Today's top business news: Stocks end the day with losses, oil slides on demand concerns, speculators run amok, and more  06/29/2020 10:45:29  8

Exchanges in Shanghai, Hong Kong, Tokyo and Seoul finished up to 2% lower following a rout on Wall Street.   | Photo Credit: PTI

The benchmark indices have started the week on a weak note with losses of over 1%.

Petrol and diesel prices continue to scale new highs as the government tries to shore up revenues.

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

Speculators run amok

Wild EXPLOSION in speculation:NASDAQ / S&P volume ratio has gone through the roof, and is now higher than at the peak of the dot-com bubble!

For those who are old enough to remember, most traders who got rich quick during the dot-com bubble also lost their shirts in the crash

— SentimenTrader (@sentimentrader) June 27, 2020

Sensex drops 210 points on weak global cues

The benchmark stock indices, which were down over 1% during the lows of the day, managed to recover some of the losses by close.

PTI reports: "Equity benchmark Sensex on Monday dropped 210 points on selling mainly in banking and IT stocks as mounting coronavirus cases kept investors globally on edge.

After plunging 509 points during the day, the 30-share BSE index pared some losses to end 209.75 points, or 0.60 per cent, lower at 34,961.52.

Likewise, the NSE Nifty settled 70.60 points, or 0.68 per cent, down at 10,312.40.

Axis Bank was the top loser in the Sensex pack, dropping around 5 per cent, followed by Tech Mahindra, SBI, L&T, IndusInd Bank, Infosys and NTPC.

On the other hand, HDFC Bank, HUL, Kotak Bank and Bharti Airtel were among the gainers.

According to Narendra Solanki, Head- Equity Research (Fundamental), Anand Rathi, market opened on a negative note tracking subdued trades in Asian markets as global coronavirus death toll crosses 5,00,000 as investors continued to monitor developments amid concerns that a surge in cases could impact the reopening of economies.

During afternoon session, market recovered marginally but failed to sustain the gains as European markets opened lacklustre which further weighed on already negative sentiments, he added.

Further, geopolitical tensions like India-China border issue and US-China trade tiff also kept participants on edge, traders said."

Strong inquiries, increased preference for personal mobility to boost auto sales in July

Some good news for the auto sector which has for a long time been moving from one crisis to another.

PTI reports: "Strong inquiries for passenger vehicles and two-wheelers, rising footfall post-lockdown easing in tier 2 and tier 3 cities, increased preference for personal mobility and wedding season demand are expected to boost auto sales in July, a report has said.

Business is also expected to be driven by further improvement in rural demand (owing to early monsoon and manpower availability for agriculture activities) and product availability due to ramp up in production, Dolat Capital said in its report on the automobile sector on Monday.

Noting that while the two-wheeler sales momentum looks stable, the recovery in passenger vehicles demand looks elusive due to short-lived nature of pent-up demand, it expects two-wheeler demand to pick up further (low-ticket, utility-driven purchases).

However, risk-aversion and wealth impact of the COVID-19 pandemic could affect replacement purchases and upgrades of around 50 per cent of sales in passenger vehicles.

Two-wheeler retail sales have improved during the month with good demand from up-country markets lifting the sales, Dolat Capital said, adding that except Maharashtra, Gujarat, Tamil Nadu (post-lockdown, from June 15), retail demand is recovering quickly.

Entry-level bike segment witnessed most inquiries owing to down-trading of vehicles as demand continues to recover on the back of improvement in rural sentiment and low interest rate, it said.

According to the report, dealers are benefiting from the recent Emergency Credit Line Guarantee Scheme, which offers 20 per cent extra working capital financing at 7.25-8.5 per cent to dealers with turnover below Rs 1 billion (Rs 100 crore).

Observing that tractor sales are recovering at a faster pace, it said the segment is seeing volume recovery driven by improvement in farm-level indicators such as output prices, lower input prices, higher government spending in rural areas, and expectation of normal monsoon and adequate water reservoir levels."

Government allows export of COVID-19 PPE medical coveralls

Partially relaxing export norms, the government on Monday permitted shipments of Personal Protection Equipment (PPE) medical coveralls for COVID-19 with a monthly export quota of 50 lakh units.

