The benchmark indices that opened flat this morning have rallied on the back of gains made by index heavyweights.
Reliance India Limited, which has been entering a spree of investment deals over the last month or so, has declared itself to be net-debt free.
Join us as we follow the top business news through the day.
Negative rates are the new normal
Reliance rally lifts markets; Sensex soars 524 points, Nifty tops 10,200
A top-heavy rally helped the benchmark indices post a second day of gains despite overall economic uncertainty.
PTI reports: "Equity benchmark Sensex rallied 524 points on Friday, propelled by stellar gains in index-heavyweight Reliance Industries amid positive sentiment in global markets and fresh foreign fund inflows.
After soaring 640.32 points during the day, the 30-share index settled 523.68 points, or 1.53 per cent, higher at 34,731.73.
Similarly, the broader NSE Nifty surged 152.75 points, or 1.51 per cent, to 10,244.40.
Bajaj Finance was the top gainer in the pack, soaring around 7 per cent, followed by Reliance Industries (RIL) which ended over 6 per cent higher.
RIL spurted to its record high of Rs 1,788.60 during the day after Mukesh Ambani said his flagship firm is now net-debt free after a record Rs 1.69 lakh crore fundraising in under two months. The stock ended at Rs 1,759.50.
On the other hand, IndusInd Bank, HCL Tech, ITC, M&M and HDFC were among the laggards.
According to analysts, besides stock-specific action, rally in global markets and fresh foreign fund inflows buoyed market sentiment.
“It has been good week for the global markets as positive sentiment on reopening the economies overshadowed reports of fresh COVID-19 cases in the US and China,” said Sanjeev Zarbade, VP PCG Research, Kotak Securities.
Market mood was supported by a gradual resumption in business activities and an earlier-than-expected normalisation in certain consumption sectors, he noted.
Bourses in Shanghai, Hong Kong, Seoul and Tokyo ended on a firm note.
Stock exchanges in Europe were trading significantly higher in early deals.
International oil benchmark Brent crude futures climbed 2.51 per cent to USD 42.55 per barrel.
On the currency front, the rupee settled 6 paise lower at 76.20 against the US dollar.
Meanwhile, foreign institutional investors bought equities worth a net of Rs 366.57 crore on Thursday, provisional exchange data showed."
Economists raise doubts over timing of economic revival in post-COVID-19 era
The trajectory of the economic recovery as lockdowns are eased remains a matter of hot debate at the moment with many doubting the prospects of a V-shaped recovery.
PTI reports: "Economists on Friday expressed doubts over the timing of the economic revival in the post- COVID-19 era, saying that the pandemic has sauntered on stage when the slowdown had already begun.
Rathin Roy, director of National Institute of Public Finance and Policy, an autonomous research body, said declining consumption and investment is not matched by the increase in government spending.
“Neither the Reserve Bank of India nor the government can save the economy. The private agents will have to ensure that they will drive the economic growth and take the lead”, Roy said at a webinar organised by Indian Chamber of Commerce.
However, Prime Minister Narendra Modi had recently said the economy is showing “green shoots” as the country emerges from the coronavirus lockdown.
Regarding the Rs 20 lakh crore financial package announced by the government, Roy said the public sector banks have been asked to lend more.
“The government has chosen the credit and monetary policy route to boost the economic growth rather than the fiscal mode,” he said.
Roy said the issue of migrant workers will have an impact on the economic growth and availability of quality workers in the post-COVID-19 world will be a challenge.
State Bank of India’s chief economic advisor Soumya Kanti Ghosh said the GDP for one quarter has been lost, amounting to Rs 40-50 lakh crore, due to the coronavirus crisis.
“No amount of fiscal or monetary support will help recover that,” he said, adding that the pandemic has come at a time when the economy was already in a recessionary mode.
Ghosh also said the issue of migrant workers due to the lockdown “has not been handled well“.
He said the RBI has been proactive with its steps to revive the economy.
“When the economy is contracting, more credit offtake will lead to bad asset quality, and this is where the fiscal policy will come into play,” he added.
Rajat Kathuria, director and chief executive of the Indian Council for Research on International Economic Relations (ICRIER), another policy think-tank, said it is worrying that the unemployment is going up among the low- skill, uneducated and self-employed workers.
He expressed hope that workers will return to their workplaces as there are little employment opportunities in rural areas.
According to him, India should invest more in creating a welfare state."
Rupee settles 6 paise lower at 76.20 against US dollar
The rally in domestic equities didn't help the rupee today.
