The benchmark stock indices have opened the day with gains after ending flat yesterday.
RBI Governor Shaktikant Das' comments at a public lecture have helped buoy sentiments in the currency market.
Join us as we follow the top business news through the day.
Risk assets recover most of their Covid-19 losses
Markets rise for 5th day, end modestly higher amid F&O expiry
Stocks managed to rise but only marginally after paring opening gains.
PTI reports: "Equity benchmarks Sensex and Nifty pared most of their intra-day gains to end marginally higher on Thursday as monthly derivative contracts expired amid weak global cues.
After touching a high of 39,326.98 during the session, the BSE Sensex succumbed to selling pressure in the last hour of trade. It finally finished at 39,113.47, up 39.55 points or 0.10 per cent.
The NSE Nifty inched up 9.65 points or 0.08 per cent to close at 11,559.25.
IndusInd Bank was the top gainer in the Sensex pack, rallying over 6 per cent, followed by M&M, SBI, HDFC, Axis Bank, Sun Pharma and Maruti.
On the other hand, ONGC, Bajaj Auto, RIL, Kotak Bank and UltraTech Cement were among the laggards.
After opening higher, the markets continued to trade in the positive zone in the afternoon session as traders were encouraged by RBI Governor Shaktikanta Das’ statement that the new resolution framework is expected to give durable relief to borrowers amid the COVID-19 crisis, said Narendra Solanki, Head- Equity Research (Fundamental), Anand Rathi.
However, market participants turned cautious as August futures and options (F&O) contracts expired, traders said.
Further, global investors are awaiting cues from US Federal Reserve Chairman Jerome Powell’s speech at the central bank’s annual Jackson Hole symposium. Officials in the past have used the meeting, being held online this year, to make market-moving announcements.
Bourses in Hong Kong, Tokyo and Seoul settled with losses, while Shanghai was in the positive territory.
Stock exchanges in Europe were trading on a negative note in early deals.
Global oil benchmark Brent crude was trading 0.04 per cent higher at USD 46.18 per barrel.
Meanwhile, the rupee soared 48 paise to close at 73.82 against the US dollar after the RBI Governor said the central bank has not exhausted its ammunition to deal with the pandemic-induced stress.
Speaking at a webinar, Das also said rather than becoming averse to lending, banks have to improve their risk management and governance frameworks, and also build sufficient resilience."
Indian court halts insolvency proceedings against Reliance's Anil Ambani
Huge relief for the younger Ambani sibling.
Reuters reports: "An Indian court on Thursday halted insolvency proceedings against Reliance Group chairman Anil Ambani, the younger brother of India's richest man, and barred him from disposing of any of his assets.
Anil Ambani, who runs a business group separate from his billionaire brother Mukesh Ambani, had filed a plea with the Delhi High Court challenging the appointment of a resolution professional over a roughly 12 billion rupee ($163 million)personal guarantee that he had given to the State Bank of India for loans to his companies.
His Reliance Communications (RCom), a mobile carrier launched in 2002 with cut-price plans and is currently in insolvency.
Its heavy debt load and a string of losses exacerbated its shutdown as Mukesh Ambani's Reliance Industries in 2016 launched its Jio telecoms venture, breaking the Indian telecoms market with cheap data plans and free voice services.
Most of Anil Ambani's other companies, in sectors such as defence, entertainment and infrastructure, have also struggled.
Ambani, the joint heir to Reliance Industries, forced a split in the conglomerate after his father Dhirubhai Ambani's death in 2002.
In a 2005 deal brokered by their mother, Anil Ambani won control of the power, financial services and the newly built telecoms business, while Mukesh Ambani retained the oil and petrochemicals business.
But Anil Ambani's fortunes have ebbed since and he narrowly escaped a jail sentence last year with his elder brother coming to his rescue."
Rupee settles 48 paise higher at 73.82 against US dollar after RBI Guv comments
The rupee sharply appreciated 48 paise to settle at 73.82 against the US dollar on Thursday after RBI Governor Shaktikanta Das said the central bank has not exhausted its ammunition to deal with the current situation due to the coronavirus pandemic.
At the interbank forex market, the domestic unit opened at 74.30, unchanged from its previous closing, but gained ground and finally ended at 73.82 against the greenback, higher by 48 paise over its previous close.
During the day, the local unit witnessed an intra-day high of 73.81 and a low of 74.36 against the US dollar.
