Today's top business news: Shares tank as coronavirus cases cross 20 million, factory output rises at slowest rate in 8 months, Goldman Sachs lowers India growth forecast for FY21 to 11.1%, and more

Updates from the world of economy, markets, and finance

May 04, 2021 10:18 am | Updated 04:15 pm IST

Bombay Stock Exchange (BSE), in Mumbai. File

Bombay Stock Exchange (BSE), in Mumbai. File

The benchmark stock indices opened the day on a negative note as the total count of coronavirus cases crossed 20 million.

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

4:00 PM

Sensex slumps 465 pts; Nifty slips below 14,500

Another bad day for stocks amid the pandemic.

PTI reports: "Market benchmark Sensex tumbled 465 points on Tuesday, tracking losses in index heavyweights Reliance Industries, HDFC twins and Infosys despite a positive trend in global equities.

The 30-share BSE index ended 465.01 points or 0.95 per cent lower at 48,253.51, and the broader NSE Nifty slumped 137.65 points or 0.94 per cent to 14,496.50.

Dr Reddy's was the top loser in the Sensex pack, shedding around 2 per cent, followed by Reliance Industries, Sun Pharma, HDFC twins, Infosys, M&M and PowerGrid.

On the other hand, ONGC, Bajaj Finance, TCS, Nestle India and SBI were among the gainers.

"Domestic equities gave up gains towards the second half of the day and fell sharply as mounting uncertainty led by rise in second wave of COVID-19 cases weighed on investors’ sentiments," said Binod Modi, Head Strategy at Reliance Securities.

Barring PSU banks, selling pressure was visible across the sectors with pharma witnessing steep correction.

While a persistent increase in daily caseload in several states is still a matter of concern, visible modest decline in new cases in many parts like Maharashtra and Delhi offers comfort, he noted.

Active COVID-19 cases in India rose to 34,47,133 against 34,13,642 on Monday, according to a Health Ministry update Tuesday morning.

Elsewhere in Asia, bourses in Hong Kong and Seoul ended on a positive note. Stock exchanges in Shanghai and Tokyo were closed for holidays.

Equities in Europe were largely trading with gains in mid-session deals.

Meanwhile, international oil benchmark Brent crude was trading 1.79 per cent higher at USD 68.77 per barrel."

3:30 PM

Arrange vaccination, else we’ll stop work: Air India Pilots

One of the pilots’ unions of Air India on Tuesday threatened to stop work if the airline failed to organise vaccination camps for them on a priority basis.

“We feel let down by the self-serving approach of the management, which sees no injustice in organising vaccine camps at few bases but excludes pilots. If Air India fails to set up vaccination camps on a pan-India basis for the flying crew above the age of 18 years on priority, we will stop work,” the Indian Commercial Pilot’s Association wrote to Director Operations of Air India, Captain R S Sandhu.

The Union represents Air India pilots flying narrow body planes.

 

3:00 PM

RBI imposes ₹3 crore penalty on ICICI Bank

A penalty of ₹3 crore has been imposed on ICICI Bank Ltd for contravention of certain directions, the Reserve Bank of India said on Monday.

The RBI has imposed a monetary penalty of ₹3 crore on ICICI Bank for "contravention of certain directions issued by the RBI contained in Master Circular on 'Prudential Norms for Classification, Valuation and Operation of Investment Portfolio by Banks' dated July 1, 2015", the central bank said in a statement.

Meanwhile, ICICI Bank in a stock exchange filing said the penalty has been imposed under certain provisions of the Banking Regulation Act, 1949 for shifting certain investments from HTM category to AFS category in May 2017.

 

2:30 PM

India 1-mth dlr forward premium at highest in two decades on large dlr flows

Rupee rides a strong wave.

Reuters reports: "Near-term forward premiums in India surged on Tuesday with the one-month dollar/rupee premium trading at its highest level in more than two decades as massive dollar inflows towards an initial public offering skewed prices.

The partially convertible rupee was trading largely steady at 73.91/92 per dollar at 0830 GMT compared to its close of 73.9150 on Monday after earlier rising to 73.7725 levels.

"As long as the carry is at such elevated levels, no one will go long dollar," the head of foreign exchange trading at a private bank said.

A slight fall in local equities which were down 0.1% each, combined with the global dollar strength, kept a cap on the rupee's early gains.

