The benchmark stock indices opened the day with modest gains but have since lost ground.
Reliance Industries has managed to strike its sixth deal in just a few months as the company looks to massively deleverage itself.
Join us as we follow the top business news through the day.
Elon Musk hits out at Jeff Bezos
Sensex rallies 307 points; SBI soars over 7% post Q4 show
The benchmark stock indices have ended what has been a strong week with further gains.
PTI reports: "Equity benchmark Sensex rallied 307 points on Friday, propelled by gains in index-heavyweights HDFC Bank, ICICI Bank and SBI.
After hitting a high of 34,405.43, the 30-share index settled 306.54 points or 0.90 per cent higher at 34,287.24.
Similarly, the NSE Nifty rose 113.05 points or 1.13 per cent to 10,142.15.
State Bank of India (SBI) was the top gainer in the Sensex pack, surging around 8 per cent, after the country’s largest lender reported an over four-fold jump in standalone net profit at Rs 3,580.81 crore for the March quarter.
Tata Steel, Bajaj Finance, HDFC Bank, NTPC, Axis Bank and ICICI Bank also ended with firm gains.
On the other hand, TCS, HUL, Bajaj Auto and Infosys were among the laggards.
Reliance Industries (RIL) succumbed to profit-booking, ending flat after touching its one-year high in intra-day trade. The company announced sale of 1.85 per cent stake in its digital unit Jio Platforms to Abu Dhabi-based sovereign investor Mubadala for Rs 9,093.60 crore.
According to traders, besides stock-specific action, persistent foreign fund inflows and positive cues from global markets led to bullish sentiment here."
Need to use resources prudently in COVID-19 crisis, don’t initiate any new scheme: FinMin to ministries
The Finance Ministry, pressed for resources, has barred other ministries from creating new spending schemes.
PTI reports: "The finance ministry has asked all ministries and departments not to initiate any new scheme in the current financial year and said that there is a need to use resources prudently in the wake of the COVID-19 crisis.
However, funds for schemes under the Pradhan Mantri Garib Kalyan Package, the Aatmanirbhar Bharat Abhiyan package and any other special package or announcement would be allocated, according to an office memorandum by the Department of Expenditure, which comes under the finance ministry.
Also, schemes that are already approved for the currrent financial year will remain suspended till March 31 next year or further orders. This would also include those schemes for which in-principle approval has been given by the department.
“It may be appreciated that in the wake of the COVID-19 pandemic, there is an unprecedented demand on public financial resources and a need to use resources prudently in accordance with emerging and changing priorities,” the expenditure department said adding that it has been receiving many new proposals for in-principle approval from various ministries or departments.
“No new proposals for a scheme/sub-scheme should be initiated this year (2020-21) except the proposals announced under the Pradhan Mantri Garib Kalyan Package, the Aatmanirbhar Bharat Abhiyan package and any other special package/announcement,” it said.
With regard to the existing ongoing schemes, the department said it has already given an interim extension till March 31, 2021, or till the date the recommendations of the 15th Finance Commission come into effect, whichever is earlier.
“No funds may be released for schemes that are not in strict conformity to the instructions...nor should budgetary provisions be made available by re-appropriation to such schemes,” it said adding any exceptions to these guidelines would require approval of the expenditure department."
SBI reports over four-fold jump in Q4 profit at ₹3,581 crore
The country’s largest lender SBI on Friday reported over four-fold jump in standalone net profit at ₹3,580.81 crore for March quarter 2019-20.
State Bank of India (SBI) had registered a profit of ₹838.4 crore during January-March period of 2018-19, the lender said in a regulatory filing.
Income of the bank during March quarter of the last financial year rose to ₹76,027.51 crore from ₹ 75,670.5 crore in the same period of 2018-19, SBI said.
Rupee settles on a flat note, slips 1 paisa to 75.58 against US dollar
A recap of the rupee's performance today against the US dollar.
PTI reports: "The rupee surrendered all intra-day gains to provisionally close on a flat note at 75.58 against the US dollar on Friday as investors looked for cues to move forward and take positions.
Forex traders said positive domestic equities, sustained foreign fund flows, revival of business activities and weak US dollar supported the local unit, but there were still a slew of risks, including US-China trade tiff, that weighed on the currency.
At the interbank forex market, the rupee opened strong at 75.38, but later pared gains and finally settled at 75.58 against the US dollar, down 1 paisa over its last close of 75.57.
“The USD/INR spot has been trading in a very tight range 75-75.65 as investors await catalyst to move forward and take positions,” said Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services.
Currently, the spot is in indecisive market and going forward the focus will be on Jio-Mubadala deal related dollar flows, US-China trade spat and whether there is a second wave of infection.
The expectations of more stimulus measures from the US government drove the optimism in the market, however, Trump administration postponed the meeting to next week crashing investors’ hopes, he said.
Technically, 75 is a crucial support and break off which can take spot towards 74.50 or bounce from there can take prices towards 76.50,” he added."
