The benchmark stock indices have capitalized on yesterday's gains to clock further gains in the morning.
Former RBI top officials have voiced their concern over the entry of corporate giants into banking.
Join us as we follow the top business news through the day.
Mutual funds dominate US bond market
Markets surge to lifetime highs; Nifty breaches 13,000-mark
Yet another strong day for stocks with gains of over 1%
PTI reports: "Equity benchmarks Sensex and Nifty rallied to fresh lifetime highs on Tuesday following heavy buying in banking, financial, realty and auto counters amid persistent foreign capital inflows.
A strengthening rupee also boosted market sentiments, traders said.
After scaling a record intra-day high of 44,601.63, the 30-share BSE Sensex ended 445.87 points or 1.01 per cent higher at a record 44,523.02.
Similarly, the broader NSE Nifty rose 128.70 points or 1 per cent to close above the 13,000-mark for the first time at 13,055.15.
Axis Bank was the top gainer in the Sensex pack, surging around 4 per cent, followed by M&M, HDFC Bank, ITC, SBI, ICICI Bank, Maruti, Kotak Bank and Sun Pharma.
On the other hand, HDFC, Titan, Nestle India, Bharti Airtel, ONGC and Infosys were among the laggards.
Sector-wise, BSE bankex, auto and finance indices rose up to 2.37 per cent.
Foreign institutional investors remained net buyers in the capital market as they purchased shares worth Rs 4,738.44 crore on Monday, according to provisional exchange data.
The rupee appreciated 10 paise to close at 74.01 against the US dollar.
Elsewhere in Asia, bourses in Hong Kong, Tokyo and Seoul ended with significant gains, while Shanghai closed in the red.
Stock exchanges in Europe were trading on a mixed note in early deals.
Meanwhile, Brent crude futures, the global oil benchmark, rose 0.85 per cent to USD 46.45 per barrel."
NSE declares Karvy Stock Broking as defaulter, expels from membership
The National Stock Exchange (NSE) has declared Karvy Stock Broking as a defaulter for non-compliance with the regulatory provisions of the bourse.
In addition, Karvy Stock Broking has been expelled from the membership of the exchange, the NSE said in a circular.
The move effective from November 23, was taken as the broker failed to comply with NSE guidelines, it added.
Under the guidelines, stock brokers are required to fulfill their obligations and should not involve in any misconduct, or unprofessional conduct among others.
Earlier, Karvy had unauthorisedly transferred securities of clients into its demat accounts by misusing the PoAs (Power of Attorney) given by its clients.
India’s two-wheeler exports to see sustained growth in H2 FY22: Ind-Ra
Sustained growth expected in two-wheeler exports despite the disturbances caused by the lockdown.
PTI reports: "India’s two-wheeler exports will see sustained growth in the second half of next fiscal after witnessing temporary hurdles in the first half this year due to COVID-19 and weakened crude oil prices, hurting the economies of key exporting destinations, according to ratings agency Ind-Ra.
Exports momentum is expected to continue in the remaining part of FY21 and FY22, primarily driven by the exporting countries’ lower penetration level, demand for usage as commercial fleet, stability in crude prices, lack of public infrastructure and aversion to public transport amid COVID-19, India Ratings and Research said in a statement.
India exports two-wheelers mainly to African, Asian and Latin American countries, constituting 37.5 per cent, 22.9 per cent and 21.4 per cent, respectively, during the first half of FY21, it added.
“Within this, Nigeria, Colombia, Nepal, Bangladesh and Philippines together accounted for around 50 per cent of the total exports in FY20 (in terms of value),” the rating agency said.
Indian original equipment manufacturers (OEMs) will continue to gain traction for their key offering on the back of their strong market position and robust distribution network, it added.
Indian two-wheeler manufacturers such as Bajaj Auto and TVS Motor Co will benefit from their exports-focused business model, with almost 49 per cent and 26 per cent, respectively, of their total sales volume in the first half of FY21 coming from exports, it said.
However, Indian OEMs face tough competition, particularly from Japanese OEMs that have a strong market share globally. Though Chinese OEMs have a higher market share than Indian OEMs in the global markets, the competition is fragmented and Indian OEMs have superior quality, the agency noted.
Ind-Ra said it expects the two-wheeler (2W) exports decline for FY21 to be in line with that of the domestic industry at 18-21 per cent.
