The benchmark stock indices, which have rallied in recent weeks, are witnessing some resistance as investors look to book profits.
Another global rating agency has passed a negative judgment on India's growth prospects owing to the lack of sufficient fiscal stimulus.
Join us as we follow the top business news through the day.
Global stocks are now most expensive since 2002
Sensex tanks 414 points; financial stocks tumble
A strong start to the day turned ugly pretty soon as financial stocks pulled the indices down.
PTI reports: "Benchmark Sensex plunged 414 points on Tuesday, dragged by heavy losses in heavyweights HDFC Bank, RIL and ICICI Bank as investors fretted over the rising number of COVID cases in the country.
After opening on a positive note, the 30-share index reversed all early gains to settle 413.89 points, or 1.20 per cent, lower at 33,956.69.
In a similar movement, the NSE Nifty declined 120.80 points, or 1.19 per cent, to 10,046.65.
ICICI Bank was the top laggard in the Sensex pack, falling around 3 per cent, followed by Bharti Airtel, HDFC Bank, Bajaj Finance, Kotak Bank and Axis Bank.
On the other hand, IndusInd Bank, Sun Pharma, M&M and HDFC were among the gainers.
According to analysts, domestic market succumbed to profit-booking at higher levels as concerns over rising number of COVID-19 cases in the country outweighed the optimism over reopening of the economy."
Pre-owned cars strike chord with customers as lockdown eases
Some striking changes in consumer behavior in the car market is underway as the lockdown is eased.
PTI reports: "As the COVID-19 restrictions ease, more customers are looking to buy pre-owned cars with average selling price going down as compared to that in the pre-lockdown period, according to used cars buying and selling platform CARS24.
The preferred top five models in pre-owned cars continue to be Maruti Suzuki Swift, Hyundai Santro Xing, Hyundai Grand i10, Honda City and Maruti Suzuki Swift Dzire.
CARS24 had conducted a customer survey when the lockdown was imposed to find how the COVID-19 pandemic was likely to impact consumers with regards to owning a car in the post-lockdown era.
“In that research what actually came out was in favour of the auto industry with 40-45 per cent customers saying they would want to commute via their own cars after lockdown is over, primarily because of the fact that they would feel safer and avoid infection,” CARS24 Co-founder and CMO Gajendra Jangid told PTI.
The company then asked customers who were planning to buy cars before the lockdown was imposed and how their decision has changed post-lockdown.
“We found that 23 per cent of respondents have changed their preference of buying a new car to a used car. That was primarily driven by the fact that their budget has decreased, they have a crunch and they don’t want to spend that much money. There is a shift in car ownership in favour of used cars as well,” he added."
Flipkart introduces AI-driven voice assist for shopping
E-commerce player Flipkart has introduced Voice Assistant capability on its platform, to make buying experience simpler and natural. Introduced in Flipkart’s grocery store, Supermart, the Voice Assistant will enable consumers to discover and buy products easily using voice commands in multiple languages, starting with Hindi and English, said a company statement.
The voice-first conversational AI platform has been built by in-house technology team with solutions for Speech Recognition, Natural Language Understanding, Machine Translation, and Text to Speech for Indian languages. These solutions are capable of understanding vernacular languages such as Hindi, e-commerce categories and products, and tasks such as searching for a product, understanding product details, placing an order, etc.
The indigenously developed AI platform is built to automatically detect the language spoken by the user, and in real-time transcribe, translate, transliterate and understand the user’s intent to have engaging shopping-related conversations in various Indian languages, as per the company.
FDI from Cayman Islands to India jumps three-fold to $3.7 billion in 2019-20
Tax havens continue to dominate when it comes to acting as domiciles for investors.
PTI reports: "Cayman Islands has emerged as the fifth largest investor in India, with foreign direct investment from the nation increasing over three-fold to USD 3.7 billion in 2019-20, according to the Department for Promotion of Industry and Internal Trade (DPIIT).
India had received FDI worth USD one billion in 2018-19 and USD 1.23 billion in 2017-18 from Cayman Islands, which is UK Overseas Territory.
Similarly, FDI from Cyprus too increased by about three-times to USD 879 million in the last financial year from USD 296 million in 2018-19. It was USD 417 million in 2017-18, the DPIIT data showed.
Experts have stated that over time, Cayman Islands has become one of the most preferred jurisdictions for routing investments due to the absence of direct taxes costs and is one of most significant reasons why developed economies like UK, France, and Germany are now falling behind.
“In fact, three times year-on-year leap in FDI inflows from Cayman Islands must be viewed as an indicator of how this small offshore tax haven has emerged as a favourite intermediate investment holding jurisdiction by investors across the world rather than India gaining higher popularity as an Investment destination,” Nischal Arora, Partner- Regulatory, Nangia & Co LLP said."
