After a week of significant gains, stocks have witnessed a slight correction this morning on selling pressure.
Gold is now nearing the $1,900 mark as investors bet on higher inflation as central banks around the world ease policy.
Join us as we follow the top business news through the day.
US 5-year Treasury yield hits all-time low
Sensex, Nifty end flat after see-saw trade; RIL hits fresh peak
Weakness in global stocks didn't affect the Indian benchmark stock indices very much.
PTI reports: "The Sensex and Nifty ended marginally lower after a highly volatile session on Friday as a global equity selloff outweighed stock-specific gains on the indices.
After gyrating 487 points during the session, the 30-share BSE Sensex settled 11.57 points, or 0.03 per cent, lower at 38,128.90.
Similarly, the NSE Nifty declined 21.30 points, or 0.19 per cent, to 11,194.15.
Axis Bank was the top laggard in the Sensex pack, shedding over 3 per cent, followed by SBI, ICICI Bank, ONGC, HDFC and Kotak Bank.
On the other hand, Reliance Industries’ market valuation crossed the Rs 14 lakh crore-mark after its stock rallied over 4 per cent to scale its fresh peak.
HCL Tech, Tech Mahindra, Sun Pharma, IndusInd Bank and Infosys were among the other gainers.
According to traders, despite the rally in index-heavyweight RIL, domestic markets turned volatile amid a selloff in global equities on escalating tensions between the US and China.
Earlier in the day, China ordered the US to close its consulate in Chengdu in retaliation to Washington’s decision to shut the Chinese mission in Houston, further straining the already tense bilateral ties.
Bourses in Shanghai, Hong Kong, Seoul and Tokyo plunged up to 3.86 per cent.
Stock exchanges in Europe were trading over 1 per cent lower in early deals.
Meanwhile, international oil benchmark Brent crude futures rose 1.09 per cent to USD 43.77 per barrel.
In the forex market, the rupee slipped 8 paise to close at 74.83 against the US dollar.
Traders said a record spike in coronavirus cases in the country too weighed on domestic investor sentiment."
Oil prices edges up on weak dollar, U.S.-China tensions weigh
The promise of supply side frictions may be helping oil.
Reuters reports: "Oil prices edged higher on Friday, supported by a weaker dollar, though tensions between the United States and China weighed.
Brent crude was up 26 cents at $43.57 a barrel at 0944 GMT, while U.S. West Texas Intermediate (WTI) crude was up 29 cents at $41.36.
“Both crude benchmarks are roughly back where they were before this weeks upside breakout. Looking ahead, the oil market will likely settle back into a wait-and-see mode amid the increasingly uncertain environment,” PVM analysts said in a note.
China ordered the United States to close its consulate in the city of Chengdu on Friday, responding to a U.S. demand this week that China close its Houston consulate.
The dollar slid to 22-month lows against a basket of currencies.
A weaker dollar usually spurs buying of commodities priced in dollars such as oil because they become cheaper for holders of other currencies.
The U.S. economic outlook has darkened in the past month amid renewed lockdowns in some states to tackle surging coronavirus cases, according to economists in a Reuters poll.
The number of Americans filing for unemployment benefits hit 1.416 million last week, unexpectedly rising for the first time in nearly four months, suggesting the U.S. economic recovery is stalling amid a resurgence in COVID-19 cases.
Globally, more than 15 million people have been infected and over 620,000 have died.
While the rise in infections has fanned fears of renewed government lockdowns, worries that oil demand could be hit have been exacerbated by tensions between the United States and China - the world's top two oil consumers.
In China, congestion at east coast oil ports is adding to costs for shippers and importers even as fuel demand stalls.
Oil prices could see a near-term correction if a recovery in fuel demand slows further, especially in the United States, Barclays Commodities Research said.
Still, the bank lowered its oil market surplus forecast for 2020 to an average of 2.5 million barrels per day (bpd) from 3.5 million bpd previously."
Rupee settles 8 paise lower at 74.83 against US dollar
The rupee managed to recover a significant portion of the losses it suffered at open this morning.
PTI reports: "The rupee slipped 8 paise and settled at 74.83 against the US dollar on Friday as weak domestic equities and escalating tensions between the US and China weighed on investor sentiment.
The rupee opened on a weak note at 74.94 at the interbank forex market, and finally closed at 74.83 against the US dollar, down 8 paise over its previous close of 74.75 against the greenback.
During the session, the domestic unit touched an intra-day high of 74.80 and a low of 74.98 against the US dollar.
Forex traders said concerns over growing tensions between the US and China dragged down the local unit.
China on Friday ordered the US to close down its consulate in Chengdu in retaliation to Washington’s decision to shut the Chinese mission in Houston, further straining the already tense bilateral ties.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.04 per cent to 94.72.
