Stocks started the day on a positive note while the rupee and gold have slipped in value.
With governments worldwide keen to end the lockdown in a staggered manner, investors expect economic activity to return to normalcy in the coming months.
Join us as we follow the top business news through the day.
ECB's very ordinary response to the coronavirus crisis
Sensex jumps 371 points, Nifty tops 9,300 as financial stocks soar
The benchmark indices managed to rally enough in the afternoon session to regain the points lost in the morning session.
PTI reports: "Extending its gains for the second session, equity benchmark Sensex jumped 371 points on Tuesday driven by aggressive buying in financial stocks amid hopes of another stimulus package by the government.
After a volatile session, the 30-share BSE gauge settled 371.44 points or 1.17 per cent higher at 32,114.52. It hit an intra-day high of 32,199.91 and a low of 31,661.34.
Similarly, the NSE Nifty advanced 98.60 points, or 1.06 per cent, to close at 9,380.90.
IndusInd Bank was the top gainer in the Sensex pack, rallying over 15 per cent, followed by Bajaj Finance, HDFC, Axis Bank, ICICI Bank, M&M and SBI.
On the other hand, Sun Pharma, Nestle India, NTPC, HCL Tech and Bajaj Auto were among the laggards.
The Reserve Bank of India’s massive liquidity booster to the mutual fund industry continued to spur buying in financial stocks, traders said.
Expectation of another stimulus package by the government has also buoyed investor sentiment, they added."
ADB approves USD 1.5 billion loan to India to fight COVID-19
Looks like the monetary help that was earlier promised to India by the Asian Development Bank has finally been approved.
PTI reports: "The Asian Development Bank on Tuesday said it has approved a USD 1.5 billion (about Rs 11,400 crore) loan to India to help fund its response to the novel coronavirus pandemic, including support for immediate priorities such as disease containment and prevention, as well as social protection for the poor and economically vulnerable sections.
ADB is fully committed to supporting the Government of India in its response to this unprecedented challenge, ADB President Masatsugu Asakawa said.
“The quick-disbursing fund is part of a larger package of support that ADB will provide in close coordination with the government and other development partners.
“We are determined to support India’s COVID-19 response programs and ensure that they provide effective support to the people of India, especially the poor and vulnerable,” Asakawa said in a statement."
Oil prices plunge again, WTI down 20% on supply glut
More bad news for oil producers who are finding it hard to prop up prices as global demand gets decimated by the lockdown.
IANS reports: "US oil prices tumbled again on Tuesday with the June contract of WTI crude on the NYMEX falling nearly 20 per cent amidst a supply glut and storage concerns.
The June Contract of WTI is currently at $10.24 per barrel, lower by 19.87 per cent from its previous close.
The plunge in US oil prices has come on the back of renewed concerns of decline storage capacity as supply continues and demand remains nearly standstill.
The latest plunge in the WTI crude in the US, comes a week after it fell below zero for the first time ever.
The decline comes despite the recent output cut agreement between the Organization of Petroleum Exporting Countries (OPEC) and its allies. There were hopes that agreement would stabilise oil prices, but with the Covid—19 pandemic continuing, there has been a large slip in demand that is not letting oil prices to pick up.
The current market is oversupplied on shrinking demand, creating a situation of free fall for crude."
IT services companies to suspend hiring this year, says Mohandas Pai
Hiring freezes and pay cuts may soon hit the IT sector, which has been one of the largest job creators in the country.
PTI reports: "India’s information technology services industry would see hiring freeze this year and senior level staff taking a 20-25 per cent salary cut due to the adverse impact of the COVID-19 pandemic, says IT industry veteran T V Mohandas Pai.
The former Chief Financial Officer of IT services major, Infosys Ltd, said the IT industry has done a “fabulous, unbelievable and remarkable” job in transitioning more than 90 per cent of its employees to work from home.
Speaking to PTI, Pai said he does not expect the demand for office space in the IT sector to shrink going forward because companies would now need to maintain social distancing in their cramped office space.
“Now with social distancing, you need more space per person. So, 25 per cent working from home will provide additional space. I think space in the offices for people would get bigger; so for the next one year, the market (office space segment) could be very soft, and then it will grow at the normal pace,” he said.
On apprehensions in some quarters about job losses and salary cuts, Pai said IT companies would not hire more and they will suspend recruitment, except honouring commitments already made."
BSE to execute trades at negative prices for commodity derivatives segment
Reuters has reported that the Bombay Stock Exchange has updated its systems to allow the execution of trades at negative prices in the commodity derivatives segment.
This comes after oil futures traded below zero last week.
Here is BSE's official note on the matter: "This is pursuant to recent global developments in the crude oil derivatives markets where trading of derivatives contracts happened at negative prices owing to various underlying factors. It is hereby informed to all Trading Members of Commodity Derivatives segment that Exchange’s BOLT Plus trading system has been modified to accept orders and execute trades at negative prices. Accordingly, existing versions of trading system APIs – ETI as well as IML APIs will also support trading activity at negative price levels. "
Axis Bank pick 29% stake in Max Life Insurance
Private sector lender Axis Bank and Max Financial Services Limited (MFS) has signed a definitive agreement to buy 29% stake in Max Life Insurance Company in an all cash deal, the bank said in a statement. Axis Bank which already has 1% stake in the insurer, will have 30% stake after the deal is closed.
