Sensex falls over 400 points; Nifty below 11,700
The benchmark stock indices witnessed a huge fall today, marking the third consecutive day of losses.
The sharp fall is in line with the rout witnessed in stocks across the world due to the spread of the deadly coronavirus.
The Nifty and the Sensex closed down around 1% for the day.
Private labels to grow faster online: KPMG study
Mini Tejaswi reports:
Online private labels are expected to continue to be a driver for profitable growth for e-commerce marketplaces as they are allowing retailers and e-tailers to create their own brand exclusivity, says a joint study by KPMG in India and Retailers Association of India.
As retailers are on a constant search for new opportunities to stand out from the competition, stay exclusive and drive consumer loyalty, the market has been seeing an emergence of a vital differentiator in the form of online private label brands, the study observes.
As a result, online private labels are expected to grow at 1.3-1.6x, faster than e-commerce platforms until 2022. These labels will continue to generate 1.8-2.0x higher margins than external brands.
Harsha Razdan, Partner & Head, Consumer Markets and Internet Business, KPMG in India said “Private labels have the potential to offer higher margins on account of supply chain efficiencies and better control over operations. Further, this could also lead to higher consumer stickiness, thus becoming a critical element of the overall business strategy.''
Virus adds downside risk to earnings
The third quarter of the current financial year has proved to be lacklustre for companies in terms of earnings as many reported a fall in top-line while holding back on capital expenditure (capex) and hiring amid overall economic slowdown.
More importantly, market participants are now expecting further downside risks to the earnings in the current quarter with the economic slowdown accentuated by the COVID-19 outbreak.
According to Edelweiss, the third quarter ended December 31, 2019 was a weak one with the overall top-line of companies under its coverage shrinking 1% and the profit rising by a meagre 3%.
Govt revises framework for enhanced disclosures in auditor reports of companies
Auditors will soon be required to provide details about companies’ defaults on borrowings in a prescribed format as well as ensure disclosure of various other information in their reports, with the government putting in place a stricter framework.
The corporate affairs ministry has notified the Companies (Auditor’s Report) Order, 2020 (CARO, 2020). It would be applicable for audit of financial statements of eligible companies for the financial years commencing on or after April 1, 2019.
Among other requirements, a specific format has been prescribed for auditors to report the period and the amount of default by the company in repayment of loans or other borrowings or in the payment of interest thereon to any lender. PTI
We need to reformulate tech and learning: Nadella
Mini Tejaswi reports:
Microsoft CEO Satya Nadella on Wednesday met a gathering of students and educators at the Young Innovators Summit organised by Microsoft India at the India Habitat Centre, Delhi.
"We need to reformulate the relationship between technology and learning. It is very interesting to witness the way young innovators think today. What excited and inspired me from my meetings with students was the quality of their ideas, the scope of their ambition, deep passion and deep empathy turning into action. This is truly transformative, and is how societies and economies move forward,'' said the Microsoft CEO.
He also spoke about the role that technology would play in transforming the education ecosystem over the next decade, and outlined the opportunity students have today to solve some of the world’s most pressing problems with technology.
Mr Nadella is on a three-day India visit and he has already completed the Mumbai and Bengaluru legs of the tour.
India can seal trade deal with U.S. much faster, says Goyal
The Free Trade Agreement between the U.S. and India may not take years, Union Minister for Commerce and Industry Piyush Goyal said on Tuesday. The two countries had decided to engage on a fast-track basis, given that the two nations can trust each other, he said.
“I think with the U.S., I would personally think that we can do a much larger trade deal much faster..we’re both democracies with a rule of law. I think that’s very important... secondly, we both are transparent,” Mr. Goyal said at an event organised by the CII and the U.S.-India Business Council.
LIC listing may get delayed due to procedural glitches: Fitch
The Indian government’s proposed IPO of state—owned Life Insurance Corporation of India (LIC) will improve the accountability and transparency of the country’s largest insurer but is unlikely to happen during the next fiscal, Fitch Ratings said on Wednesday.
“The procedural and legal bottlenecks in terms of amending certain sections of the LIC Act, conducting independent valuations as well as obtaining regulatory approvals may delay the execution beyond the government’s target deadline of end—March 2021, ” Fitch said. IANS
Oil slides for 4th day as pandemic fears deepen
Crude oil prices gave up early gains and slid for a fourth day on Wednesday as fears of a coronavirus pandemic deepened as the outbreak spread in several countries outside China.