On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 61.63 points lower at 38,078.84 and broader NSE Nifty fell 49.80 points to 11,165.65.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 1,740.50 crore on Thursday, according to provisional exchange data."
India smartphone shipment falls 51% to 18 mn units in June qtr: Counterpoint
Yet another industry that has been hit hard by the lockdown.
PTI reports: "India’s smartphone shipments declined by 51 per cent year-on-year to just over 18 million units in the June quarter due to coronavirus-related disruption, Counterpoint Research said on Friday.
The COVID-19 pandemic and the nationwide lockdown had resulted in zero shipments during April. However, the market is starting to return to normal.
“In June 2020, Indian smartphone shipments registered a mild decline of 0.3 per cent y-o-y, thanks to the pent-up demand as well as a push from brands,” Counterpoint said.
It added that due to concerns over potential COVID-19 infection, consumers prefer contactless purchasing and online channels. Smartphone brands are also recognising this trend by pushing more inventory to online channels, it noted.
Smartphone vendors had shipped a little over 31 million units in the March 2020 quarter, and 37 million units in the June 2019 quarter, as per previous Counterpoint reports.
“The COVID-19 pandemic wiped-out almost 40 days of production as well as the sales of smartphones due to the nation-wide lockdown... the market witnessed a surge in sales as the lockdown restrictions were slowly lifted,” Counterpoint Research Senior Research Analyst Prachir Singh said.
The quarter was, thus, marred by both demand and supply constraints which led Original Equipment Manufacturer (OEMs) to rethink their go-to-market strategies, he added.
“On the supply side, the factories were shut down in April and started operating in May, which resulted in supply shortages for some manufacturers. Some brands maintained the supply of their products by importing fully assembled handsets,” Singh said.
Additionally, the last week of the quarter saw components being held up at customs, which also impacted the supply chain, he added.
Xiaomi led the tally with 29 per cent share of the smartphone market, followed by Samsung (26 per cent), Vivo (17 per cent), Realme (11 per cent) and Oppo (9 per cent).
OnePlus regained its top position in the premium market (over Rs 30,000 segment), while Apple remained the leading brand in the ultra-premium segment (over Rs 45,000).
Shilpi Jain, Research Analyst at Counterpoint Research, said the contribution of Chinese brands fell to 72 per cent in June quarter from 81 per cent in March 2020 quarter."
Reliance Industries market valuation crosses Rs 14 lakh crore-mark
RIL shares show no signs of stopping.
PTI reports: "Reliance Industries’ market valuation crossed Rs 14 lakh crore-mark on Friday as its stock rallied over 4 per cent to scale its fresh peak.
The company’s partly paid-up shares listed separately have a market capitalisation of Rs 53,821 crore. The combined market capitalisation of Reliance Industries now stands at Rs 14,07,854.41 crore.
The stock of the country’s most valued firm jumped 4.32 per cent to a record high of Rs 2,149.70 on the BSE.
This took its market valuation to Rs 13,54,033.41 crore in the late morning trade on the BSE.
On the NSE, shares of the oil-to-telecom conglomerate rose by 4.47 per cent to an all-time high of Rs 2,149.90.
Shares of Reliance Industries had on Thursday also jumped nearly 3 per cent amid reports that Amazon was eyeing a stake in the conglomerate’s retail arm.
The company’s partly paid-up shares zoomed 9.99 per cent to Rs 1,299 on the BSE.
ReliancePP -- the partly paid-up shares issued in the recently concluded rights issue -- had listed on the stock exchanges on June 15, 2020.
While RIL is the country’s most valuable listed company, the second-placed TCS has a market capitalisation of Rs 8,07,419.38 crore, followed by HDFC Bank at the third place with an m-cap of Rs 6,11,095.46 crore."
India needs further economic reforms to attract more investment: IMF
India’s concerted efforts to strengthen the business climate and encourage investment in trade have helped attract investment, but the country needs further economic reforms to ensure sustainable and more inclusive growth , according to the IMF.
The remarks by International Monetary Fund’s Chief Spokesperson Gerry Rice on Thursday came in response to a question on the recent FDI announcements made by global giants like Facebook and Google in India.
In recent weeks, several international companies have pledged $20 billion FDI in India, and a whopping $40 billion this year so far.
“Concerted efforts have been made in recent years, in India, to strengthen the business climate and encourage investment in trade, and these have helped to attract investment and improve the current account financing mix and also help to contain external vulnerabilities, Mr. Rice told reporters at a news conference.
People are now getting tired of lockdowns
Biocon shares decline 3% after Q1 earnings
Investors weren't too enthused by what came out of Biocon's Q1 results.
