Today's top business news: Stocks end choppy trading day flat, ITC slides as second wave curbs likely to hit cigarette business, rupee falls by 19 paise to close below 73 mark against dollar, and more

A view of the BSE building in Mumbai. File

A view of the BSE building in Mumbai. File

The benchmark stock indices opened the day on a negative note after overnight losses in US stocks.

Join us as we follow the top business news through the day.

4:30 PM

Rupee falls by 19 paise to close below 73 mark against dollar

Rupee weakness persists amid fears of a taper tantrum.

PTI reports: "Extending losses for the third straight session, the rupee on Wednesday fell by another 19 paise to end at 73.09 against the US currency due to a stronger dollar in overseas market and weak domestic equities.

At the interbank foreign exchange market, the rupee opened on a negative note at 73.13 per dollar as against its previous close of 72.90. It hovered in the range of 73.04 to 73.30 per dollar during the day before ending at 73.09.

The domestic currency has lost 64 paise in the three trading sessions to Wednesday.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.35 per cent to 90.14.

"The Indian Rupee depreciated amid strong dollar and muted domestic markets. The US Dollar gained strength amid rise in US treasury yields and improved economic data from the US. Further, surge in crude oil prices added downside pressure," said Saif Mukadam, Research Analyst, Sharekhan by BNP Paribas.

Additionally, market participants remained vigilant ahead of Reserve Bank of India (RBI) monetary policy meeting outcome scheduled to be announced on Friday.

"The central bank is likely to keep its interest rates untouched; more focus will be on statements to get hint on future monetary stance. Rupee may trade in the range of 72.50 to 73.50 in next couple of sessions," Mukadam added.

On the domestic equity market front, the BSE Sensex ended 85.40 points, or 0.16 per cent lower at 51,849.48, while the broader NSE Nifty rose 1.35 points or 0.01 per cent to close at 15,576.20.

Brent crude futures, the global oil benchmark, rose 1.12 per cent to USD 71.04 per barrel.

Foreign institutional investors were net sellers in the capital market on Tuesday as they offloaded shares worth Rs 449.86 crore, as per exchange data.

Meanwhile, India reported 1,32,788 new coronavirus infections taking the country's tally of COVID-19 cases to 2,83,07,832, while the daily positivity rate has further dropped to 6.57 per cent, according to the Union Health Ministry data updated on Wednesday."

4:00 PM

Sensex slips 85 pts; Nifty ends marginally higher

Another lackluster day for stocks.

PTI reports: "Equity benchmark Sensex slipped 85 points on Wednesday, tracking losses in ITC, HDFC twins and Infosys amid a mixed trend in global markets.

The 30-share BSE index ended 85.40 points or 0.16 per cent lower at 51,849.48, while the broader NSE Nifty inched up 1.35 points or 0.01 per cent to 15,576.20.

ITC was the top loser in the Sensex pack, shedding nearly 3 per cent, followed by Tech Mahindra, Axis Bank, Asian Paints, TCS, HCL Tech, HDFC and Kotak Bank.

On the other hand, IndusInd Bank, PowerGrid, Reliance Industries, Bajaj Auto and Maruti were among the gainers.

"Ahead of the MPC policy, domestic market continued its volatility with a mixed bias. Selling was witnessed in financials, IT and FMCG stocks but it reduced towards the close of trading," said Vinod Nair, Head of Research at Geojit Financial Services.

Weakness across US and Asian markets also added to the negative trend, he noted.

"PSU banks attracted buyers in hopes that the government will soon finalise the list for privatisation. In the policy, RBI is expected to focus on economic growth by maintaining the status quo on policy rates and ensuring liquidity while keeping an eye on the inflationary pressure due to rising commodity prices," Nair said.

Elsewhere in Asia, bourses in Shanghai and Hong Kong ended in the negative territory, while Tokyo and Seoul rose.

Equities in Europe were trading with gains in mid-session deals.

International oil benchmark Brent crude was trading 0.98 per cent higher at USD 70.94 per barrel."

