandemic, as compared to the same month in 2019 before the health crisis hit, according to industry body RAI.
In its latest business survey, the Retailers Association of India (RAI) said the highest decline was witnessed in the sports goods category at 66 per cent, while foods and grocery had the least with a dip of just 7 per cent as compared to June 2019.
"Retail businesses continue to be stressed and are finding it difficult to sustain due to restricted timing of operations and weekend closures," RAI Chief Executive Officer Kumar Rajagopalan said in a statement.
In terms of region, RAI said the East zone witnessed the biggest decline in June this year at 55 per cent, followed by West and South with declines of 50 per cent each and North with a dip of 43 per cent when compared to June 2019.
However, the June performance was far better compared to May when the overall retail business in India declined by 79 per cent as compared to the same month in 2019.
Showing signs of recovery, the beauty, wellness, and personal care category had a dip of 57 per cent in June as compared to the same month in 2019. In May, the category had a decline of 87 per cent as against May 2019.
Similarly, apparel and clothing dipped by 52 per cent in June this year as against the same month in 2019. In May, it had negative growth of 77 per cent as compared to May 2019.
Footwear also recovered slightly with a 61 per cent decline in June. It had a degrowth of 86 per cent in May when compared to the same month in 2019.
Consumer durables and electronics had a decline of 46 per cent in June as compared to the same month in 2019. The segment had posted a dip of 71 per cent in May as compared to May 2019.
Quick service restaurants, which saw a decline of 70 per cent in May as compared to the same month in 2019, had a degrowth of 10 per cent last month as compared to June 2019, RAI said."
Govts need to take steps to hold NSO Group accountable: WhatsApp CEO
Following revelation that NSO Group’s ‘Pegasus’ software may have been used to snoop on journalists, politicians and activists worldwide, including 300 Indian numbers, WhatsApp CEO Will Cathcart has called on governments and companies to take steps to hold the Israeli technology firm accountable.
WhatsApp had in 2019 sued the NSO Group, accusing it of using its messaging service to conduct cyberespionage on roughly 1.400 user accounts, including of journalists and human rights activists.
“This is a wake up call for security on the internet. The mobile phone is the primary computer for billions of people. Governments and companies must do everything they can to make it as secure as possible. Our security and freedom depend on it,” Mr. Cathcart said in a tweet.
Zomato CEO Deepinder Goyal joins Magicpin Board as independent director
More churn in the startup space.
PTI reports: "Online business discovery and rewards platform Magicpin on Monday said Zomato co-founder and Chief Executive Officer Deepinder Goyal has joined its board as an independent director.
Goyal joins the existing board and advisors that consist of Bejul Somaia (Managing Director of Lightspeed Venture Partners), Vivek Gambhir (CEO of Boat Lifestyle), and Manish Kheterpal (Managing Director at Waterbridge), a statement said.
Founded by Anshoo Sharma and Brij Bhushan in 2016, Magicpin connects hyperlocal merchants and brands with consumers. It is backed by Lightspeed Venture Partners, Waterbridge, and Samsung. It has over 1.5 lakh merchants on the platform, serving 50 lakh consumers across 50 cities.
“We are excited about Deepinder joining our board. He brings a wealth of experience from scaling up Zomato into the tech giant it is today. We are looking forward to his guidance and mentorship as we step into our next phase of growth,” Magicpin co-founder and Chief Executive Officer Anshoo Sharma said.
Magicpin is already driving over USD 1 billion in annual revenues for its existing partners and continues to grow at a rapid pace, the statement said.
"I am delighted to join the magic pinboard. They are a high-quality team and I am excited about how they are being a driver of growth for local merchants across categories. I am looking forward to contributing to the company's success,” Goyal said."
Explained | Why has the RBI barred Mastercard from issuing new cards in India?
The story so far: The Reserve Bank of India (RBI) on Wednesday banned Mastercard from issuing new debit and credit cards to customers in India with effect from July 22. According to the RBI, the U.S. card-issuer has failed to comply with the local data storage rules announced by the central bank in 2018. The ban has unsettled banks operating in India that use Mastercard’s services to issue a variety of cards to their customers.
India's HDFC Bank slides as profit misses on rising provisions
The pandemic's lingering affects on banking.
Reuters reports: "Shares of HDFC Bank Ltd slid more than 3% on Monday after India's largest private-sector lender missed quarterly profit expectations on higher bad loan provisions due to the second COVID-19 wave.
The second and more ferocious coronavirus wave forced the country into lockdowns for much of the June quarter, shutting businesses and limiting customer spending. Restrictions are now being eased some parts of the country.
The disruptions led to a decrease in retail loan originations, sale of third-party products, card spends and efficiency in collection efforts, HDFC Bank said in its results statement https://www.bseindia.com/xml-data/corpfiling/AttachLive/da967685-e312-488c-b2c8-8335e1d2047b.pdf on Saturday.
