The benchmark stock indices have opened on a positive note this morning after significant gains recorded in yesterday’s session.
The head of telecom giant Airtel has opined on the headwinds facing the sector.
Join us as we follow the top business news through the day.
Chinese stocks rise on debt financing
Markets end with modest gains; financial stocks extend rally
Stocks ended the day well off the day’s highs.
PTI reports: “Equity benchmarks Sensex and Nifty closed in the green for the third straight session on Tuesday, propelled by financial stocks amid firm global cues.
After a choppy session, the BSE index ended 44.80 points or 0.12 per cent higher at 38,843.88.
The NSE Nifty inched up 5.80 points or 0.05 per cent to close at 11,472.25.
Bajaj Finance was the top gainer in the Sensex pack, rallying over 4 per cent, followed by SBI, Tech Mahindra, Asian Paints, Bajaj Finserv, IndusInd Bank, ICICI Bank and M&M.
On the other hand, NTPC, Sun Pharma, Nestle India, Tata Steel and L&T were among the laggards.
Traders said despite a largely positive trend in global equities, domestic investors were cautious amid lack of directional cues.
Bourses in Tokyo and Seoul ended with gains, while Shanghai and Hong Kong finished in the red.
Stock exchanges in Europe were trading on a positive note in early deals.
Global oil benchmark Brent crude was trading 0.39 per cent higher at USD 45.82 per barrel.
In the forex market, the rupee ended on a flat note at 74.33 against the US dollar.
Meanwhile, earlier in the day, the Reserve Bank of India said it will conduct simultaneous purchase and sale of government securities under Open Market Operations (OMO) for an aggregate amount of Rs 20,000 crore in two tranches.”
Weekend curfews, partial lockdowns hurting business: Retailers’ body
Retail bodies are not impressed by the continuation of lockdown restrictions.
PTI reports: “Weekend curfews and partial lockdowns continue to hurt retail business and dampen consumer sentiment as many states still impose “irrational weekend lockdowns”, the Retailers Association of India (RAI) said on Tuesday.
For retailers, over 45 per cent of the week’s entire business happens over the weekends, Saturday and Sunday, RAI said in a statement. It added that after facing losses for over four months due to lockdown, retailers are depending on the weekend business to help recover from the financial stress they have been facing.
“However, local authorities in some states continue to impose strict lockdowns on weekends, which are becoming a huge setback in their path to recovery,” it added.
RAI said the Indian retail industry continues to struggle to get back to its feet with constant roadblocks being faced at the state and local levels with weekend curfews and partial lockdowns, which continue to hurt retail business and dampen consumer sentiment.
“Over 10 states continue to impose irrational weekend lockdowns. These include Punjab, Haryana, Kerala, Madhya Pradesh, Uttar Pradesh, Jammu and Kashmir, and Nagaland, among others,” the retailers’ body said.
RAI Chief Executive Officer Kumar Rajagopalan said, “These are knee-jerk reactions that are crippling the sector and gravely affecting the economy. We have urged the Centre and the states governments to collaboratively work towards supporting the revival of the retail industry.”
India will always be a consumption economy, and if the retail industry suffers, it will have a crippling effect on the entire value chain that involves manufacturing, entertainment, right down to artisans and other micro-enterprises, he added.
For retailers, nearly 60-70 per cent of costs are fixed costs, such as rents, and salaries to employees make a large part of this cost. This, along with low margins, leaves businesses with limited flexibility that has already started leading to layoffs and downscaling or even shutting down operations widely, Rajagopalan said.
“If the weekend business is lost then the hopeful recovery from the festive season will become a distant dream,” he added.
RAI also said it is also grossly inconvenient to customers, who after a busy workweek wait for the weekend to do their shopping, especially in cases where both partners are working.
“Partial closures and keeping shops closed during weekends are detrimental to social distancing as customers have no choice but to throng stores during restricted hours,” it added.
In times like this when the business is inelastic, it is crucial to keep stores open on all days and for extended hours. Only this will help retailers crawl back from the financial distress they have been facing and encourage social distancing, RAI said.
The association also claimed that weekend and partial lockdowns continue despite orders from the Ministry of Home Affairs (MHA) to keep retail open on all days, suggesting a lack of coordination between the Centre and states.”
