The Nifty and the Sensex opened the day on a choppy note after yesterday's gains. They have since lost ground to trade in the red. The benchmark indices continue to be range-bound this month.
Join us as we follow the top business news through the day.
David Einhorn bets against tech stocks
Sensex plunges 600 pts; Nifty cracks below 11,750
Another day of deep correction for stocks.
PTI reports: "Equity benchmark Sensex plunged 600 points on Wednesday, tracking heavy losses in index majors Reliance Industries, HDFC Bank and ICICI Bank amid a massive selloff in European markets.
After hitting a low of 39,774.60 during the day, the 30-share BSE index ended 599.64 points or 1.48 per cent lower at 39,922.46.
Similarly, the broader NSE tanked 159.80 points or 1.34 per cent to close at 11,729.60.
IndusInd Bank was the top loser in the Sensex pack, shedding over 3 per cent, followed by HDFC, ICICI Bank, Tech Mahindra, Bajaj Finance, UltraTech Cement and Tata Steel.
On the other hand, Bharti Airtel was the top gainer, rallying more than 4 per cent, after the country’s second largest telecom operator reported its highest-ever quarterly consolidated revenue, helping it narrow losses in the July-September period.
Consolidated revenue rose 22 per cent to Rs 25,785 crore in the September quarter, while net loss narrowed to Rs 763 crore.
M&M, Maruti and L&T also ended with gains.
According to analysts, Indian equities faced intense selloff after European markets opened with heavy losses amid spiking COVID-19 cases.
Extremely volatility was also witnessed ahead of monthly derivatives expiry and US presidential election, they said.
Benchmarks in Europe plunged up to 3 per cent in early deals.
Bourses in Hong Kong and Tokyo ended on a negative note, while Shanghai and Seoul were in the positive territory.
Meanwhile, international oil benchmark Brent crude was trading 3.20 per cent lower at USD 40.28 per barrel."
Financial conditions recover significantly after hitting the abyss in April: Crisil
An update on conditions in the credit market.
PTI reports: "Financial conditions in India have witnessed a speedy recovery from the COVID-19 pandemic-led harrowing abyss courtesy the Reserve Bank’s interventions, domestic credit rating agency Crisil said on Wednesday.
While easy global monetary policies have helped, the RBI’s accommodative stance has contained short-run pressures no less, the agency said, citing its newly-launched monthly Financial Conditions Index (FCI).
Financial conditions in India have staged a full-throttle recovery from the harrowing abyss they had been sent flailing into by the COVID-19 pandemic in April, it stated.
It said the central bank’s measures have helped mitigate the large and broad-based economic damage caused by the pandemic.
However, it made it clear that pockets of stress still remain, pointing to the weak bank credit growth, wider spreads on lower-rated corporate bonds, and fundamental pressures due to high government borrowing.
The agency has used 15 conditions for constructing the FCI, which includes monetary policy conditions, money market, equity markets, external finance conditions, bank lending conditions and money supply in the economy.
It said the FCI is designed to give a comprehensive measure of financial conditions for the Indian economy by capturing price and supply variables across financial markets, along with prevailing risk sentiments.
Not only does it capture the extent of monetary policy transmission across various financial market segments, but also evaluates the policy stance itself in the context of prevailing inflation conditions, it said.
The financial conditions had been tightening since the IL&FS default in 2018, leading the FCI to turn negative, it said, adding that the COVID-19 pandemic only magnified the same to make it tightest in a decade in April 2020.
The FCI value was far below one standard deviation from the long-term average, implying significant tightening, it said. The only time when FCI dipped to a similar level earlier was in 2013, during the Fed taper tantrum.
However, the FCI has been improving since then and turned positive in July. Currently the financial conditions are easiest in two years, it stated.
It said RBI’s sharp rate cuts and unconventional measures have helped ease financial conditions.
The multitude of steps taken by the RBI, coupled with global easing have helped ease the financial conditions in India visibly since April, though weak bank credit growth, wider spreads of lower-rated corporate bonds, and fundamental pressure imposed by high government borrowing indicate that some stress persists, it said.
While the central bank’s accommodative stance should help in the short-run, it remains to be seen until when and to what extent these pressures will be masked, it added."
Airtel’s India metrics strong in Q2, revenue surpasses estimates: Analysts
Airtel's quarterly results have enthused analysts.
PTI reports: "Bharti Airtel has delivered “solid” all round performance in the September quarter with revenue surpassing estimates, while its India mobile metrics logged improvement in key areas like growth in total subscribers without ARPU dilution, and 4G additions, according to analysts.
ICICI Securities said Bharti Airtel’s second quarter numbers underlined “superior execution” in India mobile and other segments.