The product was banned for export earlier, but it has now been moved to the restricted category.

In a notification, the Directorate General of Foreign Trade (DGFT) said: A monthly quota of 50 lakh PPE medical coverall for COVID-19 units has been fixed for issuance of export licence to the eligible applicants to export PPE medical coveralls for COVID-19 as per the criteria to be separately issued in a trade notice.

Rupee settles 7 paise higher at 75.58 against US dollar

Easing crude oil prices and a weakening dollar helped the rupee stage a bounceback.

PTI reports: "The rupee settled 7 paise higher at 75.58 (provisional) against the US dollar on Monday supported by weak American currency and easing crude prices even as the equity market was trading in the negative territory.

Forex traders said weak domestic equities, foreign fund outflows and rising COVID-19 cases weighed on investor sentiments. However, weak American dollar supported the local unit and restricted the decline.

The rupee opened on a flat note at the interbank forex market at 75.64 against the US dollar, then gained ground and finally settled for the day at 75.58 against the US dollar, up 7 paise over its last close.

It had settled at 75.65 against the US dollar on Friday.

During the four-hour trading session the domestic unit touched an intra-day high of 75.52 and a low of 75.64 against the US dollar.

Meanwhile, the number of cases around the world linked to the disease has crossed 1.01 crore and the death toll has topped 5.01 lakh.

In India, the death toll due to COVID-19 rose to 16,475 and the number of infections rose to 5,48,318, according to the health ministry.

On the equities front, the 30-share BSE benchmark Sensex was quoting 345.82 points lower at 34,825.45 and the broader Nifty fell 109.90 points to 10,273.10.

Foreign institutional investors were net sellers in the capital market, as they sold equity shares worth Rs 753.18 crore on Friday, according to provisional exchange data.

Brent crude futures, the global oil benchmark, fell 2.15 per cent to USD 40.14 per barrel.

The dollar index, which gauges the greenbacks strength against a basket of six currencies, fell by 0.09 per cent to 97.34."

SBI economists pitch for 2nd round of financial package for impacted sectors

More calls emerge asking for another stimulus package to boost the economy as it reels under crisis.

PTI reports: "The surge in equity markets is not linked to economic recovery and may be a sign of irrational exuberance, economists at SBI said on Monday, pitching for a second round of fiscal support to help the impacted sectors.

They also warned that banks will start reporting higher non-performing assets (NPAs) after September, once the six-month moratorium on loan repayment ends.

The markets shed over a fifth of their value in the early days of the COVID-19 pandemic and have recouped some of the losses in the last few weeks. Interestingly, the gains happened even as the chorus of a contraction in GDP started among the analysts, wherein some expect a negative growth of up to 5 per cent in 2020-21.

There is a weak linkage between buoyant markets and economic recovery and the phenomenon largely reflects irrational exuberance , the economists wrote in a note, attributing the same to easy liquidity made available by RBI.

Beautiful markets do not signify a beautiful economy, they said.

They also seemed to suggest that India cannot rely a lot on agriculture to boost the overall GDP growth, pointing out that even if the farm sectors historically best performance of 15.6 per cent growth in 1951-52 were to be considered, a similar performance can only help the GDP growth by 2 percentage points.

We must think of a second round of fiscal support at least for the beleaguered sectors, the note said.

It can be noted that the government has already announced a Rs 20 lakh crore package, but the actual fiscal expenditure will be just a tenth of the package.

The note said deposits in bank accounts are fast outpacing borrowings at present, and added that a large part of Indian population depends on interest from deposits because of the lack of a social security base in the country."

It is no coincidence that many of the countries which have responded most effectively to covid-19 are those dealt the heaviest blows 18 years ago by SARS

— The Economist (@TheEconomist) June 29, 2020

Airbus sees output down 40% for two years as job cuts loom

Airbus plane output will be 40% lower for two years compared to pre-crisis plans, its chief executive said in remarks published on Monday, underscoring the threat to jobs as it draws up rapid restructuring plans due to a travel slump.

Reuters reported on June 3 that Airbus was looking to hold underlying jet output at 40% below pre-coronavirus pandemic plans for two years as the basis for the restructuring.

