The Sensex and the Nifty have opened the day on a positive note with modest gains ahead of the festive season.
The Principal Economic Advisor to the government has weighed in favor of an immediate demand push to the economy.
Join us as we follow the top business news through the day.
The rise of tech stocks
Sensex ends 127 points higher; Nifty reclaims 11,900-level
Stocks didn't have much momentum going for them even though they ended the day with gains.
PTI reports: "Equity benchmark Sensex ended 127 points higher on Friday, primarily led by gains in auto, metal and power sector stocks amid positive cues from global markets.
After rising 252.63 points during the day, the 30-share Sensex settled 127.01 points or 0.31 per cent higher at 40,685.50, and the broader NSE Nifty rose 33.90 points or 0.28 per cent to end 11,930.35.
On the Sensex, Maruti Suzuki was the top gainer, rallying around 4 per cent, followed by M&M, Tata Steel, PowerGrid, Bajaj Auto and NTPC.
On the other hand, UltraTech Cement, HCL Tech, HUL and Bajaj Finserv were among the laggards.
According to traders, domestic equities ended with gains tracking largely positive cues from global markets.
Bourses in Hong Kong, Tokyo and Seoul closed up to 0.54 per cent higher, while Shanghai finished in the red.
Stock exchanges in Europe were also trading in the green in early deals.
Meanwhile, international oil benchmark Brent crude was trading 0.38 per cent higher at USD 42.62 per barrel.
In the forex market, the rupee depreciated 7 paise to close at 73.61 against the US dollar."
Covaxin Phase III trial from November
Vaccine maker Bharat Biotech plans to conduct Phase III clinical trial for COVID-19 vaccine candidate Covaxin from November.
The company, which is developing the vaccine in collaboration with the Indian Council of Medical Research (ICMR), intends to conduct the trial on 26,000 volunteers across 25 cities in the country, sources said.
This move follows the company getting Drugs Controller General of India (DCGI) approval to conduct the Phase III clinical trial for Covaxin.
At its meeting on October 20 a Subject Expert Committee (SEC) of the DCGI, giving the approval, said “after detailed deliberation and based on available evidences, the Committee [has] recommended for grant of permission to conduct [of] Phase III clinical trial,” subject to certain conditions.
Centre steps in to check onion prices, to offer buffer stock to States and UTs
In a bid to cool down retail onion prices that are ruling over ₹75 per kg in some places, the Centre has stepped up efforts and asked States and Union Territories to take the kitchen staple from the central buffer stock for retail intervention.
As per data maintained by the Consumer Affairs Ministry, retail onion prices in Mumbai were ruling at ₹86/kg, Chennai at ₹83/kg, Kolkata at ₹70/kg and Delhi at ₹55/kg on October 22.
“We have stepped up efforts to check the price rise. We have requested State governments and Union Territories to take onion from our buffer stock for retail intervention,” Consumer Affairs Secretary Leena Nandan told PTI .
Assam, Andhra Pradesh, Bihar, Chandigarh, Haryana, Telangana and Tamil Nadu have shown interest and taking a total of 8,000 tonnes of onion from the buffer, she said, adding that the Ministry is awaiting response from other States.
Pandemic likely to delay penetration of electric vehicles: Ind-Ra
Yet another long-term consequence of the pandemic-induced lockdowns.
PTI reports: "The coronavirus pandemic is expected to delay the penetration of electric vehicles in India, as low affordability and the government’s priority on reviving existing conventional automobile industry shift the focus away from EVs in the interim, according to rating firm Ind-Ra.
The passenger vehicles (PVs) segment of e-mobility will face a double whammy, as consumers would be wary to buy a costlier EV than an internal combustion engine (ICE) vehicle, while original equipment manufacturers (OEMs) would refrain from incurring high Capex, India Ratings and Research (Ind-Ra) said in a statement.
“Low affordability and the government’s priorities on reviving the otherwise suffering auto industry could shift the focus away from EVs in the interim,” it added.
Reduced affordability and lower economic activities due to the pandemic could result in the automobile industry recording a decline in sales of over 20 per cent year-on-year for the second consecutive year in FY21, the agency said.
