The benchmark stock indices have opened the day with significant gains on positive global cues.
Former Niti Aayog Vice-Chairman Arvind Panagariya has weighed in favour of a demand-side stimulus to help the economy recover.
Join us as we follow the top business news through the day.
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Gold dips as dollar holds onto gains; U.S.-China spat in focus
The yellow metal is cooling down after a record rally this year.
Reuters reports: “Gold prices fell on Monday as the dollar held onto gains made after better-than-expected U.S. payrolls data, while investors kept a close eye on Sino-U.S. relations ahead of scheduled trade talks.
Spot gold was down 0.3% to $2,028.90 per ounce by 0336 GMT. U.S. gold futures rose 0.6% to $2,039.20. Japanese and Singapore markets were closed for public holidays. Gold hit a record high of $2,072.50 on Friday before retreating nearly 2% as the dollar bounced on data showing U.S. nonfarm payrolls increased 1.763 million in July.
“The stronger dollar narrative is weighing on investors’ decisions, along with the fact that people will be more (prone) to profit-taking after such a big run-up,” said Stephen Innes, chief market strategist at financial services firm AxiCorp. “A correction is very possible here. It really depends on how market views the overall dollar, with U.S.-China trade escalation sort of favourable to the dollar.”
The dollar has, on occasion, been the favoured safe haven amidst flare-ups in tensions between Washington and Beijing. Last week, U.S. President Donald Trump took steps to ban two popular Chinese apps. “There is room here for people to unwind some of their gold exposure,” said DailyFx currency strategist Ilya Spivak, since it appears the U.S. Federal Reserve might start “to take their foot off the gas” on aggressive stimulus after recent better economic data.
Speculators reduced their bullish positions in COMEX gold and silver contracts in the week to Aug. 4. But gold’s appeal as a safe haven has been underpinned by the uncertainty driven by the coronavirus pandemic, with resultant widespread global stimulus also fuelling concerns of inflation, helping bullion surge over 33% so far this year.
In the United States, which has marked a grim milestone of 5 million cases, Trump signed executive orders on Saturday partly restoring enhanced unemployment payments to millions of Americans. Elsewhere, silver fell 1.2% to $27.96 per ounce, while platinum rose 0.7% to $968.56 and palladium climbed 0.6% to $2,188.83.”
Frequent earthquakes prompting people to look for home insurance: Survey
Interesting change in people’s behavior as earthquake frequency rises.
PTI reports: “Frequent low-intensity earthquakes are prompting people living in the National Capital Region (NCR) to look for home insurance, says a survey conducted by the e-insurance platform Policybazaar.com.
The company said it surveyed more than 11,000 insurance buyers who visited the mobile application of the company between July 17 and 21, 2020. The survey was carried out to apprehend the perception and understanding of people towards home insurance and to gauge their understanding of the benefits home insurance.
According to the online survey, five out of ten respondents in Delhi said that earthquakes have made them anxious to think about buying home insurance.
“In an already uncertain time, the anxiety about earthquakes has triggered nearly 42 per cent of respondents’ pan-India and in Delhi, who don’t have a home insurance yet, to consider buying home insurance in the near future,” Policybazaar.com said.
Pan-India, nearly every fifth person who took the survey admitted to already having home insurance while in the National Capital Region, 35 per cent of the respondents have home insurance, it said.
It further noted that “unfortunately, home insurance is certainly not the first insurance product” on most people’s list as 73 per cent of the respondents across India and 57 per cent in Delhi (NCR) said that they have so far not considered buying home insurance.
“These numbers depict a major concern and this is because, according to a report by the National Disaster Management Authority, 59 per cent of India’s area is vulnerable to moderate-to-major earthquakes,” it said.
The country is divided into four seismic zones — II, III, IV and V — that signify an increasing order of intensity and frequency of occurrences of earthquakes, it added.
As per the survey, around 10 per cent of respondents who do not have a home insurance yet said that they were planning to buy home insurance in the near future, while over 30 per cent considered buying home insurance a possibility.