Rupee pares early gains, settles 1 paisa down at 74.33 against US dollar
The rupee pared its early gains and settled for the day on a flat note at 74.33 against the U.S. dollar on Tuesday, tracking muted domestic equities.
At the interbank forex market the domestic unit witnessed highly volatile trade. It opened on a strong note at 74.17, but lost ground during the day and finally ended at 74.33 against the greenback, down 1 paisa over its previous close of 74.32 against the American currency.
During the day, the local unit witnessed an intra-day high of 74.17 and a low of 74.51 against the U.S. dollar.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.12% down at 93.18.
Waive service tax on AGR dues: telcos
Telecom operators’ body COAI has approached the Finance Ministry seeking waiver of service tax on adjusted gross revenue (AGR) dues to be paid to the government. The telecom operators have been paying service tax and then GST under the reverse charge mechanism (RCM) on licence fees (LF) and spectrum usage charges (SUC) made to the Department of Telecom for the period starting April 1, 2016.
The industry paid about ₹6,600 crore between April 2016 and March 2017 in cash to discharge its output service tax liability, the Cellular Operators Association of India (COAI) said in a letter to the Ministry dated July 17.
“Telecom Sector should not be burdened with Service tax liability due to incremental LF and SUC payable pursuant to the SC decision, as it is going through challenging times,” COAI Director General S P Kochhar said in the letter.
RBI calls for deep-seated, wide-ranging reforms for sustainable growth
The case for radical structural reforms has never been stronger as the pandemic wreaks havoc.
PTI reports: “Cautioning that India’s potential output may undergo a structural downshift following the pandemic, the Reserve Bank on Tuesday made a strong case for deep-seated and wide-ranging reforms to regain losses and return to the path of sustainable economic growth.
The COVID-19 pandemic will inflict deep disfiguration on the world economy and the shape of the future will be heavily contingent upon the evolving intensity, spread and duration of COVID-19 and the discovery of the elusive vaccine, the RBI said in its ‘assessment and prospects’ which forms part of the central bank’s Annual Report for the year 2019-20.
Post-COVID-19, the overwhelming sense is that the world will not be the same again and a new normal could emerge, the Reserve Bank of India (RBI) said.
“In a post-pandemic scenario, deep-seated and wide-ranging structural reforms in factor and product markets, the financial sector, legal architecture, and in international competitiveness would be needed to regain potential output losses and return the economy to a path of strong and sustainable growth with macroeconomic and financial stability,” the RBI said.
As in the rest of the world, “India’s potential output can undergo a structural downshift as the recovery driven by stimulus and regulatory easing gets unwound in a post-pandemic scenario,” it noted.
Moreover, this recovery is likely to be different as the global financial crisis occurred after years of robust growth with macroeconomic stability; by contrast, COVID-19 has hit the economy after consecutive quarters of slowdown, it added.”
Dr. Reddy’s forays into hospital nutrition segment
Pharma major Dr. Reddy’s Laboratories on Tuesday said it is foraying into the hospital nutrition segment in India with a nutrition drink.
The product, Celevida Maxx, is a unique addition to its nutrition portfolio and designed to help manage nutritional needs of cancer, critical care and chronic obstructive pulmonary disease (COPD) patients, the Hyderabad-headquartered firm said.
“We are pleased to foray into the hospital nutrition segment in India. With Celevida Maxx, we look forward to strengthening our presence in the nutrition segment and continue making a positive impact on patients’ lives,” CEO, Branded Markets (India and Emerging Markets) M.V. Ramana said.
RBI announces special OMO of Rs 20,000 crore in 2 tranches
The central bank continues to try influencing the shape of the yield curve.
PTI reports: “The Reserve Bank of India on Tuesday said it will conduct simultaneous purchase and sale of government securities under Open Market Operations (OMO) for an aggregate amount of Rs 20,000 crore in two tranches.
The auction will be in held in two tranches of Rs 10,000 crore each and will be conducted on August 27 and September 03, 2020, Reserve Bank of India (RBI) said in a statement.