This is likely to impact the sales of EVs, which are costlier than an ICE vehicle. Two-wheelers have benefitted from rural demand and shift to personal mobility, and the segment could be the least impacted with regard to electrification due to better pricing and model choices, it noted.
“However, three-wheelers and buses, which have seen higher electrification in 2019, are among the most affected segments in FY21 and hence could see a delay in electrification,” Ind-Ra said.
Growth in buses may take a back seat as orders for city buses are largely from state transport undertakings, and state governments are already grappling with a falling GDP, it added.
On the other hand, two-wheelers (2W), especially scooters, could see an upside due to the lower pricing delta between an EV and ICE and several models available to consumers. Though the EV penetration is likely to be faster in scooters, buses and three-wheelers (3W) in the medium term (defined as three to five years), PVs may take longer, the agency said.
“Ind-Ra also believes that underlying challenges in the adoption of EVs such as higher battery cost and reliance on imports would prevail in the medium term, and robust government policies would remain key for the development of EVs in the country,” it added.
In terms of investments by automotive firms on EVs, Ind-Ra said, “Amid the current slowdown, OEMs are unlikely to incur aggressive Capex over the electric platform. Segment-wise, PVs and CVs have seen e-vehicle launches by conventional OEMs; and hence are unlikely to see material progress in FY21-FY22“.
Stating that government measures remain key, it said that while the government has laid out Rs, 10,000 crore outlay over FY20-22 for faster EV adoption under the FAME-II policy, capping of subsidies at a specific vehicle price, which is Rs 15 lakh for an e-PV, limits the scope of EVs in the premium car segment.
In case of e-two-wheelers, the FAME-II scheme has a stricter requirement for speed, range and energy, which excludes the majority of the models present in the Indian markets, Ind-Ra said.
“Moreover, the majority of e-2W and 2-3W run on the lead-acid battery while the subsidies are limited to EVs using lithium-ion battery. Though e-2Ws are gradually transitioning to lithium-ion batteries, e-3Ws may take longer due to cost viability,” it added.
Ind-Ra believes that robust government support is imperative, as could be seen globally, for achieving the target of 30 per cent electrification by 2030.
“For example, China (over 50 per cent of the global electric fleet) witnessed a subsidy programme of over USD 60 billion during 2009-2019. The Indian subsidy programme of Rs 100 billion (equivalent to USD 1.4 billion) is much smaller than China’s,” it said.
Moreover, the incentives are capped at 20 per cent of the vehicle cost in India compared to 30-50 per cent in the initial years in China, and 35 per cent in the United Kingdom. Thus, it becomes essential for the government to lay down more comprehensive policies, enhance incentives and ensure robust implementation of existing policies to increase EV adoption, it said."
Maharashtra invites Tesla to invest in state; discussions held
Maharashtra is looking for potential investment from the US electric car major Tesla in the state and has held discussions with the company, weeks after Tesla revealed its plans to enter the Indian market. State Tourism Minister Aaditya Thackeray said in a tweet on Thursday that Industries Minister Subhash Desai held a video call, in which he also participated, with the Tesla team, inviting the electric car maker to Maharashtra.
Maharashtra is already home to a host of domestic and foreign automobile manufacturers with Chakan Industrial belt near Pune a major automobile hub in the state.
“This evening I had the opportunity to participate in a video call by Industries Minister @Subhash_Desai ji with @Tesla team to invite them to Maharashtra. I was present not because of just the investment but my firm belief in electric mobility & sustainability @elonmusk,” Mr. Thackeray said in a tweet.
Federal Bank expects spurt in NPAs in next two quarters if economic conditions do not improve
Could Federal Bank be the canary in the coal mine for India's banking sector?
PTI reports: "Federal Bank has said it fears a higher-than-normal accretion of non-performing assets (NPA) over the next two quarters from loans to small businesses and retail borrowers if economic conditions do not improve.
As against the usual rate of Rs 300-350 crore in fresh slippages per quarter, the number may go higher by over 30 per cent if the economy continues to be challenging, its managing director and chief executive Shyam Srinivasan told PTI.
He said the Rs 300 crore slippage number is excluding the corporate advances and made it clear that there is no large chunk corporate loan which it feels may slip into NPA.