PTI reports: "The rupee settled 6 paise lower at 76.20 (provisional) against the US dollar on Friday as strengthening of the US currency and rising COVID-19 cases weighed on investor sentiment.
Forex traders said factors like strengthening US dollar, rising coronavirus cases and border tension between India and China dragged down the local unit, while positive domestic equities and fresh foreign fund inflows supported the rupee and restricted the decline to some extent.
The rupee opened at 76.28 against the US dollar, regained some lost ground and finally settled for the day at 76.20 against the US dollar, down 6 paise over its previous close.
It had settled at 76.14 against the greenback on Thursday.
During the four-hour trading session, the domestic unit witnessed an intra-day high of 76.17 and a low of 76.29 against the US dollar.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.03 per cent to 97.44.
The 30-share BSE benchmark Sensex was trading 343.30 points higher at 34,551.35 and broader NSE Nifty rose 105.30 points to 10,196.95.
Foreign institutional investors were net buyers in the capital market as they bought shares worth Rs 366.57 crore on Thursday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, rose 2.51 per cent to USD 42.55 per barrel."
India's electricity output falls steeply in first half of June
Massive changes in power output as the lockdown continues to affect normal activities.
Reuters reports: "India's electricity generation during the first half of June fell at a slightly faster rate than in May, provisional government data showed, driven by lower consumption in western states hit hardest by the coronavirus outbreak.
Power generation fell 14.5% in the first 15 days of June, a Reuters analysis of daily load despatch data from federal grid operator POSOCO showed, compared with a 14.3% fall in May.
Prime Minister Narendra Modi has been citing electricity consumption to show there are “greenshoots” in the Indian economy.
While power use has picked up from previous months when India was under a strict lockdown, electricity demand - which is impacted by seasonal changes - has been lower when compared with the same periods from the previous year.
Electricity use by the industrial western states of Maharashtra and Gujarat - the top electricity consuming states in the country - fell over 24% each, compared with declines of 13.8% and 18.9% in May. Consumption in Delhi fell nearly 30%, a steeper fall than the 26.8% decline in May.
Maharashtra, Gujarat and Delhi - which are among the most industrialised regions in the country - account for nearly three-fourths of all deaths in India, according to government data.
Industries and offices together account for over half of India's annual power consumption.
However, the southern state of Tamil Nadu, India's auto manufacturing hub, registered a 8.5% fall in power use, compared with a 15.3% decline in May.
Electricity use in the state is slated to fall in the coming days as it has imposed a strict lockdown in and around its capital city of Chennai from Friday until the end of June."
E-commerce start-up DealShare to hire 5,000 people by this Dec
Some bright spots in what otherwise looks like a terrible labor market.
PTI reports: "E-commerce start-up DealShare on Friday said the company is planning to hire over 5,000 people by the end of this calendar year across 25 cities in Rajasthan, Gujarat, Maharashtra and Karnataka, mostly in warehouse, delivery and technology segments.
We are an ecommerce company targeting middle and lower middle class families falling under the Rs 25,000-50,000 monthly salary bracket, who mostly go to the neighbourhood kirana stores, DealShare founder, chief business officer and chief finance officer Sourjyendu Medda told PTI here.
The firm is currently growing at 25 per cent month-on-month and is looking to expand.
To cater to the growing e-commerce demand, the company plans to hire 3,000 workforce in the next two-three months in Rajasthan, Gujarat, Maharashtra and Karnataka and 5,000 by the end of December across all levels in warehouse, delivery and technology segments, he added.
Currently, DealShare has more than 300 direct employees.
The company has close to two million subscribers, and the number is growing steadily, he said, adding that it is planning to penetrate deeper to reach 100 cities by December this year in the four states it is currently present in and the National Capital Region."
FinMin invites bids from transaction advisors for LIC IPO
The Centre seems to have kickstarted the process to divest its stake in LIC.
PTI reports: "Kick-starting the process of LIC disinvestment, the Finance Ministry on Friday invited bids from consulting firms, investment bankers, and financial institutions for advising it on the proposed initial public offer.
The government proposes to engage up to two pre-IPO transaction advisors, for assisting the Department of Investment and Public Asset Management (DIPAM) in the preparatory processes leading to the Initial Public Offer (IPO) of Life Insurance Corporation of India (LICI), tipped to be the largest ever in the country.
