The benchmark stock indices have opened the day with considerable gains after two days of choppy trading.
RIL has witnessed the inflow of more investments into its retail arm with Silver Lake upping its stake.
Join us as we follow the top business news through the day.
Bank job cuts soar
Sensex rallies 629 points; Nifty reclaims 11,400
It was a great day for stocks with the indices holding on to their heavy gains in the morning.
PTI reports: "Equity benchmark Sensex rallied 629 points on Thursday driven by strong buying sentiment in financial stocks amid positive domestic and global cues.
The 30-share BSE index ended 629.12 points or 1.65 per cent higher at 38,697.05.
The broader NSE Nifty surged 169.40 points or 1.51 per cent to close at 11,416.95.
IndusInd Bank was the top gainer in the Sensex pack, zooming over 12 per cent, followed by Bajaj Finance, Axis Bank, ICICI Bank, Tech Mahindra, Bajaj Finserv and Kotak Bank.
On the other hand, ITC, NTPC, Titan, Reliance Industries and ONGC were the laggards.
The domestic market opened on a positive note following positive global cues and better-than-expected domestic PMI manufacturing data, said Narendra Solanki, Head- Equity Research (Fundamental), Anand Rathi Shares.
India’s manufacturing sector activity improved for the second straight month in September and touched an over eight-and-a-half-year high supported by accelerated increases in new orders and production, even as firms reduced staff numbers.
The headline seasonally adjusted IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) increased from 52.0 in August to 56.8 in September -- highest since January 2012.
“During the afternoon session, the markets further showed strength as more broad based buying was witnessed specially in banks and financial stocks ahead of the Supreme Court judgement on moratorium interest case scheduled for Monday.
“The sentiments were also boosted as... government has released a set of fresh guidelines under its Unlock 5 plans to kick start the economy with additional relaxations with fewer restrictions,” he stated.
Meanwhile, Tokyo Stock Exchange halted trading after it witnessed a technical glitch earlier in the day. Markets in Shanghai, Hong Kong and Seoul were closed for holidays.
Indices in Europe were trading on a positive note in early deals.
International oil benchmark Brent crude was trading 0.76 per cent lower at USD 41.98 per barrel."
Crisil expects bank credit to grow by up to 1% in FY21
Numbers that show the disastrous effect of the lockdown on bank lending.
PTI reports: "The banking system’s credit growth will plummet to a multi-decadal low of up to 1 per cent in FY21, domestic credit ratings agency Crisil said on Thursday.
For non-banking finance companies (NBFCs), the shock will be more pronounced and assets under management (AUM) may decline by up to 3 per cent during the fiscal, impacted majorly by wholesale segment, it said.
It can be noted that non-food credit growth was at 5.5 per cent as of August 28 as compared to the year-ago period.
Lenders have been undertaking targeted measures to increase the growth and are pinning hopes on festive season for growth to go up.
Generally, bank credit growth is said to be directly linked to the economic activity, which is set to contract by over 10 per cent in FY21.
“Given the grim economic outlook, the banking system’s credit growth will come at between 0-1 per cent in FY21. This will be a multi-decade low,” the agency’s senior director Somasekhar Vemuri told reporters on a call.
For NBFCs, credit growth will be in negative zone and assets under management will decline by 1-3 per cent in the fiscal year, he said.
From an asset quality perspective as well, NBFCs will be more impacted than the banks, he added.
NBFCs are likely to witness a 0.50 to 2.50 per cent surge in delinquencies this fiscal, driven largely by the small business and wholesale segments, the agency said.
In case of banks, the restructuring scheme will help limit the quantum of loans recognised as non-performing assets (NPAs), the agency said without giving any estimate.
It had earlier estimated the banking industry’s NPAs to surge to 11.5 per cent of the overall assets in FY21.
NBFCs are also likely to benefit from the loan recast scheme.
Given the salary cuts and job losses, the retail lending segment, which has so far been immune to high levels of stress, will also see a rise in NPAs, Vemuri said.
