Stocks opened the day with significant gains of over 1% after falling sharply over the last few sessions.
Shares of Reliance Industries have jumped after news of another stake sale to pare down debt.
Join us as we follow the top business news through the day.
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Equity MF inflows hit 4-month low of Rs 6,108 crore in April
The sharp drop in the benchmark indices has had a negative effect on inflows into equity mutual funds.
PTI reports: "Inflows into equity mutual funds dropped to a four-month low of Rs 6,108 crore in April as the broader market witnessed extreme volatility on concerns over the coronavirus pandemic.
Overall, the mutual fund industry witnessed net inflows of Rs 45,999 crore across all segments, data by the Association of Mutual Funds in India showed on Friday.
In comparison, an outflow of Rs 2.13 lakh crore was seen in March.
As per the data, inflows into equity and equity-linked open ended schemes stood at Rs 6,213 crore, while an outflow of Rs 105 crore was seen from close ended funds, taking the net inflow to Rs 6,108 crore.
In March, such schemes attracted a net infusion of Rs 11,485 crore, which was the highest level in a year.
Prior to this, equity schemes saw an investment of Rs 10,760 crore in February, Rs 7,547 crore in January and Rs 4,432 crore in December.
Fears of deepening global slowdown due to the COVID-19 outbreak and subsequent lockdowns have spooked the markets globally, including in India.
Almost all the equity-oriented mutual fund categories registered net inflows last month."
Sensex ends 199 points higher; Reliance Industries rallies over 3%
The benchmark indices gave up a huge chunk of their gains after being up well over 1.5% during the day.
PTI reports: "Equity benchmark Sensex ended 199 points higher on Friday, propelled by strong gains in index-heavyweight Reliance Industries and positive cues from global markets.
After rallying 645.13 points during the day, the 30-share index surrendered most gains to settle 199.32 points or 0.63 per cent higher at 31,642.70.
Similarly, NSE Nifty rose 52.45 points, or 0.57 per cent, to finish at 9,251.50.
Hindustan Unilever was the top gainer in the Sensex pack, rallying over 4 per cent, followed by Nestle India, Tech Mahindra and Sun Pharma.
Reliance Industries was the biggest contributor to the gains on the index, jumping over 3 per cent after the company announced that US-based private equity firm Vista Equity Partners will buy 2.32 per cent stake in Jio Platforms for Rs 11,367 crore.
On the other hand, NTPC, M&M, Axis Bank and IndusInd Bank were among the laggards.
According to traders, besides stock-specific action, firm cues from global markets and strong foreign fund inflows enthused buying activity in the domestic market.
Foreign portfolio investors purchased equities worth a net Rs 19,056.49 crore in the capital market in the previous session, provisional exchange data showed."
RIL's repositioning as consumer, tech company to support stock price, says JP Morgan
More analysts are turning bullish on Reliance Industries as the company tries to deleverage its balance sheet.
IANS reports: "The core energy business of Reliance Industries Limited (RIL) could be staring at a multi-year slump, but “repositioning as a consumer/technology company” should continue to support stock price, according to US brokerage, JP Morgan.
After the Facebook (FB) and Silver Lake stake sale in Jio Platforms (JPL), RIL has announced a deal to sell a 2.23 per cent stake in Jio Platforms (JPL) to Vista Partners for US $ 1.5 billion. This takes the total equity flow into JPL to $ 7.95 billion for a total equity sale of 13.45 per cent.
“We expect the news flow and expectations of ‘similar sized deals’ to continue to drive near-term stock outperformance as it allows investors to look through near-term earnings weakness”, JP Morgan said in a research.
JP Morgan said that the core energy business could be staring at multi-year slump, but “repositioning as a consumer/technology company” should continue to support stock price.
“While we build in a sharp recovery in refining and petchem, the global outlook is increasingly for a muted recovery, given the global overcapacity and large hit to demand, even as we come out of COVID-19. The sharp fall in crude makes the gasifier and India gas investments non-accretive”, it said.
“However Retail, Jio, the FB investment with WhatsApp partnership and, now, the comments about another potential investor in Jio Platforms provide valuation support and a case for further re-rating, in our view, as they allow investors to look beyond the near-term earnings weakness”, it added."
Investors exit stocks at fastest rate since March, “tech fatigue” sets in
Stocks may have recovered from their March lows, but fund flows suggests investors are still not back to being bullish.
Reuters reports: "Investors pulled $16.2 billion from stocks in the past week in the largest weekly redemption since the March stock market slump, according to the Bank of America's weekly flows data.
Stock markets have staged a remarkable recovery in the past month after the coronavirus crisis cause a massive tumble in March. The rebound has been powered by technology stocks but BofA said there were signs of “tech fatigue”.
Technology stocks saw the first week of outflows so far this year, with investors redeeming $43 million worth, BofA said its weekly research note.