Max Financial Services presently holds a 72.5% stake in Max Life and Mitsui Sumitomo Insurance (MSI) owns 25.5% stake. Axis Bank also has a minor stake in the life insurer.
“The aforesaid transaction with Axis Bank follows the ongoing swapping by MSI of 20.6% stake that it holds in Max Life with a 21.9% stake in MFS. MFS also plans to purchase MSI’s balance stake in Max Life,” Axis Bank said adding it may take six to nine months to close the deal.
Airtel signs $1 billion deal with Nokia to enhance network capacity
Nokia and Bharti Airtel on Tuesday announced a multi-year agreement to deploy Nokia’s SRAN solution across nine circles in India. The deal, which according to an industry source is pegged at close $1 billion, will help Airtel to enhance the network capacity of its networks, in particular 4G, and improve customer experience.
“The rollout, which will also lay the foundation for providing 5G connectivity in the future, will see approximately 300,000 radio units deployed across several spectrum bands, including 900 Mhz, 1800 Mhz, 2100 Mhz and 2300 Mhz, and is expected to be completed by 2022,” as per a joint statement issued by the companies.
It added that these Nokia supplied networks will give Airtel the best possible platform when 5G networks launch across the country, with their low latency and faster speeds.
India’s rating could come under pressure if fiscal outlook deteriorates, says Fitch
Some words of caution coming from the global rating agency amid talk of a second round of fiscal stimulus.
PTI reports: "Fitch Ratings on Tuesday said India’s sovereign rating could come under pressure if there is further deterioration in fiscal outlook as a result of lower growth or fiscal easing.
It said that given the extended lockdown, India is likely to announce further fiscal easing to support growth and its assessment of India’s rating in such a case would be guided by our judgement of its probable medium-term fiscal path in the post-crisis environment.
Further deterioration in the fiscal outlook as a result of lower growth or fiscal easing could pressure the sovereign rating in light of the limited fiscal headroom India had when it entered this crisis, Fitch said in a statement.
It said the government may tighten fiscal policy again once the pandemic is under control, but India’s record of meeting fiscal targets and implementing fiscal rules has been mixed in recent years, which will colour our assessment of any official commitment to tighten fiscal policy over the medium term.
Fitch had in December 2019 reaffirmed India’s ‘BBB-’ rating with a stable outlook.
Saying that the country has limited fiscal space to respond to the challenges posed by the health crisis, Fitch said general government debt stood at 70 per cent of GDP in FY20, according to our estimate, well above the ‘BBB’ median of 42 per cent."
Oil refineries cut output as coronavirus hits fuel demand
Global oil refineries are cutting down their output as retail demand remains hit by the lockdown.
Reuters reports: "Oil refineries around the world have been curbing output since February as fuel demand has been crushed by global travel restrictions aimed at containing the spread of the coronavirus.
European refineries' output was 9% lower at 9.5 million barrels per day (bpd) in March on a monthly basis and almost 10% lower year on year, data from Euroilstock showed. China's daily crude oil throughput in March sank to a 15-month low, with state refiners maintaining deep output cuts.
In India, crude oil production fell 5.5% last month from a year earlier to around 2.70 million tonnes (0.64 million bpd), provisional government data showed. While most refiners are running, several have reduced the amount of barrels of oil they process as gasoline and diesel use falls sharply.
Demand for oil worldwide is down about 30% as the coronavirus chokes economic activity, forcing billions of people to stay home to curb its spread, creating a global supply glut."
Reliance Industries to consider first rights issue in three decades
One of India's top business conglomerates may be looking to raise more capital from its shareholders via a rights issue.
Reuters reports: "Reliance Industries Ltd will consider a rights issue at its board meeting on April 30, in what would be its first such issue in nearly three decades, the oil to retail conglomerate said in an exchange filing late on Monday.
Reliance did not provide any details of the rights issue under consideration.
Shares in the company rose as much as 1.8% in early trade following the announcement, later falling in line with the broader market. At 0455 GMT, the shares were trading down 2% while the Nifty share index was 0.1% lower.
Promoters - as controlling stakeholders are called in India - hold a little over 50% of the company. Analysts said the potential for a rights issue is a positive development and reflects the confidence of management and their commitment to reducing Reliance's net debt to zero by March 2021.
“It reflects promoter's unflinching faith in the medium to long term prospects of various businesses,” said Ajay Bodke, chief executive at Prabhudas Lilladher, a portfolio management service company.
“This is an apt opportunity for current shareholders to participate in the likely value unlocking of various businesses over the next couple of years.”"
China’s netizen population hits record 904 million: Report
The number of internet connections in China reached a whopping 904 million by March this year, up by 75.08 million from 2018, according to an official report released on Tuesday.
Internet penetration in China has reached 64.5%, up 4.9 percentage points over the end of 2018, the report issued by the China Internet Network Information Centre (CINIC) said.
