The benchmark stock indices have opened the day with modest losses after yesterday’s impressive gains as traders may be looking to book profits.

Join us as we follow the top business news through the day.

4:30 PM

Real unemployment rates likely much higher in Europe and the US

 

4:00 PM

Sensex rallies 304 points; Nifty tops 11,700

Another good day for stocks marked by significant gains.

PTI reports: “Equity benchmark Sensex rallied 304 points on Wednesday, tracking gains in index-heavyweights Reliance Industries, HDFC twins and Infosys.

After opening on a weak note, the 30-share index gained ground to end 304.38 points or 0.77 per cent higher at 39,878.95.

Similarly, the broader NSE Nifty jumped 76.45 points or 0.66 per cent to close at 11,738.85.

Titan was the top gainer in the Sensex pack, climbing over 4 per cent, followed by Bajaj Auto, Maruti, Reliance Industries, ONGC and UltraTech Cement.

On the other hand, Bajaj Finance, PowerGrid, Tata Steel, NTPC and Sun Pharma were among the laggards.

“Market recovered quickly in morning trade and traded in the green throughout the day led by autos ahead of the RBI policy,” said S Ranganathan, Head of Research at LKP Securities.

The newly-constituted MPC of the Reserve Bank began its three-day deliberations earlier in the day. The decision of the rate-setting panel will be announced on October 9.

Although the broader market was a bit lacklustre, sustained buying in cement and select pharma counters was seen during the day, he added.

According to traders, Indian investors are also eyeing the possibility of a domestic fiscal package announcement in the near term.

Meanwhile, bourses in Hong Kong, Tokyo and Seoul ended on a mixed note, while Shanghai was closed for a holiday.

Stock exchanges in Europe were trading on a negative note in early deals.

International oil benchmark Brent crude was trading 1.59 per cent lower at USD 41.97 per barrel.

In the forex market, the rupee strengthened by 13 paise to settle at 73.33 against the US dollar.”

3:30 PM

RBI’s MPC begins deliberations, to announce policy review on Friday

The delayed MPC gets going today.

PTI reports: “The newly-constituted Monetary Policy Committee (MPC) of the Reserve Bank began its three-day deliberations on Wednesday, amid expectations that the central bank will maintain status quo on the benchmark lending rates in view of hardening inflation.

At the end of the deliberations, the RBI will come out with its monetary policy review on Friday.

The meeting of the six-member MPC, earlier slated for September 29 to October 1, was rescheduled as the appointment of independent members was delayed. The MPC must have a quorum of four.

The government has now appointed three eminent economists Ashima Goyal, Jayanth R Varma and Shashanka Bhide as members of the MPC headed by the RBI Governor.

Experts opined that the Reserve Bank of India may not go for a reduction in the policy rate in the wake of rising Consume Price Index (CPI) based inflation, driven mainly by supply-side issues.

Industry bodies are of the view that the RBI should maintain its accommodative stance on the policy interest rates in the wake of serious challenges in limiting contraction in the economy due to COVID-19 pandemic.

Tanvee Gupta Jain, Economist, UBS Securities India said that retail inflation (CPI) was above the RBI’s upper tolerance band of 6 per cent in the past two quarters (March and June 2020), and likely remained above 6 per cent in the September quarter too.

Jain expects the RBI to keep the policy rates on hold.

“That said, we maintain our base case view that the policy easing cycle is not over yet. We expect a further 25-50 bp rate cuts in FY21, likely in the December/February policy review once CPI inflation has eased close to the RBI’s 4 per cent,” the UBS analyst said in a report.

RBI Governor Shaktikanta Das had earlier said, although there was headroom for further monetary policy action, it was important to keep “our arsenal dry and use it judiciously“.

Mayur Modi, Co-founder and Co-CEO, Moneyboxx Finance pointed out that the smaller NBFCs have found it difficult to access liquidity, both for working capital and growth.

“As of now only established and big NBFCs are getting access to RBI’s partial guarantee scheme and other liquidity measures. On the other hand, if this scheme gets extended to smaller NBFCs which are catering to micro-businesses (borrowing up to Rs 5 lakh), these businesses will find some relief in the form of easy accessibility of loans at a better rate,” he said.