MSMEs facing difficulties in accessing COVID-related relief packages
MSMEs are finding it hard to get their hands on the stimulus money promised by the Centre.
PTI reports: "MSMEs are seriously concerned about the implementation of the emergency COVID-19-related packages meant as relief for industry as they face innumerable difficulties in accessing benefits at the level of banks, according to Karnataka Small Scale Industries Association (KASSIA).
For one, guidelines issued under the Emergency Credit Link Guarantee Scheme (ECLGS) are not uniform and different banks have framed their own guidelines leading to confusion and hardship in making use of the schemes at a time when industries are in dire straits, KASSIA President R Raju said in a statement.
The same confusion exists with regard to moratorium on the repayment of installments and interest as well as other compliances. While some banks may be transparent and forthcoming, a number of others are unsure and place hurdles in the way of the MSME customers in accessing these benefits, he said.
KASSIA has received a number of complaints and representations from its members about the difficulties in accessing the schemes.
We, therefore, would like to seriously urge the government to immediately ensure that uniform guidelines are issued and followed by all the Banks and other institutions as otherwise a large number of MSMEs, accounting for approximately 30-35 per cent of the units, may have no option but to shut down for want of succour, Raju added."
Taj ‘strongest’ Indian brand: Brand Finance report
The iconic Taj brand of Tata Group’s Indian Hotels Company Ltd. (IHCL) has been ranked No. 1 in the list of the strongest Indian brands by Brand Finance in its ‘India 100 2020’ report.
Taj is nation’s strongest addition to measuring overall brand value, Brand Finance,
a leading global brand valuation consulting firm said.
The top 10 Indian brands in terms of brand value for this year include Taj, Jio, HP, Maruti Suzuki, HDFC Bank, IndiGo, IndianOil, LIC, ACC and Amul.
US Federal Reserve fuels stock market rally
UltraTech Cement restricts FY21 capex to Rs 1,000 crore amid COVID-19 disruptions
Companies trying to see through uncertain times may be cutting down on their long-term investment plans.
PTI reports: "UltraTech Cement has restricted its capital expenditure plans for this fiscal to Rs 1,000 crore due to COVID-19 disruptions, as conserving its cash position has become the “biggest motto” for the company this year.
In a regulatory filing, the Aditya Birla Group firm said the capital and financial resources of the company remain entirely protected in spite of the adverse impact on its sales during the first two phases of the lockdown and the liquidity position remains “adequately covered“.
“Due to COVID-19, capital expenditure (CAPEX) plans for the current financial year have been restricted to an amount of around Rs 1,000 crore, said UltraTech in a disclosure of material impact of COVID—19 pandemic.
It is continuously monitoring any material changes in future economic conditions.
“The company’s capital and financial resources remain entirely protected in spite of the adverse impact on its sales during the first two phases of the lockdown. The company’s liquidity position remains adequately covered.
“During the lockdown period also, the company has been servicing its debt obligations as per schedule and on due dates,” it said, adding it doesn’t not require to avail the moratorium extended by banks as per the Reserve Bank of India guidelines.
“Conserving cash is the biggest motto for the company this year. The company is carrying sufficient inventories across all its plants to meet the production requirements,” it said.
The company further noted that work on the 2.2 million ton Cuttack grinding unit, in Odisha, which was scheduled for commissioning in March, 2021 has been slowed down."
Most MSMEs to shed staff to revive: survey
Over 70% of MSMEs who responded to a survey by the All India Manufacturers Organisation (AIMO) intend to reduce headcount across the board. AIMO received 46,525 responses from MSMEs, corporate CEOs, the self-employed, experts and individuals. About 49% of the survey’s respondents were from MSMEs and 7% were corporate CEOs.
“The most striking aspect of the survey was that 72% of MSME respondents and 42% of corporate respondents said they would definitely reduce headcount to get their business back on track. In fact, only less than 20% of all categories said they would continue with the same headcount,” said K.E. Raghunathan, immediate past president, AIMO.
Emerging markets face external funding risks
RIL shares hit record high post another investment in Jio
Traders are excited as more investors show interest in picking a piece of RIL.
IANS reports: "Shares of Reliance Industries (RIL) Friday hit a record high of Rs 1,617.70 per share after the company announced to get another major investment in Jio Platforms.
RIL’s market capitalisation is currently around Rs 10.09 lakh crore.
Its share price, however, has declined from the record level and around 10.52 a.m., it was trading at Rs 1,591.35 on the BSE, higher by Rs 11.40 or 0.72 per cent from its previous close.
RIL on Friday announced that Mubadala Investment Company (Mubadala), the Abu Dhabi-based sovereign investor, will invest Rs 9,093.60 crore in Jio Platforms at an equity value of Rs 4.91 lakh crore and an enterprise value of Rs 5.16 lakh crore.