Gold and high-yield bond funds both saw their biggest six-week inflows on record, with $32 billion flowing into high-yielding bonds in what analysts called a “high-yield comeback”.
Investors added $11.3 billion into bonds and $53.5 billion into cash in the past week, BofA said, with an internal indicator of sentiment at “extreme bearish”.
As lockdown measures aiming to limit the spread of the new coronavirus have brought the global economy to a halt, BofA analysts said that they had seen a massive inflow to cash from BofA private clients in the past four to eight weeks.
The U.S. bank also said that nine of ten clients believed the current market recovery was a “bear market rally” and seven out of ten said they would only buy the assets that the U.S. Federal Reserve purchases through it various stimulus schemes."
Shares and currencies boosted by hopes of easing Sino-U.S. tensions
Global markets are in risk-on mode today with stocks and currencies rallying quite heavily.
Reuters reports: "Emerging market currencies firmed on Friday as signs of an improvement in frayed Sino-U.S. relations lifted sentiment, with Turkey's lira continuing its rebound from a record low hit a day earlier.
China's commerce ministry said its top trade representatives and their U.S. counterparts agreed over a call on Friday to strengthen economic and public health cooperation and create a favourable environment to implement the Phase 1 trade deal struck in January.
“That will be of substantial relief to markets, as the last thing the world economy needed right now, was an escalation in hostilities on that front,” said Jeffrey Halley, senior market analyst, Asia Pacific at OANDA.
Investors had been fretting over the potential fallout from yet another escalation in tensions between the world's two biggest economies as countries struggle with the economic havoc wrought by the new coronavirus pandemic.
Turkey's lira climbed 0.3% after some early choppiness. The currency had bounced 1% in the last session after touching all-time lows.
Most Asian shares gained taking an index of regional shares excluding Japan up 1%. Mainland China shares rallied after Beijing further opened up its financial markets to foreign investors.
Along with gains in Turkey South Africa as well as central Europe , MSCI's index of emerging market stocks looked set to post its best session in more than a week."
Most Indians to wait for vaccine before making travel plans
The ongoing coronavirus pandemic has brought about a paradigm shift in people’s approach towards travel as a recent survey has found that most Indians want to wait for a vaccine to be found against COVID-19 before they make travel plans after the lockdown is lifted.
Further, while weekend getaways and road trips can still be considered, international trips are out of the question in the coming months with many now preferring to opt for hotels with a high rating instead of homestays.
While fear of crowds emerged as the biggest concern among travellers, most would now prefer a high rating hotel instead of an Airbnb-kind of accomodation.
India's fuel demand growth could return to normal by mid-May
The government is optimistic about the return of normalcy after fuel demand more than halved since the lockdown.
Reuters reports: "India's fuel demand growth could return to normal levels by mid-May as the nation takes steps to end a lockdown aimed at stemming the spread of COVID-19, oil minister Dharmendra Pradhan said, helping refiners hit by severe inventory losses.
Fuel demand growth in India, the world's third-biggest oil importer and consumer, plunged to historic lows in April, provisional data shows, as the country's eight-week long lockdown hit economic and industrial activity.
“Since last two week there is a gradual increase in the demand, very slow ... but we are confident by middle of May we will be moving towards the normal position. That's our calculation,” Pradhan told IHS Markit's CERAWeek conversations.
Falling fuel demand has reduced crude processing by refiners, who are facing storage constraints at a time when lower cracks in overseas markets have made exports unattractive.
Pradhan said the slump in global oil prices, together with with falling fuel demand, would lead to inventory losses for refiners. Refiners had to defer some oil cargoes due to the fall in local demand, he added."
Economic activity at 49-57% during lockdown, says McKinsey
Here's an estimate of the level of economic activity during the lockdown and the risks involved going forward.
IANS reports: "Only 49 to 57 percent of Indias economic activity has operated during the lockdown so far, with 143 million to 186 million inactive non-farm workers, according to a research by McKinsey and Company.
In the past six weeks, India’s economy has functioned at 49 to 57 per cent of its full activity level, by our estimates, McKinsey said in a report.
That economic cost, though unavoidable in the early stages of a lockdown, might not be sustainable in the longer term. It is becoming increasingly clear that COVID-19 will not disappear immediately; the economy will need to be managed alongside persistent infection risks, possibly for a prolonged period. After reopening, some countries have needed to resume lockdowns in response to rising infection rates, and India may be no exception, the report said.
India’s intertwined supply chains need a sharply targeted lockdown approach India’s manufacturing, labor, and distribution chains are intertwined across sectors and geographies, particularly in the wake of the Goods and Services Tax, McKinsey said."
Moody’s Investors Service sees India’s economic growth at ‘zero’ in FY21
The global ratings agency isn't very optimistic about India's growth and credit rating forward.
