The benchmark stock indices have opened the day with modest gains after Reliance shares were boosted by the company's latest deal.
UNCTAD has come out with its estimate of the economic cost of the coronavirus-induced lockdown.
Join us as we follow the top business news through the day.
Credit markets are cracking
Sensex ends 66 points lower; Bharti Airtel crashes 8%
The benchmark indices plunged into losses after opening the day with sizeable gains.
PTI reports: "Extending its losses for the fifth straight session, equity benchmark Sensex ended 66 points lower on Wednesday, tracking weakness in Bharti Airtel, TCS and Bajaj Finance despite largely positive cues from global markets.
After opening on a positive note, the 30-share BSE index pared all intra-day gains to settle 65.66 points or 0.17 per cent down at 37,668.42.
Similarly, the NSE Nifty fell 21.80 points or 0.20 per cent to close at 11,131.85.
Bharti Airtel was the top laggard in the Sensex pack, tanking around 8 per cent, followed by Tata Steel, IndusInd Bank, NTPC, PowerGrid, ONGC and TCS.
On the other hand, Axis Bank, HUL, Infosys, Nestle India and HDFC Bank were among the gainers.
According to traders, despite positive global cues, domestic benchmarks were dragged lower by stock-specific selling in index majors.
Bourses in Shanghai, Hong Kong and Seoul ended with gains, while Tokyo closed in the red.
Stock exchanges in Europe were trading significantly higher in early deals.
Meanwhile, international oil benchmark Brent crude was trading 0.89 per cent higher at USD 42.09 per barrel.
In the forex market, the rupee inched up 1 paisa to close at 73.57 against the US dollar."
Food delivery sector showing stronger signs of recovery: Zomato
More signs of greenshoots in the economy.
PTI reports: "The food delivery segment in India has shown stronger signs of recovery with the overall sector clocking over 85 per cent of the pre-COVID gross merchandise value (GMV), Zomato Founder and CEO Deepinder Goyal said on Wednesday.
The key insight is that the food delivery sector has recovered and even grown beyond pre-COVID levels in a number of large pockets of the country, led by some of the most affluent residential areas in the country, Goyal said in a blogpost.
Delhi and Mumbai are nearing full recovery at around 95 per cent of the pre-COVID levels, he added.
Metros such as Bengaluru, Hyderabad, and Chennai are at around 80 per cent of pre-COVID sales.
Some cities such as Kolkata, Patna, Jamshedpur, Ranchi, and Siliguri have recovered completely and have exceeded pre-COVID levels, he said.
“Within most cities, the affluent parts of the city are driving this recovery,” Goyal said.
Customers are now relying on food delivery even more than usual when a city goes under a lockdown. Some cities such as Kolkata see more customers ordering online when the city is more or less shut, but restaurants are open, he added.
“With the ongoing IPL season and the subsequent festival season, we expect food delivery in both metros and smaller cities to make a full recovery soon — and resume growing over pre-COVID levels,” Goyal said."
Rupee gains marginally against US dollar
The rupee managed to recover most of its opening losses to close the day with gains.
PTI reports: "The rupee appreciated by one paisa to close at 73.57 (provisional) against the US dollar on Wednesday, as investors turned cautious amid weak domestic equities.
At the interbank forex market, the rupee opened weak at 73.59 against the greenback and moved in a close range. It finally settled 1 paisa lower at 73.57 against the American unit.
During the session, the domestic unit witnessed an intra-day high of 73.49 and a low of 73.63.
On Tuesday, the rupee depreciated 20 paise to settle at 73.58 against the US dollar.
A stronger dollar against major currencies overseas also put pressure on the domestic unit, forex dealers said.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, climbed 0.18 per cent to 94.15.
On the domestic equity market front, BSE benchmark Sensex was trading 312.99 points lower at 37,421.09, and broader NSE Nifty slipped 37.65 points to 11,116.00.
Brent crude futures, the global oil benchmark, fell 0.19 per cent to USD 41.64 per barrel.
“All this while, the pessimism over US economic recovery compared to the Europe was keeping the dollar index low. But now again the bets are rising for the dollar as there are fears of second lockdown in Europe and delay in US fiscal stimulus and will reflect on USD/INR spot.