Lower business volumes and higher bad loan additions led to lower revenues and more provisions, the lender added.
Shares of the bank dropped by their most since April 30, dragging the Nifty Bank index 2.1% lower. The stock was the top drag on the benchmark NSE Nifty 50 index.
"Even as we remain sanguine about the bank's growth prospects..., we think that the asset quality deterioration will be a key investor concern in the near term," Nirmal Bang institutional equities research said in a note.
The trend of elevated slippages, or the fresh addition of bad loans, due to COVID-19 will be seen in other banks too, ICICI Securities said in a note, adding that the lenders would follow suit in creating disruption buffers.
HDFC Bank's net profit for the three months ended June 30 rose 16.1% to 77.3 billion rupees ($1.04 billion), but missed analysts' expectations for a profit of 80.72 billion rupees, according to Refinitiv data.
Provisions for bad loans jumped 24% to 48.31 billion rupees, while gross bad loans as a measure of total loans, a measure of asset quality, ticked up to 1.47% from 1.32% in the previous quarter.
HDFC Bank's stock was up around 6% this year by Friday's close, underperforming both the banking index and the Nifty."
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HDFC Bank shares tumble over 3% after Q1 earnings
Today's biggest loser among major stocks.
PTI reports: "Shares of HDFC Bank dipped over 3 per cent on Monday as the company's June quarter earnings failed to enthuse investors.
The stock went lower by 3 per cent to Rs 1,475 on the BSE.
At the NSE, it dipped 3.17 per cent to Rs 1,474.
HDFC Bank's consolidated net profit for the June quarter increased 14 per cent to Rs 7,922 crore, but the largest private sector lender reported reverses because of the second wave of the pandemic which compressed its growth.
When compared with the preceding March quarter's Rs 8,434 crore, there was a decline in the consolidated profit. On a standalone basis, the bank reported a post-tax profit of Rs 7,730 crore as against Rs 6,659 crore in the year-ago period and Rs 8,187 crore in the January-March period.
Its core net interest income grew 8.57 per cent to Rs 17,009 crore on advances growth of 14.4 per cent and the net interest margin coming at 4.1 per cent, while the other income grew 54.3 per cent to Rs 4,075 crore.
It can be noted that the year-ago quarter had a deep impact of the national lockdown and the ensuing impact in economic activity, whereas the reporting quarter had an impact due to localised lockdowns.
"These disruptions led to a decrease in retail loan originations, sale of third party products, card spends and efficiency in collection efforts. The lower business volumes, coupled with higher slippages, resulted in lower revenues, as well as an enhanced level of provisioning, the bank said in a statement.
"HDFC Bank reported lower-than-expected Q1 FY22 PAT of Rs 77.3 bn owing to greater-than-anticipated impact of the second COVID wave -- from both lower disbursements and softer collections," according to a note by Edelweiss Research."
Razorpay acquires TERA Finlabs
One more acquisition by a fintech startup.
PTI reports: "Fintech startup Razorpay on Monday said it has acquired TERA Finlabs, a Bengaluru-based startup that provides technology, risk and capital solutions to enable embedded financing solutions for businesses.
TERA Finlabs is an Indian subsidiary of UK-based digital lender, GAIN Credit.
The company, however, did not disclose the financial details of the transaction.
"This acquisition of TERA Finlabs is aligned with Razorpay's strategy of financially supporting as many MSMEs as possible by building core-competencies in capital solutions, credit underwriting, and data-driven risk management capabilities.
"TERA will provide its entire technology stack, risk management capabilities, and onboarding solutions to create and enable a credit line for Razorpay's merchant network," a statement said.
Razorpay Capital along with TERA Finlab's technology capabilities will be able to service the credit needs of over 10,000 businesses in India by next year, the statement said.
Razorpay had forayed into the business-to-business (B2B) small and medium-sized enterprises (SME) lending space with the launch of Razorpay Capital in 2019.
This is Razorpay's third acquisition in less than three years. Previously, Razorpay had acquired Thirdwatch - an Artificial Intelligence-driven company that helps reduce Return-to-Origin or RTO fraud losses in e-commerce - in 2018, and Opfin - a payroll management software company - in 2019.
Razorpay CEO and co-founder Harshil Mathur said in India, banks are wary of providing business loans to startups and new SMEs due to the risks attached to new revenue models of startups.
"Through our lending platform, Razorpay Capital, we have been striving to solve these cash flow challenges, making it easier for businesses to get finance and grow. And progressing in that journey, an acquisition such as this fits perfectly with our vision of developing tailor-made affordable credit solutions for the underbanked small businesses across industries so that they can digitally transform and disrupt," he added.