“Bharti’s India mobile print shows marked improvement in many areas such as growth in total subs without ARPU dilution which shows quality of customer addition; lower churn rate increasing life-time value of customers and continued delivery of 4G net add, which has now likely matched the market leader,” it said in a report on Tuesday.
ICICI Securities believes that higher 4G subscriber base will enable the telco to better transfer tariff hike into Average Revenue Per User (ARPU), whenever such hike happens.
On Tuesday, Bharti Airtel reported its highest-ever quarterly consolidated revenue, on the back of a rise in data usage and higher realisations, helping narrow losses.
Consolidated revenue for India’s No.2 telecom operator rose 22 per cent to Rs 25,785 crore in the July-September quarter while net loss narrowed to Rs 763 crore.
Goldman Sachs has termed Airtel’s Q2 as “another solid quarter” and noted that the telco surpassed estimates, both on topline and operating profit level.
A key surprise was the strong data subscriber addition, which Goldman Sachs estimated could result in some ARPU increase in the December quarter.
Data for the last 9-12 months suggests Bharti has largely closed the gap versus Jio on wireless revenue growth, while Bharti’s divergence with Vodafone Idea has continued, Goldman Sachs said.
“We expect this quarter to be no different, and forecast 4 per cent quarter-on-quarter revenue growth for both Jio and Vodafone Idea, versus 7 per cent for Bharti,” the Goldman Sachs note said.
CLSA, in its report, observed that Airtel’s September quarter revenue and Earnings before Interest Tax Depreciation and Amortisation or EBITDA were “ahead of estimates”, its India mobile 4G and subscriber momentum was “strong”, and its ramp-up in non-mobile businesses “commendable”.
In a note on Tuesday evening, Jefferies said Airtel’s 14 million subscriber additions and sequential margin expansion in India mobile and growth in Africa operations “surprised positively“.
“We remain constructive despite uncertainty around timing of next tariff hike, as, in its absence, market share gains are playing out,” it added."
Rupee settles 16 paise lower at 73.87 against US dollar
The rupee depreciated 16 paise and settled at 73.87 against the US dollar on Wednesday as heavy selling in the domestic equity market and strengthening American currency weighed on investor sentiment.
At the interbank forex market, the rupee opened on a positive note at 73.70 against the greenback, but soon pared the gains and closed for the day at 73.87, registering a decline of 16 paise over its previous close of 73.71.
In a volatile trading session, the domestic unit witnessed an intra-day high of 73.64 and a low of 73.93 against the US currency.
“The toxic brew of no US fiscal stimulus and rapidly rising coronavirus cases are dwindling market sentiments, especially ahead of the US election event risk,” said Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services.
TikTok leans into e-commerce with Shopify deal
The popular short-form video app TikTok, still under US government scrutiny for its Chinese ownership, is moving closer to becoming a marketplace for buying stuff.
Canadian e-commerce platform Shopify said on Tuesday it’s made a deal with TikTok enabling merchants to create shoppable video ads that drive customers to online stores.
The partnership was announced Tuesday amid stalled negotiations for Walmart to buy a 7.5% stake in the video app. Walmart’s planned investment is part of a government-forced deal that would rescue TikTok from a threatened ban by President Donald Trump and advance Walmart’s ambitions for the world of social commerce.
Bharti Airtel shares jump nearly 13% as company logs highest-ever quarterly revenues
The telecom giant's tariff-hike efforts seem to be bearing fruit.
PTI reports: "Shares of Bharti Airtel jumped nearly 13 per cent on Wednesday after the company reported its highest-ever quarterly consolidated revenue on the back of a rise in data usage and higher realisations.
The stock gained 12.65 per cent to Rs 487.80 on the BSE.
On the NSE, it zoomed 12.61 per cent to Rs 488.
The country’s second largest telecom operator, on Tuesday reported its highest-ever quarterly consolidated revenue on the back of a rise in data usage and higher realisations, helping it narrow losses in the July-September period.
Consolidated revenue rose 22 per cent to Rs 25,785 crore in the September quarter while net loss narrowed to Rs 763 crore.
The quarterly showing was bolstered by an all-round growth across the portfolio -- geographies and segments, and rise in average revenue per user (ARPU) as well as strong 4G additions.
The net loss (before exceptional items) for Q2 FY21 was at Rs 744 crore while loss after exceptional items stood at Rs 763 crore.
Airtel’s revenue at Rs 25,785 crore in the just-concluded quarter marked the “highest ever consolidated quarterly revenues“.
In the September quarter, India revenue rose 22 per cent year-on-year to Rs 18,747 crore led by strong 4G customer momentum."
Drop in leisure driving stalls global recovery in fuel demand
Here's what may be hindering global fuel demand from returning to normal.
Reuters reports: "Brandon Thompson was planning on making an eight-hour drive this year from his home in Iowa to Ann Arbor, Michigan, to see his favorite college football team play. Then the pandemic hit.