The proportion of salaried people availing home loans will also be limited.
The home and gold loan segments will see the lowest NPAs for NBFCs, while the stress will be highest in vehicle finance and small businesses segment, he said.
The agency also shared collection data for NBFCs for April-August, which showed collections for wholesale segment at under 40 per cent, while the same for home loans and gold loans was highest at around 90 per cent each."
Rupee zooms 63 paise to close at 73.13 against US dollar
It was a great day for the rupee that was boosted by the rally in stocks.
PTI reports: "The rupee strengthened by 63 paise and closed for the day at 73.13 (provisional) against the US dollar on Thursday, as positive domestic equities and weak American currency buoyed investor sentiments.
At the interbank forex market, the domestic unit opened at 73.60 against the US dollar, then gained further ground and finally settled at 73.13, registering a rise of 63 paise over its previous close.
On Wednesday, the rupee closed at 73.76 against the US dollar.
During the session, the domestic unit witnessed an intra-day high of 73.07 and a low of 73.60 against the greenback.
Forex traders said, the appreciation in the rupee was supported by strong macroeconomic data.
“We are expecting the rupee to trade with a slight appreciation bias in the near-term, given the persistent dollar inflows in the domestic market and a healthy current account surplus,” said Sugandha Sachdeva VP-Metals, Energy and Currency Research, Religare Broking.
Sachdeva further noted that “72.80 remains a strong hurdle for the rupee, and the Reserve Bank of India may not be very comfortable allowing it to appreciate above those levels.”
Going ahead, the market will be watching developments around the next round of US fiscal stimulus package, without which the upbeat risk appetite may not be able to sustain for very long, Sachdeva said.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.11 per cent down at 93.78.
On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 594.68 points higher at 38,662.61 and broader NSE Nifty surged 162.75 points to 11,410.30.
Foreign institutional investors were net sellers in the capital market as they offloaded shares worth Rs 712.48 crore on Wednesday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, fell 0.38 per cent to USD 42.14 per barrel."
Dr. Reddy’s launches generic of Sensipar tablets in U.S.
Dr. Reddy’s Laboratories has launched Cinacalcet Tablets, a therapeutic equivalent generic version of Sensipar (cinacalcet) Tablets in the U.S. market.
Sensipar is a trademark of Amgen Inc. The drug is indicated for Secondary Hyperparathyroidism (HPT) in adult patients with chronic kidney disease on dialysis.
The Sensipar brand and generic market had U.S. sales of around $312 million MAT for the most recent twelve months ending in July 2020, a release from Dr. Reddy’s said citing IQVIA Health numbers.
Oil stable on U.S. stimulus hopes but demand fears linger
The oil market doesn't seem to be out of the woods yet.
Reuters reports: "Oil prices were steady on Thursday as renewed hopes for U.S. fiscal stimulus provided support but concerns over rising infections hampering fuel demand capped gains.
U.S. West Texas Intermediate (WTI) crude futures eased 1 cent to $40.21 a barrel at 0532 GMT , after jumping 2.4% on Wednesday.
Brent crude futures climbed 2 cents to $42.32 a barrel, after falling 0.2% overnight. The Trump administration has proposed a new stimulus package to House Democrats worth over $1.5 trillion. ”Even if Trump does sign it must still be approved and originated by the House. Still, it appears progress is being made with the Republicans at $1.5 trillion, and the Democrats at $2.2 trillion,” said Jeffrey Halley, senior market analyst for Asia Pacific of OANDA. ”Now that we have a market spread, the odds of a compromise have increased dramatically and this will be positive for markets.”
Earlier, U.S. Treasury Secretary Steven Mnuchin said talks with House Speaker Nancy Pelosi made progress on COVID-19 relief legislation, and the House of Representatives postponed a vote on a $2.2 trillion Democratic coronavirus plan to allow more time for a bipartisan deal to come together.
WTI jumped on Wednesday after data from the U.S. Energy Information Administration showed crude and distillate inventories, which include diesel and jet fuel, fell more than expected in the latest week.