Speaking at a webinar organised by financial daily Business Standard, Das said that rather than becoming averse to lending, banks have to improve their risk management and governance frameworks, and also build sufficient resilience.
India's banking sector needs more reforms, RBI governor says
A reminder from the central bank chief about long-pending reforms.
Reuters reports: "India's banking sector needs reforms in terms of governance culture and risk management practices, Reserve Bank of India (RBI) Governor Shaktikanta Das warned on Thursday.
Even though the financial sector continues to be sound and stable, more needs to be done to bring about more reforms, Das said at an event at Business Standard newspaper.
Das also raised concerns about the rising fraud cases in the banks and expressed concerns around managing such incidents.
Frauds of 100,000 Indian rupees ($1,345) and above at banks increased by 159% in terms of value in 2019/20, the RBI said in its annual report released earlier this week.
Total fraud stood at 1.86 trillion rupees in fiscal 2020 versus 715.43 billion rupees in fiscal 2019, data showed.
The RBI has also asked banks to build strong buffers at a time when bad loans are expected to rise."
Amazon faces new antitrust challenge from Indian online sellers
A group of more than 2,000 online sellers has filed an antitrust case against Amazon in India, alleging the U.S. company favours some retailers whose online discounts drive independent vendors out of business, a legal filing seen by Reuters showed.
The case presents a new regulatory challenge for Amazon in India, where it has committed $6.5 billion in investment but is battling a complex regulatory environment.
In January, the Competition Commission of India (CCI) had ordered an investigation of Amazon and rival Flipkart, owned by Walmart, over alleged violations of competition law and certain discounting practices, which Amazon is challenging, according to court filings.
Gold slips as investors book profit, await Fed's cues
The gold rally has lost steam in recent days with monetary policy decisions on the anvil.
Reuters reports: "Gold retreated on Thursday, following a sharp rise in the last session, as investors squared positions to focus on whether U.S. Federal Reserve Chairman Jerome Powell signals a change in monetary strategy.
Spot gold was down 0.8% to $1,938.32 per ounce by 622 GMT, after rising 1.3% on Wednesday. U.S. gold futures eased 0.3% to $1,946.70 per ounce.
“It was a pretty significant rally overnight on pretty limited news. The thinner Asian trading session has seen punters pull profits,” said IG Markets analyst Kyle Rodda.
“Gold bulls will be hoping, in a way, that the stars align a bit: that Powell outlines the Fed's pivot to inflation targeting, and expresses an openness to keep long term rates low, ideally through a new yield-curve control program.”
Powell is set to address the Fed's annual central bankers' conference at 1310 GMT, with investors looking for cues on inflation and monetary strategy.
The Fed has slashed interest rates to near zero and rolled out unprecedented stimulus to revive the coronavirus-hit economy, contributing to gold's over 27% climb so far this year.
Lower interest rates decrease the opportunity cost of holding non-yielding bullion and weigh on the dollar, making gold cheaper for investors holding other currencies.
“Gold should find willing buyers on dips to $1,935 an ounce. Overall, we expect gold to trade in a choppy $1,935-$1,970 range ahead of Powell's speech,” said Jeffrey Halley, a senior market analyst at OANDA.
The dollar index touched a near one-week low, while caution crept into global equities markets on fears of fresh U.S.-China tensions after Washington blacklisted 24 Chinese companies and Beijing reportedly test fired missiles into the South China Sea.
Elsewhere, silver dropped 1.5% to $27.12 per ounce. and palladium dipped by 1.1% to $2,172.93 and platinum fell 0.2% to $926.59."
Rupee gains 40 paise; touches 73.90 against dollar after RBI Guv comments
The RBI Governor's comments this morning have helped the rupee gain against the dollar with foreign investors piling in.
PTI reports: "The rupee gained sharply in afternoon trade and touched 73.90 against the US dollar on Thursday after RBI Governor Shaktikanta Das said the central bank has not exhausted its ammunition to deal with the current situation due to the coronavirus pandemic.
The rupee rose 40 paise from its closing level of 74.30 on Wednesday. In morning trade on Thursday, it had touched 74.36 against the American currency.
Speaking at a webinar organised by financial daily Business Standard, Das said that rather than becoming averse to lending, banks have to improve their risk management and governance frameworks, and also build sufficient resilience.
“Extreme risk aversion can be self-defeating, banks will not be able to win their bread,” Das said, amid reports of a slowdown in credit growth in the system.