“Going ahead we may see USD/INR spot trading above 73.75. But the spot is not breaking the support zone of 73.20/73.25 and also the resistance of 73.75. There are slew of corporate inflows lined up in coming sessions, which may cap the upside in spot...,” said Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services.
Foreign institutional investors were net sellers in the capital market as they offloaded shares worth Rs 2,072.76 crore on Tuesday, according to provisional exchange data."
Amid COVID-19 impact, Indian economy forecast to contract 5.9% in 2020: U.N.
Impacted by disruptions caused by the COVID-19 pandemic , India's economy is forecast to contract by 5.9% in 2020, the U.N. has said in a report, warning that while growth will rebound next year, the contraction is likely to translate into a permanent income loss.
The Trade and Development Report 2020 by U.N. Conference on Trade and Development (UNCTAD) said on Tuesday that the world economy is experiencing a deep recession amid a still-unchecked pandemic.
It said the global economy will contract by an estimated 4.3% this year, leaving global output by year’s end over $6 trillion short (in current U.S. Dollars) of what economists had expected it to be before the coronavirus began to spread.
“In short, the world is grappling with the equivalent of a complete wipeout of the Brazilian, Indian and Mexican economies. And as domestic activity contracts, so goes the international economy; trade will shrink by around one-fifth this year, foreign direct investment flows by up to 40% and remittances will drop by over $100 billion,” the UNCTAD report said, painting a grim picture of the global economic scenario.
India's coronavirus infections surge again after dip
Worrying signs pointing to a prolonged economic crisis.
Reuters reports: "India's coronavirus infections surged again on Wednesday, a day after falling to their lowest figure in almost a month.
In the last 24 hours, there were 83,347 new cases, with 1,085 deaths, federal health data showed.
India, with a population of about 1.4 billion, is consistently reporting the world's highest daily tally of infections, as it grapples with overstretched health services in the effort to control the pandemic.
Its 5.6 million infections rank second only to the United States, and more than 90,000 people have died."
Mercedes-Benz unveils AMG GLE 53 4MATIC+ Coupé at ₹ 1.2 crore
German luxury car maker Mercedes-Benz on Wednesday announced the introduction of the all-new performance SUV Coupé - the AMG GLE 53 4MATIC+ Coupé at an all India ex-showroom price of ₹1.2 crore.
AMG GLE 53 4MATIC+, introduced for the first time in India, offers more power and performance and replaces the AMG 43 Coupé in India.
“The vehicle combines sporty elegance and powerful performance with good off-road capabilities, innovative and intuitive technologies and intelligent driving assistance systems,” the company said.
Unveiling the Coupé at the company’s exclusive AMG Performance Centre in Mumbai, Santosh Iyer, VP, Sales & Marketing, Mercedes-Benz India said, “The introduction of the AMG GLE 53 4MATIC+ Coupé is a strategic decision aimed at strengthening our AMG portfolio by introducing the much awaited ‘AMG 53 series’ in India.”
38.71 lakh EPF members withdrew ₹44k crore since lockdown: Labour Minister
As many as 38,71,664 employees provident fund (EPF) withdrawal claims worth ₹44,054.72 crore were settled since March 25, Parliament was informed on Monday.
The government had imposed the nationwide lockdown on March 25, 2020, to contain deadly coronavirus.
“Total 38,71,664 EPF withdrawals claims from EPF accounts worth ₹44,054.72 crore were settled till date since lockdown was imposed (March 25 this year),” Labour Minister Santosh Gangwar said in a written reply to the Rajya Sabha.
These withdrawals also include COVID-19 claims, as per the reply.
Reliance Industries shares jump 3% on KKR deal
The bull run in RIL stock continues unabated with more investments pouring into the company.
PTI reports: "Shares of Reliance Industries on Wednesday gained 3 per cent after the company said global investment firm KKR will invest Rs 5,550 crore in its subsidiary Reliance Retail Ventures Ltd (RRVL) to pick 1.28 per cent equity stake.
The stock jumped 2.95 per cent to Rs 2,276.50 on the BSE. Reliance Industries was the top gainer in the Sensex pack.
On the NSE, it gained 2.96 per cent to Rs 2,276.75.
“This investment values Reliance Retail at a pre-money equity value of Rs 4.21 lakh crore. This marks the second investment by KKR in a subsidiary of Reliance Industries, following a Rs 11,367 crore investment in Jio Platforms announced earlier this year,” Reliance Industries said in a statement.