The government “proposes to engage up to two pre-IPO Transaction Advisor(s) from reputed professional consulting firms/ investment bankers/ merchant bankers/ financial institutions/ banks, independently (not in the consortium) for facilitating/assisting DIPAM in the preparatory processes leading to the IPO of LICI, the Finance Ministry said in the Request For Proposal (RFP) for engaging pre-IPO transaction advisors.
The advisors can submit their bids beginning Friday, till July 13, 2020. The bids would be opened by DIPAM on July 14.
The advisor would ensure preparatory aspects of the proposed IPO and would, advise and assist the government on modalities of IPO and the timing; structuring the transaction; organizing non-deal roadshows, suggesting measures to fetch optimum value; positioning of the minority sale, among others, the RFP said.
The bidder would be required to have at least 3 years experience for providing advisory services for IPO/strategic disinvestment/strategic sale/M&A activities/ private equity investment transaction.
“Bidders should have advised, handled, and completed at least one transaction of IPO of a size of Rs 5,000 crore or more between April 1 2017 to March 31, 2020 or should have managed a capital market transaction of Rs 15,000 crore or more during the period, the RFP said.
The government is looking at listing the country’s largest life insurer on domestic bourses in the January-March quarter of current fiscal.
In the 2020-21 Budget, Finance Minister Nirmala Sitharaman had announced government’s plan to sell a part of its holding in LIC by way of Initial Public Offer (IPO)."
ICICI Bank divests stake in ICICI Lombard for ₹ 2,250 crore
ICICI Bank on Friday said it has divested 3.96% stake in ICICI Lombard General Insurance Company for ₹ 2,250 crore.
Following this, the bank’s shareholding in the insurer stands at approximately 51.9%.
While announcing its results for the quarter ended March 2020 on May 9, 2020, the bank had stated that it would look at further strengthening the balance sheet as opportunities arise.
Pursuant to the approval of its board, the bank has divested 18,000,000 equity shares of face value of ₹ 10 each of ICICI Lombard General Insurance Company, ICICI Bank said in a filing to BSE.
Covid-19 cases shoot up to crisis levels in Beijing
Petrol price cumulatively hiked by ₹7.11 per litre, diesel by ₹7.67, in 13 days
Petrol price on June 19 was hiked by 56 paise per litre and diesel by 63 paise a litre, taking the cumulative increase in rates to ₹7.11 and ₹7.67 per litre respectively in less than two weeks.
Petrol price in Delhi was hiked to ₹78.37 per litre from ₹77.81, while diesel rates were increased to ₹77.06 a litre from ₹76.43, according to a price notification of State oil marketing companies.
Rates have been increased across the country and vary from State to State depending on the incidence of local sales tax or VAT.
This is the 13th daily increase in rates in a row since oil companies on June 7 restarted revising prices in line with costs, after ending an 82-day hiatus in rate revision.
Indian stocks inch up as Reliance hits record high
A recap of the morning session in stocks.
Reuters reports: "India's main indexes rose on Friday, riding on gains in Reliance shares after the oil-to-telecoms conglomerate said it had become net-debt free, taking some focus away from rising coronavirus infections and border tensions with China.
The NSE Nifty 50 index rose 0.89% to 10,180.95 by 0617 GMT, while the benchmark S&P BSE Sensex was up 0.82% at 34,490.85. Both indexes were on track to finish the week higher.
Shares of Reliance Industries Ltd rose as much as 2% to a record high on the company's announcement of being net debt free after raising over 1.69 trillion rupees ($22.15 billion) over the last few weeks via stake sales in its digital arm and a rights issue.
However, there are widespread concerns about India's economic growth, which is already languishing at multi-year lows and faces further challenges from rising COVID-19 cases at home and abroad.
As of Friday, COVID-19 cases in India were over 380,500 and deaths were well past 12,500.
“In case, hopes of a V-shaped recovery in earnings growth in the second half of fiscal year 2020-21 does not materialize, the market can face a steep correction,” said Ajay Bodke, chief executive officer and chief portfolio manager (PMS) at Prabhudas Lilladher in Mumbai.
“Caution is being thrown to the winds with market ignoring heightened geopolitical risks and being wildly optimistic about a sharp bounce back,” Bodke added.
Tensions between Indian and China have grown following deadly clashes between the two sides over a contested border.
Financial stocks rose with the Nifty PSU Bank Index , which tracks state-owned lenders, adding 2.5%, while the Nifty Private Bank Index rose 1.6%.
India's small-cap and mid-cap shares rose over 1% each.