He also said the central bank has not exhausted its ammunition, whether on rate cuts or other policy actions, to deal with the current situation due to the pandemic.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.08 per cent to 92.93.
On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 173.06 points higher at 39,246.98 and broader NSE Nifty rose 46.85 points to 11,596.45.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 1,581.31 crore on Wednesday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, rose 0.18 per cent to USD 45.72 per barrel."
Risk averseness will be self-defeating for banks: RBI Governor Shaktikanta Das
RBI Governor Shaktikanta Das on Thursday warned banks that being overly risk averse will be “self-defeating” and that lenders will not be able to win their bread if they do not carry out their basic task.
Speaking at a webinar organised by financial daily Business Standard, Mr. Das said, rather than becoming averse to lending, banks have to improve their risk management and governance frameworks, and also build sufficient resilience.
Extreme risk aversion can be self-defeating, banks will not be able to win their bread, Mr. Das said, amid reports of a slowdown in credit growth in the system, which is essential to push up the economy.
Bankers point out to past experiences and feel that containing loans from getting sour is an important objective.
Realty stocks in demand; zoom up to 15%
Investors in realty shares are excited by some reduction in the tax burden on their companies.
PTI reports: "Realty stocks on Thursday were in huge demand, rising up to 15 per cent, following the Maharashtra government’s decision to reduce the stamp duty to two per cent till December saying the move will foster demand creation and give a boost to the allied industries.
Sunteck Realty zoomed 14.61 per cent, Prestige Estates Projects 10.23 per cent, Godrej Properties 9.99 per cent, DLF 9.52 per cent, Indiabulls Real Estate 6.37 per cent, Oberoi Realty 8.28 per cent, Sobha Limited 4.12 per cent and Mahindra Lifespace Developers jumped 4.10 per cent on the BSE.
The BSE realty index was trading 7.28 per cent higher in morning trade.
The ailing real estate has welcomed the Maharashtra government’s decision to reduce the stamp duty to two per cent till December.
The state government on Wednesday decided to slash stamp duty on sale deed documents by 3 per cent from September 1 to December 31, 2020, and by 2 per cent from January 1, 2021 to March 31 2021.
Stamp duty is the transactional tax collected by the government on property purchases. Stamp duty collection is one of the largest contributors to a state’s revenues.
“CREDAI has been pursuing state governments for reduction in stamp duty since the beginning of lockdown. The move will benefit the customer and foster demand creation along with giving a stimulus to the allied industries coupled with employment generation,” CREDAI National Chairman Jaxay Shah said.
He further said that whenever there has been a reduction in the stamp duty in the past, it has only led to an increase in revenue in the government treasury."
US bond yields creep up
TikTok CEO Kevin Mayer resigns
TikTok Chief Executive Officer Kevin Mayer has left the company, less than three months after he joined the hit short video app, and U.S. General Manager Vanessa Pappas will replace him on an interim basis, according to an internal memo seen by Reuters .
The development comes days after TikTok sued the Trump administration over an executive order banning transactions in the United States with the popular short-form video-sharing app.
Mr. Mayer was Walt Disney Co's top streaming executive before he joined TikTok on June 1. He was also appointed as chief operating officer of TikTok's Chinese parent, ByteDance at the time.
Indian farmers driven to debt as banks turn risk-averse during pandemic
The government's credit programme hasn't reached many ordinary farmers yet.
Reuters reports: "Last month, Dnyaneshwar Siddhanth, a farmer from Indias western state of Maharashtra, was in desperate need of money to buy seed and fertilizer as the monsoon sowing season approached.
But after being rejected by his bank for a loan despite several attempts, Siddhanth finally borrowed 150,000 Indian rupees ($2,021) from a moneylender at a rate of 60% annually.
Amid India's worst economic slowdown in decades due to the novel coronavirus pandemic, millions of farmers like Siddhanth are being shunned by banks as lenders turn cautious due to rising bad loans.
That is forcing them to turn to illegal-moneylenders who are charging increasingly exorbitant rates, according to over a dozen farmers and bankers that Reuters spoke to.
Agriculture accounts for near 15% of India's $2.8 trillion economy and is a source of livelihood for more than half of its 1.3 billion people.
Higher interest rates will reduce farm earnings, impacting overall rural incomes which are key to reviving the economy.
“Most of the profit goes to paying interest to a private moneylender,” Siddhanth said.
“Everything now depends on monsoon rains. If the crops fail, then I will have to sell land to repay the loan.”"