Rupee pares initial gains, settles 6 paise down at 75.61 against US dollar
The bearish sentiment in domestic equities weighed on the rupee today.
PTI reports: "The rupee pared initial gains to close 6 paise lower at 75.61 (provisional) against the US dollar on Tuesday tracking muted domestic equities and strengthening American currency in the overseas market.
Forex traders said persistent foreign fund flows and the revival of business activity supported the rupee, but strong US dollar weighed on the domestic unit.
The rupee opened at 75.53 against the US dollar, but pared the gains to settle at 75.61 against the US dollar, down 6 paise over its previous close.
It had settled at 75.55 against the greenback on Monday.
During the four-hour trading session, the domestic unit saw an intra-day high of 75.43 and a low of 75.61.
Meanwhile, the 30-share BSE benchmark Sensex was trading 164.73 points lower at 34,205.85 and broader NSE Nifty fell 47.30 points to 10,120.15.
Foreign institutional investors were net buyers in the capital market as they bought shares worth Rs 813.27 crore on Monday, according to provisional exchange data."
IBM exits facial recognition business, calls for police reform
International Business Machines Corp disclosed Monday it will no longer offer facial recognition or analysis software in a letter to Congress calling for new efforts to pursue justice and racial equity, new Chief Executive Officer Arvind Krishna said.
The company will stop offering facial recognition software and opposes any use of such technology for purposes of mass surveillance and racial profiling, Mr. Krishna said, who also called for new federal rules to hold police more accountable for misconduct.
IBM did not explain the timing of its decision to exit facial recognition development but Mr. Krishna told lawmakers “now is the time to begin a national dialogue on whether and how facial recognition technology should be employed by domestic law enforcement agencies.”
Just 5% of India Inc bullish on hiring in Jul-Sep quarter, job outlook bleakest in 15 years: Survey
More doubt cast on the chances of a V-shaped recovery in the economy.
PTI reports: "India’s job market looks grim with just 5 per cent of companies planning to add more staff in the next three months as corporates gear up for the post-lockdown era with a wait-and-watch policy, a survey said on Tuesday.
According to the ManpowerGroup Employment Outlook Survey that covered 695 employers across India, the net employment outlook stood at 5 per cent for the July-September quarter, weakest since the survey began 15 years ago.
The encouraging news, however, is that India features among the top four countries out of 44 nations that projected a positive hiring trend. The other three are Japan, China and Taiwan that have a net employment outlook of 11 per cent, 3 per cent and 3 per cent, respectively, for July to September 2020.
“Corporate India is rationalising its workforce in response to the economic slowdown. It is indeed a wait-and-watch game as organisations are gearing up for the post-lockdown era where they anticipate an upsurge in demand, said Sandeep Gulati, Group Managing Director of ManpowerGroup India.
India is optimistic and the government’s stimulus economy package may boost the economic activities across sectors, he said, adding that the government does have its focus on the employment ratio of the country. Both these elements may bring a fresh ray of hope for the job seekers before the end of this financial year."
India's economy to shrink by 3.2% in 2020-21, worst since 1979: World Bank
One more downgrade of the country's growth projections as its economy recovers from the lockdown.
IANS reports: "As India reels from the impact of the COVID-19 pandemic, the World Bank projects the country’s economy to shrink by 3.2 per cent in the current fiscal year, the worst performance since 1979.
The Bank said on Monday that the world was facing its worst recession since the World War II and per capita incomes would fall plunging millions into poverty.
Making the forecast for India, the Bank said: “Stringent measures to control the spread of the virus will heavily curtail activity, despite some support from fiscal and monetary stimulus. Spillovers from weaker global growth and balance sheet stress in the financial sector will also weigh on activity.”
The Bank’s Global Economic Prospects report cut the last fiscal year’s gross domestic product (GDP) growth for India to 4.2 per cent and forecast it to fall by 3.2 per cent in 2020-21 “when the impact of the pandemic will largely hit”.
The last time India had recorded a negative growth rate was in 1979 when it was -5.24 per cent.
The Bank forecast the global economy to shrink by 5.2 per cent this year resulting in a “largest fraction of economies experiencing declines in per capita output since 1870”.
The projected 3.6 per cent drop in per capita income this year “will tip millions of people into extreme poverty this year”, the report warned."
‘Pak. copper shipments to China rose at India’s cost’
Billionaire industrialist Anil Agarwal, chairman of Vedanta Limited, has written to Prime Minister Narendra Modi on June 4, requesting to allow the opening of its Sterlite Copper plant in Tamil Nadu in the overall interests of the economy.
According to Mr. Agarwal, India has lost over ₹40,000 crore due to closure of this plant, of which $1.2 billion was lost in foreign exchange alone.