3:30 PM

Exports jump 67% to USD 32.21 bn in May; trade deficit at USD 6.32 billion

Exports benefit from a low base.

PTI reports: "India's exports grew by 67.39 per cent to USD 32.21 billion in May driven by healthy growth in sectors such as engineering, petroleum products and gems and jewellery, even as trade deficit widened to USD 6.32 billion, according to government data released on Wednesday.

Exports in May last year stood at USD 19.24 billion and in May 2019 it was at USD 29.85 billion, the commerce ministry's preliminary data showed.

Imports in May rose by 68.54 per cent to USD 38.53 billion, from USD 22.86 billion in May 2020. In May 2019, imports stood at USD 46.68 billion.

"India is thus a net importer in May 2021 with a trade deficit of USD 6.32 billion, an increase of 74.69 per cent over trade deficit USD 3.62 billion in May 2020 and reduction by 62.49 per cent over trade deficit USD 16.84 billion in May 2019," the ministry said.

The country's merchandise exports in April had jumped nearly three-fold to USD 30.63 billion, even as the trade deficit widened to USD 15.1 billion.

Oil imports during May this year rose to USD 9.45 billion, as compared to USD 3.57 billion in May 2020. In May 2019, it stood at USD 12.59 billion.

Exports during Apr-May this year have jumped to USD 62.84 billion, as against USD 29.6 billion in the same period last year. It was USD 55.88 billion in Apr-May 2019, the data showed.

Imports during Apr-May 2021 was USD 84.25 billion, up from USD 39.98 billion in April-May 2020. In Apr-May 2019 it stood at USD 89.07 billion.

In Apr-May 2021, oil imports aggregated at USD 20.32 billion, up from USD 8.24 billion in Apr-May 2020. In Apr-May 2019 it was USD 24.16 billion.

Exports of engineering, petroleum products and gems and jewellery in May stood at USD 3 billion, USD 3.51 billion and USD 1.9 billion respectively.

Commenting on the data, Trade Promotion Council of India (TPCI) Founder Chairman Mohit Singla said that the fall in the import of newsprint, transport equipment and iron and steel is a welcome trend towards self-reliance, as it shows that the government's import substitution strategy has strongly worked for these sectors.

The Engineering Export Promotion Council (EEPC) said that shipments in the sector saw a substantial year-on-year rise in May primarily on account of low-base due to strict lockdown in the same month last year.

"We expect the order book of exporters to remain strong in the current financial year given the demand trend from key markets such as US, China and Europe," it said in a statement."

3:00 PM

Australia's economy booms to pre-pandemic levels as consumers, businesses spend

Australia's economy raced ahead last quarter as consumers and businesses spent with abandon, lifting output back above where it was last year when pandemic lockdowns tipped the country into its first recession in three decades.

The economy expanded by a real 1.8% in the three months to March, data from the Australian Bureau of Statistics (ABS) showed on Wednesday. Economists in a Reuters poll had forecast a 1.5% rise following an upwardly revised 3.2% gain in the fourth quarter.

The solid back-to-back quarterly growth helped annual output climb 1.1% to A$525.7 billion ($408.05 billion), a major turn around from last year's recession low of $468.3 billion.

2:30 PM

Security firm SIS helps over 46,000 pandemic-hit staff through unique fund

Security services, cash handling and facilities management firm SIS Group Enterprises, employing over 2.3 lakh people, has said it has provided financial assistance to over 46,500 staff impacted by COVID-19 through a unique fund.

“Soon after the outbreak of the novel coronavirus last year, we had set up a ₹10 crore ‘Hamare Heroes Welfare Fund’ to provide financial assistance to employees who could be impacted by the pandemic,” Rituraj Sinha, group managing director, SIS Ltd., said.

This initiative was started to provide a safety net to the employees who are working while risking their lives to help others, he said. “We have assisted over 46,500 employees so far. In case of fatality, the fund is used to compensate the families,” Mr. Sinha said.

