The benchmark stock indices are witnessing a significant correction this morning, with losses of close to 1%
Eyes are now set on the month-end GDP figure release that is expected to show the India economy contracted by over 20% in Q1.
Join us as we follow the top business news through the day.
When the US dollar acts funny
Sensex tanks 394 points on global selloff; Nifty below 11,350
What seems like a normal correction hit stocks today.
PTI reports: "Domestic equity benchmark Sensex plunged 394 points on Thursday, tracking a massive selloff in global markets after US Fed’s gloomy economic outlook spooked investors across the world.
The BSE Sensex ended 394.40 points or 1.02 per cent lower at 38,220.39. The broader NSE Nifty slumped 96.20 points or 0.84 per cent to 11,312.20.
HDFC was the top loser in the Sensex pack, shedding over 2 per cent, followed by Axis Bank, Bharti Airtel, M&M, Reliance Industries, ICICI Bank, IndusInd Bank and Titan.
On the other hand, NTPC, ONGC, PowerGrid and Tata Steel were the gainers.
The Indian market opened on a negative note following subdued Asian markets which were impacted by the US Federal Reserve’s cautious view of the economy, US-China tensions and new clusters of coronavirus infections, said Narendra Solanki, Head- Equity Research (Fundamental), Anand Rathi.
The Fed’s minutes showed again that policymakers are finding it difficult to forecast the path of the economy, which will depend greatly on what happens with the coronavirus.
During the afternoon session markets briefly attempted to bounce back from day’s lows but the strength failed to sustain as profit booking by traders was seen, he said.
“Traders also remained concerned with the World Bank’s report stating that it is likely to project a steeper contraction in India’s economy than the 3.2 per cent it had forecast for the current financial year,” he added.
Bourses in Shanghai, Hong Kong, Tokyo and Seoul ended with heavy losses.
Stock exchanges in Europe also witnessed robust selling in early sessions.
Global oil benchmark Brent crude was trading 1.06 per cent lower at USD 44.89 per barrel.
In the forex market, the rupee settled at 75.02 against the US dollar, down 20 paise over its previous close."
Oil falls on caution over demand recovery
Demand concerns continue to worry the oil market.
Reuters reports: "Oil prices fell on Thursday on demand concerns driven by cautious views from OPEC+ producers and the U.S. Federal Reserve regarding economic recovery from the coronavirus pandemic.
Brent crude was down 48 cents, or 1%, at $44.89 a barrel at 0933 GMT, and West Texas Intermediate (WTI) U.S. oil fell 34 cents, or 0.8%, at $42.59 a barrel.
“The surge in COVID-19 infections over the summer has muted the recovery and anyone still believing in a V-shaped recovery needs to do some reassessment,” said Hussein Sayed, chief market strategist at FXTM.
A firmer U.S. dollar also put pressure on oil prices, analysts said, leaving them stuck in their narrow trading range of recent weeks.
Oil prices have been rangebound since mid-June, with Brent trading between $40 and $46 per barrel, and WTI between $37 and $43.
The Organization of the Petroleum Exporting Countries and its allies, known an OPEC+, said on Wednesday that the pace of oil market recovery appeared to be slower than anticipated with growing risks of a prolonged second wave of the pandemic.
The group pressed oil nations pumping above output targets to cut more in August-September due to concerns about the strength of recovery in demand.
Prices were also pressured after several U.S. Fed members said additional monetary policy easing may be needed because a rebound in employment was already slowing.
“All roads in global and regional economies lead to the containment of the virus and the end of these roads is not in sight yet,” said oil broker PVM's Tamas Varga.
The U.S. Energy Information Administration said on Wednesday that U.S. fuel demand fell by more than 2 million barrels per day (bpd) to 17.2 million bpd in terms of product supplied.
Overall fuel demand in the last four weeks is down 14% from year-ago levels. As the summer driving season comes to a close, fuel demand tends to decline.
However, stockpiles of crude in the United States fell for a fourth straight week, even as net imports rose, the EIA said."
Rupee settles below 75/USD mark; depreciates 20 paise
The weakness in stocks has hammered the rupee.
PTI reports: "The rupee plunged 20 paise and settled below the 75 per US dollar mark on Thursday as strengthening American currency and losses in domestic equities weighed on investor sentiment.
Forex traders said strong dollar, weak domestic equities and US Federal Reserve meeting minutes weighed on investor sentiment.
At the interbank forex market, the local unit settled for the day at 75.02 against the US dollar, down 20 paise over its previous close of 74.82.