PTI reports: "Shares of biotechnology major Biocon on Friday dropped nearly 3 per cent after the company reported a 26.30 per cent decline in its consolidated net profit for the quarter ended June 30, 2020.
The stock fell 2.74 per cent to Rs 418.50 on the BSE.
On the NSE, it was down 2.83 per cent to Rs 418.10.
Biocon has reported a 26.30 per cent decline in its consolidated net profit at Rs 167.8 crore for the quarter ended June 30, 2020.
The company had posted a net profit of Rs 227.7 crore for the corresponding period of the previous fiscal, Biocon said in a late night filing to the BSE.
Consolidated revenue from operations of the company stood at Rs 1,671.3 crore for the quarter under consideration, as against Rs 1,458.9 crore for the same period year ago, it added.
“Profitability for the quarter was impacted due to higher research and development spend, lower profit share in the biosimilars business, and lower profitability in the research services segment,” Biocon Executive Chairperson Kiran Mazumdar-Shaw said."
Biocon Q1 net profit declines 26% to Rs 167.8 crore
Bad news for Biocon investors.
PTI reports: "Biotechnology major Biocon has reported a 26.30 per cent decline in its consolidated net profit at Rs 167.8 crore for the quarter ended June 30, 2020 mainly on account of higher R&D spend and lower profitability in the Research Services segment.
The company had posted a net profit of Rs 227.7 crore for the corresponding period of the previous fiscal, Biocon said in a late night filing to the BSE.
Consolidated revenue from operations of the company stood at Rs 1,671.3 crore for the quarter under consideration, as against Rs 1,458.9 crore for the same period year ago, it added.
“Profitability for the quarter was impacted due to higher Research and development (R&D) spend, lower profit share in the Biosimilars business, and lower profitability in the Research Services segment,” Biocon Executive Chairperson Kiran Mazumdar-Shaw said.
It has been a breakthrough quarter for Biocon as it made a significant contribution to the global efforts aimed at addressing the pandemic through its innovative science, she added.
Research and development spend for the quarter stood at Rs 142 crore, as against Rs 110 crore for the year-ago quarter, Biocon said.
Shares of Biocon Ltd were trading at Rs 418.85 per scrip on BSE, down 2.66 per cent from its previous close."
Gold poised for best week in more than 3 months on stimulus bets
The breakout rally in gold has helped the metal hit new highs.
Reuters reports: "Gold was headed on Friday for its biggest weekly gain in more than three months, steadying near a nine-year high, as it benefited from a weak dollar and inflation expectations, fuelled by stimulus for virus-battered economies.
Silver eyed its best week since 1987, with additional impetus coming from bets for a revival in industrial activity. Spot gold was up 0.1% at $1,889.24 per ounce by 0410 GMT, having hit its highest since September 2011 at $1,897.16 on Thursday. Prices have risen more than 4% this week, putting gold on course for its longest winning streak since late 2011.
“We're seeing a very explosive week for gold,” said DailyFx currency strategist Ilya Spivak. “The basic logic has to do with the introduction of further fiscal stimulus... in the European Union, and we're talking again about further fiscal stimulus in the United States.
“Interest rates are not really expected to go higher, and the likely response is seen as inflation.”
Gold tends to benefit from widespread stimulus measures from central banks as it is perceived as a hedge against inflation and currency debasement.
The dollar index held near a two-year low with investors also awaiting Beijing's response to the U.S. move to close its Houston consulate this week. The tensions also prompted investors to seek safety in bullion.
“Despite the bullishness, downside risks remain for gold. Demand for jewellery remains soft at prices above $1,800 in key retail markets India and China and gold has to be content with investment demand to push prices,” analysts at Phillip Futures said in a note.
U.S. gold futures eased 0.3% to $1,884.60. Low physical demand has been forcing dealers in India and China to offer hefty discounts. Spot gold may retest a support at $1,880 per ounce, Reuters technical analyst Wang Tao said.
Silver, which fell 0.5% to $22.60 per ounce, was up more than 17% for the week. Platinum rose 0.1% to $906.41 and palladium gained 0.8% to $2,142.25."
US stock market recovery without tech
Rupee falls 23 paise to 74.98 against US dollar in early trade.
The bearish sentiment in the stock market has had an impact on the currency market as well.
PTI reports: "The rupee depreciated 23 paise to 74.98 against the US dollar in opening trade on Friday tracking weak domestic equities and strengthening American currency.
Forex traders said steady crude oil prices and foreign fund inflows supported the rupee, while factors like strong dollar, muted domestic equities and rising COVID-19 cases dragged the local unit down.
The rupee opened on a weak note at 74.94 at the interbank forex market, then lost further ground and touched 74.98 against US dollar, down 23 paise over its last close.