Affected employees get about ₹10,000 as financial assistance.

 

2:00 PM

RBI's MPC begins deliberations amidst expectations of status-quo in policy rate

The RBI's rate-setting procedure gets underway.

PTI reports: "The Reserve Bank's rate-setting panel, Monetary Policy Committee (MPC), began its three-day deliberations on Wednesday amid expectations of a status quo on benchmark rate mainly on account of uncertainty over the impact of the second wave of COVID-19 pandemic.

Moreover, the fears of firming inflation may also refrain the MPC from tinkering with the interest rate in its bi-monthly monetary policy outcome to be announced on Friday.

The RBI had kept key interest rates unchanged at the last MPC meeting held in April. The key lending rate, the repo rate, was kept at 4 per cent and the reverse repo rate or the central bank's borrowing rate at 3.35 per cent.

M Govinda Rao, Chief Economic Advisor, Brickwork Ratings said the better-than-expected GDP numbers provide the much-needed comfort to the MPC on the growth outlook.

However, with the imposition of partial lockdown-like restrictions to contain the virus spread in several parts of the country, the downside risk on growth recovery has intensified, he said.

"Hence, the RBI is likely to continue with its accommodative monetary policy stance. Considering the risk of inflation emanating from the rising commodity prices and input costs, Brickwork Ratings expects the RBI MPC to adopt a cautious approach and hold the repo rate at 4 per cent," he noted.

Dhruv Agarwala, Group CEO, Housing.com, Makaan.com and Proptiger.com believes the RBI can maintain its accommodative stance in light of the economic impact of the second wave of COVID-19, without endangering its key goal of keeping inflation under control.

Reviving growth has become an important objective due to the economic damage caused by the recent lockdowns, he said, and added the RBI should also consider providing more liquidity to the National Housing Bank to enable the stability of housing finance companies, which in turn will allow the real estate sector to expand.

Shanti Ekambaram, Group President – Consumer Banking, Kotak Mahindra Bank was of the view that in the current environment, the choices before the Monetary Policy Committee may be limited.

"With the second phase of the pandemic impacting consumption and growth, the MPC will likely maintain status quo on policy rates, continue with an accommodative policy stance and ensure adequate liquidity in the system – all in an effort to stimulate growth. While it will keep one eye on inflation levels on the back of rising global commodity prices, it currently will focus on supporting economic growth," Ekambaram said.

According to Sandeep Bagla, CEO of TRUST AMC, "It is expected to be a no change policy, with continued economy friendly soft interest rate bias." The RBI annual report released last week has already made it clear that "the conduct of monetary policy in 2021-22, would be guided by evolving macroeconomic conditions, with a bias to remain supportive of growth till it gains traction on a durable basis while ensuring inflation remains within the target." The Reserve Bank, the report added, would ensure that system-level liquidity remains comfortable during 2021-22 in alignment with the stance of monetary policy, and monetary transmission continues unimpeded while maintaining financial stability.

In the assessment of the RBI, the evolving CPI inflation trajectory is likely to be subjected to both upside and downside pressures. The food inflation path will critically depend on the temporal and spatial progress of the south-west monsoon in 2021.

The government has retained the inflation target at 4 per cent with the lower and the upper tolerance band of 2 per cent and 6 per cent, respectively, for the next five years (April 2021 - March 2026).

Retail inflation, based on Consumer Price Index (CPI), slipped to a three-month low of 4.29 per cent in April mainly on account of easing of prices of kitchen items like vegetables and cereals. The RBI mainly factors in the CPI while arriving at its monetary policy.

As per the RBI annual report, supply-demand imbalances may continue to exert pressure on food items like pulses and edible oils, prices of cereals may soften with bumper foodgrains production in 2020-21."

12:30 PM

Yamaha cuts prices of two FZ-25 bikes

Yamaha Motor India has announced a revision in the ex-showroom prices of two bikes in the FZ-25 series. “Our team has managed to bring down the input costs for the FZ-25 series and would like to pass on the benefit to customers,” Yamaha Motor India said in a statement. The revised prices are ₹1,34,800 (ex-showroom, Delhi) for FZ-25 and ₹1,39,300 for FZS-25.

