Today's top business news: Stocks drop, Raghuram Rajan warns against import substitution, FIIs hike stake in Reliance Industries to 25.2%, and more

A view of the BSE building in Mumbai. File   | Photo Credit: Paul Noronha

The Nifty and the Sensex have opened the day on a weak note with marginal losses after yesterday's modest gains.

Former RBI Governor Raghuram Rajan has weighed against the government's import substitution efforts.

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

4:30 PM

Americans are now more open to the world, thanks to Trump

 

4:00 PM

Sensex snaps 4-session winning run, ends 149 points lower

An end to the Sensex's winning streak.

PTI reports: "Snapping its four-session rising streak, equity benchmark Sensex ended 149 points lower on Thursday, tracking losses in index majors Reliance Industries, Infosys and ICICI Bank amid weak cues from global markets.

The 30-share BSE index settled 148.82 points or 0.37 per cent lower at 40,558.49. The broader NSE Nifty slipped 41.20 points or 0.35 per cent to 11,896.45.

IndusInd Bank was the top laggard in the Sensex pack, shedding around 3 per cent, followed by ICICI Bank, Titan, Infosys, HDFC Bank, Nestle India, Sun Pharma and Reliance Industries.

On the other hand, NTPC, Bharti Airtel, Bajaj Finance and Axis Bank were among the gainers.

“Indian markets traded on a negative note following benign Asian and global market cues as IMF on Wednesday downgraded its forecast for Asia-Pacific region to (-) 2.2 per cent in 2020,” said Narendra Solanki, Head- Equity Research (Fundamental), Anand Rathi.

During the afternoon session, markets attempted briefly to scale back losses but failed and remained lacklustre with narrow range, he added.

On the global front, bourses in Shanghai, Tokyo and Seoul ended in the red, while Hong Kong settled on a positive note.

Stock exchanges in Europe were also trading with losses in early deals.

Meanwhile, international oil benchmark Brent crude was trading 0.22 per cent higher at USD 41.82 per barrel."

3:30 PM

FIIs hike stake in Reliance Industries to 25.2%

Foreign institutional investors (FIIs) have raised stake in billionaire Mukesh Ambani-led Reliance Industries to a record 25.2% in the quarter ended September 30, according to the company’s regulatory filing.

Reliance Industries (RIL) on Thursday filed a statement showing the shareholding pattern for the quarter ended September 30.

The statement showed FII holding 165.8 crore shares or 25.2% of the total shareholding.

In the previous quarter ended June 30, foreign investors held 163.07 crore shares of 24.72%.

In an investor note, JP Morgan said FII holding in RIL has hit a new high.

“As has been the case now for two years, FII’s stake in RIL hit new highs. Surprisingly, mutual funds’ (MF) stake declined by 25 basis points quarter-on-quarter and was the second straight quarter of stake decline,” it said.

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3:00 PM

Rupee settles 4 paise higher at 73.54 against US dollar

The currency market's fate diverged from that of stocks today.

PTI reports: "The rupee appreciated by 4 paise to close at 73.54 against the US dollar on Thursday, as sustained foreign fund inflows strengthened investor sentiment.

However, a strong dollar against major currencies overseas restricted the rupee’s gain, forex dealers said.

At the interbank forex market, the rupee opened lower at 73.77, but pared all its losses to finally settle at 73.54, registering a rise of 4 paise.

During the session, the domestic unit witnessed an intra-day high of 73.53 and a low of 73.78 against the US dollar.

It had settled at 73.58 against the greenback in the previous session on Wednesday.

Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 2,108.48 crore on Wednesday, according to exchange data.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, surged 0.13 per cent to 92.73.

On the domestic equity market front, BSE benchmark Sensex was trading 225.51 points lower at 40,481.80, and the broader NSE Nifty fell 66.20 points to 11,871.45.

Brent crude futures, the global oil benchmark, fell 0.46 per cent to USD 41.92 per barrel."

2:00 PM

CPI-IW base year revised from 2001 to 2016

Labour and Employment Minister Santosh Kumar Gangwar on Thursday released the revised consumer price index for industrial workers (CPI-IW) from the existing base year of 2001 to 2016.