“On a review of current and evolving liquidity and market conditions, the Reserve Bank has decided to conduct simultaneous purchase and sale of government securities under OMO for an aggregate amount of Rs 20,000 crores in two tranches of Rs 10,000 crores each,” it said.
On August 27, the central bank said it would be selling four securities totalling Rs 10,000 crore and will be purchasing four securities of the same amount.
“The securities for the second tranche auction on September 03, 2020 will be announced separately,” it added.
The Reserve Bank further said it will continue to monitor evolving liquidity and market conditions and take measures as appropriate to ensure orderly functioning of financial markets.
The simultaneous purchase and sale of government securities programme involves purchasing government securities of longer maturities and selling equal amount of securities of shorter maturities.”
Big leap in mobile transactions during lockdown: SBI chairman
Mobile banking may become the most-preferred banking channel, superseding Internet banking, in the days to come, SBI Chairman Rajnish Kumar said.
“Out of 100 transactions at SBI, only nine transactions are being made at branches. While transactions at ATMs at the time of demonetisation stood at about 55%, these are down to about 30% now. Mobile banking has risen to to 55% now,” Mr. Kumar said, addressing the seventh G. Ramachandran Memorial Lecture organised by the Southern India Chamber of Commerce and Industry.
According to him, transactions via digital banking had risen due to the lockdown. “During the pandemic, SBI delivered all its services without any interruption. Mobile transactions were almost on a par with Internet banking,” he said.
Exxon removed from the Dow
Sunil Mittal hints at mobile services rate hike
Is the era of cheap telephone services about to end?
PTI reports: “Bharti Airtel founder and Chairman Sunil Bharti Mittal on Monday hinted at an increase in mobile services rates while stating that the average revenue per user is expected to cross Rs 200 in the next six months.
He said 16 GB data consumption a month for Rs 160 is a tragedy.
“You either consume 1.6 GB of capacity per month either at this price point or you may prepare to pay a lot more. We are not wanting USD 50-60 like the US or Europe but certainly USD 2 for 16 GB a month is not sustainable,” Mittal said at an event.
He said that ARPU of Rs 300 is required to make industry sustainable with lower end still paying Rs 100 a month.
“But if your consumption is largely around watching TV, movies, entertainment and depriving other vital special services on to the networks, then you need to pay for that,” Mittal said.
He was speaking at the launch event of book ‘Some Sizes Fit All’ written by his colleague at Bharti Enterprises, Akhil Gupta.
Airtel reported an increase in average revenue per user at Rs 157 in the first quarter ended June 30, 2020. The rise in ARPU comes following an increase in tariff by Bharti Airtel in December 2019.
Mittal said that while telecom operators have served the nation during the difficult times, the industry needs to invest in 5G, more optical fibres, submarine cables etc.
“Businesses which are not telecom, also need to adopt digital stories around them. You should see solid ARPUs building up in the next 5-6 for industry to be sustainable. We are down to 2-3 players now. India is a very price conscious market. In six month time we should be crossing the mark of Rs 200 for sure and Rs 250 would be ideal,” Mittal said.
Telecom operator Bharti Airtel has reported widening of losses to Rs 15,933 crore for June quarter — its fifth straight quarter of decline — as the telco made additional provision for statutory dues.
The company had been struggling to make margins due to tariff war triggered by Reliance Jio in 2016 and the Supreme Court order in favour of the government on statutory dues added to its woes.”
Rupee surges 15 paise to 74.17 against US dollar in early trade
The rupee has gained backed by positive sentiment in the domestic stock bourses.
PTI reports: “The rupee surged 15 paise to 74.17 against the US dollar in opening trade on Tuesday tracking positive domestic equities and weak American currency.
At the interbank forex market, the domestic unit opened at 74.17 against the US dollar, registering a gain of 15 paise over its previous close.
It had settled at 74.32 against the US dollar on Monday.
Forex traders said positive trend in the equity markets, weak American currency and sustained foreign fund inflows aided the rupee’s movement.
“Optimism surrounding the US-China Phase 1 deal also lent support after both sides saw progress on trade issues and are committed to making the Phase 1 agreement reached in January a success,” Reliance Securities said in a research note.