As internet connections grew in large numbers facilitating the growth of online social media in the country, China supervises and controls the content through massive firewalls.
While global social media platforms like Twitter, Facebook and Google are blocked in the country, China also exercises greater supervision over poplar internet media platforms like Weibo, which is akin to Twitter, to control the content.
Debt monetisation arrives in Asia
Equity indices turn flat after initial gains
An update on the benchmark indices which have pared initial gains made during the open.
IANS reports: "The key Indian equity indices pared their initial gains on Tuesday to trade on a flat note.
The Sensex had opened over 350 points higher at 32,101.91.
Selling pressure was witnessed in FMCG, healthcare and energy stocks, while healthy buying took place in finance and banking stocks.
A mixed trend among the Asian stock markets also weighed on the Indian indices, analysts said.
At 10.19 a.m., Sensex was trading at 31,814.77, higher by 71.69 points or 0.23 per cent from the previous close of 31,743.08.
It has touched an intra-day high of 32,164.65 and a low of 31,661.34 points so far.
The Nifty50 on the National Stock Exchange was trading at 9,296.85, higher by 4.55 points or 0.16 per cent from the previous close."
Rupee slips 15 paise to 76.40 against US dollar in early trade
The rupee depreciated 15 paise to 76.40 against the US dollar in opening trade on Tuesday, amid strengthening American currency overseas and volatility in domestic equities.
Forex traders said the weakness in the rupee was largely due to muted domestic equities and strengthening of the US dollar. Moreover, rising coronavirus cases in the country also weighed on the local unit.
The rupee opened weak at 76.33 at the interbank forex market and then fell further to 76.40, down 15 paise over its last close.
The rupee had settled at 76.25 against the US dollar on Monday.
Gold falls 1% as nations plan to ease coronavirus lockdowns
Gold could be at a crucial inflection point as both bearish and bullish forces act in tandem to affect its price.
Reuters reports: "Gold fell more than 1% on Tuesday as some countries planned to gradually ease coronavirus restrictions, although recession concerns and a retreat in riskier assets kept the bullion near the $1,700-level.
Spot gold slipped 1.0% to $1,697.31 per ounce by 0348 GMT. U.S. gold futures fell 0.6% to $1,713.00 per ounce.
Some countries, including Italy and New Zealand, announced easing of lockdowns and more U.S. states looked to restart businesses, while Britain's Prime Minister Boris Johnson has said it was too early to relax restrictions.
“The fact that we're seeing these attempts from different countries to at least partially reopen is providing some downside to gold,” said ING analyst Warren Patterson.
Business shutdowns have led to a record 26.5 million Americans filing for unemployment benefits since mid-March and are likely to push the unemployment rate to 16% or higher in the next jobs report. Adding to mounting evidence of the pandemic's economic toll, Japan's March jobless rate rose to its highest in a year, while job availability slipped to a more than three-year low, official data showed.
“The impact from the shutdown is going to be felt for quite some time moving forward through macro data, and that will continue to support gold,” Patterson said, adding that a low interest rate environment would continue to benefit gold."
Sensex surges over 400 points in opening trade; financial stocks rally
Financials continue to aid the rally in benchmark indices after liquidity support offered for mutual funds by the RBI yesterday.
PTI reports: "Equity benchmark Sensex jumped over 400 points in opening trade on Tuesday tracking gains in financial stocks on Reserve Bank support amid tepid cues from global markets.
After hitting a high of 32,164.65, the 30-share index pared gains to trade 151.91 points or 0.48 per cent higher at 31,894.99.
Similarly, the NSE Nifty advanced 60.05 points, or 0.65 per cent, to 9,342.35.
IndusInd Bank was the top gainer in the Sensex pack, rallying over 8 per cent, followed by Axis Bank, HDFC, Tech Mahindra, ICICI Bank, Kotak Bank and SBI.
On the other hand, Sun Pharma, HCL Tech, Reliance Industries and Bharti Airtel were among the laggards.
In the previous session, the BSE barometer settled 415.86 points or 1.33 per cent higher at 31,743.08, while the Nifty closed 127.90 points, or 1.40 per cent, to 9,282.30.
Foreign portfolio investors were net sellers in the capital market on Monday, as they offloaded equity shares worth Rs 916.42 crore, according to provisional exchange data.
The Reserve Bank of India’s Rs 50,000-crore liquidity booster to the mutual fund industry has spurred buying in financial stocks, traders said."
Oil prices slide again as world runs low on storage capacity amid plunge in demand
Oil fell on Tuesday, adding to huge declines in the previous session, on worries about limited capacity to store crude worldwide and expectations that fuel demand may only recover slowly as coronavirus pandemic restrictions are gradually eased.
U.S. West Texas Intermediate (WTI) crude futures dropped by as much as 7.1% and were off 6%, or 77 cents, at $12.01 a barrel as of 0110 GMT. WTI plunged 25% on Monday.
Brent crude futures fell as much as 3.5% in early trade and were last down 1.4%, or 27 cents, at $19.72 a barrel. The benchmark slid 6.8% on Monday, and the contract for June delivery expires on April 30.
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