Citing media reports in Pakistan, Mr. Agarwal said in his letter that Islamabad’s copper shipments to China had increased 400% in the last three years to $550 million last year, boosting Pakistan’s local economy even as Chinese firms were vying to capture India’s copper market.
Maruti ties up with Mahindra Finance for vehicle loans
As the economy opens up gradually, car companies are tying up with financiers to boost sales.
PTI reports: "Maruti Suzuki India (MSI) on Tuesday said it has joined hands with Mahindra Finance for vehicle loans.
As per the tie-up, customers can avail wide options for getting their car financed from Mahindra Finance, MSI said in a statement.
The companies have come together to ease the availability of finance for customers looking at personal mobility solutions during the ongoing COVID-19 pandemic, it added.
Mahindra Finance is a very well networked non-banking finance company (NBFC) across India and has the expertise in lending across all profiles including semi-rural, rural and no-income proof customers,” MSI Executive Director (Marketing and Sales) Shashank Srivastava said.
More than one-third of Maruti’s retail sales come from rural India, he added.
Customers will benefit from the range of offers like buy now and pay later, step up EMI and balloon EMI, he added.
MSI has a dealer network of over 3,086 showrooms across the country while Mahindra Finance too has a network of 1,450 branches.
The partnership would support all the customers segments -- salaried, self-employed, agriculturists and businessmen to purchase cars, the auto major said."
Ed Yardeni doubts rally in stocks
Petrol price hiked by 54 paise per litre, diesel by 58 paise
Domestic fuel prices continue to rise as dynamic pricing kicks in after a break.
PTI reports: "Petrol price on Tuesday was hiked by 54 paise per litre and diesel by 58 paise a litre - the third straight daily increase in rates after oil PSUs ended an 82-day hiatus in rate revision.
Petrol price in Delhi was hiked to Rs 73.00 per litre from 72.46, while diesel rates were increased to Rs 71.17 a litre from Rs 70.59, according to a price notification of state oil marketing companies.
This is the third daily increase in rates in a row. Oil companies had on Sunday restarted revising prices in line with costs, after ending an 82-day hiatus.
Prices were raised by 60 paise per litre each on both petrol and diesel on Sunday as well as on Monday. In all, petrol price has gone up by Rs 1.74 per litre and diesel by Rs 1.78 a litre in three days.
Oil PSUs - Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) - had put daily price revisions on hold soon after the government on March 14, hiked excise duty on petrol and diesel by Rs 3 per litre each.
Oil companies did not pass on that excise duty hike, as well as the May 6 increase in tax on petrol by Rs 10 per litre and Rs 13 a litre hike on diesel by setting them off against the decline in retail prices that should have effected to reflect international oil rates falling to two-decade low.
International rates have since rebounded and oil companies having exhausted all the margin are now passing on the increase to customers, an industry official said."
Franklin Templeton MF puts on hold e-voting process
Ashish Rukhaiyar reports from Mumbai:
Franklin Templeton Mutual Fund has put on hold the e-voting process that was scheduled to commence on Tuesday after the Gujarat High Court declined to vacate the stay on the process.
On Monday, Justice Gita Gopi dismissed the plea filed by Franklin Templeton MF, which sought the lifting of the stay that was granted by the court on June 3 after three entities who had invested money in the fund house filed a petition in the court.
"Pursuant to the order dated 8th June 2020 issued by the Honourable High Court of Gujarat, the E-voting scheduled for 9 – 11 June 2020 and Unitholder's Meeting on 12 June 2020, related to the schemes under winding up, stands suspended till further communication," said a spokesperson for Franklin Templeton Mutual Fund.
This assumes significance as the e-voting process was the first step in getting the unitholders' nod to proceed with winding up of the schemes that was abruptly announced by the fund house in April. At the time of announcing the winding up, the six debt schemes had cumulative assets under management (AUM) of around ₹26,000 crore.
Meanwhile, the investors who filed the petition have stated that that the e-voting process should be done only after the forensic report mandated by the Securities and Exchange Board of India (SEBI) is completed so that investors can make an informed decision. The e-voting window was scheduled to be open from June 9 to June 11.
Farmers are strong, not vulnerable; they need to be given choices, says Agriculture Secretary
The disruption caused by the COVID-19 pandemic led to at least 12 States allowing direct marketing of agriculture produce, which offered greater options to farmers during the lockdown , Agriculture Secretary Sanjay Agarwal says. The two new ordinances pushing agricultural marketing reform will widen choices for small farmers, he adds.
Despite the lockdown, this year’s wheat harvest hit record highs, and government procurement at minimum support prices (MSP) is also higher than last year. However, Haryana and Uttar Pradesh have fallen short of procurement targets. What is the reason?
I was looking at a video of ITC. This year, because direct marketing was allowed for farmers to sell their produce during the lockdown, they had a line of over two km of tractors outside their purchasing centres.