But demand worries remain as the pandemic has infected over 7.2 million and killed more than 206,000 people in the United States.
Growing supply from the Organization of the Petroleum Exporting Countries (OPEC) also weighed on the market, with output having risen by 160,000 barrels per day (bpd) in September from August as some Libyan installations restarted and Iran's exports grew, a Reuters survey found.
ANZ Research noted reports of Russia increasing production beyond its quota within the grouping of OPEC and its allies, called OPEC+.
“Increasing supplies from OPEC+ will be risking their rebalancing effort as the market is still grappling with weak demand,” ANZ Research said.
In a Reuters survey, 40 analysts and economists now see global demand contracting by 8 million-9.8 million bpd this year versus 8 million-10 million bpd consensus last month.
However they trimmed their outlook for oil prices this year, with the average of forecasts for benchmark Brent crude at $42.48 a barrel for 2020 down from an average forecast of $42.75 last month.
The 2020 U.S. crude price outlook was at $38.70 per barrel versus $38.82 predicted in August."
Import duty of 5% imposed on key component used in TV manufacturing from October 1
Customs duty of 5% has been imposed on import of a key component used in manufacturing of LED/LCD TVs from October 1, a government notification said on Wednesday.
The government had last year exempted customs duty on open cells for a year till September 30 as the domestic industry had sought time to build capacity.
The finance ministry, through a notification on Wednesday, prescribed 5% customs duty on open cells for LED/LCD TV panels.
EY Tax Partner Abhishek Jain said this levy seems to aim at fostering domestic manufacturing of open cells for televisions in India.
Multiplex operators zoom up to 18% as cinemas to reopen from Oct 15
Reprieve for cinema halls has helped share owners.
PTI reports: "Stocks of multiplex operators PVR and INOX Leisure on Thursday jumped up to 18 per cent after the Union Home Ministry issued new guidelines for opening of cinemas, theatres and multiplexes with up to 50 per cent of their seating capacity from October 15.
Shares of PVR zoomed 14.99 per cent to Rs 1,395 on the BSE.
INOX Leisure shares jumped 17.63 per cent to Rs 318.20 on the BSE.
The Union Home Ministry on Wednesday issued new guidelines for permitting more activities in areas outside containment zones that include opening up cinemas, theatres and multiplexes with up to 50 per cent of their seating capacity from October 15.
In a statement, it said the activities permitted from October 15, in areas outside the containment zones include cinemas, theatres and multiplexes that can open with up to 50 per cent of their seating capacity, for which the Standard Operating Procedure (SOP) will be issued by the Ministry of Information and Broadcasting."
India’s Sept. manufacturing PMI sees fastest pace of growth in over 8 years
India’s manufacturing sector activity improved for the second straight month in September and touched an over eight-and-a-half-year high supported by accelerated increases in new orders and production, even as firms reduced staff numbers, a monthly survey said on Thursday.
The headline seasonally adjusted IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) increased from 52.0 in August to 56.8 in September — highest since January 2012.
“The Indian manufacturing industry continued to move in the right direction, with PMI data for September highlighting many positives. Due to loosened COVID-19 restrictions, factories went full steam ahead for production, supported by a surge in new work,” said Pollyanna De Lima, Economics Associate Director at IHS Markit.
Philippine peso at an inflection point
Tariffs still very low, pricing revival critical for telecom sector: Birla
Low tariffs continue to be a pain point for telecom firms.
PTI reports: "Telecom tariffs are “still very low” and pricing revival is critical for the long-term growth of the sector, Vodafone Idea Chairman Kumar Mangalam Birla said on Wednesday.
Addressing Vodafone Idea Ltd (VIL) shareholders at the company’s Annual General Meeting, Birla said the telecom industry had witnessed the first round of tariff hikes by all operators in December 2019.
“However, tariffs are still very low and therefore pricing revival is critical for the long-term growth of the sector,” he said.