The Nifty realty index, which tracks real estate firms, jumped 4.02% with shares of Godrej Properties Ltd advancing over 4.5%."
Reliance Industries shares jump 2%; market valuation rises by Rs 16,346 crore
The honeymoon for Reliance's stock continues as investors pile in with more capital.
PTI reports: "Shares of Reliance Industries on Friday jumped 2 per cent after Mukesh Ambani announced that his oil-to-telecom conglomerate had become net debt-free.
The heavyweight stock rose 1.97 per cent to Rs 1,689 -- its all-time high -- on the BSE.
On the NSE, it surged 1.99 per cent to its record peak of Rs 1,688.95.
With this, the company’s market valuation rose by Rs 16,346.65 crore to reach Rs 10,66,034.08 crore in morning trade on the BSE.
Earlier in the day, Ambani announced that Reliance Industries had become net debt-free after raising a record Rs 1.69 lakh crore from global investors and a rights issue in under two months.
Reliance raised Rs 1.15 lakh crore from global tech investors by selling a little less than a quarter of the firm’s digital arm, Jio Platforms, and another Rs 53,124.20 crore through a rights issue in the past 58 days.
Taken together with last year’s sale of 49 per cent stake in fuel retailing venture to BP Plc of UK for Rs 7,000 crore, the total fund raised is in excess of Rs 1.75 lakh crore, the company said.
Reliance had a net debt of Rs 1,61,035 crore as on March 31, 2020. “With these investments, RIL has become net debt-free,” it said."
Moody’s downgrades Tata Motors’ rating
Moody’s Investors Service on Thursday said it had downgraded Tata Motors’ rating as the company faces tough market conditions amid the COVID-19 pandemic.
The ratings agency said it had downgraded Tata Motors’ corporate family rating (CFR) and senior unsecured instruments rating to B1 from Ba3.
“The outlook on all ratings has been changed to ‘negative’ from ratings under review,” Moody’s Investors Service said in a statement.
This rating action concludes the review for downgrade initiated on March 26 2020, it added.
Gold ticks higher on virus fears; firm dollar limits upside
Fears of a deadly second wave of the coronavirus pandemic is holding up gold.
Reuters reports: "Gold prices edged higher on Friday, with the metal's safe-haven demand supported by concerns over a second wave of coronavirus infections, although gains were limited by a stronger U.S. dollar.
Spot gold rose 0.2% to $1,725.88 per ounce by 0506 GMT. The bullion has fallen 0.3% so far this week. U.S. gold futures rose 0.2% to $1,735.10.
“Gold prices seem to be in somewhat of an equilibrium at the moment. Balanced between geopolitical and COVID-19 concerns on one side, and economic recovery hopes and dollar strength on the other,” said Jeffrey Halley, senior market analyst at OANDA.
“Gold continues to see patient buyers on dips to $1,710 to $1,715 an ounce, with equally patient sellers lying in wait on any spikes towards $1,740.”
More than 8.38 million people have been reported to be infected by the coronavirus globally, with China reporting 32 new virus cases on Friday, 25 of which were reported in the capital city Beijing. A surge in fresh infections in several U.S. states and the imposition of travel curbs in Beijing to stop a new outbreak have renewed fears of a delay in economic recovery as countries reopen after conronavirus-induced lockdowns.
Simmering geopolitical tensions between North Korea and South Korea, and India and China also offered some support to bullion, which is often used as a safe-haven investment during times of political and financial uncertainty."
Rupee falls 15 paise to 76.29 against US dollar in early trade
Global cues dragged the rupee down against the US dollar this morning.
PTI reports: "The rupee depreciated 15 paise to 76.29 against the US dollar in opening trade on Friday tracking its Asian peers, even as the domestic equity market was in the positive territory.
Forex traders said positive domestic equities supported the rupee, but factors like rising coronavirus cases and border tension with China weighed on the local unit.
The rupee opened at 76.28 against the US dollar, then fell further to 76.29 against the US dollar, down 15 paise over its previous close.
It had settled at 76.14 against the greenback on Thursday.
“Most Asian currencies were weak against the greenback this morning as the US dollar extended gains supported by safe haven appeal and could weigh on the domestic unit,” said Abhishek Goenka, Founder and CEO, IFA Global.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.03 per cent to 97.38.
The 30-share BSE benchmark Sensex was trading 103.97 points higher at 34,312.02 and broader NSE Nifty rose 34.70 points to 10,126.35.