With this investment, Jio Platforms has raised Rs 87,655.35 crore from leading global technology and growth investors including Facebook, Silver Lake, Vista Equity Partners, General Atlantic, KKR and Mubadala in less than six weeks."
Rupee rises 19 paise to 75.38 against US dollar in early trade
Heavy foreign buying helped the rupee appreciate against the US dollar this morning.
PTI reports: "The rupee appreciated 19 paise to 75.38 against the US dollar in early trade on Friday as strong domestic equity supported by foreign fund inflows boosted investor sentiments.
Forex traders said positive domestic stock market, sustained foreign fund inflows, weak American currency and upbeat risk appetite supported the rupee.
The rupee opened on a strong note at 75.38 at the interbank forex market, up 19 paise over its last close.
It had settled at 75.57 against the US dollar on Thursday.
On the equities front, the 30-share BSE benchmark Sensex was quoting 87.70 points higher at 34,068.40 and broader Nifty rose 42 points to 10,071.10
Foreign institutional investors were net buyers in the capital market, as they bought shares worth Rs 2,905.04 crore on Thursday, according to provisional exchange data."
Bad loans to rise sharply, PSBs stare at 6th year of loss: ICRA
With debt servicing capacity of borrowers coming under strain as the country enters a period of possible economic recession, bad loans of Indian banks are expected rise sharply this fiscal, which could lead to yet another year of loss for public sector banks (PSBs), ratings agency ICRA said in a report.
ICRA estimated gross non-performing assets to rise to 11.3-11.6% by March 2021 from an estimated level of 8.6% for March 2020, with fresh gross slippage of 5-5.5% of standard advances in FY21. The agency said uncertainty on the asset quality of banks remains high with almost 30-40% of the loan book across various banks under the repayment moratorium.
US unemployment claims climbed by 1.88 million last week
The US labor markets shows no signs of tightening even as the economy is reopened gradually.
IANS reports: "The number of US unemployment claims totalled 1.88 million last week as the COVID—19 pandemic continues to sweep the nation, the Labour Department reported.
In the week ending May 30, the number of Americans filing for unemployment benefits decreased by 249,000 from the prior week to 1,877,000, the ninth weekly decline in a row but remaining staggeringly high, Xinhua news agency quoted the Department as saying on Thursday.
With the latest numbers, 42.6 million initial jobless claims have been filed over the past 11 weeks, meaning that nearly 28 per cent of all Americans employed in February lost their jobs, at least temporarily, according to Tim Quinlan, senior economist at Wells Fargo Securities.
“Last week we were excited to see that continuing claims fell, indicating that gross hiring had picked up enough to pull down the number of people receiving benefits.
“There was no such consolation this week, as they rose again to 21.5 million,” Quinlan said on Thursday.
The Labour Department is expected to release its jobs report in May on Friday.
US employers cut a staggering 20.5 million jobs in April, and the unemployment rate soared to a record 14.7 per cent.
Diane Swonk, chief economist at Grant Thornton, a major accounting firm, believed that US unemployment will remain painfully high in May and throughout the summer."
Mubadala to buy 1.85% stake in Jio Platforms for ₹9093.6 crore
Mubadala, the Abu Dhabi-based sovereign investor, has agreed to invest ₹9,093.60 crore in Mukesh Ambani led Jio Platforms for 1.85% stake, valuing Jio Platforms at enterprise value of ₹5.16 lakh crore.
Jio Platforms, a wholly-owned subsidiary of Reliance Industries (RIL), with this investment, has raised ₹87,655.35 crore from leading global technology and growth investors including Facebook, Silver Lake, Vista Equity Partners, General Atlantic, KKR and Mubadala in less than six weeks.
Jio Platforms, a next-generation technology platform focused on providing high-quality and affordable digital services across India, has more than 388 million subscribers.
Shares edge higher led by Reliance, financials
The end to the 6-day winning streak yesterday did not deter equity investors this morning.
Reuters reports: "Indian shares edged higher on Friday, helped by gains in financial stocks and a surge in conglomerate Reliance Industries after Abu Dhabi state fund Mubadala invested in its digital unit.
The NSE Nifty 50 bluechip index rose 0.74% to 10,100 as of 0347 GMT, while the S&P BSE Sensex was up 0.69% at 34,214.63. Both the indexes were on track for second straight weekly gains.
The Nifty 50 has risen 5.36% so far this week, after a similar rally last week.
Reliance Industries Ltd hit a record high on Friday at 1,618 rupees after it said Mubadala Investment Co will buy a 1.85% stake in its digital unit, Jio Platforms, for 90.93 billion rupees ($1.21 billion)
India's top lender by assets, State Bank of India, rose 1.58% ahead of March quarter results later in the day, while the Nifty banking index rose 1.32%.
Meanwhile, MSCI's broadest index of Asia-Pacific shares outside of Japan slipped 0.2%, ahead of Friday's U.S. nonfarm payrolls data."