Reliance Retail, a subsidiary of RRVL, operates India’s largest, fastest growing and most profitable retail business serving close to 640 million footfalls across its 12,000 stores nationwide.
Mukesh Ambani, Chairman and Managing Director of Reliance Industries, said: “KKR has a proven track record of being a valuable partner to industry-leading franchises and has been committed to India for many years.
We look forward to working with KKR’s global platform, industry knowledge and operational expertise across our digital services and retail businesses”."
Bharat Biotech inks pact with WU’s School of Medicine for COVID-19 intranasal vaccine
Bharat Biotech On Wednesday signed a licensing agreement with Washington University School of Medicine in St Louis for a novel “chimp-adenovirus” (Chimpanzee adenovirus), single dose intranasal vaccine for COVID-19 .
According to a press release issued by the city-based vaccine maker, Bharat Biotech owns the rights to distribute the vaccine in all markets except the US, Japan and Europe.
While the Phase I trials will take place in St Louis University’s Vaccine and Treatment Evaluation Unit, Bharat Biotech, upon obtaining the required regulatory approval, will pursue further stages of clinical trials in India and undertake large scale manufacture of the vaccine at its GMP facility located in Genome Valley here, it said.
Global economy to contract 4.3% in 2020; output worth USD 6 trn to be wiped out: UNCTAD report
The latest estimate of the economic cost of the coronavirus-induced lockdown.
Reuters reports: "The global economy is expected to contract by 4.3 per cent this year, hit hard by the coronavirus pandemic, which will wipe out global output worth over USD 6 trillion, a UN report said on Tuesday.
Output in India is expected to shrink by 5.9 per cent in 2020, before rebounding to 3.9 per cent the next year, it added.
The lockdown has parachuted economists into unfamiliar territory, as the current situation is not like a war economy nor is it traditional supply-side constraints or a financial crisis threatening banking sector, said the UNCTAD ‘Trade and Development Report 2020 - From global pandemic to prosperity for all: Avoiding another lost decade’
“In a global health crisis, putting lives before profits has triggered a series of simultaneous and mutually reinforcing supply, demand and financial shocks.
“In the wake of these shocks the global economy will contract by an estimated 4.3 per cent this year, leaving global output by year’s end over USD 6 trillion short (in current US dollars) of what economists had expected it to be before the Covid-19 pathogen began to spread,” said the UNCTAD report.
The global economy had entered dangerous waters by late 2019 and the growth was slowing across all regions with a number of economies contracting in the final quarter.
There was a widely shared expectation that things would improve in 2020, led by an expected rebound in the large emerging economies, with global growth returning to its long-run potential in 2021.
In short, the world is grappling with the equivalent of a complete wipeout of the Brazilian, Indian and Mexican economies, it said.
Trade will shrink by around one-fifth this year, foreign direct investment flows by up to 40 per cent and remittances will drop by over USD 100 billion, it added.
The biggest falls in output will be in the developed world, with some likely to register a double-digit decline, the UN report said.
“But the greatest economic and social damage will be in the developing world where levels of informality are high, there is continued reliance on a few commodities or tourism as a source of foreign exchange, and fiscal and policy space is limited,” it warned.
The report expects Latin America to be hit with 7.6 per cent drop in output and more declines, possibly in double digits, for largest economies such as Argentina and Mexico.
This contrasts with East Asia, where growth will remain in positive territory, albeit much lower than in 2019. China, for example, is expected to grow at 1.3 per cent. Output in India is expected to shrink by 5.9 per cent in 2020, before rebounding to 3.9 per cent the next year, it said.
“Next year will likely see a rebound. However, it will be uneven within and across countries and uncertainty will persist,” UNCTAD Secretary-General Mukhisa Kituyi said in the report.
Unemployment will be on an upward trend, more and more companies will be facing the threat of bankruptcy; supply chains will be fragile; confidence will be shaken and demand will be weak, Kituyi said.
“In this condition, the wrong policy steps - and ignoring the experience of the last decade - could trigger further shocks which would not only derail recovery but could usher in a lost decade,” the official added.
Kituyi said the global economic crisis caused by COVID-19 throws up a stark choice -- continue misguided policy choices or collectively chart a new path that leads from recovery to a more resilient, more equal and more environmentally sustainable world in line with the ambition of the 2030 Agenda for Sustainable Development.