Labour Secretary Apurva Chandra said the revised index would not lead to an increase in dearness allowance (DA) for government employees at the moment.

The expenditure on food had decreased from 46% to 39%, indicating greater disposable income, he added.

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1:30 PM

India's Dr Reddy's isolates data center services after cyberattack

The company's shares have recovered much of their losses after the data breach.

Reuters reports: "Indian drugmaker Dr Reddy's Laboratories Ltd said on Thursday it had isolated all its data center services as a preventive measure following a cyberattack.

Shares of the company, which has a partnership to run clinical trials of Russia's Sputnik-V COVID-19 vaccine in India, fell as much as 4.3% after local television channel ET Now first reported the news.

“We are anticipating all services to be up within 24 hours and we do not foresee any major impact on our operations due to this incident,” Dr Reddy's Chief Information Officer Mukesh Rathi said in a statement.

Dr Reddy's, India's No.2 drugmaker by market value, had shut its key plants globally due to the breach at its servers, ET Now had reported, citing sources.

Its plants in the United States, United Kingdom, Brazil, India and Russia were impacted, the report added.

Hyderabad-based Dr Reddy's also has tie-ups with global firms to sell coronavirus treatments remdesivir and favipiravir in India besides its partnership for the Sputnik-V vaccine.

Dr Reddy's did not respond to a Reuters email seeking more details."

1:00 PM

Indian economy set for a near double-digit contraction this FY

A consensus seems to be building on India's growth drop this year.

Reuters reports: "The Indian economy will suffer its deepest contraction on record this fiscal year and recent government stimulus does not go far enough to significantly boost activity depressed by the coronavirus pandemic, according to economists polled by Reuters.

With over 7.6 million coronavirus infections, India is the second worst hit country in the world after the United States and the spread shows no signs of abating.

While the government has removed most restrictions imposed on businesses to slow the spread of the virus, the Reserve Bank of India issued gloomy economic forecasts earlier this month but kept interest rates unchanged citing rising inflation.

That puts the onus on the government, which last week announced another round of fiscal stimulus to boost demand by $10 billion.

But the Oct. 13-21 poll of 55 economists showed they were more pessimistic about this fiscal year's outlook than just two months ago.

Nearly 90% of economists, 34 of 39, who responded to an additional question said the latest government stimulus was not enough to boost the economy significantly.

“While the measures introduced to push consumer spending and capital expenditure are clearly innovative within the confines of fiscal prudence, they do little to move the needle significantly in terms of the growth outlook this (fiscal) year,” said Sakshi Gupta, senior economist at HDFC Bank.

After shrinking a record 23.9% in the April-June quarter, the Indian economy was forecast to contract 10.4% and 5.0% in the third and fourth quarter, respectively and merely stabilize in the first three months of 2021.

That compares with contractions of 8.1% and 1.0%, respectively, and 3.0% growth forecast in August.

For the current fiscal year ending March 31, Asia's third-largest economy was predicted to shrink 9.8%, more than the RBI's latest 9.5% projection, and 26 of 55 economists saw a contraction of 10% or more for the year.

The poll marks the seventh consecutive downgrade to this year's outlook and if confirmed, would be the weakest annual economic performance since records began six decades ago.

Although the economy was expected to grow 9.0% and 5.7% next fiscal year and in FY 2022-23, respectively, all but one of 36 economists with a view said it would take at least a year for Indian GDP to reach pre-COVID-19 levels.

Despite higher inflation projections, economists expect the central bank to be more concerned about reviving growth than price pressures driven by supply-side disruptions and to cut interest rates next quarter.

“The problem is we are unlikely to have any immediate assessment of the extent of durable damage to the supply chains in the economy. On the demand side, job losses and salary cuts mean lower demand for longer,” said Indranil Pan, chief economist at IDFC First Bank.

“Any onset of a second wave (of coronavirus) as is being witnessed elsewhere could derail the normalization process and put the projections in jeopardy.”"

