The benchmark stock indices have rallied this morning on the back of positive global cues.
Earnings announcements from India Inc. continue to pour in with auto majors showing some signs of improvement.
Join us as we follow the top business news through the day.
What central banks have learned from the crisis
Sensex rallies 429 points; Nifty tops 10,550 level
It was a good for the benchmark stock indices which rallied well over 1% by the end of the day.
PTI reports: "Equity benchmark BSE Sensex rallied 429 points on Thursday on widespread buying amid a broad upmove in global markets following encouraging COVID-19 vaccine trials.
After soaring 600 points during the session, the 30-share index settled 429.25 points, or 1.21 per cent, higher at 35,843.70.
The NSE Nifty surged 121.65 points, or 1.17 per cent, to close at 10,551.70.
M&M was the top gainer in the Sensex pack, jumping around 6 per cent, followed by Titan, HCL Tech, Tata Steel, Infosys and TCS.
On the other hand, Axis Bank, HUL, Kotak Bank and Bharti Airtel were among the laggards.
According to Narendra Solanki, Head- Equity Research (Fundamental), Anand Rathi, market rallied tracking positive Asian peers on news that Germany’s BioNTech and US pharmaceutical giant Pfizer reported positive preliminary results from a joint project for a potential coronavirus vaccine.
Further, positive factory output data across economies too boosted global investors’ risk appetite, traders said.
Bourses in Shanghai, Hong Kong, Tokyo and Seoul ended with significant gains.
Stock exchanges in Europe were also trading around 1 per cent higher in early deals.
International oil benchmark Brent crude futures rose 0.86 per cent to USD 42.39 per barrel.
On the currency front, the rupee appreciated 56 paise to settle at 75.04 against the US dollar."
India’s GDP may contract by 6.4% in FY21: Care Ratings
The forecasts about India's growth this year only seem to be getting worse.
PTI reports: "Care Ratings on Thursday revised India’s GDP growth forecast for the current financial year to (-) 6.4 per cent as economic activity continues to be under restriction due to the lockdown on account of the COVID-19 pandemic.
The rating agency, in May, had projected a decline in GDP growth of 1.5-1.6 per cent in FY21.
It said given that the nation is into a lockdown for July too with several restrictions on resumption of services in particular as well as movement of people, the cutoff date for normalcy will spread into the latter part of the third quarter and more likely to the fourth quarter.
“Under these assumptions our forecast for GDP growth is now (-) 6.4 per cent for FY21 with GVA (de)growth estimated to be around (-) 6.1 per cent, Care Ratings said in a report.
The sharper fall in real GDP also means that the nominal GDP for the year will also decline assuming inflation of 5 per cent which in turn will affect the projected fiscal deficit number of the central government which will be in the region of 8 per cent for FY21, it said.
In FY20, the country’s economy grew at an estimated 4.2 per cent, almost a decade low.
It, however, said the positive growth will come from only agriculture and the government sector.
The agency’s May estimate for a decline in GDP growth of 1.5-1.6 per cent was based on the assumption that the lockdown would be ending by the month-end and that the recovery process will be gradual and be calibrated across sectors with the second half being closer to normal.
GDP forecasts for FY21 are unique as they would be varying depending on the evolving situation and the assumptions being made on the recovery process in the country, the report said.
The agency said its assumption now is that two-third of the economic sectors would broadly be operating at 50-70 per cent capacity by the end of third quarter and the balance may not even reach this state this year."
Maruti launches vehicle lease subscription service
As the industry tries to recover, auto majors are trying out various ways to enthuse customers.
PTI reports: "The country’s largest carmaker Maruti Suzuki India on Thursday launched its vehicle lease subscription service for individual customers under ‘Maruti Suzuki Subscribe’ brand.
The company said it has tied up with ORIX Auto Infrastructure Services Ltd, a subsidiary of ORIX Corporation, Japan, to launch the subscription service in India.
The subscription service will begin as a pilot project in Gurugram and Bengaluru and will be initially available on Swift, Dzire, Vitara Brezza and Ertiga from Maruti Suzuki ARENA Channel and Baleno, Ciaz and XL6 from NEXA Channel, the company said in a regulatory filing.
Maruti Suzuki India joins rival Hyundai Motor India, which had last year launched its subscription model initially in six cities across India as part of its partnership with self-drive car-sharing firm Revv.