Financial services firm Edelweiss in its report said while a rate cut is unlikely in the forthcoming policy review, “we do expect the policymakers to maintain the dovish/accommodative stance, thereby keeping the door open for further rate cuts“.

Jyoti Prakash Gadia, Managing Director, Resurgent India said the RBI needs to tilt its stance towards growth post-COVID-19 at this stage even at the cost of some inflation as a trade-off.

FirstRand Bank treasury head Harihar Krishnamoorthy said: “Along with everybody, I also expect no change in the policy rate as the inflation is above the RBI’s comfort level. RBI will continue with an accommodative stance to make sure that the economy has enough money”.

After its last MPC meeting in August, the RBI had kept interest rates unchanged to help tame inflation that in recent times had surged past 6 per cent mark, and said the economy is in an extremely weak condition following the pandemic. The RBI has cut interest rates by 115 basis points since February.”

3:00 PM

India approves 16 companies, including top Apple suppliers, for smartphone plan

India on Tuesday said it was approving incentives under a federal plan to boost domestic smartphone production to 16 companies, including top Apple suppliers Foxconn, Wistron and Pegatron .

India’s smartphone industry has become a showpiece for Prime Minister Narendra Modi’s “Make In India” drive. The $6.65 billion incentive scheme is part of the government’s aim to make the country into an export and manufacturing hub.

The companies have to invest to tap into the scheme. The government did not disclose what investment Foxconn, Wistron and Pegatron, which is yet to start Indian operations, will make.

Two sources previously told Reuters these three companies plan to invest a total of almost $900 million in India in the next five years to benefit from the scheme.

 

2:30 PM

Housing sales drop 35% in 7 cities in July-Sep despite demand recovery: Report

The real estate sector may have a long road of recovery ahead of it.

PTI reports: “Housing sales across seven major cities in the country fell 35 per cent year-on-year to 50,983 units during the July-September period even as the demand recovered post lockdown, according to data analytics firm PropEquity.

Sales stood at 78,472 units in the year-ago period in seven cities — Delhi-NCR, Mumbai Metropolitan Region (MMR), Chennai, Kolkata, Bengaluru, Hyderabad and Pune.

On sequential basis, however, sales jumped over two-fold from 24,936 units in the April-June quarter of this year, PropEquity said.

Last week, property consultant Anarock reported 46 per cent year-on-year (YoY) drop in sales of residential properties during July-September quarter at 29,520 units in these seven cities.

“The Indian real estate sector is showing some recovery as many projects were launched in the last quarter; and with various schemes and offers, developers were able to clear significant inventory,” PropEquity founder and MD Samir Jasuja said.

“As we move into the festive season, we forecast this recovery to continue with more offers, discounts and attractive payments schemes to attract customers, Jasuja added.

According to the PropEquity data, housing sales declined in all seven cities during July-September 2020 compared to same period last year.

In Bengaluru, sales fell 44 per cent to 6,098 units from 10,878 units.

Chennai saw 36 per cent fall in sales at 2,403 units during July-September quarter from 3,749 units in the year-ago period.

Sales of residential properties went down by 32 per cent in Hyderabad at 4,677 units from 6,924 units.

Kolkata witnessed 44 per cent decline in sales to 2,239 units during July-September from 4,023 units in the year-ago period.

Housing sales in MMR dipped 30 per cent to 16,652 units from 23,719 units, while demand fell 23 per cent in the NCR to 9,375 units from 12,237 units.

In Pune, sales decreased 44 per cent to 9,539 units during July-September 2020 from 16,942 units in the same period last year.

PropEquity, which is owned and operated by P E Analytics, is an online real estate data and analytics platform covering over 1,18,010 projects of 34,217 developers across 44 cities.”

2:00 PM

New H-1B rules to restrict US’s access to skilled talent: Nasscom

Reacting to the new restrictions on the H-1B visa programme by the US, the National Association of Software and Service Companies (Nasscom) on Wednesday said the changes announced will restrict access to talent and will harm the American economy.