The U.S. dollar extended gains, unwinding a month long decline as investors weighed chances that interest rates will be forced higher by a U.S. economic recovery and awaited upcoming data and policy speeches for clues.

India's one-month forward premium was quoted at 0.51 rupee after having touched 0.64 rupee earlier in the session, its highest since at least 2000.

The 1-year forward premium touched 4.00 rupee, its highest since August 2016.

"It is mainly due to surplus dollars lying in the system, accumulated mainly because of offshore unwinding and it has been further aggravated by Powergrid flows," a separate dealer with a private bank said.

PowerGrid InvIT's initial public offering closed for subscription on Monday and had attracted a total subscription of $2.78 billion.

Traders said the sudden unexpected surge in forward premiums has made the spot market highly illiquid and volumes are likely to stay subdued until the forward premiums correct.

"Many banks are sitting on large losses due to such erratic moves in forwards. I feel RBI will have to come out with some solution to it," said Paresh Nayar, head of forex and fixed income trading at First Rand Bank."

2:00 PM

Goldman Sachs lowers India growth forecast for FY21 to 11.1%

Another growth estimate downgrade amid the second wave of the pandemic.

PTI reports: "Wall Street brokerage Goldman Sachs has lowered its estimate for India's economic growth to 11.1 per cent in fiscal year to March 31, 2022, as a number of cities and states announced lockdowns of varying intensities to check spread of coronavirus infections.

India is suffering the world's worst outbreak of COVID-19 cases, with deaths crossing 2.22 lakh and new cases above 3.5 lakh daily. This has led to demand for imposition of nationwide strict lockdowns to stem the spread of the virus - a move that the Modi government has so far avoided after the economic devastation last year from a similar strategy.

Instead, it has left it to the states to impose restrictions to manage the virus. Several states and cities have imposed lockdowns of varying degrees.

"The intensity of the lockdown remains lower than last year," Goldman Sachs said in a report. "Still, the impact of tighter containment policy is clearly visible in higher frequency mobility data across key India cities." As containment policy has tightened, high frequency data -- particularly on the services side -- has taken a hit. The manufacturing side -- as indicated by high frequency data on electricity consumption, and the stable April manufacturing PMI -- has been more resilient.

Labour market indicators suggest that the daily unemployment rate has ticked up moderately in recent weeks, but the employment impact so far is much more contained than in April-June last year.

"Overall, most indicators still suggest that the impact has been less severe than it was in Q2 (April-June) last year," Goldman Sachs said.

While the lockdown impact is much less severe than last year, the recent declines in services indicators including e-way bills, mobility, rail freight and cargo traffic has led to trimming GDP estimates.

"While activity is likely to rebound back quite sharply from Q3 (July-September) onwards -- assuming restrictions can ease somewhat over that timeframe -- the net result is to lower our FY22 real GDP growth forecast to 11.1 per cent (from 11.7 per cent previously), and our 2021 calendar year growth forecast to 9.7 per cent (from 10.5 per cent)," it said.

Goldman Sachs is not the first brokerage which has downgraded the GDP growth projections.

While Nomura last month downgraded projections of economic growth for the current fiscal year (April 2021 to March 2022) to 12.6 per cent from 13.5 per cent earlier, JP Morgan projects GDP growth at 11 per cent from 13 per cent earlier. UBS sees 10 per cent GDP growth, down from 11.5 per cent earlier and Citi has downgraded growth to 12 per cent.

India's GDP growth had been on the decline even before the pandemic struck earlier last year. From a growth rate of 8.3 per cent in FY17, the GDP expansion had dipped to 6.8 per cent and 6.5 per cent in the following two years and to 4 per cent in 2019-20.

In the COVID-ravaged 2020-21 fiscal (April 2020 to March 2021), the economy is projected to have contracted by up to 8 per cent.

RBI has projected FY22 GDP growth at 10.5 per cent, while IMF puts it at 12.5 per cent. The World Bank sees 2021-22 growth at 10.1 per cent.

New confirmed cases are up sharply from 2 lakh a day two weeks ago. Active cases have increased to 34 lakh from 15 lakh two weeks ago.

"The outbreak is broadening to other states such as Uttar Pradesh and Karnataka, with Maharashtra's share in total active cases falling to 20 per cent, from 60 per cent a couple of weeks ago," the Goldman Sachs report said.