The bank had reported slippages at Rs 3 crore for the September quarter but disclosed that the same number would have been Rs 237 crore if not for the mandates on stress treatment. It had also set aside money as provisions as per the higher number.
Speaking about the rise in slippages it expects, Srinivasan explained that many accounts in the retail, agricultural sector and small businesses may not be able to meet the criteria laid down under the one-time restructuring framework announced by the Reserve Bank of India.
He said the bank will be proactive in recognising such slippages and will set aside money as credit provisions as and when the assets slip into NPA, which may lead to an increase in credit costs.
The lender had decided to set aside additional provisions for COVID-related stress in the September quarter, which was among the reasons that dragged its net profit down by 26 per cent despite the operational profit being at an all-time high.
The bank is expecting to close FY21 with credit growth of up to 9 per cent, he said, adding that it will accelerate to the normal levels of between 15-18 per cent from FY22 onward.
Growth in corporate credit is low in the current fiscal, but the same in retail and small business loans is higher, he said.
The bank does not fear any impact from the dip in remittances by the diaspora, Srinivasan said, pointing out that it has been increasing its market share in such flows over the last few years and its share now stands at 17.5 per cent.
The growth in both the non-resident Indians and domestic deposits has been handsome in the September quarter and the share of the low-cost current and saving account deposits has crossed 30 per cent, he added.
The bank is targeting to launch its credit card offering by 2021, Srinivasan said."
Aditya Birla Fashion to sell 7.8% stake to Flipkart Group for ₹1,500 crore
Aditya Birla Fashion and Retail Ltd (ABFRL) on Friday said its board has approved plans to raise ₹1,500 crore by issuing 7.8% stake on a preferential basis to Walmart-owned Flipkart Group.
“Aditya Birla Fashion and Retail has today approved the raising of ₹1,500 crore by way of preferential issue to Flipkart Group. The equity capital will be raised at ₹205 per share. With this infusion, Flipkart Group will own 7.8% equity stake in ABFRL on a fully diluted basis. The promoter and promoter group companies of ABFRL will hold about 55.13% upon completion of the issuance,” ABFRL said in a regulatory filing.
Aditya Birla Group Chairman Kumar Mangalam Birla said this partnership is an emphatic endorsement of the growth potential of India.
Crompton Greaves shares jump 15% after Q2 earnings
A monster rally in the shares of the electricals firm on positive earnings news.
PTI reports: "Shares of Crompton Greaves Consumer Electricals Ltd surged nearly 15 per cent on Friday after the company reported a 27.77 per cent increase in consolidated net profit for the quarter ended September 2020.
The stock jumped 14.66 per cent to Rs 328.45 -- its 52-week high -- on the BSE.
At the NSE, it gained 14.79 per cent to its one year high of Rs 329.
Crompton Greaves Consumer Electricals Ltd on Thursday reported a 27.77 per cent increase in consolidated net profit at Rs 141.68 crore for the quarter ended September 2020.
The company had posted a net profit of Rs 110.88 crore for the July-September period a year ago, Crompton Greaves Consumer Electricals Ltd (CGCEL) said in a BSE filing.
Revenue from operations climbed 12.77 per cent to Rs 1,213.19 crore during the quarter under review, as against Rs 1,075.79 crore in the same period previous fiscal.
Total expenses were at Rs 1,040.73 crore as against Rs 961.60 crore earlier, up 8.22 per cent."
WhatsApp to offer in-app purchases, cloud hosting services
Facebook Inc on Thursday said its WhatsApp messaging app would start to offer in-app purchases and hosting services, as it moves to boost revenue from the app while knitting together e-commerce infrastructure across the company.
The world's biggest social media company has been trying to boost sales from higher-growth units such as Instagram and WhatsApp, which it bought in 2014 for $19 billion but has been slow to monetize.
With the changes, WhatsApp will enable businesses sell products inside WhatsApp via Facebook Shops, an online store launched in May to offer a unified shopping experience across Facebook's apps.
The company will also enter the cloud computing sector, offering firms who use its customer service messaging tools the ability to store those messages on Facebook servers.
A snapshot of US unemployment
Rupee slips 11 paise to 73.65 against US dollar in early trade
The gains in stocks wasn't enough to help the rupee this morning.