Mathur pointed out that the team at TERA FinLabs comes with exceptional domain knowledge in credit underwriting and risk management, and Razorpay sees immense value in TERA Finlabs core lending infrastructure capabilities.
"MSMEs were an underserved market for a long time. However, in the last 16 months, they have started to show rapid growth with their adoption of digital. And this has created an opportunity for significant disruptions in the lending sector - Embedded Credit is one such innovation that I'm certain will transform this space," Pradeep Rathnam, co-Founder and CEO of TERA Finlabs, said.
TERA Finlabs' robust end-to-end platform will enable new entrants to build a scalable and profitable credit business, he added.
Razorpay - which is backed by investors like GIC, Tiger Global, Sequoia Capital India and MasterCard - has been witnessing a 40-45 per cent growth month-on-month. It has achieved USD 40 billion TPV (Total Payment Volume) and currently powers payments for over 8 million businesses, Airtel, Ola, Zomato, Swiggy, Cred, ICICI Prudential and others. It aims to reach 200 million customers by 2021."
Rupee tumbles 20 paise to 74.77 against US dollar in early trade
The drubbing of stocks this morning affects the rupee as well.
PTI reports: "The Indian rupee depreciated 20 paise to 74.77 against the US dollar in opening trade on Monday as firm American currency and weak domestic equities weighed on investor sentiment.
At the interbank foreign exchange, the rupee opened at 74.73 against the dollar, then fell further to 74.77, registering a fall of 20 paise over its previous close.
On Friday, the rupee had settled at 74.57 against the US dollar.
The Indian Rupee started on a weaker note this Monday against the greenback tracking the strength of the dollar, Reliance Securities said in a research note.
Asian currencies have started weak against the greenback this Monday morning and will weigh on sentiments.
Moreover, the local unit could remain weak, as investors will flee towards the safety of the greenback amid concerns over rising COVID-19 cases globally, the note added.
The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading up 0.02 per cent at 92.70.
Global oil benchmark Brent crude futures fell 0.57 per cent to USD 73.17 per barrel.
On the domestic equity market front, BSE Sensex was trading 345.62 points or 0.65 per cent lower at 52,794.44, while the broader NSE Nifty declined 92.50 points or 0.58 per cent to 15,830.90.
Foreign institutional investors were net sellers in the capital market on Friday as they offloaded shares worth Rs 466.30 crore, as per exchange data."
Active or passive? Why investment grammar is important
Your decision to choose investment products depends on your investment objectives. Are you, for instance, investing to achieve a life goal or are you investing your surplus cash? This is important because you can give up significant liquidity if you are investing surplus cash. Whereas, you need liquidity if you are saving to achieve a life goal.
This week, we focus on your goal-based investments and delve into a related question: what factors should you consider before investing in active funds for your goal-based portfolios?
Indian shares fall at open on underwhelming HDFC Bank profit
The largest private sector bank drags down stocks.
Reuters reports: "Indian shares fell at the open on Monday, dragged by HDFC Bank as it missed quarterly profit expectations, with sentiment further dented by broader Asian peers falling in early trade on a renewed coronavirus scare.
By 0352 GMT, the NSE Nifty 50 index was down 0.69% at 15,812.75 and the S&P BSE Sensex was down 0.72% at 52,760.08. Both indexes ended the week nearly 1.5% higher, their first weekly gain in three.
HDFC Bank fell as much as 3.2%, its lowest in nearly a month, after the lender reported a quarterly profit that missed expectations on Saturday as bad loan provisions rose and asset quality deteriorated. The NSE Nifty Bank index was down as much as 2.1%.
Investors will focus on telecom stocks with the Supreme court set to hear the adjusted gross revenues (AGR) case later in the day. India's top court, in September last year, reaffirmed dues payable by telecom companies Bharti Airtel and Vodafone Idea.
Investors are also eyeing results from Nifty 50 components HCL Tech and HDFC Life.
The Indian parliament's monsoon session begins on Monday with issues such as petrol prices and the country's COVID-19 status up for discussion.
Asian shares slipped to a one-week low on Monday and perceived safe haven assets, including the yen and gold, edged higher amid fears of rising inflation and a surge in coronavirus cases, while oil prices fell on oversupply worries."
Top oil producers agree on modest output boost from August
The world’s leading oil producers agreed on Sunday to continue to modestly boost output from August, after the United Arab Emirates blocked a deal earlier this month.
An OPEC+ meeting agreed to raise output by 400,000 barrels per day (bpd) each month from August to help fuel a global economic recovery as the pandemic eases, the Vienna-based group said in a press statement.
The grouping will “assess market developments” in December, it said. The deal also extends a deadline on capping output from April 2022 to the end of 2022.
Days of negotiations of OPEC+ members to continue to further ease production cuts became deadlocked early this month, exposing a row between the world’s largest oil exporter Saudi Arabia and brash neighbour the United Arab Emirates.