12:30 PM

Funding values ex-Tesla CIO's Tekion at $1 billion

Former Tesla chief information officer (CIO) Jay Vijayan's Automotive Retail Cloud technology venture Tekion, a cloud technology firm and provider of SaaS retail operating platform Automotive Retail Cloud, announced a Series C round of funding of $150 million at a $1 billion valuation on Wednesday.

The funding round, led by private equity firm Advent International, included the participation of Exor (the holding company of Fiat Chrysler Automobiles and Ferrari), Airbus Ventures and FM Capital (a fund that includes a large number of top 100 automobile dealers in the US as its limited partners). “We believe Tekion will be the trailblazer for enabling the modernisation of the entire consumer journey,” said Mr. Vijayan, CEO of Tekion.

“Today’s consumers receive outstanding personalised retail experiences from companies like Amazon, Apple, Google, and Disney. Why shouldn’t they expect the same in their vehicle acquisition and service needs? We believe Tekion will be the trailblazer for enabling the modernisation of the entire consumer journey. It’s time to even the playing field for the automotive retail industry.

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12:00 PM

Sentiment in real estate remains pessimistic in Jul-Sep, outlook turns positive: Survey

An update on the real estate scene.

PTI reports: "The sentiment in the real estate industry remained pessimistic during July-September due to the COVID-19 pandemic, but the outlook for the next six months has turned optimistic with signs of revival in demand, according to a survey.

Knight Frank-Ficci-NAREDCO on Thursday released their ‘Real Estate Sentiment Index Q3 2020 Survey’ of developers, banks, financial institutions and private equity players operating in the sector.

The ‘Current Sentiments Score’ improved to 40 points during the July-September period from a record low of 22 points in the previous quarter but remained in the pessimistic zone.

However, the ‘Future Sentiment Score’ is in the optimistic zone at 52 points, up from 41 in the previous quarter.

A score of above 50 signifies ‘Optimism’ in sentiments, a score of 50 means the sentiment is ‘Same’ or ‘Neutral’, while a score below 50 shows ‘Pessimism’

Knight Frank attributed the revival in sentiments to the “remarkable upturn seen in the real estate business, especially in the residential segment, in the third quarter of 2020 as a result of the unlocking process“.

About 57 per cent of the survey respondents opined that the economy is going to grow and improve in the next six months.

The funding outlook also improved compared to the previous quarter. 38 per cent of respondents opined that the scenario would be better in the coming six months, while 31 per cent felt that the current levels of credit availability would continue for the next six months."

11:30 AM

India recorded export growth of 4% in September: UNCTAD

Export growth declined in India in the third quarter of 2020 relative to the same quarter last year but picked up pace in September, according to a global trade update by the UN.

The UNCTAD’s new global trade update said that global trade recorded a 5 per cent drop in the third quarter of 2020 compared with the same period last year. This marks an improvement on the 19 per cent year-on-year plunge recorded in the second quarter, and the United Nations Conference on Trade and Development (UNCTAD) expects the frail recovery to continue in the fourth quarter.

India’s export growth saw a decline of 6.1 per cent in the third quarter of 2020 as compared to third quarter of last year. However India recorded export growth of four per cent in September, it said.

Depending on how the COVID-19 pandemic evolves in the winter months, the UN trade and development body expects the value of global trade to contract by 7 per cent to 9 per cent with respect to 2019.

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11:00 AM

Bitcoin surges to one-year high

 

10:40 AM

Rupee falls 16 paise against U.S. dollar in early trade

The rupee depreciated by 16 paise to 73.74 against the U.S. dollar in opening trade on Thursday, tracking weak domestic equities and strengthening American currency.

At the interbank forex market, the domestic unit opened sharply lower at 73.77 but recovered slightly to touch 73.74 in early deals, registering a fall of 16 paise over its previous close.

On Wednesday, the rupee had lost 9 paise to close at 73.58 against the U.S. currency.

Forex traders said strong dollar and lower domestic equities weighed on investor sentiments.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, strengthened by 0.19% to 92.78.