During the session, the domestic unit witnessed an intra-day high of 74.93 and a low of 75.05 against the US dollar.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.31 per cent to 93.17.
“The US dollar has strengthened overnight after the release of US Federal Open Market Committee (FOMC) minutes that were less dovish than expected,” said Abhishek Goenka, Founder and CEO, IFA Global.
As per the FOMC minutes, the committee members have expressed concern over the continuing impact of COVID-19 on economic growth.
On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 398.14 points lower at 38,216.65 and the broader NSE Nifty fell 98.10 points to 11,310.30.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 459.01 crore on Wednesday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, fell 0.82 per cent to USD 45 per barrel.
Meanwhile, the number of cases around the world linked to COVID-19 has crossed 2.24 crore and in India, the number of infections topped the 28-lakh mark."
RBI releases National Strategy for Financial Education
The National Strategy for Financial Education (NSFE): 2020-2025 document released by the Reserve Bank of India (RBI) on Tuesday has recommended a ‘5 C’ approach for dissemination of financial education in the country.
These include emphasis on development of relevant content in curriculum in schools, colleges and training establishments, developing capacity among the intermediaries involved in providing financial services, leveraging on the positive effect of community-led model for financial literacy through appropriate communication strategy, and, enhancing collaboration among various stakeholders.
This NSFE for the period 2020-2025, the second one after the 2013-18 NSFE, has been prepared by the National Centre for Financial Education (NCFE) in consultation with all the Financial Sector Regulators (RBI, SEBI, IRDAI and PFRDA), DFS and other Ministries of Govt. of India and other stakeholders (DFIs, SROs, IBA, NPCI) under the aegis of the Technical Group on Financial Inclusion and Financial Literacy (TGFIFL) under the Chairmanship of Deputy Governor, RBI.
Gold rebounds as slow recovery fears resurface after Fed minutes
The safe haven asset is
Reuters reports: "Gold prices rose on Thursday following a sharp fall in the previous session as the U.S. Federal Reserve's cautious view on a recovery from the coronavirus-induced economic slump drove investors away from riskier assets.
Spot gold was up 0.6% at $1,941.24 per ounce by 0700 GMT, after declining more than 3.5% to a near one-week low on Wednesday. U.S. gold futures fell 1.1% to $1,948.10. “Gold is stable after it got hammered overnight. The main fundamentals behind gold have not changed,” said Edward Meir, an analyst at ED&F Man Capital Markets. “Stimulus is still coming in and it's very pre-mature to say we're recovering globally and should see higher rates and stronger dollar; we are many months away from that.”
The Fed on Wednesday warned the economic downturn triggered by the COVID-19 pandemic faces a highly uncertain path and reiterated the need for additional fiscal stimulus. The dovish remarks from the Fed on the U.S. economy triggered a retreat in U.S. stocks and across Asian markets.
Central banks, including the Fed, have rolled out massive stimulus measures and cut interest rates near zero to combat the economic toll from the virus outbreak, helping gold rise more than 28% so far this year as it is considered a hedge against inflation and currency debasement. Keeping a check on gold's advance, the dollar index rebounded and U.S. Treasury yields rose after the Fed minutes showed policymakers expressed little support to implement yield curve control to keep cost of borrowing low.
“Gold remains sensitive to movements in the U.S. dollar and U.S. monetary policy expectations. The market proved quite disappointed by last night's Federal Open Market Committee minutes,” said IG Markets analyst Kyle Rodda. Elsewhere, silver rose 1.1% to $27 per ounce, platinum climbed 0.3% to $934.89, and palladium gained 0.7% to $2,171.77."
Netmeds to add delivery to RIL’s health offering, say analysts
The second acquisition by Reliance Industries Ltd. in the e-pharmacy space via a majority stake in Netmeds for ₹620 crore will complement its digital consultation and diagnostic tests offering, analysts said on Wednesday.
Netmeds operates an online pharmacy in India for prescription products, OTC, and health and wellness products. Morgan Stanley said this was the company’s “second acquisition in the e-pharmacy space, an area it has highlighted would be of focus as it builds its digital-plus e-commerce ecosystem.” Over the past three years, RIL has announced $3.1 billion in acquisitions with 13% in retail, 80% in telecom, media and technology, and 6% in energy.
Netmeds is present in 670 cities and towns and had about $1 million in revenue in FY18, it said. Its app also offers doctor consultation services.
Banks set to restructure up to ₹8.4 lakh cr. of loans: Ind-Ra
Banks are likely to restructure up to ₹8.4 lakh crore of loans, or 7.7% of the overall system’s credit, under the newly announced recast package, a domestic ratings agency said on Wednesday.