 

12:00 PM

Urban Company raises USD 255 mn, valuation crosses USD 2.1 bn

The pandemic isn't dithering investors in the home services space.

PTI reports: "Home services marketplace Urban Company on Wednesday said it has raised USD 255 million (about Rs 1,857 crore) in funding led by Prosus Ventures, Dragoneer and Wellington Management.

The series F round - which also saw participation from Vy Capital, Tiger Global and Steadview - takes Urban Company's valuation to USD 2.1 billion.

The latest round includes a primary capital infusion of USD 188 million and a secondary sale of approximately USD 67 million by select angels and early investors, Urban Company CEO and co-founder Abhiraj Singh Bhal told PTI.

He added that Urban Company has raised about USD 330 million in primary capital till date.

Bhal said the funds will be used towards innovation, training, product development, enhanced quality control and safety measures for both partners and consumers.

The company also aims to increase its geographic footprint by entering the top 100 cities in India by 2022 and further expanding into international markets.

"With this funding, we plan to rapidly scale our business while continuing to invest further in the safety of our consumers and service partners, training of partners and product development...We will continue to penetrate existing markets while venturing into new overseas geographies,” Bhal said.

Currently, Urban Company has more than 35,000 service partners across 35 cities in India, the UAE, Singapore, Australia and the Kingdom of Saudi Arabia. The marketplace offers a variety of home services to consumers across categories like beauty and personal care, cleaning services, plumbing, carpentry and appliance repairs.

Bhal said the company has also been focussed on upskilling and training its service partners. The number of partners is set to grow in line with its expansion into more cities.

Talking about the impact of pandemic on business, Bhal said while there was significant impact initially but the situation has changed now.

"After the lockdown was lifted last year, we saw momentum returning and double to pre-COVID levels. We expect strong growth momentum to continue as more people use our services while staying safe within their homes," he added.

Bhal noted that the company has undertaken a number of steps to ensure the safety of its partners, including taking care of their vaccination and providing safety gear.

He added that over 50 per cent of its partners have already been vaccinated, and by June-end, this number is expected to go up to 75-80 per cent.

Consumers can see the overall vaccination rate along with the vaccination status of the partner assigned when they book a service."

11:30 AM

ITC slides as second wave curbs likely to hit cigarette business

The second wave hits hard the FMCG behemoth.

Reuters reports: "Shares of cigarettes-to-hotel conglomerate ITC Ltd fell nearly 3% on Wednesday, after the company warned that lockdown restrictions could cause disruptions in its supply chain in the near future.

For fast-moving consumer goods companies (FMCG) such as ITC, selling everything from instant foods, snacks, groceries to cigarettes, supply chain is a key part of operations, allowing them to hawk their wares across the country. A hit to the supply chain would possibly dent volumes and sales.

ITC's warning on Tuesday came as its money-making cigarette business barely staged a recovery from last year's nationwide lockdown, with March quarter revenue rising 14% to 58.50 billion rupees ($799.10 million).

Cigarette volumes were slightly short of pre-COVID-19 levels towards the end of the year, according to analysts at Antique Stock Broking.

"ITC's cigarette division posted a strong outperformance versus peers during the year indicating market share gains. However, fresh restrictions in urban and rural markets may delay cigarette volume recovery going ahead."

A record surge in coronavirus infections in April and May drove many Indian states to reintroduce limited lockdowns.

ITC reported 1% drop in March quarter profit due to tax expenses, while revenue jumped 24%.

The owner of several brands, including Sunfeast, Savlon and Aashirvaad, said its overall business saw strong recovery in discretionary and out of home products.

Analysts at Prabhudas Lilladher, however, said the lockdowns were temporary hiccups and expect a smart pickup post the first quarter.