“Since 2W exports only account for 16-18 per cent of the total 2W sales for Indian OEMs, this is not likely to be substantial enough to compensate for the domestic volumes during the same period,” it added.
2W export volumes are likely to increase by mid-teens in FY22, the ratings agency said.
The industry faced temporary hiccups in the first quarter of FY21 due to the COVID-19 spread as well as weakened crude oil prices, hurting the economies of key exporting destinations for India.
“This coupled with the nationwide lockdown, supply-chain and logistics disruptions impacted export sales significantly,” Ind-Ra said.
Since then India’s 2W exports have moved in line with growth in domestic markets, it added."
Huawei's Chinese mobile rivals look to capitalise on its U.S. woes
Chinese handset rivals of Huawei Technologies including Xiaomi, Oppo and Vivo are making aggressive moves to seize market share from their giant rival, after stepped-up U.S. sanctions hobbled Huawei's supply chains, industry insiders say.
Last week Huawei said it had sold its budget brand smartphone unit Honor for an undisclosed sum in a bid to safeguard the latter's supply chain from U.S. action, which has made it difficult to source essential components.
All the same, Huawei's Chinese rivals smell blood in the mid- to high-end phone market. In August a Huawei executive said the company will not be able to produce its flagship processors that power its high-end smartphones.
“What we can see now, whether from Xiaomi, Oppo or Vivo, is that they're raising their forecasts for next year,” said Derek Wang, an executive in charge of production at handset maker Realme, which shares a supply chain with Oppo.
Non-performing loans in Indian banking sector to rise in next 12-18 months: S&P
A warning call from the ratings agency.
PTI reports: "Non-performing loans in the Indian banking sector is likely to witness an uptick and may shoot up to 11 per cent of gross loans in the next 12-18 months, S&P Global Ratings said on Tuesday.
It said forbearance is “masking” problem assets for Indian banks arising from COVID-19 and the financial institutions will likely have trouble maintaining momentum after the proportion of Non-performing loans (NPL) to total loans declined consistently so far this year.
“While financial institutions performed better than we expected in the second quarter, much of this is due to the six-month loan moratorium, as well as a Supreme Court ruling barring banks from classifying any borrower as a non performing asset,” S&P Global Ratings credit analyst Deepali Seth-Chhabria said.
In its report titled “The Stress Fractures In Indian Financial Institutions”, S&P said with loan repayment moratoriums having ended on August 31, 2020, NPLs in the banking sector will likely shoot up to 10-11 per cent of gross loans in the next 12-18 months, from 8 per cent on June 30, 2020.
According to S&P, the banking system’s credit costs will remain elevated at 2.2-2.9 per cent this year and next.
“Resumption of economic activity, government credit guarantees for small to mid-size enterprises, and buoyant liquidity is helping to limit stress. Our NPL estimates are lower than previous but we are still of the view that the sector’s financial strength will not materially recover until fiscal 2023 (ended March 31, 2023),” it said.
According to S&P, 3-8 per cent of loans could get restructured.
Banks and non-bank financial companies (NBFCs) have also been strengthening their balance sheets and bolstering their equity bases. Banks have also been building reserves and creating excess COVID provisions, which in our view should help them smooth the hit from COVID-related losses.
“For NBFCs we rate, performance has been improving. Like with banks, collections have surged for NBFCs. Top-tier NBFCs are benefiting from surplus system liquidity, as indicated by a sharp reduction in risk premiums. Weaker finance companies, however, have faced higher risk premiums. We expect such polarisation to persist in 2021,” S&P added."
Maruti Suzuki Subscribe launched in four more cities
Maruti Suzuki continues to target the niche car subscription market.
PTI reports: "The country’s largest car maker Maruti Suzuki India on Tuesday announced expansion of its vehicle subscription programme to Mumbai, Chennai, Ahmedabad and Gandhinagar with plans to expand it further in up to 60 cities over the next three years.
The company had earlier launched its ‘Maruti Suzuki Subscribe’ in cities like Delhi-NCR, Bangalore, Hyderabad, and Pune.
The programme has now been expanded and launched in four more cities — Mumbai (including Navi Mumbai and Thane), Chennai, Ahmedabad and Gandhinagar, Maruti Suzuki India (MSI) said in a statement.