The Average Revenue Per User (ARPUs) in the Indian market continue to remain the lowest in the world, while data consumption is among the highest globally.
“The verdict on the long-pending industry issue of Adjusted Gross Revenue or AGR also added to the financial woes of telecom operators... Efforts from the Government of India to soften the financial burden by recommending payment through instalments has now been upheld by the Supreme Court,” Birla said.
In a stock exchange filing, Vodafone Idea said multiple items - including resolutions seeking approval of borrowing powers of the company, alteration of Articles of Association, nod of issuance of securities of up to Rs 15,000 crore - as set out in its September 4 notice, were transacted at the AGM.
The results of the voting will be intimated separately, the filing said.
Earlier this month, the board of Vodafone Idea approved fund-raising plans of up to Rs 25,000 crore through a combination of equity and debt instruments, subject to shareholders’ nod.
The board’s move had come just days after Supreme Court directed telecom operators to pay 10 per cent of total Adjusted Gross Revenue-related dues this year, and rest of the payments in 10 instalments starting from next fiscal year.
The ambitious fund raising plans promise to throw a lifeline to cash-strapped Vodafone Idea, which has suffered massive losses, has been losing subscribers and ARPUs, and faces outstanding statutory dues of about Rs 50,000 crore."
Bajaj Auto reports 10% jump in Sept sales at 4,41,306 units
Definite signs of greenshoots in the auto sector.
PTI reports: "Bajaj Auto on Thursday reported a 10 per cent increase in its total vehicle sales at 4,41,306 units in September.
The Pune-based automaker had sold a total of 4,02,035 vehicles in September 2019.
Total two-wheeler sales in September stood at 4,04,851 units as compared to 3,36,730 units in the same month of 2019, a jump of 20 per cent, Bajaj Auto said in a regulatory filing.
Total commercial vehicles sales, however, plunged 44 per cent in the previous month to 36,455 units as compared to 65,305 vehicles sold in September 2019, it said.
Total domestic sales went up by 6 per cent to 2,28,731 units as against 2,15,501 units in September 2019.
In September, Bajaj Auto’s exports went up by 14 per cent to 2,12,575 units compared with 1,86,534 units in September 2019."
At Rs 40,072 crore, govt’s external financing jumps 5-times till Aug: Report
An interesting change in trend after the government decided to turn more open to foreign borrowings.
PTI reports: "External financing of the government has jumped nearly five times over the previous year’s figure at Rs 40,072 crore during the first five months of the current fiscal, according to an analysis of the fiscal deficit numbers by Care Ratings.
At Rs 40,072 crore, the external financing of government debt is a whopping 867 per cent of the budget estimate for the full year, the agency said.
This is around 5 per cent of the total borrowings as 95 per cent of deficit financing is met through domestic sources, mainly market borrowings, it added.
According to data released by the Controller General of Accounts earlier on Wednesday, fiscal deficit during April-August stood at 109.3 per cent of the annual target. This was 57 per cent higher than the corresponding period last year.
In absolute terms, fiscal deficit -- which is the gap between expenditure and revenue -- stood at Rs 8,70,347 crore.
The government had pegged fiscal deficit for 2020-21 at Rs 7.96 lakh crore or 3.5 per cent of the GDP in the budget in February.
Later, following the COVID-19 outbreak, the government had increased its market borrowing to Rs 12 lakh crore, which is also likely to overshoot and analysts peg fiscal deficit for the full year at over 9 per cent of GDP.
Despite the massive spike in fiscal deficit and market borrowing, capital expenditure has declined by 1.3 per cent during the reporting period.
In view of widening fiscal deficit, government has increased market borrowings to Rs 9.7 lakh crore, which is 141 per cent higher than the same period last year, as well as external financing, which is a little over five times than last year, Care Ratings said.
Total receipts, which are 16 per cent of budget estimate, have fallen by 39 per cent during April-August compared with the corresponding period last year.
Of this, revenue receipts, which are 18 per cent of the budget estimate, have declined by nearly 39 per cent, it said.
