Today's top business news: Large-scale job losses and lower food intake amid lockdown, SC questions RBI on interest waiver, negative interest rates fuel gold rally, and more

Updates from the world of economy, markets, and finance

Updated - June 04, 2020 04:36 pm IST

Published - June 04, 2020 09:44 am IST

Migrant worker Kiran Devi and her children walk along a road in New Delhi on June 3, 2020 to her home in Chhatarpur, Madhya Pradesh. Ms. Devi started her journey on May 23, 2020 from Jalandhar.

Migrant worker Kiran Devi and her children walk along a road in New Delhi on June 3, 2020 to her home in Chhatarpur, Madhya Pradesh. Ms. Devi started her journey on May 23, 2020 from Jalandhar.

The benchmark indices opened this morning with moderate gains but soon lost ground to trade in the red.

All eyes are on the pace of economic recovery as the lockdown is lifted in phases by the government even as case counts rise.

Join us as we follow the top business news through the day.

4:30 PM

Negative interest rates fuel gold rally


4:15 PM

Amazon in talks to buy $2 billion stake in Bharti Airtel, say sources

Amazon .com is in early-stage talks to buy a stake worth at least $2 billion in Indian mobile operator Bharti Airtel , three sources with knowledge of the matter told Reuters , underscoring the growing attraction of India’s digital economy for U.S. tech giants.

The planned investment, if completed, would mean Amazon acquiring a roughly 5% stake based on the current market value of Bharti, which is India’s third-largest telecoms company with more than 300 million subscribers.

The discussions between Amazon and Bharti come at a time when global players are placing major bets on the digital arm of Reliance Industries, which owns Bharti’s telecom rival Jio .

Reliance ’s digital unit has raised $10 billion in recent weeks from Facebook, KKR and others.


4:00 PM

Sensex snaps 6-day winning run to end 129 points lower; bank stocks tank

The benchmark stock indices snapped their 6-day winning streak on the back of a string of bad news.

PTI reports: "Snapping its six-day winning streak, equity benchmark Sensex closed 129 points lower on Thursday, dragged by losses in banking stocks amid weak cues from global markets.

After swinging 599 points during the day, the 30-share index settled 128.84 points or 0.38 per cent lower at 33,980.70. It hit an intraday high of 34,310.14 and a low of 33,711.24.

Likewise, the NSE Nifty slipped 32.45 points or 0.32 per cent to close at 10,029.10. During the day, the index rose to 10,123.85 and touched a low of 9,944.25.

Asian Paints was the top laggard in the Sensex pack, falling around 5 per cent, followed by Bajaj Finance, HDFC, IndusInd Bank, Axis Bank and Kotak Bank.

On the other hand, Tech Mahindra, Sun Pharma, Bharti Airtel and HCL Tech were among the gainers.

According to Narendra Solanki, Head- Equity Research (Fundamental), Anand Rathi, market opened flat tracking mixed global market cues in Asia as investors were seen weighing in prospects of economic recovery.

Market weakened further as India saw the single- largest one-day spike in COVID-19 cases, he said, adding the overhang of Supreme Court’s statement on the ongoing interest moratorium case led to a selloff in financial stocks.

The Supreme Court has sought the finance ministry’s reply on waiver of interest on loans during the moratorium period after the RBI said it would not be prudent to go for a “forced waiver of interest” risking financial viability of the banks."

3:30 PM

SC questions RBI on payment of interest on bank loans after three-month moratorium

The Supreme Court questioned the Reserve Bank of India’s (RBI) regulatory package requiring the continuation of payment of interest on bank loans after the three-month moratorium during the pandemic lockdown is lifted.

“On one hand granting moratorium and then payment of interest... This is detrimental... These are unprecedented times... These are not normal times,” Justice Sanjay Kishan Kaul orally remarked during the virtual court hearing.

Justice M.R. Shah, also on the Bench led by Justice Ashok Bhushan, wondered what relief had ultimately been granted if loan interest continued to accrue for the moratorium period.