Further, Asian currencies have started stronger against the US dollar and could boost the domestic unit, the report added.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.17 per cent to 93.14.
On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 93.52 points higher at 38,892.60 and broader NSE Nifty advanced 23.62 points to 11,490.05.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 219.07 crore on Monday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, rose 0.09 per cent to USD 45.17 per barrel.”
Soaring price, higher LTV pose asset quality risks to gold loan cos: Report
A report flags possible risks in the gold loan market.
PTI reports: “Surging gold prices and the RBI’s decision to allow banks to lend more against the yellow metal pose risks to gold loan focused non-banking lenders, warns a report.
Gold prices have rallied more than 35 per cent since April, which has helped support higher loan growth by some gold loan companies.
Though this will bolster their interest income, it also raises potential risks associated with a fall in gold prices, ratings agency Fitch said in its report.
Growth in gold-backed lending may outperform other parts of the financial sector in the near-term due to the higher prices, it said.
While Manappuram Finance and IIFL Finance saw loan growth of 4-5 per cent between March and June, the largest player Muthoot Finance saw a 1 per cent decline in gold loans as it played more cautious during the lockdown months. As against this, banks saw a 1 per cent contraction in lending.
“Higher gold price increases asset quality and collateral risks that gold lenders will face if price falls,” the report said, adding gold prices can fall if the global economic growth outlook improves.
“A lower gold price may trigger intentional defaults by some borrowers, particularly if outstanding loan amounts start to exceed the market value of collateral pledged, as they did during periods of significant decline in 2012 and 2013,” it said.
The RBI’s move to retain the loan-to-value (LTV) cap for gold loan companies at 75 per cent provides a buffer against these risks. Some lenders have reduced internal LTV caps below the regulatory ceiling to better manage collateral risks. As a result the average LTVs are in the 55-65 range, it said.
However, the RBI raised the LTV to 90 per cent for gold loans by banks until next March.
If banks opt to exploit this higher LTV rate, they could pose a competitive threat to gold loan companies and may pressure smaller entities to lend at higher LTVs, increasing risks associated with their new lending, the report said.”
Sensex rises over 200 points in early trade; financial stocks extend gains
Stocks have opened marginally higher this morning after yesterday’s gains.
PTI reports: “The BSE benchmark Sensex advanced over 200 points in early trade on Tuesday, tracking gains in financial stocks amid largely positive trend in global markets.
After touching a high of 39,008.89 in opening session, the BSE Sensex was trading 157.31 points or 0.41 per cent higher at 38,956.39; while the NSE Nifty was up 46.70 points or 0.41 per cent at 11,513.15.
IndusInd Bank was the top gainer in the Sensex pack, rising around 2 per cent, followed by SBI, Bajaj Finance, Bajaj Finserv, Axis Bank, ICICI Bank, HDFC, M&M and Maruti.
On the other hand, HCL Tech, Nestle India, UltraTech Cement and Tech Mahindra were among the laggards.
In the previous session, the Sensex closed 364.36 points or 0.95 per cent higher at 38,799.08, while the broader Nifty jumped 94.85 points or 0.83 per cent to 11,466.45.
Exchange data showed that foreign institutional investors bought equities worth Rs 219.07 crore on a net basis on Monday.
Traders said, besides stock-specific action, domestic bourses followed largely positive trend in global equities.
Bourses in Tokyo and Seoul were trading with gains in mid-day deals, while those in Shanghai and Hong Kong were in the red.
Stock exchanges on Wall Street ended on a positive note in overnight session
Global oil benchmark Brent crude was trading 0.22 per cent higher at USD 45.74 per barrel.”
‘WhatsApp leads Zoom among video-calling apps’
The most preferred video calling apps in India continue to be WhatsApp and Zoom with user shares of 35% and 27%, respectively, while Jio has 4%, as per a study by LocalCircles.
Among the top video-calling apps being used in the country, there is no Indian app. The popular group video-calling apps used in India include Zoom, WhatsApp, Microsoft Teams, Google Meet and Skype.
While some 11% used Microsoft Teams, 5% said Skype, 13% used Google Meet/Hangout and 5% used other group video calling apps
More than 35,000 people across 247 districts participated in a survey conducted by LocalCircles.