The industry association added that this will also “endanger U.S. jobs, put U.S. interests at risk, slowing down R&D into solutions to the COVID crisis,” while reiterate that it is important for the US market to be able to access skilled talent for its businesses, especially during the COVID-19 recovery phase.

The new rules notified by the Department of Homeland Security (DHS), and the Department of Labor (DoL) for the H-1B visa regime, changes the definitions of specialty occupation, employer, & employee-employer relationship, and limits the validity of an H-1B visa to one year for a worker placed at a third-party worksite, while also increasing enforcement and investigations for these visas.

 

1:30 PM

RIL shares jump over 4% after ADIA invests Rs 5,512.5 crore in Reliance Retail

More money pours into a Reliance Group entity.

PTI reports: “Shares of Reliance Industries Ltd on Wednesday gained over 4 per cent after Reliance Retail Ventures Ltd raised Rs 5,512.50 crore from Abu Dhabi Investment Authority (ADIA).

The stock jumped 4.49 per cent to Rs 2,309.40 on the BSE.

At the NSE, it rose by 4.46 per cent to Rs 2,309.

Reliance Retail Ventures Ltd, run by India’s richest man Mukesh Ambani, on Tuesday raised Rs 5,512.50 crore from Abu Dhabi Investment Authority (ADIA), taking the total fundraise to Rs 37,710 crore in less than four weeks.

“ADIA’s investment will translate into a 1.20 per cent equity stake,” the Indian firm said in a statement.

The investment values RRVL, the retail arm of Reliance Industries Ltd, at a pre-money equity value of Rs 4.285 lakh crore.

“With this investment, RRVL has raised Rs 37,710 crore from leading global investors including Silver Lake, KKR, General Atlantic, Mubadala, GIC, TPG and ADIA in less than four weeks,” the statement said.”

1:00 PM

‘Gold imports plunge 59% to 4-month low’

India’s gold imports in September fell 59% from a year earlier to the lowest level in four months, a government source said on Tuesday, as a drop in prices from a record high failed to lure buyers, who were postponing purchases anticipating a bigger drop.

The world’s second-biggest consumer of the precious metal imported about 11 tonnes of gold in September, down from 27 tonnes a year ago, the source said.

The source asked to remain anonymous since he is not authorised to speak to the media. Silver imports in the month plunged 93% from a year ago to 20 tonnes, he said.

 

12:30 PM

Indian banks say govt’s interest waiver will add to costs, spark litigation

Looks like banks are not going to accept any interest waiver without a fight.

Reuters reports: “Indian bankers fear the government’s decision to waive some interest payments on loans under a COVID-19 support plan will create unnecessary work for lenders and lead to more litigation, without providing much of a boost for the sagging economy.

In an Oct. 2 filing with India’s Supreme Court, seen by Reuters, the government said it is amending a controversial clause in a relief plan that allowed distressed borrowers to skip repayments for six months but then charged them ”interest-on-interest” on the delayed payments, putting them deeper in debt.

The change will waive the compounded interest component on small business loans and some personal debts from March to August.

The government will bear the cost, which could be as high as $1 billion, according to analysts.

But for Indian lenders saddled with over $120 billion of bad loans and a coronavirus-induced collapse in demand, the move will further pressure already stressed balance sheets.

In the case of a similar scheme for farm loans, banks typically need to wait nine to 24 months to get the funds from the government, two bankers said.

Lenders also will need to recalculate millions of loans, according to interviews with four bankers and a lawyer.

“Getting the money back from the government is a painful exercise,” said a senior banker at one of India’s shadow banks.

“At the end, a lot of work will happen, nobody will be happier and the government will be poorer.”

A finance ministry spokesman declined to comment, citing ongoing legal proceedings.

Banks’ legal costs are also on the rise as lawsuits pile up.

“The state-owned banks may show government support, but the private lenders are in it for the profit. They will have different calculations and those calculations will be challenged by the government,” said the lawyer.

A banker at a private lender added: “That is the problem with such waivers, because where does it end?”