Testing has increased and so has the daily positive rate to 21.3 per cent, from 13.1 per cent two weeks ago.

"Medical infrastructure remains under severe pressure in many large cities with acute shortages in medical oxygen, blood plasma, key drugs and hospital beds," it said. "Government medical panel estimates suggest cases could rise to over 5,00,000 per day by mid-May." Goldman Sachs said there are some early signs of a peak in the rate of change of total active cases, although new cases and the positive testing rate remains very high.

On the vaccine front, India has vaccinated 12.6 crore beneficiaries with the first dose and 2.73 lakh beneficiaries with the second dose (9.3 per cent of total population has received at least one dose) as of May 3.

"The vaccination pace has fallen to 23 lakh per day compared to 33 lakh a day two weeks ago, as key vaccine manufacturers highlight production delays on raw-material shortages," it said. "However, these production delays are likely to be short-lived as the US loosened restrictions for vaccine raw material exports to India." Goldman Sachs said recent developments suggest that the vaccination pace could pick-up meaningfully in coming months.

The government also recently expanded vaccine eligibility to allow all adults over the age of 18 from May 1.

"Given these changes our healthcare analysts expect vaccine supply to improve significantly in the 2nd half of 2021," it said. "With increased vaccine supply and a larger eligible population pool, we now expect the country to be able to vaccinate two-thirds of its entire population by Q1-2022 from Q2-2022 previously.""

1:30 PM

Petrol price up 15 paise, diesel 18 paise after over two-week hiatus

Petrol price on Tuesday was increased by 15 paise per litre and diesel by 18 paise as state-owned fuel retailers started passing on the increase in international oil prices to consumers after an 18-day hiatus.

Petrol now costs ₹ 90.55 per litre in Delhi, up from ₹ 90.40, according to a price notification of state-owned fuel retailers.

A litre of diesel comes for ₹ 80.91, as against ₹ 80.73 previously.

Rates have been increased across the country and vary from state to state depending on the local incidence of taxation (VAT).

Oil companies, who have in recent months resorted to unexplained freeze in rate revision, had hit a pause button after cutting prices marginally on April 15. This coincided with electioneering hitting peak to elect new governments in five states including West Bengal.

12:00 PM

CII’s Kotak urges firms to voluntarily curtail operations

A day after mooting more stringent restrictions on economic activity to contain the ‘suffering’ from the pandemic, CII president Uday Kotak on Monday urged companies to take ‘voluntary measures’ to break the COVID transmission chain by minimising all activity that requires in-person presence at the work premises for the next two weeks.

Auto makers including Maruti Suzuki, Hero MotoCorp, JCB India and Honda Motorcycles and Scooters India have taken the lead by halting production temporarily or advancing maintenance schedules, to protect their employees, Mr. Kotak pointed out. Similarly, services sector firms such as Kotak Mahindra Bank, TCS and Infosys have adopted a work-from-home system.

“The healthcare system and medical personnel are stretched to the limit and exhausted. Measures to break the chain of transmission are of paramount importance to mitigate human tragedy and loss of lives, alongside augmenting health infrastructure and medical supplies,” Mr. Kotak said, asking all ‘responsible’ corporates to strive to protect their employees and ensure “their employee balance sheet” remains healthy.

 

11:30 AM

Indian shares struggle in choppy trade as coronavirus cases cross 20 mln

An update on the stock indices.

Reuters reports: "Indian shares struggled to make headway on Tuesday as the country crossed the grim milestone of 20 million coronavirus cases, with losses in heavyweights Reliance and HDFC Bank limiting advances by most banks and metal stocks.

The NSE Nifty 50 index edged up 0.08% to 14,645.95 by 0459 GMT, while the benchmark S&P BSE Sensex was up 0.03% at 48,734.19. The Nifty midcap and smallcap indexes, however, gained more than 1% each.

India reported 357,229 new COVID-19 cases over the last 24 hours, taking the total tally to 20.28 million. The second wave of COVID-19 infections has overwhelmed the healthcare system and forced several states to enter lockdowns. Several states in the world's second-most populous country have also run out of COVID-19 vaccines.

"Markets will likely remain choppy for some time because of the uncertainties around the pandemic. Investors will be waiting for clarity on the vaccine situation, plateauing of cases and whether we will see a central level lockdown again," said Aishvarya Dadheech, fund manager at Ambit Asset Management.