More than 60% of this ₹8.4 lakh crore was likely to slip into the non-performing assets (NPAs) category if not for the recast move, and the restructuring would help banks’ bottomlines as the funds needed to be set aside, as provisions, would be lower, India Ratings and Research said. Earlier this month, the RBI had announced a recast package which focussed on a case-by-case approach for restructuring rather than a blanket or sectoral approach. The central bank had also allowed small-value, non-corporate loans to be recast.
Unlike the earlier experience post the global financial crisis — when about 90% of the restructuring happened in corporate loans — the non-corporate segment, which includes small businesses, agricultural loans and retail lending, will account for a higher share this time, the agency said.
Stocks are re-rating at record levels
Ruchi Soya shares plunge 5% after Q1 earnings
The controversial stock plunged after results but has recovered since.
PTI reports: "Shares of Ruchi Soya on Thursday plunged 5 per cent after the company reported a 13 per cent decline in its net profit for the first quarter ended June 30.
The stock declined 4.99 per cent to Rs 683.90 on the BSE.
It tanked 4.99 per cent to Rs 683.25 on the NSE.
Patanjali Group firm Ruchi Soya on Wednesday reported a 13 per cent decline in its net profit to Rs 12.25 crore for the first quarter ended June 30, and announced the resignation of Acharya Balkrishna as managing director of the company.
Its net profit stood at Rs 14.01 crore in the year-ago period.
The total income fell to Rs 3,057.15 crore during the first quarter this fiscal, from Rs 3,125.65 crore in the corresponding period previous year.
“Acharya Balkrishna has resigned from the office of Managing Director of the company with effect from August 18, 2020, due to his pre-occupation. The Board of Directors has accepted his resignation,” the filing said.
Balkrishna has been designated as Non-Executive Non-Independent Director, liable to retire by rotation with effect from August 19, 2020, subject to approval of members of the company.
He will continue to be the Chairman of the Board.
Ram Bharat, whole-time director of the company, has been designated as Managing Director of the company with effect from August 19, 2020, till December."
Harley-Davidson may exit India
Barely a decade after its entry , Harley-Davidson Inc. is looking to wind down its assembly operations in the country as a result of weak sales and a lack of visibility for future demand, industry executives said.
The iconic U.S. motorcycle maker has sent out feelers to a few automakers through consultants for a possible outsourcing arrangement using its leased assembly facility at Bawal in Haryana, a person privy to the preliminary talks said.
The decision is in keeping with its latest ‘rewire’ strategy to focus on about 50 markets, mainly in North America, Europe and parts of Asia Pacific that represent the “majority of the company’s volume and growth potential”. In a statement accompanying its second-quarter results last month, Harley- Davidson said: “The company is evaluating plans to exit international markets, where volumes and profitability do not support continued investment in line with the future strategy.”
India faces protracted slowdown as virus clouds rural revival
Gloomy prospects may await the economy even as greenshoots begin to show.
Reuters reports: "India is staring at a protracted slowdown as coronavirus cases reach its countryside, with signs of recovery in the rural economy hailed by Prime Minister Narendra Modi “at best a mitigating factor”, government officials and analysts said.
The world's No.5 economy reports first-quarter GDP data on Aug. 31 and, according to a Reuters poll, it is likely to have contracted 20% over April-June. It is forecast to shrink 5.1% in the year to March 2021, the weakest since 1979.
Nearly half of India's 1.38 billion population rely on agriculture to survive, with the sector accounting for 15% of its economic output.
Modi has been citing higher fertiliser demand and sowing of monsoon crops, both key signs of rural activity, to show there are “green shoots” in the economy.
But four government officials said the uptick in activity may not be as large as believed given a spike in virus cases in rural areas that were initially isolated from the pandemic.
“The economic situation has in fact worsened since April and May, and we are likely moving towards a longer economic slowdown than earlier expected,” a finance ministry official said.
The official pointed to sluggish consumer demand and a slowdown in rural lending as causes for concern.
“The situation on the economy front is very serious and the government's hands are tied on the fiscal front,” a government adviser with direct knowledge of India's budget plans said.
Both declined to be named as they were not authorised to speak to media. A ministry spokesman declined to comment."
MSMEs facing existential crisis says KASSIA
The small scale industry, which is vulnerable to shocks, has the least capacity to absorb them, and the pandemic has caused irreparable damage in a large number of cases, said KASSIA (Karnataka Small Scale Industries Association).