“We realized very early on if there was a season, there would be no fans,” said Thompson, a University of Michigan Wolverines fan.
Millions of people like Thompson worldwide continue to cancel or curtail leisure trips as the COVID-19 pandemic maintains its grip on many countries. That is contributing to a slower-than-expected recovery in fuel demand.
Thompson would have driven more than 500 miles (805 km) to see the game and go tailgating, where thousands of fans arrive hours early to sit in the parking lot and eat and drink. Across the country, fans of many sports would have made similar journeys.
Traffic outside of the 7 a.m. to 10 a.m. and 4 p.m. to 7 p.m. rush hours accounts for about 55% of overall U.S. fuel demand, according to Rystad Energy. That includes trips to sporting events, shuttling kids to activities, or going to the movies. Non-rush leisure travel was down by 12% from pre-virus levels as of early October, Rystad said.
Mobility is again declining in Europe, where several nations are reimposing lockdowns due to a spread in cases, which are soaring as well in India and Brazil.
“The downwards trend in European mobility indicators is likely to continue, with pressure on road transportation fuels demand probable in the weeks ahead,” JBC Energy said in a note.
The Organization of the Petroleum Exporting Countries (OPEC) warned that the recovery in fuel demand from strict lockdowns earlier this year has been anemic and could hamper oil markets for months to come.
The United States at 9 million barrels per day is the world's biggest gas guzzler, more than double the second-largest consumer, China, according to U.S. Energy Department figures. Demand in China has rebounded more than in other major world economies.
Non-rush traffic had been recovering in the United States until September when it stalled, according to Artyom Tchen, senior oil market analyst at Rystad. Non-rush traffic levels globally are currently off by 1 million barrels per day from pre-COVID levels, Tchen said, to about 25.2 million barrels per day.
“The kids today, their parents are crazy: They'll drive like 300 miles for a hockey game,” said John Kilduff, partner at Again Capital in New York. Without those trips, gasoline demand is likely to remain near its current 8.5 million barrels per day, Kilduff said.
The United Kingdom is one of the worst hit countries in Europe, with its driving mobility falling to levels last seen in March, when the first round of restrictions came into effect, according to Apple mobility data.
In Germany, traffic is even lower, with visits to restaurants, cafşs, shopping centers, theme parks, museums, libraries and cinemas falling by 12% last week."
Cognizant names Rajesh Nambiar as Chairman and Managing Director of India
Nasdaq-listed IT firm Cognizant has appointed Rajesh Nambiar as the Chairman and Managing Director of India and a member of Cognizant’s Executive Committee effective November 9, 2020.
He joins Cognizant from Ciena, a networking, systems, and software company, where he currently serves as Chairman and President of Ciena, India.
“In the repositioned and elevated role of the India Chairman and Managing Director, Rajesh will strengthen our brand positioning in India and enhance our relationships with relevant Indian government agencies, chambers of commerce, universities, the media, and key policy-making bodies, including NASSCOM,” said Brian Humphries, CEO, Cognizant. “Rajesh will also serve as the Executive Committee representative of our nearly 200,000 associates in India,” he added.
In a statement issued by Cognizant, Mr. Nambiar said, “My priority is to build upon Cognizant’s rich legacy of innovation, industry leadership, and client-centric employee culture to help the company engineer modern businesses that improve everyday life.”
Restaurant stocks prove immune to Covid
Hero MotoCorp and Harley Davidson to partner for Indian market
Hero MotoCorp on Tuesday said that it has entered into a distribution and licensing agreement with American motorcycle maker Harley Davidson to develop and sell a range of premium motorcycles under the Harley Davidson brand name.
The announcement comes almost a month after Harley-Davidson Inc. announced that it will discontinue sales and manufacturing operations in India as part of a global strategic restructuring plan ‘The Rewire’.
“As per a distribution agreement, Hero MotoCorp will sell and service Harley-Davidson motorcycles, and sell parts & accessories and general merchandise riding gear and apparel through a network of brand-exclusive Harley-Davidson dealers and Hero’s existing dealership network in India,” Hero MotoCorp said in a statement.
It added that as part of a licensing agreement, Hero MotoCorp will develop and sell a range of premium motorcycles under the Harley-Davidson brand name.
Rupee inches 6 paise higher to 73.65 against U.S. dollar in early trade
The rupee opened on a flat note and inched 6 paise higher to 73.65 against the U.S. dollar in early trade on October 28 supported by foreign fund flows.
At the interbank forex market, the rupee was trading in a narrow range. It opened at 73.70 against the American currency, gained some ground and touched 73.65, up 6 paise from its previous close.
On October 27, the rupee settled at 73.71 against the U.S. dollar.