“It may be assumed that considering the given scenario and the frequency of earthquakes, people have slowly and steadily started to realise the importance of home insurance and are giving it a second thought for protecting their home and property,” said PolicyBazaar.com.”
Rupee opens flat against US dollar
A flat opening for the rupee this morning despite some strngth shown by stocks.
PTI reports: “The rupee opened on a flat note against the US dollar on Monday tracking weakness in Asian peers even as domestic equities started on a positive note.
At the interbank forex market, the rupee opened weak at 74.96, down 3 paise over its previous close of 74.93.
The domestic unit, however, soon pared the losses and was trading 2 paise higher at 74.91 against the greenback.
Forex traders said, while firm start of the equity market and foreign fund inflows supported the rupee, factors like weak Asian currencies and rising COVID-19 cases dragged down the local unit.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.11 per cent to 93.32.
On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 315.34 points higher at 38,355.91 and broader NSE Nifty rose 98.90 points to 11,312.95.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 397.32 crore on Friday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, rose 0.97 per cent to USD 44.83 per barrel.
Meanwhile, the number of cases around the world linked to COVID-19 has crossed 1.98 crore; and in India, the number of infections touched 22,15,074.”
Economy may need stimulus on demand side: Niti Aayog Vice-Chairman Arvind Panagariya
As India’s economic growth begins to pick up, the country is going to need perhaps ‘a little bit of stimulus’ on the demand side, noted economist and former Niti Aayog Vice-Chairman Arvind Panagariya said on Saturday.
Mr. Panagariya also said that he was more worried about the general trend of rising import tariffs in India.
“Down the road, as the economy is continuing to open up, if we see that inventories are accumulating rapidly then that would be a clear sign that there is a demand deficiency problem. At that point, I think stimulus would be very useful,” he said at CII’s India@75 virtual event.
Mr. Panagariya pointed out that even with the current level of intervention, India was staring at debt-to-GDP ratio rising from 72% to about 85% at least by the end of the current year.
Sensex surges over 300 points in early trade; Nifty tops 11,300
Another great to start to the week for stocks.
PTI reports: “Benchmark Sensex jumped over 300 points in early trade on Monday, led by gains in index majors HDFC twins, L&T and Kotak Bank amid sustained foreign fund inflow and positive cues from global markets.
The BSE Sensex was trading 317.68 points or 0.84 per cent higher at 38,358.25; while the NSE Nifty was up 92.05 points or 0.82 per cent at 11,306.10.
M&M was the top gainer in the Sensex pack, rallying over 4 per cent, followed by L&T, Kotak Bank, SBI, Bajaj Finance, Sun Pharma, ITC and HDFC duo.
On the other hand, Maruti, Tata Steel and Nestle India were the laggards.
In the previous session, the Sensex had settled just 15.12 points or 0.04 per cent higher at 38,040.57, while the Nifty rose 13.90 points or 0.12 per cent to finish at 11,214.05.
Exchange data showed that foreign institutional investors bought equities worth Rs 397.32 crore on a net basis on Friday.
According to traders, market sentiment was positive tracking firm cues from other Asian indices and consistent foreign fund inflow.
Bourses in Shanghai, Hong Kong and Seoul were trading on a positive note, while Tokyo was closed for a holiday.
Global oil benchmark Brent crude was trading 1.06 per cent higher at USD 44.87 per barrel.”
Coal import drops 43% in July owing to high stockpile at pitheads, plants
India’s coal import fell 43.2% to 11.13 million tonnes (MT) in July this year on account of high stockpile of the dry fuel at pitheads, plants and ports.
The country had imported 19.61 MT of coal in July 2019, according to a provisional compilation, by mjunction services limited, based on the monitoring of vessels’ positions and data received from shipping companies.
mjunction — a joint venture between Tata Steel and SAIL — is a B2B e-commerce company that also publishes research reports on coal and steel verticals.
“Imports in July 2020 stood at 11.13 million tonnes (provisional)… Earlier, coal and coke imports in July 2019 stood at 19.61 MT,” it said.