The company has partnered with ORIX Auto Infrastructure Services India, a subsidiary of ORIX Corporation, Japan to introduce the service for individual customers in these four cities, it added.
Under the initiative - Maruti Suzuki Subscribe - a customer can use a brand-new car without actually owning it by paying an all-inclusive monthly fee that comprehensively covers maintenance and insurance for the complete tenure.
MSI Executive Director (Marketing and Sales) Shashank Srivastava said the Maruti Suzuki Subscribe program has received encouraging response from customers with over 6,600 enquiries in the first few months of pilot launch.
“The Maruti Suzuki Subscribe program comes with a bouquet of benefits like flexible tenure, zero down payment, insurance and complete maintenance,” Srivastava said adding that “we are aiming to introduce the Maruti Suzuki Subscribe program in 40-60 cities over a period of 2 to 3 years“.
The program also provides 24x7 roadside assistance and customer support.
“We are confident that with the flexibility Subscription provides to customers, in addition to convenience and a hassle free experience, it will surely find a lot of takers in the post pandemic fast changing world of mobility,” ORIX India MD and CEO Sandeep Gambhir said.
The partners are witnessing an increased need from customers to have personalized and customized solutions and flexible ownership options as against the traditional ways of owning cars, and Subscription does just that, Gambhir added.
Under the Maruti Suzuki Subscribe, users can opt from a wide range of the company’s vehicles such as Swift, Dzire, Vitara Brezza, and Ertiga from Maruti Suzuki ARENA and Baleno, Ciaz, and XL6 from NEXA. The monthly subscription fee varies depending on the model and city.
For instance, the subscription fee starts from Rs 14,665 per month for Swift LXi model in Ahmedabad, the company said."
Bengaluru-based payments company Cashfree raises $ 35 million
Bengaluru-based fintech, Cashfree said on Tuesday it has received USD 35.3 million (approximately ₹ 260 crore) as part of its Series B raise.
The investment was led by growth stage financial services investor, Apis Growth Fund II, with participation from existing investor Y Combinator, it said in a statement.
Cashfree, a payments and banking technology company that enables businesses in India to collect payments online and make payouts, was founded by Akash Sinha and Reeju Datta in 2015.
The company is a 2017 alumnus of Y Combinator, the start-up incubator based in San Francisco, and has grown exponentially, processing over $ 12 billion annualised payment volumes as of March 2020, the statement said.
Cashfree said it has been profitable since its first year of operations and counts more than 50,000 businesses amongst its merchants including internet companies such as Cred, BigBasket, Zomato, HDFC Ergo, Ixigo, Acko, Zoomcar, and Delhivery.
Lakshmi Vilas Bank stock tanks over 53% in 6 days
Shares of Lakshmi Vilas Bank continue to tank.
PTI reports: "Shares of Lakshmi Vilas Bank continued to face selling pressure for the sixth consecutive day and have tanked over 53 per cent during the period amid negative reports around the company.
On Tuesday, the stock plunged 9.88 per cent to Rs 7.30 -- its lower circuit limit as well as one year low -- on BSE.
At NSE, it plummeted 9.88 per cent to Rs 7.30 -- its lowest trading permissible limit for the day.
Since last Tuesday (November 17), the stock has tanked 53.35 per cent on the BSE.
The government has placed Lakshmi Vilas Bank (LVB) under one-month moratorium, superseded its board and capped withdrawals at Rs 25,000 per depositor.
The step was taken on the advice of the Reserve Bank of India, in view of the declining financial health of the private sector lender.
LVB is the third bank to be placed under moratorium since September last year after the cooperative bank PMC in 2019 and private sector lender Yes Bank this March. While Yes bank has successfully been revived under the guidance of State Bank, the PMC resolution is still a far cry."
Google under review for possible British competition enquiry
Britain's competition regulator said on Monday it was assessing whether a complaint about Google related to digital advertising warranted a formal competition law investigation.
The complaint from Marketers for an Open Web (MOW), a coalition of technology and publishing companies, said it wanted the Competition and Markets Authority (CMA) to delay the launch of Google's Privacy Sandbox technology.
MOW said the technology would remove features such as login and advertising from the open web and put them under Google's control.