3:10 PM

Rupee settles 10 paise lower at 75.57 against US dollar

The rupee weakened against the dollar despite heavy buying of domestic equities by foreign investors.

PTI reports: "The rupee depreciated 10 paise to provisionally close at 75.57 against the US dollar on Thursday as strengthening US dollar and weak domestic equities weighed on investor sentiment.

Forex traders said sustained foreign fund inflow and the revival of business activities supported the local unit, but concerns about US-China trade tiff dragged the local unit down.

The rupee opened weak at 75.62 at the interbank forex market, then gained some lost ground and settled for the day at 75.57 against the US dollar, down 10 paise over its last close.

It had settled at 75.47 against the US dollar on Wednesday.

During the trading session, the local currency touched an intra-day high of 75.38 and a low of 75.62 against the US dollar.

On the equities front, the 30-share BSE benchmark Sensex was quoting 198.45 points lower at 33,911.09 and broader Nifty fell 52.90 points to 10,008.65.

Foreign institutional investors were net buyers in the capital market as they bought equity shares worth Rs 1,851.12 crore on Wednesday, according to provisional exchange data."

3:00 PM

Work from home trend may change location preference of home buyers

The Covid-19 crisis could bring about certain secular changes in the country's real estate market.

IANS reports: "As several companies adopt ‘work from home’ policy on a long term basis, housing preferences of working people in terms of location are set to change.

According to a report by Anarock Property Consultants, with work from home becoming a norm, prospective home buyers are likely to move to the peripheral areas of cities where they are likely to get a bigger home at affordable prices compared to the cities.

“The COVID-19 era presents a radically transformed real estate market, with preferences changing to accommodate new market realities. With work-from-home a viable option even after the lockdown, many future homebuyers will shift to the peripheral areas for bigger homes and a better lifestyle — at more affordable prices,” it said.

The report said that the previous ‘gold standard’ of Indian housing a” “walk-to-work or “short drive to work” — the norm living in and around central corporate workplace hubs, may shed some of its popularity for the middle class. Central locations would retain their allure for high net worth individuals and C-suite’ level buyers who can afford larger spaces there.

“The work-from-home concept may become the next fulcrum for homebuying decisions,where the walk-to-work option had held the longest sway,” says Anuj Puri, Chairman, Anarock Property Consultants.

He added that with the rise of the work from home culture, many may now prefer to live in more spacious and cost-effective homes in less central areas.

While sufficient supply currently exists in most of the peripheries, this new demand will eventually also dictate fresh supply, Puri said, adding that bigger homes, affordable prices and more generous open spaces in the peripheral areas will draw demand from tenants and buyers alike."

2:30 PM

TVS Motor unveils EMI scheme

TVS Motor Company, the manufacturer of two-and-three-wheelers, has rolled out ‘Buy now pay after six months’ equated monthly instalment (EMI) scheme for TVS XL100, which is valid till July 31, 2020.

Once the applicable customer avails the scheme after the purchase of TVS XL100, they are offered a moratorium of six months before the commencement of EMI payment. In effect, the customer will get a six-month holiday from EMI. The Loan to Value for this scheme will be 75%, said the company in a statement.


2:10 PM

World food price index hits 17-month low in May

Global food prices have surprisingly dropped as a sharp fall in demand outweighed the inflationary effect of disrupted supply chains.

Reuters reports: "World food prices fell for a fourth consecutive month in May, hit by the economic fallout of the coronavirus pandemic which has stymied demand, the United Nations food agency said on Thursday.

The Food and Agriculture Organization (FAO) food price index, which measures monthly changes for a basket of cereals, oilseeds, dairy products, meat and sugar, averaged 162.5 points last month, down 1.9% on April.

It was the lowest monthly reading since December 2018.

The dairy index dropped 7.3%, led by sharp falls in both butter and cheese, partly because of lower import demand.