Brent crude fell 31 cents, or 0.6%, to $54.64 a barrel by 0753 GMT, while U.S. West Texas Intermediate crude dropped 16 cents, or 0.3%, to $49.74.
Fears of a pandemic have escalated as authorities around the world battle to prevent the spread of coronavirus, which has now been found in about 30 countries. Reuters
Indian refiners buy crude bound for China at deep discounts
Indian refiners are buying crude oil headed to China at deep discounts as the world’s largest importer of oil has cut its refining output by over 1.5 million barrels per day (bpd) due to the worsening effect of coronavirus on energy markets.
“It’s an opportunity for us. In the spot market, we are getting a discount anywhere between $3 and $5 per barrel of crude. The price of crude has already fallen to $55 from $70 in early January due to spread of coronavirus. We have contracted for certain varieties of crude for as low as $49 a barrel,” a director of a state-owned oil firm told The Hindu .
India is the world’s third largest crude importer and meets 83% of its crude requirements through imports. “China has rejected a significant amount of crude due to spread of coronavirus. This offers a great opportunity for Indian refiners as certain grades of African and Latin American crude oil are available at deep discounts. The freight rates have gone down by almost 50%,” said the head of another refiner.
Global recession likely if coronavirus becomes pandemic: Moody’s Analytics
A global recession is likely if coronavirus becomes a pandemic, and the odds of that are uncomfortably high and rising with infections surging in Italy and Korea, Moody’s Analytics said on Wednesday.
“The coronavirus has been a body blow to the Chinese economy, which now threatens to take out the entire global economy,” Chief Economist at Moody’s Analytics Mark Zandi said.
The outbreak of the virus, officially called COVID-19, was first detected in Wuhan in China in December and has since affected thousands of people across the globe.
“COVID-19 is battering the global economy in numerous ways. Chinese business travel and tourism has all but stopped; global airlines are not going to China and cruise lines are cancelling most Asia-Pacific itineraries. This is a huge problem for major travel destinations, including in the US, where some 3 million Chinese tourists visit each year,” Moody’s Analytics said. PTI
BS VI fuel cess may be on cards
Even as India is gearing up to switch over to the world’s cleanest fuel from April 1, 2020, Indian OMCs (oil marketing companies) have made a representation to the government to recover about ₹35,000 crore invested in upgrading their refineries to produce BS VI fuel.
The OMCs plan to recover this money by imposing a cess ₹0.70 to ₹1 on every litre of petrol and diesel.
When asked for comments, R. Ramachandran, director (refineries) at Bharat Petroleum Corporation Ltd. (BPCL) told The Hindu, “Our (OMCs) aspiration is that we should be compensated to tune of ₹0.70 to ₹1.30 on every litre of BS VI fuel sold. This should be built into the final retail price of the fuel.
BankBazaar Looking to End FY20 at EBITDA Profitability Despite Tough Year for Fintech
BankBazaar, India’s leading provider of free credit score and online financial services marketplace, announced that it expects to close this financial year on a month-on-month EBITDA-profitable basis (for the month of March 2020).
According to the company, this growth was accelerated by an almost 100% increase in organic traffic between October 2019 and January 2020 which drove the registered customer base to over 40 million users.
The company saw a 46% increase in monthly revenue and a 17% reduction in costs during the same period despite tough market conditions. This was due to the popularity of its free credit score product and its decade old collaborative partnerships with leading banks and NBFCs for credit products including credit cards, personal loans, auto loans, and home loans. PTI
Tata Motors’ board approved committee gives nod to raise ₹500 crore
Tata Motors on Wednesday said its board approved committee has given its approval for raising ₹500 crore through issuance of non-convertible debentures on private placement basis.
“The Board approved Committee has today approved allotment of 5000 rated, listed, unsecured, redeemable, non-convertible debentures E28-B Series of face value ₹10 lakh each, at par, aggregating ₹500 crore,” the company said in a regulatory filing.
Trump, Modi hope talks lead to phase one of U.S.-India trade deal: White House
U.S. President Donald Trump and Indian Prime Minister Narendra Modi have agreed to “promptly” conclude ongoing trade talks that they hope can lead to the first phase of a bilateral U.S.-India trade deal, the White House said.
The statement follows Trump's visit to India on Feb. 24-25, during which the U.S. president clinched the sale of $3 billion of military equipment sale to India.
“They (Trump and Modi) agreed to promptly conclude the ongoing negotiations, which they hope can become phase one of a comprehensive bilateral trade agreement that reflects the true ambition and full potential of the bilateral commercial relations”, the White House said late on Tuesday, giving no details on what would be included in the deal.