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10:20 AM

Economy almost at doorstep of revival: Das

India’s economy is ‘almost at the doorstep of revival’, Reserve Bank of India Governor Shaktikanta Das asserted on Wednesday, adding that banks and non-banking financial companies (NBFCs) had raised, or were in the process of raising, capital to ensure adequate credit availability for businesses once the revival took hold.

The RBI’s monetary policy and the government’s fiscal policy were working in symmetry with an expansionary focus and an accommodative as well as counter-cyclical stance, Mr. Das said. The government would have to revisit its fiscal roadmap once the worst effects of the pandemic had been contained, he added.

Stressing the need for urgent governance reforms in both public and private sector banks and NBFCs, Mr. Das said this had been a lingering concern since the 2008 global financial crisis and needed attention.

“At this juncture, reforms in governance of banks and non-banking finance companies, especially in India, are very important. People mostly mix up banking reforms with ownership reforms,” he noted.

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10:00 AM

Indian shares track broader Asia lower, data breach report drags Dr Reddy's

The Indian benchmark stock indices are down broadly in line with other Asian bourses.

Reuters reports: "Indian shares tracked broader Asia lower on Thursday, as global investors fretted over a setback to U.S. stimulus talks, while Dr.Reddy's Laboratories hit a five-week low following a report that a data breach prompted the drugmaker to shut key plants.

The NSE Nifty 50 index fell 0.44% to 11,885.50 by 0457 GMT, while the S&P BSE Sensex was down 0.4% at 40,542.74.

Investor sentiment was dented globally as talks over a U.S. coronavirus aid bill faced a setback after President Donald Trump accused Democrats of being unwilling to craft an acceptable compromise on stimulus, following reports of progress earlier in the day.

Meanwhile, a Reuters poll signalled that a recent stimulus to boost demand by $10 billion in India, one of the hardest-hit nations by the pandemic, would not be enough to significantly lift business activity, with economists forecasting the economy was set for a near double-digit contraction this fiscal year.

“From an equity markets perspective, these (fall in GDP) are to some extent discounted the bigger risk is a second wave of virus and lockdowns, which could impact Q3 and Q4 economic growth,” said Siddhartha Khemka, head of retail research at Motilal Oswal.

The Reserve Bank of India, which has already rolled out several measures to shore up liquidity in the pandemic-ravaged market, will conduct on Thursday its first-ever open market operation in state development loans.

Shares of Dr.Reddy's dropped 4.3% after ET NOW reported that the drugmaker had shut all key plants globally due to a data breach. The drugmaker's stock was the biggest loser in the Nifty 50.

The Nifty Bank Index, which gained nearly 5% so far this week, slipped 1.1% on Thursday, led by a 0.6% drop each in top lenders HDFC Bank and State Bank of India .

Reliance Industries slipped 0.9%.

Aurobindo Pharma dropped 5.4% after the drugmaker's unit got a warning from the U.S. FDA regarding its New Jersey unit."

9:30 AM

‘In order to export, you have to import’: Raghuram Rajan cautions against import substitution

Former Reserve Bank governor Raghuram Rajan on Wednesday cautioned against import substitution under the ‘Aatmanirbhar Bharat’ initiative of the government, saying the country has gone down this route earlier but could not succeed.

“If the focus (under Aatmanirbhar Bharat initiative) is on import substitution by erecting tariffs, which we have done lot of in the last few years, then I think it is a direction we have tried before and it has failed. I would caution against going in that direction,” Mr. Rajan said.

He was addressing a webinar organised by the Centre for Financial Studies at Bhavan’s SPJIMR.

Mr. Rajan said in order to export, one needs to be able to import things that go into those exports as cheaply as it can.

“China’s rise as an export power came on the back of assembly. It brought in the stuff, put it together and exported it out. In order to export, you have to import. Don’t erect huge tariffs and focus on creating right environment for production in India,” he said.

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Printable version | Dec 4, 2020 2:46:01 PM | https://www.thehindu.com/business/businesslive-22-october-2020/article32914823.ece

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