The cereal price index slipped 1% as coarse grain prices continued their decline, with U.S. maize prices some 16% down on the year, and wheat export prices falling, amid expectations of ample global supplies. International rice prices edged higher.

Vegetable oil prices fell 2.8% to a 10-month low, while the meat index slipped 0.8%. Poultry and pig meat quotations continued to fall, reflecting high export availabilities and despite an increase in import demand in East Asia.

Bucking the general downward trend, the sugar price index jumped 7.4% in April largely because of lower-than-expected harvests in some major producers, notably India and Thailand.

FAO also posted its first forecast for the 2020 cereal season, foreseeing global output of 2.780 billion tonnes -- a 2.6% increase on 2019's record harvest."

1:35 PM

Gold gains after biggest daily decline in a month

The yellow metal may be at a crucial inflection point as the global economy returns to normalcy with the easing of lockdowns.

Reuters reports: "Gold prices ticked up on Thursday, after a rally in equity markets in the previous session on tentative signs of economic recovery as mandated shutdowns ease sparked the biggest daily fall in the metal since April 30.

Spot gold rose 0.2% to $1,701.02 per ounce by 0715 GMT after a 1.7% drop on Wednesday. U.S. gold futures fell 0.1% to $1,703.70.

The market is seeing some “corrective action” after Wednesday's steep decline, said DailyFx currency strategist Ilya Spivak.

Optimism over the prospect of an economic recovery as coronavirus-related lockdown restrictions ease has dampened demand for the safe-haven metal recently, sending prices down 1.5% so far this week.

“The consensus is finding it difficult to be too bullish on the yellow metal at the moment, with equity markets soaring higher by the day,” said Stephen Innes, chief market strategist at financial services firm AxiCorp, in a note

Despite improving risk sentiment, gold prices are holding above the key $1,700 an ounce level on simmering Sino-U.S. tensions, protests in U.S. cities and a weaker dollar.

The dollar index has fallen about 1% this week, with optimism over the reopening of economies around the world reducing demand for the greenback."


1:10 PM

COVID-19 impact on business not “materially adverse” so far: Nestle India

FMCG major Nestle India on Thursday said the impact of coronavirus pandemic on its business operations has not been “materially adverse” so far and the company will continue to evaluate the consequences of the health crisis and subsequent lockdown as the situation evolves.

The company also does not see any “specific challenge in terms of its capital or financial resources” or any “significant deviation in profitability”, Nestle India said in a regulatory filing.

Nestle India, a subsidiary of Nestlé of Switzerland, further said it has “strong cash position” and is in a “comfortable liquidity position” to meet its financial commitments.

“While the impact of COVID-19 on the company’s business operations has not been materially adverse so far, it is extremely difficult to assess its impact on near-term and annual results. The company continues to evaluate the impact of COVID-19 as the situation evolves,” said Nestle India.


12:40 PM

Reliance Industries closes $7 billion rights issue, India's largest ever

The much-touted Reliance rights issue worth over $7 billion has come to a close.

PTI reports: "India's oil-to-telecoms giant Reliance Industries on Wednesday closed a $7 billion rights issue, India's largest ever, luring buyers in with a rare deferred payment offer.

Proceeds from the issue, also ranked as one of the world's biggest by a non-financial company based on Dealogic data, will aid Reliance's plan to slash net debt to zero this year.

The issue was subscribed about 1.6 times, in “a vote of confidence, by both domestic investors, foreign investors and small retail shareholders, in the intrinsic strength of the Indian economy”, billionaire owner Mukesh Ambani said a statement late on Wednesday.

Reliance launched the issue last month, offering existing shareholders one new share for 15 held at a discounted price of 1,257 rupees ($17) apiece.

Investors could pay only a quarter of the price upfront, and the rest in two instalments until November 2021.

Also, in a first, Reliance said the partly paid up shares could be traded on stock exchanges, giving investors a chance to buy more of the discounted issue than the entitlement and making it an attractive bet for arbitrage players.

The shares will be allotted on June 10 and listed on the exchanges on June 12, the conglomerate has said."