PTI reports: "Moody’s Investors Service on Friday said it estimates India’s GDP growth to hit ‘zero’ in FY21 and pointed to a wide fiscal deficit, high government debt, weak social and physical infrastructure, and a fragile financial sector.
The quality of India’s economic growth has declined in recent years, demonstrated by financial stress among rural households, relatively low productivity and weak job creation, the agency said.
In its forecast for FY21, the agency estimated India’s gross domestic product (GDP) growth at zero, meaning the country’s economic growth will remain flat this financial year, and the same is seen accelerating to 6.6 per cent in FY22.
In its credit opinion which comes following the change in the forecast, Moody’s warned that the COVID-19 “shock will exacerbate an already material slowdown in economic growth, which has significantly reduced prospects for durable fiscal consolidation“.
Analysts across the board have been certain about the heavy economic toll that the pandemic will take on the country.
Moody’s local arm Icra has pegged for a contraction of up to 2 per cent in the growth as a result of the crisis, which has seen the country being put under a lockdown for nearly two months to arrest the spread of infections.
Late last month, Moody’s had slashed its calendar year 2020 GDP growth forecast to 0.2 per cent.
Its negative outlook on the sovereign rating, which was revised last in November 2019 from ‘stable’, reflects increasing risks that economic growth will remain significantly lower than in the past, it said, adding that this takes into account the deep shock triggered by the virus outbreak."
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India inflation likely fell to a five-month low in April
The drop in consumer demand owing to the nation-wide lockdown is expected to push inflation to a five-month low in April.
Reuters reports: "Indian retail inflation eased to a five month low in April as the nationwide lockdown imposed to try to quell the spread of the coronavirus and subsequent sluggish demand drove price pressures down, a Reuters poll found.
The May 5-7 poll median of more than 40 economists predicted India's annual consumer price inflation fell to 5.68% in April from March's 5.91%, still above the Reserve Bank of India's medium-term target of 4.00%.
Forecasts in the poll ranged between 4.50% and 7.00% and about 80% of participants expected inflation to be below the upper band of the RBI's inflation target range of 2.00-6.00%.
“The economic inactivity caused by the lockdown has been a big driver for inflation in April, leading to a broad-based deceleration in price pressures across all components except food,” said Rini Sen, India economist at ANZ.
“Although food prices rose in the month - owing to larger supply side constraints - it was more than offset by weaker price pressures across all other components, including domestic fuel prices.”"
U.S.-based Vista Equity Partners picks 2.32% stake in Jio Platforms for ₹11,367 crore
US-based private equity firm Vista Equity Partners will buy a 2.32% stake in billionaire Mukesh Ambani’s digital unit, Jio Platforms, for ₹11,367 crore, the company announced on Friday.
“This investment values Jio Platforms at an equity value of ₹4.91 lakh crore and an enterprise value of ₹5.16 lakh crore,” the company said in a statement.
Vista’s investment will translate into a 2.32% equity stake on a fully diluted basis, making Vista the largest investor in Jio Platforms behind Reliance Industries and Facebook.
Facebook had bought 9.99% stake in Jio Platforms — the firm that houses India’s youngest but biggest telecom firm, for ₹43,574 crore. That deal was followed by Silver Lake — the world’s largest tech investor — buying 1.15% stake in Jio Platforms for ₹5,665.75 crore.
Sensex rallies over 600 points in early trade; RIL jumps 2%
Foreign buying has helped prop up the benchmark indices this morning after a sharp drop the last few days.
PTI reports: "Equity benchmark Sensex rallied over 600 points in opening session on Friday as strong gains in index-heavyweight Reliance Industries, massive foreign fund inflow and positive global cues boosted market sentiment.
After touching a high of 32,088.51, the 30-share index was trading 559.96 points or 1.78 per cent higher at 32,003.34.
Similarly, NSE Nifty surged 175 points, or 1.90 per cent, to 9,374.05.
IndusInd Bank was the top gainer in the Sensex pack, soaring over 4 per cent, followed by Kotak Bank, Hindustan Unilever and Axis Bank.
Shares of Reliance Industries jumped over 2 per cent after the company announced that US-based private equity firm Vista Equity Partners has picked up 2.32 per cent stake in Jio Platforms for Rs 11,367 crore.
On the other hand, PowerGird, HCL Tech, Asian Paints and NTPC were trading in the red.
In the previous session, the BSE barometer dropped 242.37 points or 0.76 per cent to close at 31,443.38. The broader NSE Nifty slipped 71.85 points, or 0.78 per cent, to 9,199.05.
Foreign portfolio investors purchased equities worth Rs 19,056.49 crore in the capital market on Thursday, provisional exchange data showed.
According to traders, besides stock-specific action, massive foreign fund inflow and firm cues from global markets enthused buying activity in the domestic market."