ITC shares, which have gained 3% so far this year as of last close, were down 2% at 211 rupees as on 0542 GMT."

11:00 AM

Future of cryptocurrency in India continues to hang in the balance

The Reserve Bank of India (RBI) on May 31 asked banks not to cite its 2018 order as a reason to deny banking services to customers who dealt in cryptocurrencies. It stated that its 2018 order was set aside by the Supreme Court in March this year and that it would be inappropriate for banks to cite the order any longer.

However, the central bank asked banks to continue other due diligence procedures on cryptocurrency traders under rules linked to anti-money laundering and prevention of terrorism.

 

10:30 AM

Rupee falls 27 paise to 73.17 against U.S. dollar in early trade

The Indian rupee slumped 27 paise to 73.17 against the U.S. dollar in opening trade on Wednesday tracking weak domestic equities and strong American currency.

At the interbank foreign exchange, the domestic unit opened lower at 73.13 against the dollar, and lost further ground and touched 73.17, registering a fall of 27 paise over its previous close.

On Tuesday, the rupee had settled at 72.90 against the U.S. dollar.

“The course ahead for the currency could remain uneven amid uncertainties around the development of the pandemic situation and the economic recovery,” Reliance Securities said in a research note.

 

10:00 AM

Sensex tanks over 300 pts in early trade; Nifty tests 15,500

A poor start to the day for stocks.

PTI reports: "Equity benchmark Sensex tumbled over 300 points in early trade on Wednesday, tracking losses in index-heavyweights HDFC, Infosys and ICICI Bank amid a largely negative trend in global markets.

The 30-share BSE index was trading 309.54 points or 0.60 per cent lower at 51,625.34 in initial deals, and the broader NSE Nifty fell 70.45 points or 0.45 per cent to 15,504.40.

Tech Mahindra was the top loser in the Sensex pack, shedding over 3 per cent, followed by ITC, HDFC, HCL Tech, Kotak Bank, Infosys and ICICI Bank.

On the other hand, NTPC, PowerGrid, Sun Pharma, Maruti and Reliance Industries were among the gainers.

In the previous session, Sensex ended 2.56 points lower at 51,934.88, while the broader NSE Nifty slipped 7.95 points or 0.05 per cent to 15,574.85.

Foreign institutional investors (FIIs) were net sellers in the capital market as they offloaded shares worth 449.86 crore on Tuesday, as per provisional exchange data.

The steady decline in fresh COVID cases and rising recovery rates indicate that India is succeeding in bending the pandemic's curve, said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

"With no short-term risks to the market, consolidation is likely in the near term with a stock-specific action in response to the news. Since markets are over-bought and over-valued investors should exercise caution even when the markets are exhibiting surprising resilience," he added.

Elsewhere in Asia, bourses in Shanghai, Hong Kong and Seoul were trading in the negative territory in mid-session deals, while Tokyo was trading in the positive territory.

Equities on Wall Street closed with losses in the overnight session.

International oil benchmark Brent crude was trading 0.24 per cent higher at USD 70.42 per barrel."

9:30 AM

Auto sales decline from April levels

Amid multiple State-wise lockdowns and disruptions to production, automakers posted muted wholesales of vehicles last month.

Maruti Suzuki India, the country’s largest carmaker, said it sold 32,903 passenger vehicles (PVs) in the domestic market, compared with 1.35 lakh in April 2021, and 13,702 in May 2020. “The company shut production from May 1 through May 16, so as to divert oxygen from industrial use for medical purposes. In May 2020, the company witnessed production disruption owing to lockdowns. Since neither of the two months had normal production, the sales volume of May 2021 are not comparable with May 2020,” the company said.

Hyundai Motor India’s domestic sales stood at 25,001 last month. It had dispatched 6,883 in May 2020, and 49,002 units in April 2021.

 


Our code of editorial values

This article is closed for comments.
Please Email the Editor

Printable version | Jul 3, 2022 1:42:42 pm | https://www.thehindu.com/business/businesslive-2-june-2021/article34704464.ece