“It is our rough estimate that about 20% may never be able to restart as a result of the disruptions caused by the pandemic,” said K. Arasappa, president, KASSIA.
He added that this is mainly due to the compounding of the already existent economic slowdown by the COVID-19 pandemic which has uprooted workers and production systems in factories.
Cosmo Films Q1 net profit up 69% to Rs 47 crore
After Uflex, another packaging company has reported benefits from the pandemic.
PTI reports: "Cosmo Films Ltd on Wednesday reported a 69.15 per cent increase in consolidated net profit at Rs 46.99 crore for the first quarter ended June, 2020, helped by improved operating margins.
The company, which manufactures speciality films for packaging, lamination, labeling and synthetic paper, had posted a consolidated net profit of Rs 27.78 crore in April-June quarter a year ago, Cosmo Films said in a BSE filing.
However, its revenue from operations declined 11.04 per cent to Rs 481.29 crore during the quarter under review as against Rs 541.02 crore in the corresponding quarter of previous fiscal.
“The company posted an EBITDA of Rs 93 crore during Q1 FY21 on the back of higher speciality sales (up by 20 per cent) and improved operating margins,” Cosmo Films said in a post earning statement.
“Pent-up demand from previous quarter and supplies opening up in phased manner led to a favourable demand supply scenario and improved margins,” it added.
The company’s total expenses in Q1 FY21 declined 17.16 per cent to Rs 420.64 crore as against Rs 507.83 crore a year ago.
In a separate filing, Cosmo Films said the company is foraying into pet care business.
“The board has given in-principle approval for company’s foray in pet care business. Pilot launch is expected by early next year,” it said.
Commenting on the development, Cosmo Films CEO Pankaj Poddar said the company is going ahead with the pilot launch in National Capital Region (NCR), investing about Rs 15 crore over the next 18 months to ascertain the viability of pet care business to launch it at a larger scale.
“The overall investment is expected to remain marginal vis-୶is size of the existing business. Pet care business has been growing in India at 22 per cent CAGR.
“With smaller families, rising income levels and limited social lives (especially post Covid), pet adoption has increased and expected to grow many folds,” Poddar said.
The business scenario is highly fragmented and there are no organized players in India offering end-to-end comprehensive solution to the customers, and Cosmo expects to fill up this void.
Pet care is a low capex business, while brand building will require some investments in the initial years, he said.
“The company believes the business will deliver high returns, high valuation and add significant value to shareholders,” Poddar added.
Shares of Cosmo Films on Wednesday closed 6.75 per cent higher at Rs 480.20 on the BSE."
Indian shares fall on doubts over economic recovery path
A significant correction witnessed in stocks at open.
PTI reports: "Indian shares tracked their global counterparts to edge lower on Thursday on rising concerns about the long and difficult path to economic recovery from the coronavirus pandemic.
The country is staring at a prolonged slowdown as the health crisis grips rural areas, according to government and analysts. Meanwhile, the U.S. Federal Reserve minutes showed policymakers remained doubtful about a swift rebound in economic growth.
The blue-chip NSE Nifty 50 index fell 0.73% to 11,325.80 by 0348 GMT and the S&P BSE Sensex slipped 0.77% to 38,320.26.
Both indexes were on track to snap three straight sessions of gains and the Nifty has risen over 2% this week.
Other Asian markets slipped and MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.24%.
Coronavirus cases continued to rise in India, reporting a record daily jump of 69,672 infections on Thursday morning, taking the total cases to 2.84 million and deaths to 53,866.
In Mumbai trading, 48 of the 50 stocks on the Nifty 50 index and nine of the 11 major sectoral indexes were trading lower.
The Nifty metal index slipped 1.35% and the Nifty realty index, which tracks real estate firms, was down 1.13%.
Bucking the trend, the Nifty pharma index was up in early trade."
Apple's stock market value tops $2 trillion
Just two years after Apple became the first publicly listed U.S. company with a $1 trillion stock market value, the iPhone maker has now topped $2 trillion.
The Cupertino, California-based company's shares briefly rose to as high as $468.65 on Wednesday, equivalent to a market capitalization of $2.004 trillion. The stock was last up 1.2% at $467.62, giving Apple a market capitalization of $1.999 trillion.
Buoyed by bets on the long-term success of the country's biggest tech names in a post-coronavirus world, Apple's shares have surged since blowout quarterly results in July that saw the iPhone maker eclipse Saudi Aramco as the world's most valuable listed company. Apple's stock is up about 57% so far in 2020.
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