“We take the matters raised in the complaint very seriously, and will assess them carefully with a view to deciding whether to open a formal investigation under the Competition Act,” the CMA said.
Short bets mount on the US dollar
Rupee surges 21 paise to 73.90 against US dollar in early trade
The bullish sentiment in stocks has brushed off on the rupee as well.
PTI reports: "The rupee appreciated 21 paise to 73.90 against the US dollar in the opening session on Tuesday, tracking strong opening in domestic equities and weak American currency.
Traders said investor risk sentiment improved amid growing hopes of an early rollout and efficacy of COVID-19 vaccines.
At the interbank forex market, the domestic unit opened at 74.10 against the US dollar, and then it gained ground to touch 73.90 against the greenback, registering a rise of 21 paise over its previous close.
On Monday, the rupee had appreciated 5 paise to settle at more than two-week high of 74.11 against the US dollar.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, was down 0.04 per cent to 92.47.
Pharma major AstraZeneca said on Monday said that an interim analysis of clinical trials of its COVID-19 vaccine in the UK and Brazil showed that it was 70 per cent effective on average, becoming the third drugmaker to announce promising results to contain the deadly virus.
Meanwhile, foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 4,738.44 crore on a net basis on Monday, according to exchange data.
“Foreign fund inflows into the domestic equity markets could also help the local unit. However, these flows are being continuously mopped up by the central bank,” Reliance Securities said in a research note.
On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 392.99 points higher at 44,470.14, and the broader NSE Nifty rose 114.55 points to 13,041.00.
Brent crude futures, the global oil benchmark, rose 0.91 per cent to USD 46.48 per barrel."
Rajan, Acharya caution against proposal to allow corporate houses to set up banks
The RBI working group’s proposal to allow corporate houses to set up banks is a “bombshell” and at this juncture, it is more important to stick to the tried and tested limits on involvement of business houses in the banking sector, says an article jointly written by former RBI Governor Raghuram Rajan and ex-Deputy Governor Viral Acharya.
The authors suggest that the proposal is “best left on the shelf”.
“The history of... connected lending is invariably disastrous —how can the bank make good loans when it is owned by the borrower? Even an independent committed regulator, with all the information in the world, finds it difficult to be in every nook and corner of the financial system to stop poor lending,” the article said.
Last week, an Internal Working Group (IWG) set up by the Reserve Bank of India (RBI) made various recommendations, including that a large corporate may be permitted to promote banks only after necessary amendments to the Banking Regulation Act.
Nifty breaks 13,000 level on vaccine optimism, banks top gainers
The bull run in stocks continues unabated.
Reuters reports: "Indian shares scaled a record high on Tuesday in broad-based gains, as progress on U.S. President-elect Joe Biden's transition to the White House and optimism around another COVID-19 vaccine helped boost investor sentiment globally.
The NSE Nifty 50 index surpassed the psychologically important 13,000 level for the first time ever and was up 0.74% at 13,021.05 by 0400 GMT. The S&P BSE Sensex was 0.72% higher at 44,391.79.
All 12 Nifty sub-indexes were trading higher, with banks leading the pack. HDFC Bank and ICICI Bank were the top two boosts to the Nifty 50.
The Serum Institute of India, the world's top vaccine manufacturer, will first focus on supplying AstraZeneca's COVID-19 vaccine to India, Serum's chief said on Monday, potentially increasing the chances of the shot becoming available quickly in the world's second worst-hit country.
Other Asian markets were also trading higher on Tuesday after Biden was given the go-ahead to begin his White House transition."
General Motors will recall 7 million vehicles for air bag issue worldwide
General Motors Co will recall 7 million vehicles worldwide with potentially dangerous Takata air bag inflators after a U.S. safety agency said Monday it had rejected the Detroit automaker's petition to avoid the callback.
The recall is expected to cost the Detroit automaker $1.2 billion.
The National Highway Traffic Safety Administration (NHTSA) said GM must recall 5.9 million 2007-2014 model year trucks and SUVs because the inflators “are at risk of the same type of explosion after long-term exposure to high heat and humidity as other recalled Takata inflators.”
GM has estimated in securities filings it would cost $1.2 billion if it were required to replace air bag inflators it had sought to avoid fixing. The company confirmed the estimated cost Monday. GM said it will recall 7 million vehicles worldwide, including 544,000 in Canada.