Bankers are also concerned about that waivers may distort the culture of lending in India and argue that there are other ways to help borrowers who are in need, such as providing subsidies or loan restructuring.

“Now, in case of a flood or any other situation, even borrowers who can pay may not be keen to do so because they know the government will step in to rescue them,” said a senior banker at a public sector lender.”

12:00 PM

India approves 16 companies, including top Apple suppliers, for smartphone plan

India on Tuesday said it was approving incentives under a federal plan to boost domestic smartphone production to 16 companies, including top Apple suppliers Foxconn, Wistron and Pegatron .

India’s smartphone industry has become a showpiece for Prime Minister Narendra Modi’s “Make In India” drive. The $6.65 billion incentive scheme is part of the government’s aim to make the country into an export and manufacturing hub.

The companies have to invest to tap into the scheme. The government did not disclose what investment Foxconn, Wistron and Pegatron, which is yet to start Indian operations, will make.

Two sources previously told Reuters these three companies plan to invest a total of almost $900 million in India in the next five years to benefit from the scheme.

 

11:30 AM

Coronavirus widens US trade deficit with China

11:00 AM

ICRA sees green shoots for steel sector

The domestic steel industry is witnessing early green shoots of recovery from the second quarter of ongoing fiscal, rating agency ICRA said.

The outbreak of the COVID-19 pandemic and the subsequent nationwide lockdown had severely affected demand and production of steel in the country, leading to rise of inventory levels.

Due to the poor market conditions, steel players were forced to reduce their capacity utilisation and look to export markets to adjust their products.

However, “the domestic steel industry is witnessing early green shoots of recovery from Q2 FY21 , supported by easing of mobility restrictions and a gradual improvement in the domestic demand environment,” ICRA said.

10:40 AM

Rupee slips 9 paise to 73.55 against US dollar in early trade

The weak opening stocks had its effect on the rupee as well.

PTI reports: “The rupee depreciated 9 paise to 73.55 against the US dollar in opening trade on Wednesday as muted domestic equities and strong American currency weighed on investor sentiment.

The local unit opened at 73.53 at the interbank forex market, then lost ground and touched 73.55 against the US dollar, down 9 paise over its last close of 73.46.

Asian currencies are trading weak against USD. The rupee is likely to trade in an intra-day range of 73.35-73.65, said Abhishek Goenka, Founder and CEO, IFA Global.

The rupee continues to follow a trading pattern wherein nationalised banks aggressively buy the dips to 73.10-73.15 and buy all the way up to 73.45-73.50, Goenka said.

“Considering the fact that foreign direct investment (FDI) related inflows are lined up and the reaction function of nationalised banks, we expect the rupee to continue trading in the 72.90-73.90 range,” he said.

Meanwhile, on the global front, US President Donald Trump on Tuesday instructed his officials to stop negotiating with the House Democrats on coronavirus stimulus.

“The overall risk sentiment was holding up until Trump said he was holding back the talks on fiscal stimulus until after the election. The yield on the US 10-year bond touched the highest level since June this year but retreated post president Trump’s comment,” Goenka said.

On the domestic front, the newly-constituted Monetary Policy Committee (MPC) of the Reserve Bank is scheduled to begin its three-day deliberations starting during the day. The decision of the rate-setting panel will be announced on October 9.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.15 per cent to 93.82.

On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 264.26 points higher at 39,838.83 and the broader NSE Nifty rose 69 points to 11,731.40.

Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 1,101.76 crore on a net basis on Tuesday, according to provisional exchange data.

Brent crude futures, the global oil benchmark, fell 1.48 per cent to USD 42.02 per barrel.”

10:20 AM

Recovery in global trade could be disrupted by ongoing pandemic effects: WTO

Some words of caution from the WTO on the global trade recovery.

PTI reports: “Global trade is showing signs of bouncing back from the impact of the coronavirus-induced slump but any recovery could be disrupted by the ongoing pandemic effects, according to the WTO.

The World Trade Organization (WTO) said it now forecasts a 9.2 per cent decline in the volume of global merchandise trade for 2020, followed by a 7.2 per cent rise in 2021.