PTI reports: "The rupee slipped 11 paise to 73.65 against the US dollar in opening trade on Friday, tracking stronger American currency overseas.
At the interbank forex market, the domestic unit opened weak at 73.62 and dropped further to 73.65 against US dollar in early deals, showing a fall of 11 paise over its previous close.
On Thursday, the rupee closed 4 paise up at 73.54 against the US currency.
A strong US dollar is weighing on the rupee despite positive domestic equities trend, forex traders said.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.11 per cent to 93.05.
BSE index Sensex was trading 159.95 points higher at 40,718.44, and the broader NSE Nifty advanced 51.05 points to 11,947.50.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 1,118.46 crore on Thursday, according to exchange data.
Meanwhile, Brent crude futures, the global oil benchmark, increased 0.31 per cent to USD 42.59 per barrel."
Time is ripe for a demand push: Sanjeev Sanyal
In a fresh signal that the government could unveil another stimulus package soon, the Principal Economic Advisor in the Finance Ministry on Thursday said that the time was right for a generic push to spur demand in the economy.
The official’s remarks come on the back of Finance Minister Nirmala Sitharaman’s statement on Tuesday that she had not shut the door on another relief and stimulus package to revive the economy, which had shrunk an estimated 23.9% in the April-June quarter.
“The general problem is that there has been a shock to the system and we need to rebuild demand,” Principal Economic Advisor Sanjeev Sanyal said at the CII Financial Markets summit. “Some of it is coming back naturally, but not in every sector such as hospitality.” Mr. Sanyal stressed that the government had been ‘reticent to provide a large demand stimulus at the time of the lockdown as there was no point in pushing the accelerator with one foot on the brake.’
Indian shares rise as financials gain, blue-chip earnings in focus
A good start to the last day of trading this week before the festive season kicks in.
Reuters reports: "Indian shares rose on Friday, driven by gains in banks and conglomerate Reliance Industries, with investors focused on U.S. stimulus talks and earnings reports from domestic blue-chip companies due later in the day.
The NSE Nifty 50 index rose 0.5% to 11,953.7 by 0444 GMT, while the benchmark S&P BSE Sensex was up 0.44% at 40,726.46. Both the indexes were set for weekly gains of more than 1% each.
Asian peers were little changed as the final debate between U.S. President Donald Trump and Democratic challenger Joe Biden offered little to impress investors.
“Markets are going to be on the sidelines until the U.S. elections are over, since no one really knows what the outcome is going to be, and progress in stimulus there may depend on the outcome,” said Umesh Mehta, head of research at Samco Securities in Mumbai.
“We may see marginal gains in domestic markets in the absence of any major negative news.”
In Mumbai, HDFC Bank Ltd and ICICI Bank Ltd rose 1.2% and 1.8%, respectively, while Reliance Industries Ltd, India's largest company, gained 1.3%.
Investors were awaiting earnings reports from Nifty components Nestle India Ltd, Tech Mahindra Ltd and JSW Steel Ltd.
Corporate results this week, dominated by consumer goods firms, have been a mixed bag, although most expected a rise in demand going forward.
Credit card company SBI Cards and Payment Services Ltd tumbled 10% to a ten-week low after reporting a lower profit and a sharp drop in asset quality in the September quarter.
The Reserve Bank of India is slated to release the minutes of the October monetary policy meeting later in the day, which markets will be watching for further clues on the central bank's view of the economy and also the stances of new committee members."
‘Smartphone market hits record 50mn units in Q3’
The smartphone segment in India rebounded after the lockdown to touch an all-time high of 50 million units in the September quarter, with Chinese companies collectively holding 76% market share, according to research firm Canalys.
“Smartphone shipments in India recovered in Q3 2020, posting 8% growth to 50 million units [from 46.2 million units in the year earlier period]. This is an all-time record for smartphone shipments in a single quarter in India,” Canalys said.
Xiaomi remained the market leader with 26.1% share, shipping 13.1 million units. Samsung reclaimed the second place from Vivo with 10.2 million units (20.4% share).
Vivo had 17.6% share (8.8 million units), while Realme had 17.4% share (8.7 million units) and Oppo had 12.1% share (6.1 million units).