Earlier on Tuesday, Trump criticized India for its high tariffs. Reuters
‘Take client securities only as margin pledge’
Starting June 1, brokers will not be able to misuse client securities as the capital markets regulator has put in place stringent norms for securities that are pledged for margin requirements.
In a circular on Tuesday, the Securities and Exchange Board of India (SEBI) stated that brokers can take client securities only as ‘margin pledge’ and more importantly, such transfers cannot be made to the demat account of the broker.
“With effect from June 1, 2020, TM/CM [trading member or clearing member] shall... accept collateral from clients in the form of securities, only by way of ‘margin pledge’, created in the Depository system,” the circular stated.
Bandhan Bank shares rally 5% after RBI allows network expansion
Shares of Bandhan Bank on Wednesday jumped nearly 5 per cent in early market hours after RBI allowed the private sector lender to expand its branch network.
In September 2018, the central bank had barred Bandhan Bank from expanding its network as the lender failed to reduce the promoters’ stake to 40 per cent from close to 82 per cent within the stipulated three-year time frame of commencing operations.
On the BSE, the stock gained 4.8 per cent to trade at Rs 423.25. Later, it was trading with marginal gains of 0.78 per cent at Rs 407 per unit.
Similarly, on the NSE, the stock jumped 4.72 per cent to Rs 423. After shedding most of the early gains, it was quoting at Rs 406.80, up 0.72 per cent.
Musk's SpaceX rocket production facility approved by Port of Los Angeles
SpaceX, the private rocket company of high tech entrepreneur Elon Musk, won final approval on Tuesday to build a research and manufacturing plant for its deep-space Starship project on a tract of vacant land at the Port of Los Angeles.
The Los Angeles City Council granted a permit for the facility by a unanimous 12-0 vote, paving the way for Musk, also the founder of Tesla Inc electric car company, to proceed with an accelerated development of a new spacecraft and rocket system designed to carry humans to the moon and Mars .
The L.A. Board of Harbor Commissioners gave its go-ahead to the 10-year permit last week.
USFDA issues warning letter to Cipla for Goa manufacturing facility
Drug firm Cipla Ltd on Wednesday said that the US health regulator has issued a warning letter to the company for its manufacturing facility in Goa.
“Further to our earlier communication on the Goa manufacturing facility inspection conducted from September 16-27, 2019 by the United States Food and Drug Administration (USFDA), the company has received a warning letter from USFDA,” Cipla Ltd said in a regulatory filing.
Rupee rises 11 paise to 71.74 against US dollar in early trade
The Indian rupee appreciated by 11 paise to 71.74 against the U.S. dollar in early trade on Wednesday.
At the interbank foreign exchange the rupee opened at 71.76 and touched a high of 71.74, registering a rise of 11 paise over its previous close.
On Tuesday, rupee had settled for the day at 71.85 against the U.S. dollar.
The domestic unit, however, could not hold on to the gains and was trading at 71.78 against the dollar at 10.02 hrs.
China struggles to revive manufacturing amid virus outbreak
Factories that make the world’s smartphones, toys and other goods are struggling to reopen after a virus outbreak idled China’s economy.
But even with the ruling Communist Party promising help, companies and economists say it may be months before production is back to normal.
The problem is supply chains — the thousands of companies that provide components, from auto parts to zippers to microchips. China’s are famously nimble and resourceful, but they lack raw materials and workers after the most intensive anti-disease measures ever imposed closed factories, cut off most access to cities with more than 60 million people and imposed travel curbs.
The bad news is that there will be further impact, and the impact is worse than a lot of people initially expected, said Nicole Peng of Canalys, a research firm. Reuters
Blue Star eyes smaller towns to boost market share
Air-conditioner maker Blue Star Ltd. will enter small towns and cities with a view to increasing its market share in the coming years, a top executive said. “We might end the current fiscal with a market share of 12.75% and are targetting 13% for the next fiscal,” B. Thiagarajan, MD, Blue Star Ltd., said. “By FY24, we would like to have a market share of 15%, for which we will be expanding into tier-III, IV and V towns and cities in the coming months,” he said.
Blue Star is likely to end the current year with sales of 6.75 lakh units and the next fiscal with 7.6 lakh units, he said.
The demand from smaller towns and cities are picking up. Having cricketer Virat Kohli as brand ambassador has helped in brand recall value, he said.
CII stresses mini Indo US trade deal to start with
India and the US should agree on mini or a limited trade deal to send a positive signal to the business community, said a joint report by the CII and the US—India Business Council, here on Tuesday.