Telecom subscriber base falls to 116.3 crore in May
Telecom consumer base in the country dipped to around 116.36 crore in May but service providers were able to narrow the loss of subscriber base to 57.6 lakh as compared to the previous month, according to data released by the sector regulator Trai on Wednesday.
The telecom subscriber base had declined 85.3 lakh in April, when the country was under complete lockdown, to 116.94 crore.
“The number of telephone subscribers in India decreased from 1,169.44 million at the end of April 2020 to 1,163.67 million at the end of May 2020, thereby showing a monthly decline rate of 0.49%,” the Telecom Regulatory Authority of India’s (Trai) subscription report for May said.
Sensex jumps over 200 points in early trade; Nifty tops 11,600
A good open to the day for stocks.
PTI reports: "The BSE benchmark Sensex jumped over 200 points in early trade on Thursday tracking gains in financial stocks and persistent foreign fund inflow ahead of the expiry of monthly derivative contracts.
After touching a high of 39,310.37 in opening session, the BSE Sensex was trading 200.06 points or 0.51 per cent higher at 39,273.98; while the NSE Nifty was up 52.75 points or 0.46 per cent at 11,602.35.
IndusInd Bank was the top gainer in the Sensex pack, surging around 3 per cent, followed by HDFC twins, SBI, M&M, ICICI Bank, Axis Bank, ITC and Asian Paints.
On the other hand, Bajaj Auto, Bajaj Finance, HUL and NTPC were among the laggards.
In the previous session, the Sensex closed 39,073.92, up 230.04 points or 0.59 per cent. The NSE Nifty advanced 77.35 points or 0.67 per cent to finish at 11,549.60.
Exchange data showed that foreign institutional investors bought equities worth Rs 1,581.31 crore on a net basis on Wednesday.
According to traders extended gains in banking stocks ahead of expiry of August futures and options contracts and persistent foreign fund inflow drove the gains on key indices.
Further, investors are awaiting US Fed chairman Jerome Powell’s speech at the central bank’s annual Jackson Hole symposium. Officials in the past have used the meeting, being held online this year, to make market-moving announcements.
Bourses in Hong Kong, Tokyo and Seoul were trading with losses in mid-day deals, while Shanghai was in positive territory.
Stock exchanges on Wall Street ended on a positive note in overnight session.
Global oil benchmark Brent crude was trading 0.11 per cent higher at USD 46.21 per barrel."
Advertising revenue of entertainment industry to decline in FY21: ZEEL
Is there a secular shift in advertising spend after the pandemic?
PTI reports: "Advertisers are coming back but it is still far from recovery and advertising revenue is expected to decline in 2020-21, leading media and entertainment company Zee Entertainment Enterprise Ltd has said.
Although Zee Entertainment Enterprise Ltd (ZEEL) is witnessing a significant spike on both TV and digital platforms, but its ad monetisation has gone down sharply, the company said in its annual report for 2019-20.
The company believes in the coming festive season, brands will come back with full force and by the end of this fiscal the ad growth could return to its normal trajectory.
“In the first quarter (April-June), lockdown and absence of fresh content led to a sharp decline in advertising revenue. Though things are improving sequentially, the loss of revenue in the first half will lead to de-growth in the advertising revenue for the year, ZEEL CFO Rohit Gupta said on the outlook for the business.
According to the media and entertainment major, private consumption growth in the country was tepid during FY2019-20 which forced marketers to reduce their advertising spends.
“With the wheels of economy back in motion and resumption of fresh content on our channels, we are seeing advertisers coming back and increasing their spends,” he said
Gupta further said, “However, we are still far from complete recovery. We believe that the festive season will see brands come back with full force and by the end of this fiscal the ad growth could return to its normal trajectory.
“Our estimate is that the advertising revenue for the entertainment industry could decline by 25-30 per cent during FY21,” he added.
In FY2020, ZEEL’s advertising revenues declined by 7 per cent largely due to the “macro-economic slowdown, fall in FTA revenue and loss of viewership” in certain markets.
ZEEL in March 2019 converted two of its popular free-to-air channels into pay and pulled them out from DD FreeDish.
This had a significant impact on their viewership and affected the revenue of the network, he added.
On the cost front, the media major has initiated an exercise to relook at every cost item, across businesses and functions, resorting to zero-based budgeting.
While, during FY2020, domestic subscription revenues witnessed a growth of 33 per cent led by better monetisation of TV viewership after implementation of NTO and growth in the subscriber base of its OTT platform ZEE5."