Cathay Pacific, major shareholders Swire and Air China halt trading in Hong Kong
Some interesting development coming from East Asia this morning as the Hong Kong government decides to bail out a major airline.
Reuters reports: "Cathay Pacific Airways Ltd and its major shareholders Swire Pacific Ltd and Air China Ltd halted trading in their shares in Hong Kong on Tuesday pending announcements.
Cathay's management team on Friday met with the leaders of pilot unions at Cathay Pacific and its regional arm Cathay Dragon to brief them on condition of confidentiality ahead of an announcement expected on Tuesday, three sources with knowledge of the matter told Reuters.
A fourth person said Hong Kong's Cathay was poised to announce a new chief executive at Dragon along with some other senior management changes. The sources declined to be identified because they were not authorised to speak with media.
Swire owns a 45% stake in Cathay and Air China owns 30%.
Cathay has grounded most of its planes because of falling demand amid coronavirus-related travel curbs, flying only cargo and a skeleton passenger network to major destinations such as Beijing, Los Angeles, Singapore, Sydney, Tokyo and Vancouver.
The airline last month said it made an unaudited loss of HK$4.5 billion ($580.64 million) at its full-service airlines over January-April and flagged a “very bleak” outlook."
Sensex opens over 100 points higher, turns choppy on profit-booking
The rally in stocks over the last few weeks seems to be meeting some overhead resistance.
PTI reports: "Equity benchmark Sensex jumped over 100 points in early trade on Tuesday on optimism over reopening of the economy and unabated foreign fund inflows.
The gains were, however, capped as profit-booking at higher levels restrained benchmarks from strengthening further, traders said.
After opening at 34,520.79, the 30-share index turned choppy. It was trading 59.04 points, or 0.17 per cent, lower at 34,311.54.
Similarly, NSE Nifty slipped 17.55 points, or 0.17 per cent, to 10,149.90.
HDFC Bank was the top laggard in the Sensex pack, falling around 2 per cent, followed by M&M, Maruti, Bajaj Finance, SBI, Reliance Industries and ICICI Bank.
On the other hand, Sun Pharma, Asian Paints and ITC were among the gainers.
In the previous session, the BSE barometer settled 83.34 points, or 0.24 per cent, higher at 34,370.58, and the broader Nifty closed 25.30 points, or 0.25 per cent, up at 10,167.45.
On a net basis, foreign institutional investors bought equities worth Rs 813.27 crore in the capital market on Monday, provisional exchange data showed.
According to analysts, market opened with a positive bias due to fresh fund inflows through foreign direct investment (FDI) and foreign portfolio investors (FPIs), and a general optimism emanating from the benefits of the reversal of the lockdown."
Economy to shrink 5% this year, fiscal stimulus not enough to support growth
Another global rating agency has given a thumbs down to the Centre's stimulus programme.
PTI reports: "S&P Global Ratings on Monday said Indian economy will shrink 5 per cent in the current fiscal, saying the fiscal stimulus worth 1.2 per cent of GDP will not be enough to provide significant growth support.
In a report on emerging markets titled ‘Financial Conditions Reflect Optimism, Lockdown Fatigue Emerges’, S&P said the services sectors, which are large employers, have been severely affected, leading to widespread job losses.
“Migrant workers have been geographically displaced, and we expect it will take some time to unwind this process. There will be supply chain disruptions over the transition period,” S&P said.
The rating agency forecast Indian economy to shrink by 5 per cent in the current fiscal and said growth will rebound to 8.5 per cent in 2021-22. It projected growth to be 6.5 per cent in 2022-23.
India’s GDP growth slumped to a 11-year low of 4.2 per cent in 2019-20.
“The central bank has cut policy rates by 115 basis points since February, but policy traction remains low as banks remain unwilling to lend. New direct fiscal stimulus worth 1.2 per cent of GDP won’t be enough to provide significant growth support,” S&P said.
S&P had earlier said that the government’s stimulus package, with a headline amount of 10 per cent of GDP, has about 1.2 per cent of direct stimulus measures, which is low relative to countries with similar economic impacts from the pandemic. The remaining 8.8 per cent of the package includes liquidity support measures and credit guarantees that will not directly support growth."
Stimulus has not helped MSMEs: AIMO survey
Over 78% of the 60 million MSMEs and 83% of self-employed have expressed unhappiness over the financial stimulus announced by the Centre recently as they have not seen the direct benefits of it over the last three weeks, according to a survey conducted by the All India Manufacturers Organisation (AIMO).
“When the FM announced the details, everyone believed it was more than sufficient to tide over and rebound from the crises. However, over the last three weeks, the positive mindset has turned into a confused mindset for many of those who responded as they have not experienced the direct benefits of the package despite many visits to the banks,” said Harish Metha, national vice-president, AIMO said.