“These estimates are subject to an unusually high degree of uncertainty since they depend on the evolution of the pandemic and government responses to it,” the WTO said in a statement on Tuesday.

It said that strong trade performance in June and July have brought some signs of optimism for overall trade growth in 2020.

Trade growth in COVID-19 related products was particularly strong in these months, showing trade’s ability to help governments obtain needed supplies, it added.

“World trade shows signs of bouncing back from a deep, COVID-19 induced slump, but WTO economists caution that any recovery could be disrupted by the ongoing pandemic effects,” it said.

“The incidence of COVID-19 worldwide has fallen from its peak in the spring, but it remains stubbornly high in many areas,” Deputy Director-General Yi Xiaozhun said, adding one of the greatest risks for the global economy in the aftermath of the pandemic would be a descent into protectionism.”

10:00 AM

Sensex drops over 100 points in opening trade; Nifty below 11,650

A dull start to the day for the stock indices on overnight losses in the US markets after yesterday’s impressive gains.

PTI reports: “Equity benchmark Sensex dropped over 100 points in opening trade on Wednesday tracking losses in financial stocks amid weak cues from global markets.

The 30-share index was trading 100.60 points or 0.25 per cent lower at 39,473.97, and the NSE Nifty fell 23.45 points or 0.20 per cent to 11,638.95.

Bajaj Finance was the top loser in the Sensex pack, shedding around 5 per cent, followed by Bajaj Finserv, IndusInd Bank, ICICI Bank, Kotak Bank and Axis Bank.

On the other hand, ONGC, Maruti, Reliance Industries, HUL and UltraTech Cement were trading on a positive note.

In the previous session, Sensex zoomed 600.87 points or 1.54 per cent to close at 39,574.57, while Nifty climbed 159.05 points or 1.38 per cent to end at 11,662.40.

Exchange data showed that foreign institutional investors bought equities worth Rs 1,101.76 crore on a net basis on Tuesday.

According to Arjun Mahajan, Head – Institutional Business – at Reliance Securities, Indian equities are likely to trade sideways today with chances of profit booking at a higher level.

Investors would be keenly watching out TCS numbers and management commentary to take fresh direction. Further, BFSI space after seeing sharp recovery may see some amount of selling ahead of the Supreme Court hearing on interest waiver early next week, he said.

Further, he stated that growing ambiguity over US fiscal stimulus after President Donald Trump’s tweet on Tuesday does not bode well for global equity including India.

In a series of tweets, Trump said he had instructed his officials to stop negotiating with the House Democrats on another coronavirus stimulus package, alleging that Speaker Nancy Pelosi was not holding talks in good faith.

Bourses in Hong Kong, Tokyo and Seoul were trading with losses in mid-session deals, those in Shanghai were closed for a holiday.

Wall Street indices ended on a negative note in the overnight session.

International oil benchmark Brent crude was trading 1.66 per cent lower at USD 41.94 per barrel.

Meanwhile, Mahajan expects Indian investors to continue to focus on the possibility of domestic fiscal package announcement which is still on the cards in the near term.”

9:30 AM

IMF chief says global economy less dire but long climb ahead

The global economy is looking ‘less dire’ than it did in June and the International Monetary Fund will make a ‘small’ upward revision to its 2020 global output forecast, IMF Managing Director Kristalina Georgieva said on Tuesday.

“My key message is this: The global economy is coming back from the depths of this crisis,” Ms. Georgieva said in remarks to a London School of Economics event. “But this calamity is far from over. All countries are now facing what I would call ‘the long ascent’ — a difficult climb that will be long, uneven, and uncertain. And prone to setbacks,” she added. The IMF had in June forecast that the coronavirus shutdowns would shrink global GDP by 4.9%, marking the sharpest contraction since the 1930s Great Depression, and called for more policy support. The IMF will publish its revised forecasts next week.

But $12 trillion in fiscal support, coupled with unprecedented monetary easing has allowed many advanced economies, including the United States and the euro zone, to escape the worst damage and start to recover, she said.

 



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