Both the countries have been working to conclude a trade agreement for nearly a year.
“While both sides sought to conclude a ‘mini’ trade deal in the time for US President Donald Trump’s first official visit to India, the US and India are yet to formalise areas of mutual agreement. IANS
ADB lists masala bonds on India INX
Asian Development Bank (ADB) has listed its 10-year masala bonds worth ₹850 crore on the global debt listing platform of India INX. The proceeds would be used to support local currency lending and investment in India, the BSE-owned exchange said in a release on Tuesday.
Sensex tanks nearly 300 points; Nifty near 11,700
Ashish Rukhaiyar reports from Mumbai:
Indian equities traded lower in the first hour of the trading session on Wednesday as the coronovirus scare continued to unnerve investors globally.
At 9:50am, the 30-share Sensex lost 283 points or 0.70% to trade below the psychological 40,00-mark at 39,998.51. The broader Nifty was at 11,711, down 86.55 points More than 900 stocks were in the red on BSE, as against less than 500 gainers.
In the Asian pack, leading benchmarks including Nikkei, Hang Seng and Kospi were all trading lower on Wednesday. The overnight Dow lost more than 3% or nearly 880 points on Tuesday as reports of fresh coronovirus cases emerged from outside China.
Trump flags highest India tariffs; trade deal in works
Flagging the high duties, US President Donald Trump here on Tuesday said India imposed the highest tariffs on US products and cited the case of Harley—Davidson bike.
“We are being charged a large amount of tariffs. I think you have to pay the highest tariff when you deal with India. Harley—Davidson has to pay tremendous tariffs when they send motorcycles here. When India sends to us, there is virtually no tariff. For the most part, there are absolutely no tariff. I just said that’s unfair and we are working it out,” the US President said at the solo press conference at the fag end of his two—day India visit.
“India is probably the highest tariff nation in the world. We have to stop that. I think we are understanding each other,” Trump said. IANS
BoB moves SC against Calcutta HC order
State-run lender Bank of Baroda (BoB) has moved the Supreme Court challenging the orders passed by the Calcutta High Court in the matter of a bank guarantee issued on behalf of Simplex Projects Ltd.
“The bank has, after seeking legal advice, decided to exercise its rights available under law, by preferring a challenge against the aforesaid orders passed by the Hon’ble Calcutta High Court before the Hon’ble Supreme Court of India,” BoB said in a statement.
The matter pertains to a bank guarantee of ₹6.97 crore furnished by Bank of Baroda to Indian Oil Corporation (IOCL) on behalf of Simplex Projects Limited.
DPIIT notifies 100% FDI in insurance intermediaries
The Department for Promotion of Industry and Internal Trade (DPIIT) on Tuesday notified the government’s decision to allow 100 per cent foreign direct investment (FDI) in insurance intermediaries.
Intermediary services include insurance brokers, re-insurance brokers, insurance consultants, corporate agents, third party administrators, surveyors and loss assessors.
The FDI policy earlier allowed 49 per cent foreign investment in the insurance sector, which includes insurance intermediaries.
In its press note, the DPIIT said 100 per cent FDI is allowed in insurance intermediaries under automatic approval route.
Bank credit growth may have bottomed out at 6%: Crisil
Credit growth of commercial banks may have bottomed out, which is expected to be 6% this financial year and in 2020-21, the growth could improve to 8-9%, rating agency Crisil said.
“The prolonged slowdown in bank lending may be bottoming out this fiscal, with gross credit offtake set to rise 8-9% on-year in fiscal 2021, a good 200-300 basis points (bps) over the likely growth of around 6% this fiscal,” the rating agency said.
According to data published by the RBI, year-on-year credit growth till January 31 was 7.1% compared with the 14.5% during the same period of the previous financial year.
Target of $ 5 trillion economy is statement of intent: Niti Aayog official
The government’s target of achieving a USD 5 trillion economy by 2024-25 is a statement of intent, which sounds idealistic, a Niti Aayog official has said, asserting that “tough times” don’t last as she dispelled concerns over economic slowdown.
Addressing a session organised by the Merchant Chamber of Commerce and Industry (MCCI) here on Monday, Chairperson of the National Committee on Financial Inclusion and Literacy - Niti Aayog Bindu Dalmia said the target has been so set to raise the bar of India’s economic performance.
“For now, the ambitious USD 5 trillion economy target is a statement of intent, which sounds too idealistic,” she said, adding that the country is well on the path to achieving it. PTI