It had settled at 74.75 against the US dollar on Thursday.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.05 per cent to 94.74.
On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 230.96 points lower at 37,909.51 and broader NSE Nifty fell 76.55 points to 11,138.90.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 1,740.50 crore on Thursday, according to provisional exchange data."
Expert panel to soon clarify on data sharing between rivals
S. Gopalakrishnan, the Infosys co-founder and angel investor who is heading the expert committee on Non-personal Data Governance Framework, on Thursday said the committee would soon come out with some clarificatory points on sharing of such data between competing businesses or organisations.
“We are in the process of discussing only the clarificatory points on competition. We have said that basically the default status, even if it’s a request from the competitor, data needs to be shared. Only thing is it cannot be an unfair request or it cannot be a request that is just to take advantage of this regulation. So we’re discussing that...whether it’s sensitive or not, if the data is for illegitimate purpose,” Mr. Gopalakrishnan said replying to a query during a virtual press conference.
Indian shares slip as surging coronavirus cases weigh
A moderate correction in stocks after a week of significant gains.
Reuters reports: "Indian shares slid on Friday, dragged by banking and financials as investors offloaded some overbought stocks, while muted Asian markets and rising domestic coronavirus cases added to the pessimism.
The NSE Nifty 50 index fell 0.75% at 11,132.50 by 0350 GMT and the benchmark S&P BSE Sensex was down 0.82% at 37,829.60. However, both indexes were on track for a fifth straight week of gains.
The Nifty and Sensex have gained more than 33% each since India first went into lockdown in late March, while coronavirus cases that numbered in hundreds at that time, have touched 1.29 million by Friday morning, according to government data https://www.mohfw.gov.in.
Broader Asian markets saw a muted start as China vowed retaliation against the United States after Washington closed Beijing's consulate in Houston, Texas.
In Mumbai, banking and financial stocks led losses. The Nifty banking index, which tracks both state-owned and private-sector lenders, slid 1.3% and the Nifty financials index shed 1.4%.
Large shadow lender HDFC Ltd was the top laggard on the Nifty among stocks, falling 2.1%, followed by the country's biggest lender by assets State Bank of India, which slid 2%.
Pharma stocks, however, gained for the day with the Nifty pharma index rising 1.3%. Drugmaker Sun Pharma rose 3.8% and topped the Nifty gainers.
Reliance Industries gained for a sixth day in a row, after a media report that Amazon was in talks for a potential investment in the conglomerate's retail arm."
Govt imposes restriction on public procurement from China, other neighbours
Economic tensions continue to rise in tandem with geopolitical tensions.
PTI reports: "Amid border row with China, the government on Thursday imposed restrictions on public procurement from China and other countries with common border.
The Government of India amended the General Financial Rules 2017 to enable imposition of restrictions on bidders from countries which share a land border with India on grounds of defence of India, or matters directly or indirectly related thereto including national security, an official statement said.
The Department of Expenditure has, under the said Rules, issued a detailed order on public procurement to strengthen the defence of India and national security, it said.
As per the order, it said, any bidder from such countries sharing a land border with India will be eligible to bid in any procurement whether of goods, services (including consultancy services and non-consultancy services) or works (including turnkey projects) only if the bidder is registered with the Competent Authority.
“The Competent Authority for registration will be the Registration Committee constituted by the Department for Promotion of Industry and Internal Trade (DPIIT). Political and security clearance from the Ministries of External and Home Affairs respectively will be mandatory,” it said.
The order takes into its ambit public sector banks and financial institutions, autonomous bodies, Central Public Sector Enterprises (CPSEs) and public private partnership projects receiving financial support from the government or its undertakings, it added.
Observing that state governments also play a vital role in national security and defence of India, it said, “the Government of India has written to the Chief Secretaries of the State Governments invoking the provisions of Article 257(1) of the Constitution of India for the implementation of this Order in procurement by State Governments and state undertakings etc.”
For state government procurement, it said, the Competent Authority will be constituted by the states, but political and security clearance will remain necessary."
Protect financial sector health: Rajan
With the corporate sector poised to suffer massive write-offs and bankruptcies due to the adverse economic effects of COVID-19 and prolonged lockdowns, the government ought to carefully consider the cost that the financial sector could bear as a result and still remain sound, said former Reserve Bank of India (RBI) Governor Raghuram Rajan.
In a scenario where companies would operate at 50-75% of their capacity for the next six to eight months, they would end up accumulating a lot of debt with significantly over-leveraged firms likely facing the bankruptcy process, noted Dr. Rajan, addressing the DBS Asian Insights Conference on ‘The Economies of a Pandemic’ on Thursday.
“That is a given and coming in a big way even in countries that have managed to support their economies [through high levels of stimulus],” he said.