"The ongoing corporate earnings season is encouraging so far, and management commentary is sanguine. If the number of cases plateaus soon, it won't take much time for the economy to come back strongly."

ICICI Bank, Kotak Mahindra Bank, State Bank of India and Bajaj Finance were among the top boosts to the Nifty 50, gaining 1.9%-2.8%.

The Nifty Bank index rose 1.3%, while the Nifty Metal index advanced 1.9% to a record high on strong metal prices.

Capping the gains, conglomerate Reliance Industries and top lender HDFC Bank fell about 1.5% each.

Tata Chemicals slid nearly 8% and L&T Technology Services slumped 8.6% after both companies reported weaker quarterly profit.

Nifty 50 component Adani Ports and Special Economic Zone climbed 2.4% ahead of its quarterly results.

Asian share markets were marginally higher as investors looked to signs of recovery from the pandemic as major economies around the world reopen."

11:00 AM

Bill and Melinda Gates divorce: Wealth and philanthropy of the billionaire couple

Billionaire benefactors Bill and Melinda Gates, co-founders of one of the world's largest private charitable foundations, filed for divorce on Monday after 27 years of marriage but pledged to continue their philanthropic work together.

Bill Gates, 65, who co-founded Microsoft Corp, and his spouse, Melinda French Gates, 56, in a joint petition, asserted their legal union was "irretrievably broken," but said they had reached agreement on how to divide their marital assets. Their divorce will entail complex decisions about how to handle their wealth. Mr. Gates is ranked No. 4 on the Forbes list of the world's wealthiest individuals, with an estimated $124 billion fortune.

Here are details about their wealth and the couple’s philanthropic activities.

 

10:30 AM

'Speculative excess': ethereum finds new peak in sizzling crypto market

Cryptocurrency ether rose to afresh record peak on Tuesday before dropping sharply as some investors pulled profits from a white-hot market bulging with questionable new entrants.

A day after blowing past $3,000 for the first time, ether, the token traded over the ethereum blockchain, hit $3,457.64 on the bitstamp exchange before dropping 6% to $3,244.

That still leaves it with a gain of some 340% this year. Therise is in part a spillover from flows into bitcoin, which has grown in stature as big-name investors from Elon Musk's carmaker Tesla to Wall Street investor Stanley Druckenmiller buy in.

 

10:00 AM

Banks buoy Indian shares; coronavirus cases cross 20 mln

A good start to the day for stocks.

Reuters reports: "Indian shares edged higher on Tuesday, supported by gains in financials and metal stocks, even as the country crossed the grim milestone of 20 million coronavirus cases.

The NSE Nifty 50 index rose 0.24% to 14,669.95 by 0355 GMT, while the benchmark S&P BSE Sensex inched up 0.2% to 48,813.62.

India reported 357,229 new COVID-19 cases over the last 24 hours, taking the total tally to 20.28 million, health ministry data showed.

The second wave of COVID-19 infections has overwhelmed the healthcare system and forced states to enter lockdowns, but has not hit the equity market as hard as in the initial wave last year. The Nifty is up about 5% so far in 2021.

On Tuesday, the Nifty Bank index rose 1.1%, while the Nifty Metal index advanced 1.8% to a record high.

Nifty 50 component Adani Ports and Special Economic Zone climbed 2.4% ahead of its quarterly results."

9:30 AM

Factory orders, production rise at slowest rates in 8 months in April in India: PMI

India’s manufacturing sector activity was largely flat in April, as rates of growth for new orders and output eased to eight-month lows amid the intensification of the COVID-19 crisis, a monthly survey said on May 3.

The seasonally adjusted IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) was at 55.5 in April, little changed from March’s reading of 55.4.

In PMI parlance, a print above 50 means expansion while a score below 50 denotes contraction.

“The PMI results for April showed a further slowdown in rates of growth for new orders and output, both of which eased to eight-month lows amid the intensification of the COVID-19 crisis,” said Pollyanna De Lima, Economics Associate Director at IHS Markit.

Ms. Lima also noted that “the surge in COVID-19 cases could dampen demand further when firms’ financials are already susceptible to the hurdle of rising global prices.” The daily COVID-19 cases in India showed a slight dip with 3,68,147 new coronavirus infections being reported in a day, taking the total tally of cases to 1,99,25,604, according to the Union Health Ministry data updated on May 3.

 

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