“MSCI’s decision to tweak the Foreign Ownership Factor for Indian equities, taking into account the government’s decision to increase the cap on foreign portfolio investment in Indian equities to respective sectoral FDI caps, would push India’s weight in the MSCI EM index to 8.8% from 8.1% currently,” said Abhishek Goenka, Founder and CEO, IFA Global.
Mr. Goenka further added that “this is likely to result in inflows to the tune of $4 billion into Indian equities”.
According to Goenka, USD-INR is likely to see range bound price action during the day. “We expect an intra-day range of 73.65-74.05,” he said.
Bharti Q2 loss narrows to ₹763 crore
Bharti Airtel on Tuesday reported a net loss of ₹763 crore for the quarter ended September 30 even as it posted its highest-ever consolidated quarterly revenue of ₹25,785 crore driven by a rise in data usage and new 4G users.
The net loss for the second quarter is significantly lower than the net loss of ₹23,045 crore recorded in the July-September 2019 quarter on account of higher provisioning following a Supreme Court order related to adjusted gross revenues (AGR). “Despite being a seasonally weak quarter, we delivered a strong performance with revenue growing at 22% year-on-year,” said Gopal Vittal, MD and CEO, India & South Asia. “Our continued focus on ARPU improvement and cost optimisation led to EBITDA margin expansion by over 158 basis points in the quarter sequentially,” he added. The company said India revenue for the quarter came in at ₹18,747 crore, an increase of 22%, while mobile revenue rose 26%. The ARPU (average revenue per user) increased to ₹162 compared with ₹128 in year-earlier quarter. It added that 4G data customers increased by 48% to 152.7 million, while traffic increased to 77.3 petabytes (PB)/day compared with 48.9 PB/day a year earlier. Meanwhile, the home business segment witnessed a revenue growth of 7.3% with more than 1.29 lakh customers added during the quarter, taking the total base to 25.8 lakh customers.
On the AGR issue, the company said, “The group has represented to DoT that it has already paid more than 10% of the total dues as demanded by the DoT and will ensure ongoing compliance with the Hon’ble Supreme Court’s orders.”
Sensex, Nifty start on choppy note; Bharti Airtel soars 10%
October continues to remain a mixed month for stocks which have managed very little progress.
PTI reports: "Equity benchmarks Sensex and Nifty opened on a volatile note on Wednesday as investors await directional cues from domestic as well as global markets.
After swinging 258 points in the opening session, the 30-share BSE index was trading 75.75 points or 0.19 per cent higher at 40,597.85. Similarly, the broader NSE Nifty advanced 29.90 points or 0.25 per cent to 11,919.30.
Bharti Airtel was the top gainer in the Sensex pack, rallying over 10 per cent, after the country’s second largest telecom operator reported its highest-ever quarterly consolidated revenue, helping it narrow losses in the July-September period.
Consolidated revenue rose 22 per cent to Rs 25,785 crore in the September quarter while net loss narrowed to Rs 763 crore.
M&M, Maruti, Bajaj Finance, Bajaj Finserv, NTPC, Axis Bank and Infosys were also among the gainers.
On the other hand, Kotak Bank fell around 2 per cent, followed by HDFC, HUL, ICICI Bank and Titan.
In the previous session, Sensex surged 376.60 points or 0.94 per cent to finish at 40,522.10, while Nifty climbed 121.65 points or 1.03 per cent to 11,889.40.
Exchange data showed that foreign institutional investors purchased equities worth Rs 3,514.89 crore on a net basis on Tuesday.
According to Arjun Yash Mahajan Head Institutional Business at Reliance Securities, Indian equities are expected to be volatile ahead of monthly derivatives expiry and US presidential election.
However, news pertaining to a fiscal stimulus before Diwali, MSCI rebalancing next month and healthy 2Q corporate earnings are likely to aid the domestic market, he said.
Bourses in Hong Kong, Seoul and Tokyo were trading on a negative note in mid-session deals, while Shanghai was in the positive territory.
Equities on Wall Street ended on a mixed note in overnight session.
Meanwhile, international oil benchmark Brent crude was trading 1.78 per cent lower at USD 40.87 per barrel."
Tata Motors loss widens to ₹314 cr. on CV decline
Tata Motors Ltd. reported a wider consolidated net loss of ₹314 crore for the second quarter ended September 30 compared with a net loss of ₹217 crore a year earlier.
The auto major had reported a net loss of ₹8,438 crore in the quarter ended June.
Consolidated revenue in the latest quarter declined 18% to ₹53,530 crore due to a decline in commercial vehicle and Jaguar Land Rover (JLR) sales volumes.
“Despite concerns around risk of a second wave of infection in many countries and other geopolitical risks, we expect a gradual recovery of demand and supply in the coming months,” the company said in a regulatory filing.