Foreign institutional investors were net buyers in the capital market as they bought shares worth Rs 366.57 crore on Thursday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, rose 0.89 per cent to USD 41.88 per barrel."
Indian economy to contract by 4% in 2020-21, forecasts ADB
Hit hard by the COVID-19 pandemic, the Indian economy is expected to contract by 4% during the current financial year, the ADB said in a supplement to its Asian Development Outlook (ADO) on Thursday.
Countries in ‘Developing Asia’ will ‘barely grow’ in 2020, the ADB forecast.
China, however, is expected to record a positive growth of 1.8% in 2020, sharply down from 6.1% in 2019, the lender said.
“Growth in Indian GDP slowed to 3.1% in the last quarter...its slowest since early 2003. Economic growth slowed to 4.2% in the whole of” the last fiscal year as both exports and investment started to contract, the ADB said.
Reliance is net-debt free after ₹1.69 lakh crore fund-raising: Mukesh Ambani
A spree of investments in Jio over the last month or so has helped Reliance significantly reduce its debt load.
PTI reports: "Billionaire Mukesh Ambani on Friday announced that his oil-to-telecom conglomerate Reliance Industries is now net debt-free after raising a record Rs 1.69 lakh crore from global investors and a rights issue in under two months.
Reliance raised Rs 1.15 lakh crore from global tech investors by selling a little less than a quarter of the firm’s digital arm, Jio Platforms Ltd, and another Rs 53,124.20 crore through a rights issue in the past 58 days.
Taken together with last year’s sale of 49 per cent stake in fuel retailing venture to BP Plc of UK for Rs 7,000 crore, the total fund raised is in excess of Rs 1.75 lakh crore, the company said in a statement.
Reliance had a net debt of Rs 1,61,035 crore as on March 31, 2020. “With these investments, RIL has become net debt-free,” it said.
“I have fulfilled my promise to the shareholders by making Reliance net debt-free much before our original schedule of March 31, 2021,” Ambani said.
Jio Platforms - which houses the country’s youngest but largest telecom firm Reliance Jio, raised Rs 1,15,693.95 crore from leading global investors including Facebook, Silver Lake, Vista Equity Partners, General Atlantic, KKR, Mubadala, ADIA, TPG, L Catterton and PIF since April 22, 2020.
Saudi Arabian sovereign wealth fund PIF buying 2.32 per cent stake in the unit for Rs 11,367 crore on June 18 “marks the end of Jio Platforms’ current phase of induction of financial partners,” the statement said.
Alongside, Reliance launched India’s biggest right issue, which was subscribed 1.59 times.
Though the rights issue size was Rs 53,124 crore, the company has got only 25 per cent of the money as the remaining is to be paid only next fiscal."
Sensex jumps over 200 points; Nifty tops 10,100 level
The day has opened for stocks with some minor gains helped by index heavyweights.
PTI reports: "Equity benchmark Sensex jumped over 200 points in early trade on Friday led by gains in index-heavyweights Reliance Industries, HDFC Bank and ICICI Bank amid positive cues from global markets and fresh foreign fund inflows.
The 30-share index was trading 207.64 points, or 0.61 per cent, higher at 34,415.69.
Similarly, NSE Nifty advanced 59.45 points, or 0.59 per cent, to 10,151.10.
Bajaj Finance was the top gainer in the pack, rising around 3 per cent, followed by ONGC, Axis Bank, Tata Steel, IndusInd Bank and SBI.
Reliance Industries surged nearly 2 per cent to hit its 52-week high of Rs 1,684 after Mukesh Ambani said his flagship firm is now net-debt free after a record Rs 1.69 lakh crore fund raising in under two months.
On the other hand, Infosys, HCL Tech, Hero MotoCrop and M&M were among the laggards.
In the previous session, the BSE barometer settled at 34,208.05, up 700.13 points, or 2.09 per cent, while the broader Nifty jumped 210.50 points, or 2.13 per cent, to 10,091.65.
On a net basis, foreign institutional investors bought equities worth Rs 366.57 crore in the capital market on Thursday, provisional exchange data showed.
According to analysts, besides stock-specific actions, positive cues from global markets and fresh foreign fund inflows buoyed market sentiment.
Bourses in Shanghai, Hong Kong and Tokyo were trading with gains in early deals, while those in Seoul were in the red.
Stock exchanges on Wall Street ended on a positive note in overnight trade.
International oil benchmark Brent crude futures rose 0.84 per cent to USD 41.86 per barrel."