Similarly, MG Motor India also offers its subscription services through a strategic tie-up with Myles, the car sharing and car subscription company from Carzonrent.
In May this year, German car maker Volkswagen had also launched its car-leasing schemes allowing customers to lease all BS-VI compliant cars in its portfolio with a minimum lock-in period ranging from 2-4 years.
Automobile industry players are looking at new ways of pushing sales and making vehicles accessible to customers in the wake of the COVID-19 pandemic which has added a further blow to the sector that was reeling through a prolonged slump from last year."
Rupee jumps 56 paise to settle at 75.04 against US dollar
The rupee appreciated 56 paise to settle at 75.04 (provisional) against the US dollar on Thursday tracking weakness in the greenback and gains in the domestic equity market.
Forex traders said positive domestic equities and weak US currency supported the local unit. Moreover, investor sentiment strengthened after Pfizer reported encouraging vaccine test results.
The rupee opened at 75.51 against the US dollar, gained further ground and finally closed for the day at 75.04 against the US dollar, up 56 paise over its previous close.
It had settled at 75.60 against the greenback on Wednesday.
Apple supplier Foxconn, others hit as India holds up imports from China, say sources
Businesses are beginning to feel the pain of the Centre's ban against Chinese products.
Reuters reports: "India's additional scrutiny of imports from China has disrupted operations at plants owned by Apple supplier Foxconn in southern India, three sources told Reuters, and other foreign firms are also facing delays as tensions between the two countries build.
Customs officers at Indian ports have held back shipments from China and sought additional clearances after deadly clashes at the disputed Himalayan border last month. The checks have been imposed without any formal order.
While several companies such as Apple and Dell have been battling to free stuck shipments, hundreds of employees at Taiwanese contract manufacturer Foxconn's two plants in the south had no major work to do this week as shipments were delayed, sources said.
More than 150 Foxconn shipments - containing smartphone and electronic parts - were stuck at the port of Chennai, though some are being cleared slowly now, the first source said. The total number of parts in the shipments was not clear.
Foxconn's two plants in Tamil Nadu and Andhra Pradesh state mainly assemble Apple and Xiaomi smartphones in the country and employ thousands of workers, many of whom stay in company-provided accommodation.
“Foxconn was in a very bad state ... lots of workers stayed at the dormitory because there was no work,” said the first source.
Foxconn, Apple and Xiaomi did not respond to Reuters queries.
The finance ministry also did not respond. Two officials at the ministry, which oversees the customs department, said the inspection measures were temporary and will ease soon.
“We cannot keep checking 100% of shipments forever ... Shipments of non-Chinese companies being impacted will be cleared on priority,” said one official.
While the exact impact of the disruptions is not immediately clear, the delays come when companies in India had already been battling disrupted supply chains due to coronavirus shutdowns in recent months. Business activity has only just begun to pick up.
Prominent U.S.-India lobby groups and local industry bodies have urged the Indian government to intervene."
China hopes India corrects actions against Chinese firms immediately
China continues to press against India's ban on Chinese apps.
Reuters reports: "China's commerce ministry said on Thursday that it hopes India would correct its discriminatory actions against Chinese companies immediately, after India banned Chinese mobile apps amid a border crisis between the two countries.
China has not adopted any restrictive or discriminatory measures against Indian products and services, Ministry of Commerce spokesman Gao Feng told reporters in an online briefing, adding that India's actions are in violation of WTO rules."
Coal India trade unions begin 3-day strike; around 4 MT of coal output likely to be hit
The Centre's decision to allow more mining by private players hasn't gone down well with the trade unions.
PTI reports: "Protesting against the government’s decision to allow commercial coal mining, Coal India trade unions started their three-day strike beginning Thursday, a move that may hit around four million tonnes of production.
The unions on Thursday went on the strike from the first shift which begins at 0600 HRS, Nathulal Pandey, president of HMS-affiliated Hind Khadan Mazdoor Federation said.
On an average Coal India produces 1.3 million tonnes (MT) of coal every day, so it is estimated that the production loss due to the three-days strike would be around 4 MT, Pandey said.
The move comes at a time when the government has set an ambitious one billion tonnes of coal output for Coal India (CIL) which accounts for over 80 per cent of domestic coal output.