12:20 PM

With a draconian but porous lockdown, India flattened GDP curve instead of COVID-19: Bajaj Auto MD

The contrarian business leader Rajiv Bajaj has once again voiced his displeasure with the government's stringent lockdown.

PTI reports: "India implemented a “draconian” lockdown that was porous and has ended up decimating its economy and flattening the GDP curve instead of that of the novel coronavirus infections, industrialist Rajiv Bajaj said on Thursday.

He said it is a herculean task to open up the economy and called for taking fear out of people’s minds through a “very clear, aligned narrative” from none other than the prime minister.

“We tried to implement a hard lockdown which was still porous. So I think we have ended up with the worst of both worlds,” he said.

The managing director of Bajaj Auto was in a dialogue with Congress leader Rahul Gandhi, as part of a series on India’s COVID-19 response and the lockdown initiated by the Congress and aired on the party’s social media platforms.

The industrialist said, “We are not seeing a smooth, concerted, rhythmic movement towards unlocking.”

“On one hand a porous lockdown makes sure that the virus will still exist and as you said, it is still waiting to hit you when you will unlock. So you have not solved that problem.

“But you have definitely decimated the economy. You flattened the wrong curve. It is not the infection curve, it is the GDP curve. This is what we have ended (up) with, the worst of both worlds,” Bajaj said."


11:50 AM

Recovery from COVID-19 to be painfully slow: survey

COVID-19 and its associated safety measures, including lockdown since March 24 have taken a heavy toll on the economy, and particularly on vulnerable, informal and migrant workers and their families.

After showing the mirror to Karnataka on the impact on livelihoods, Azim Premji University has now come out with the results of the survey for Bihar, Jharkhand, Madhya Pradesh and Odisha. The survey has revealed great disruption in the economy and labour markets. “While livelihoods have been devastated at unprecedented levels during the lockdown, the recovery from this could be slow and very painful,” the researchers have said.

In response to the findings of this survey, the team which conducted the study suggests a few measures to ameliorate the conditions of those most affected by the crisis.


11:30 AM

Survey shows large scale job losses, lower food intake amid lockdown

A survey sheds light on the pain experienced by people in the unorganized sector of the economy.

IANS reports: "A survey conducted by the Azim Premji University has shown heavy job losses for informal and migrant workers in the four states of Bihar, Jharkhand, Odisha and Madhya Pradesh due to the lockdown.

The disruption in the economy and labour markets in these states is enormous. Livelihoods have been devastated at unprecedented levels during the lockdown and the recovery from this could be slow and very painful, the survey pointed out.

The sample for the survey was selected using the networks of civil society organisation collaborators.

“The findings pertain only to the sample and are not representative of the entire state. Findings should not be compared across states,” it said.

For the survey in Bihar (Rural) with 173 respondents, it said nearly half (46 per cent) of the respondents lost employment. Casual wage workers were more severely affected, with eight in 10 casual workers losing jobs.

More women (55 per cent) lost employment compared to men (35 per cent). More SC/ST workers (58 per cent) lost employment compared to OBC workers (35 per cent). Nearly seven in 10 households had to reduce their food intake during the lockdown.

The SC/ST households were the worst affected in terms of food intake as 85 per cent of them were consuming less food than before.

Nearly two in 10 vulnerable households did not receive rations. More than half (56 per cent) of the vulnerable households did not receive Jan Dhan cash transfer. Four in 10 vulnerable households did not receive any cash transfer, the survey said for Bihar."

11:20 AM

S&P 500 records best 50-day rally in history


11:00 AM

Rupee slips 15 paise to 75.62 against US dollar in early trade

The weakness in domestic equities on the rupee, which depreciated against the dollar this morning.

PTI reports: "The rupee depreciated 15 paise to 75.62 against the US dollar in opening trade on Thursday as strengthening US dollar and US-China trade tensions weighed on investor sentiments.

Forex traders said sustained foreign fund flows and the revival of business activities supported the local unit, but concerns about US-China trade tiff dragged the local unit down.