Disinvestment proceeds have been quite lackluster at a paltry Rs 28.74 crore as against the budgeted Rs 2.1 lakh crore.
Total expenditure has increased 6.2 per cent, led by increase in revenue expenditure, which accounted for 89 per cent of the expenditure and grew 7 per cent year-on-year.
Capital expenditure declined by 1.3 per cent from last year. Compared to budget estimates, only 33 per cent of the capex has been undertaken, lower than 40 per cent of budget estimate last year, it said.
Tax revenue declined by 29.7 per cent from Rs 4,04,580 crore to Rs 2,84,495 crore.
Of this, income tax fell 28.9 per cent from Rs 1,65,500 crore to Rs 1,17,738 crore, corporate tax plunged 41.8 per cent to Rs 64,715 crore from Rs 1,11,166 crore, custom duties declined 47.9 per cent to Rs 32,302 crore from Rs 62,031 crore, CGST fell 40.2 per cent to 1,25,308 crore and GST compensation cess declined 28.9 per cent to Rs 28,154 crore.
The only revenue head that grew was excise duties, which jumped 32 per cent from Rs 76,032 crore to Rs 1,00,398 crore.
Non-tax revenue fell to Rs 86,147 crore, down by 56.6 per cent or Rs 1,98,621 crore.
Even interest receipts declined by 18.9 per cent to Rs 4,070 crore and dividends and profits plunged 60.2 per cent to Rs 59,578 crore.
Total revenue receipts declined 38.6 per cent to Rs 3,70,642 crore from Rs 6,03,201 crore."
Sensex rallies over 450 points in early trade, Nifty tops 11,350
A great start to the day for stocks after a couple of days of choppy trading.
PTI reports: "Equity benchmark Sensex rallied over 450 points in early trade on Thursday driven by gains in index-heavyweights HDFC duo, Reliance Industries and ICICI Bank amid positive cues from US equities.
The 30-share index was trading 466.26 points or 1.22 per cent higher at 38,534.19, and the NSE Nifty rose 128.45 points or 1.14 per cent to 11,376.
IndusInd Bank was the top gainer in the Sensex pack, surging around 4 per cent, followed by Bajaj Auto, Bajaj Finance, Axis Bank, SBI, Bajaj Finserv, ICICI Bank, HDFC twins and Reliance Industries.
On the other hand, ONCG, Titan and Nestle India were the laggards.
In the previous session, Sensex ended 94.71 points or 0.25 per cent higher at 38,067.93, while the broader NSE Nifty rose 25.15 points or 0.22 per cent to 11,247.55.
Exchange data showed that foreign institutional investors sold equities worth Rs 712.48 crore on a net basis on Wednesday.
According to traders, domestic equities opened on a strong note following positive cues from US equities amid thin trade in other Asian markets.
Bourses in Japan halted trading after the Tokyo Stock Exchange witnessed a technical glitch earlier in the day.
Exchanges in Shanghai, Hong Kong and Seoul were closed for holidays.
Wall Street indices ended on a positive note in the overnight session.
International oil benchmark Brent crude was trading 0.02 per cent lower at USD 42.29 per barrel."
Reliance Retail to get ₹5,550 cr. investment
Reliance Industries Ltd. (RIL) and Reliance Retail Ventures Ltd. (RRVL) on Wednesday announced that co-investors of Silver Lake will invest an additional ₹1,875 crore into RRVL, a subsidiary of RIL.
This brings the aggregate investment by Silver Lake and its co-investors in RRVL to ₹9,375 crore, translating into a 2.13% equity stake in RRVL on a fully diluted basis.
This latest investment values Reliance Retail at a pre-money equity value of ₹4.29 lakh crore.
Earlier on Wednesday, General Atlantic, a leading global growth equity firm, said it has decided to invest ₹3,675 crore into RRVL.This investment values Reliance Retail at a pre-money equity value of ₹4.285 lakh crore. General Atlantic’s investment will translate into a 0.84% equity stake in RRVL on a fully diluted basis