Pandey said, in the Jhanjra area of Eastern Coalfields, five persons -- one CITU member, one INTUC and three HMS -- who were on strike have been arrested.
Further, workers employed in the BCCL, a Coal India arm, have not gone to work and as a result emergency services such has hospitals in the mines have been paralysed, Pandey said.
Besides, the general manager of the Sohagpur area of SECL, a Coal India arm, has called outsiders to work in the mine which is an “extraordinary situation” and this has never happened to Coal India.
On Wednesday, talks between Coal India trade unions and the government over the issue of commercial coal mining failed. A virtual meeting was held between Coal Minister Pralhad Joshi and representatives of trade unions on Wednesday."
SpiceJet says it has operated 200 charter flights repatriating around 30,000 Indians till now
Amid the coronavirus restrictions, SpiceJet said on Thursday it has operated a total of 200 charter flights to repatriate close to 30,000 Indians till now.
In a press release, the airline said it has operated 111 charter flights from the UAE bringing back 20,000 Indians.
It added it has operated around 50 charter flights from Saudi Arabia, Oman, Qatar, Lebanon and Sri Lanka “to bring thousands back home”.
Scheduled international passenger flights continue to remain suspended in India. Domestic passenger flights resumed in India on May 25 after a gap of two months due to the coronavirus-triggered lockdown.
Amendments to bank resolution framework to help preserve depositor confidence: Moody’s
The global ratings agency believes the new amendments can help troubled banks' health by preventing capital flight.
Reuters reports: "Moody’s Investors Service on Thursday said the amendments to India’s bank resolution framework are credit positive as they will help preserve depositor confidence.
On June 26 the government amended the Banking Regulation Act, 1948, allowing the Reserve Bank of India (RBI) to initiate the resolution of a weak bank by reconstructing its capital or merging it with another bank without the prior requirement of imposing a moratorium on its depositors or creditors.
The amended resolution process is credit positive because it will help preserve depositor confidence and avoid deposit flight from a weak bank as the risk of a moratorium is reduced, Moody’s said in a statement.
The amendments are also credit positive for the bank’s depositors and creditors because their ability to obtain full and timely repayments during the resolution process are unaffected, it afford.
Moody’s said before the amendments, the RBI could only initiate the resolution process of a weak bank after seeking approval from the government to impose a moratorium on the bank’s assets and liabilities for up to six months.
In March, RBI had imposed a moratorium on Yes Bank because of its weakening solvency and liquidity. Although the moratorium was lifted after 14 days, the bank saw a significant outflow of deposits in the run up to the moratorium and after it was lifted, the rating agency said.
Between December 2019 and March 2020, the bank’s deposits fell 36 per cent leading to sharp deterioration in its liquidity."
Goldman Sachs sees oil demand returning to pre-coronavirus levels by 2022
A long way ahead for normalcy to return in the oil market.
Reuters reports: "Goldman Sachs said on Thursday a pick-up in commuting, a shift to private transportation and government efforts to improve economies with higher infrastructure spending should help global oil demand return to pre-coronavirus levels by 2022.
Demand is expected to fall by 8% this year, before rebounding 6% in 2021 and fully recovering to pre-pandemic levels by 2022, the U.S. bank said in a note.
“Oil demand has already started to recover with the initial pace of recovery surprising to the upside in economies like China and India. Demand is still below normalised level with June demand estimated to be 12% below last year levels,” Goldman said.
The bank expects gasoline to stage the fastest demand recovery among oil products, while jet fuel consumption, which has been hit the most by the pandemic, could suffer more as consumer confidence in air travel is likely to stay low in the absence of a vaccine.
While fuel demand is gradually recovering as lockdown measures ease, a second coronavirus wave could quickly undermine the trend, industry data showed last week.
A Reuters poll on Tuesday estimated oil prices will consolidate at around $40 a barrel this year, with a recovery gaining steam in the fourth quarter and into 2021 on OPEC-led production cuts and as economies limp back from coronavirus lockdowns."
India's June gold imports plunge 86% y/y to 11 T, says govt source
The plunge in imports due to the lockdown couldn't stop the rally in the yellow metal though.
PTI reports: "India's gold imports plunged 86% year-on-year in June due to record high prices and as international air travel was banned and many jewellery shops were closed amid a nationwide lockdown to curb the spread of coronavirus, a government source said.