The rupee opened weak at 75.62 at the interbank forex market, down 15 paise over its last close.

It had settled at 75.47 against the US dollar on Wednesday.

“Strong local shares, supported by foreign fund inflows could keep depreciation limited,” Reliance Securities said in a research note, adding that investors will look ahead to cues from the European Central Bank’s meeting and US jobless claims data.

Investors are also concerned about rising number of coronavirus cases and its impact on the global as well as domestic economy."

10:40 AM

FRBM framework will need to be updated, says former CEA Subramanian

It looks like tweaks to the Fiscal Responsibility and Budget Management (FRBM) Act may be necessary as the Centre's fiscal math goes for a toss this year.

PTI reports: "Former chief economic adviser Arvind Subramanian on Wednesday said the FRBM Act will probably have to be revised by the end of the year as India will witness a sharp decline in GDP growth due to the COVID-19 crisis.

Addressing a webinar organised by EY India, Subramanian further said while labour reforms were necessary, the way they have been done by some states have undermined basic protections to workers, especially in light of the migrant crisis.

“It is going to be a very very difficult economic year. We should brace ourselves for a sharp decline in GDP growth.” he said.

Talking about India’s current macroeconomic situation amid the COVID-19 pandemic, he said the Fiscal Responsibility and Budget Management (FRBM) Act and terms of reference of the 15th Finance Commission will probably have to be revised and updated.

“Compared to the Budget 2020-21, I think the facts have changed. We will probably have to revise, and update Budget numbers, the FRBM framework and the terms of reference of the 15th Finance Commission at the end of the year,” Subramanian emphasised.

The FRBM Act of 2003 seeks to reduce the country’s fiscal deficit through financial discipline.

He also pointed out that due to the Rs 20 lakh crore economic package announced by the government to mitigate the impact of the COVID-19 pandemic, India’s debt-to-GDP will rise to 85 per cent.

The eminent economist also noted that the pandemic in India is not under control."

10:20 AM

Job postings in India halved towards May end: Indeed India

Indeed India, an arm of the Texas-based job search engine, has reported a 50% decline in job postings in May, across all sectors, in the country.

Under certain segments, postings - jobs available on the site - have come down very significantly. For instance, as of May end, hospitality and tourism-related job postings, on the portal's India site, were down by 75.3%, compared to the corresponding month a year ago. Decline in postings under the segment was 69.2% as on May 15.

Indeed, that claims to be the world's largest job portal, also reported a 42% decline in retail-related job postings, as against the same time a year ago.


10:00 AM

Sensex surges over 200 points in early trade; Nifty tests 10,100 level

The rally in benchmark stock indices continues as investors are enthused by the reopening of the economy.

PTI reports: "Equity benchmark Sensex surged over 200 points in early trade on Thursday, led by strong buying in HDFC Bank, ICICI Bank, TCS and Reliance Industries amid persistent foreign fund inflow.

After hitting a high of 34,310.14, the 30-share index was trading 124.02 points or 0.36 per cent higher at 34,233.56.

Similarly, NSE Nifty rose 41.65 points or 0.41 per cent to 10,103.20.

Tech Mahindra was the top gainer in the Sensex pack, rising around 3 per cent, followed by Sun Pharma, TCS, PowerGrid, HDFC Bank, HCL Tech and ICICI Bank.

On the other hand, Titan, M&M, ONGC and HDFC were among the laggards.

In the previous session, the BSE barometer settled at 34,109.54, up 284.01 points or 0.84 per cent, while the broader Nifty rose 82.45 points or 0.83 per cent to end at 10,061.55.

On a net basis, foreign portfolio investors bought equities worth Rs 1,851.12 crore in the capital market on Wednesday, provisional exchange data showed.

Besides stock-specific action, sustained foreign fund inflow led to the positive sentiment in the market, traders said.

However, benchmarks may succumb to profit-booking and turn jittery amid weak cues from Asian peers, they added."


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