“Neither path is preordained. Building a better world is a matter of conviction and collective action. The lives of future generations and of the planet itself will depend on the choices we all take over the coming months,” he said.
? Despite massive relief packages adopted by advanced economies and the medical community coming together in search of a vaccine, “uncertainty abounds” and “anxiety persists”, the report said.
Additional waves of infection and death cannot be ruled out, it added.
The UN trade body said the overall impact on employment this year due to lockdown, temporary relief and return to work is difficult to gauge.
It expects about 90-120 million people to be pushed into extreme poverty in the developing world.
Hunger and malnutrition are certain to follow and income gaps will widen everywhere.
“These developments point toward a massive uptick in sickness and death,” it added.
Hope of a rapid economic bounce-back from a scientific breakthrough -- in the form of an effective and widely available vaccine -- cannot blind us to other man-made dangers ahead, the report said.
If governments opt for premature fiscal tightening in an attempt to bring down public debt and businesses adopt an aggressive cost-cutting strategy in an attempt to boost exports, the recovery will likely fizzle out, with a double-dip recession a real possibility in many countries in 2022, it added."
The external debt refinancing risk facing developing countries
Rupee skids 20 paise to 73.58 against U.S. dollar
The rupee depreciated 20 paise and settled at 73.58 (provisional) against the U.S. dollar on Tuesday tracking negative domestic equities.
At the interbank forex market, the rupee opened on a weak note at 73.50, then fell further and finally closed at 73.58 against the greenback, registering a fall of 20 paise over its last close.
The rupee strengthened by 7 paise to close at 73.38 against the U.S. dollar on Monday.
During the session, the domestic unit witnessed an intra-day high of 73.38 and a low of 73.64 against the American currency.
Borrowing by states increases 45% this fiscal
Eleven States raised a total of ₹14,298 crore at the auction of State government securities or State development loans (SDLs) held on Tuesday.
This is ₹1,500 crore more than the notified amount of the auction as Maharashtra and Gujarat had accepted an additional ₹1,000 crore and ₹500 crore respectively, CARE Ratings said in a report based on RBI data.
From April 7 to September 22 in this financial year, 27 States and 2 Union Territories have cumulatively raised ₹3.26 lakh crore via market borrowings, which is a 45% increase from the borrowings in the corresponding period of 2019-20.
Having faced a sharp decline in revenues, State governments have been increasingly resorting to market borrowings. Barring the seven States of Arunachal Pradesh, Tripura, Manipur, Punjab, Uttar Pradesh, Himachal Pradesh and Jharkhand, the borrowings of all the other States have seen a notable increase from year ago, CARE said.
Shares rise as Reliance gains on KKR investment deal
First gains of the week for stocks.
Reuters reports: "Indian shares rose on Wednesday, led by gains in Reliance Industries after an investment deal by KKR & Co Inc in the conglomerate's retail arm, with a decision by India and China to not send more troops to the contested border aiding sentiment.
Shares of Reliance rose 2.9% after it said U.S. private equity firm KKR will invest 55.50 billion rupees ($755.09 million) in the conglomerate's retail arm.
China and India agreed to stop sending more troops to a Himalayan flashpoint along their contested border and to avoid any actions that might complicate the tense situation there, the two countries said on Tuesday.
The broader NSE Nifty 50 index rose 0.7% to 11,230.20 and the S&P BSE Sensex 0.7% to 37,997.74 by 0345 GMT. Both the indexes have fallen for the past four sessions and lost nearly 3% this week as of last close."
KKR to invest ₹5,550 cr. in Reliance Retail Ventures
U.S. private equity firm KKR & Co Inc will invest 55.50 billion rupees ($755.09 million) in Reliance Industries Ltd's retail arm, giving the unit a pre-money valuation of 4.21 trillion rupees, the Indian conglomerate said on Wednesday.
KKR's investment will translate to a 1.28% stake in Retail Ventures Ltd, according to Reliance.
Reliance, which has been on a fund-raising spree, had earlier raised $1.02 billion from U.S. private equity firm Silver Lake Partners for its retail business.
Reliance, controlled by Asia's richest man Mukesh Ambani has been looking to expand rapidly online to take on the likes of Walmart Inc's Flipkart and Amazon.com Inc's Indian arm.