The world's second-biggest consumer of the precious metal imported around 11 tonnes of gold in June, down from 77.73 tonnes a year ago, the source said on Thursday. The source asked to remain anonymous since he is not authorised to speak to the media.
In value terms, June imports dropped to $608.76 million from to $2.7 billion a year ago, he added."
Bajaj Auto reports 31% drop in June sales
The auto major has shown some improvement in its sales numbers when compared to May.
PTI reports: "Bajaj Auto on Thursday reported a 31 per cent decline in its total sales at 2,78,097 units in June as against 4,04,624 units in the same month last year.
Domestic sales declined by 34 per cent at 1,51,189 units last month as compared to 2,29,225 units in June 2019, Bajaj Auto said in a regulatory filing.
The company further said its total two-wheeler sales were down 27 per cent at 2,55,122 units as compared to 3,51,291 units in the year-ago month.
Domestic two-wheeler sales were at 1,46,695 units last month against 1,99,340 units in June 2019, a decline of 26 per cent, it added.
Overall commercial vehicles sales also dropped by 57 per cent at 22,975 units last month compared to 53,333 units in the year-ago period with domestic sales falling 85 per cent to 4,494 units against 29,885 units in June 2019.
Bajaj Auto said its total exports last month were down 28 per cent at 1,26,908 units as compared to 1,75,399 units in June 2019.
For the first quarter ended June 30, the company saw its total sales drop by 64 per cent to 4,43,103 units as compared with 12,47,174 units in April-June period of 2019-20."
Rupee rises 10 paise to 75.50 against U.S. dollar in early trade
The rupee appreciated 10 paise to 75.50 against the U.S. dollar in early trade on Thursday tracking weakness in the greenback and gains in the domestic equity market.
Forex traders said positive domestic equities and weak U.S. currency supported the local unit. Moreover, investor sentiment strengthened after Pfizer reported encouraging vaccine test results.
The rupee opened at 75.51 against the U.S. dollar, gained further ground and touched 75.50 against the U.S. dollar, up 10 paise over its previous close.
It had settled at 75.60 against the greenback on Wednesday.
UPI payments hit all-time high of 1.34 billion transactions in June
It looks like the lockdown has helped boost cashless transactions.
PTI reports: "Payments on Unified Payments Interface (UPI) in June hit an all-time high of 1.34 billion in terms of volume with transactions worth nearly Rs 2.62 lakh crore, as per National Payments Corporation of India (NPCI) data.
On a month-on-month basis it registered a 8.94 per cent growth from 1.23 billion in May.
UPI payments had fell to 999.57 million in terms of volume with transactions worth Rs 1.51 lakh crore in April, following the coronavirus-induced lockdown that halted almost all services, except essentials.
Online payments slowly gathered pace from May, with staggered opening of the economy. In May, the number of UPI transactions stood at 1.23 billion valued at Rs 2.18 lakh crore, showed the NPCI data.
In June, the volume in terms of transactions touched the highest level so far, as per the data available, with the first set of data dating back to April 2016 -- with nil transaction.
The number of transactions through all the available means on NPCI platform, were in upwards of 1 billion since October 2019 before dipping to 999.57 million in April this year. However, it soon regained the 1 billion plus transaction volume in May.
NPCI was incorporated in 2008 as an umbrella organisation for operating retail payments and settlement systems in India. It has created a robust payment and settlement infrastructure in the country.
It facilitates payments through a bouquet of retail payment products such as RuPay Card, Immediate Payment Service (IMPS), UPI, Bharat Interface for Money (BHIM), BHIM Aadhaar, National Electronic Toll Collection (NETC Fastag) and Bharat BillPay.
NPCI also launched UPI 2.0 to offer more secure and comprehensive services to consumers and merchants."
Visa application services for select destinations to resume from July 6, says VFS Global
VFS Global, an outsourcing and technology services provider for governments and diplomatic missions worldwide, said on Wednesday that visa application services will resume for specific visa categories for Belarus, Denmark, Dominican Republic, Ireland, Italy, Norway, Portugal, South Korea, Turkey, UAE, and United Kingdom.
VFS said it would re-open Visa Application Centres in limited cities, with the approval of respective Embassies/Consulates in India, and operate under strict health and safety guidelines. Customers will have to schedule appointments online, through the website, prior to visiting the Visa Application Centre.
However, it said outbound international commercial flights have not yet resumed as of this date.
Sensex rallies over 300 points in early trade; Nifty tops 10,500
Stocks off to yet another morning rally.
PTI reports: "Market benchmark Sensex surged over 300 points in early trade on Thursday tracking advances in global equities as positive macroeconomic data flow and hopes of a COVID-19 vaccine boosted investor sentiment.
After touching a high of 35,724.32, the 30-share index was trading 249.01 points, or 0.70 per cent, higher at 35,663.46, while the NSE Nifty rose 76.50 points, or 0.73 per cent, to 10,506.55.
ONGC was the top gainer in the Sensex pack, surging around 4 per cent, followed by M&M, IndusInd Bank, HDFC Bank, SBI and Titan.
On the other hand, Tech Mahindra and HUL were the laggards.
In the previous session, the BSE barometer settled 498.65 points, or 1.43 per cent, higher at 35,414.45, and the broader Nifty surged 127.95 points, or 1.24 per cent, to close at 10,430.05.
Foreign institutional investors were net sellers on Wednesday, offloading equities worth Rs 1,696.45 crore, provisional exchange data showed.
According to traders, domestic indices followed gains in global benchmarks amid positive factory output data across economies.
Further, hopes for a vaccine strengthened after Germany’s BioNTech and US pharmaceutical giant Pfizer reported positive preliminary results from a joint project.
Bourses in Shanghai, Hong Kong, Tokyo and Seoul were trading with significant gains.
Stock exchanges on Wall Street too ended on a positive note in overnight session.
International oil benchmark Brent crude futures rose 0.12 per cent to USD 42.08 per barrel."
Gold eases as U.S. data, vaccine hopes dent safe-haven demand
The demand for the yellow metal that hit a 8-year high yesterday eased after some positive economic news.
Reuters reports: "Gold edged lower on Thursday, easing from a near eight-year peak hit in the last session, as solid U.S. manufacturing data and promising results from a COVID-19 vaccine trial revived hopes for a quick economic recovery, denting demand for safe havens.
Spot gold was down 0.1% at $1,767.79 per ounce by 0259 GMT, after touching $1,788.96 on Wednesday, its highest since October 2012. U.S. gold futures fell 0.2% to $1,776.80.
“A general pro-growth stance across markets is why we're seeing a little bit of pressure on gold,” said Michael McCarthy, chief strategist at CMC Markets, adding that market action reflected a tussle between concern over rising COVID-19 cases and hopes for a vaccine and positive U.S. data.
Manufacturing activity in the United States rebounded in June, hitting its highest in more than a year, while similar surveys from China, Germany and France all pointed to a recovery in factory activity. The better-than-expected economic readings and optimism over a potential vaccine lifted equity markets.
However, “The bull case for gold is still intact with real rates low and suppressed and which would be able to sustain the high price of gold,” Phillip Futures said in a note.
Markets now await June U.S. employment data and weekly initial jobless claims report on Thursday for clues about the health of the world's biggest economy as new COVID-19 cases accelerate in several southern states. Offering some respite to gold, the dollar index fell 0.1% against its rivals.
While major market moves are unlikely ahead of the US data, ”any deterioration on the ground in Hong Kong could see further support for safe-haven gold,” CMC's McCarthy said. Protesters in Hong Kong took to the streets on Wednesday in defiance of sweeping security legislation introduced by China to snuff out dissent."
June auto sales flag road to recovery
Automobile makers posted an uptick in wholesale sales in June compared with May and April (when sales were zero), driven by pent-up demand, particularly from consumers in rural and semi-urban markets, as the economy gradually reopened.
Sales were, however, still significantly lower than in the year-earlier period for most companies. Tractors continued to see strong demand with Mahindra & Mahindra and Escorts bettering even the June 2019 sales.
M&M sold 35,844 tractors in the domestic market, a growth of 12% from the 31,879 units sold in June 2019. “This is our second highest June sales ever,” said Hemant Sikka, president, Farm Equipment Sector. “Timely arrival of the monsoon, combined with benefits of a record Rabi crop, government support for agri initiatives and very good progress in the sowing of the Kharif crop led to a positive sentiment among farmers.”