For the next two years - 2020/21 - we assume that production and deliveries will be 40% lower than originally planned, CEO Guillaume Faury told Die Welt newspaper, saying output would return to normal by 2025.

Airbus has till now said it was cutting output by a third on average.

Oil prices extend losses as coronavirus spike cools demand hopes

The global crude oil rally is facing resistance as demand could be hit by the second wave of the coronavirus.

Reuters reports: "Oil prices slid for a second straight session on Monday as coronavirus cases rose in the United States and other places, leading some countries to resume partial lockdowns that could hurt fuel demand.

Brent crude dropped 81 cents, or 2%, to $40.21 a barrel by 0653 GMT, while U.S. crude was at $37.74, down 75 cents, or 2%.

Brent crude is set to end June with a third consecutive monthly gain after major global producers extended an unprecedented 9.7 million barrels per day supply cut agreement into July, while oil demand improved after countries across the globe eased lockdown measures.

However, global coronavirus cases exceeded 10 million on Sunday as India and Brazil battled outbreaks of over 10,000 cases daily. New outbreaks are reported in countries including China, New Zealand and Australia, prompting governments to impose restrictions again.

The second wave contagion is alive and well, Howie Lee, an economist at Singapore's OCBC bank, said. That is capping the bullish sentiment that we've seen in the last six to eight weeks.

Other factors restricting oil prices' advance at this stage include poor refining margins, high oil inventories and the resumption of U.S. production, Lee said.

Despite efforts by OPEC+ - the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia - to reduce supplies, crude inventories in the United States, the world's largest oil producer and consumer, have hit all-time highs.

There is also a risk that gains in prices recently could see some U.S. shale producers restart wells, ANZ analysts said.

Even as the number of operating oil and natural gas rigs dropped to a record low last week, higher oil prices are prompting some producers to resume drilling."

Global mkts start the week on the back foot following heavy losses on Wall St on Fri as virus threatens econ reopening. Virus fatalities exceed half a million people worldwide. Bonds slightly lower w/US 10y at 0.65%. Oil prices down -2% w/Brent $40.19. Gold $1771. Bitcoin $9.1k.

— Holger Zschaepitz (@Schuldensuehner) June 29, 2020

JLL ties up with RoofandFloor

JLL, leading real estate consulting firm has announced a tie up with RoofandFloor, a technology driven online marketplace for homebuyers to smoothen homebuying experience starting from project discovery, shortlisting, site visits, negotiations and bookings.

The partnership brings together JLLs long established relationships with several top developers in the country and RoofandFloors tech-savvy online marketplace delivering a superior experience to high intent homebuyers, JLL said in a statement.

The platform showcases properties across 24 cities in India and supports buying, selling and resale.

Properties can be shortlisted on RoofandFloors portal and JLL would help in the homebuying journey.

Axis Bank shares tank over 5% after S&P rating cut

Could Yes Bank be the canary in the coal mine as Indian banks come under increased stress?

PTI reports: "Shares of Axis Bank on Monday declined over 5 per cent after S&P Global Ratings lowered its ratings of the lender due to increased economic risks for banks operating in India.

The stock plunged 5.21 per cent to Rs 402.90 on BSE. On NSE, it tanked 5.29 per cent to Rs 402.35.

We lowered our ratings on Axis to reflect our expectation that heightened economic risks facing Indias banking system will affect the banks asset quality and financial performance, S&P said on Friday.

While Axis Banks asset quality is superior to the Indian banking sector average, its level of non-performing assets will likely remain high compared to international peers, it noted.

The agency said economic conditions have turned adverse for Indian banks due to COVID-19 and drastic efforts to curtail the spread of the virus have resulted in a sharp economic contraction."

Markets are not pricing in inflation

Starbucks latest to say it will pause social media ads

Starbucks is the latest company to say it will pause social media ads after a campaign led by civil rights organisations called for an ad boycott of Facebook, saying it doesnt do enough to stop racist and violent content.

Starbucks said on Sunday that its actions were not part of the #StopHateforProfit campaign, but that it is pausing its social ads while talking with civil rights organisations and its media partners about how to stop hate speech online.

The coffee chains announcement follows statements from Unilever, the European consumer-goods giant behind Ben & Jerrys ice cream and Dove soap; Coca-Cola; cellphone company Verizon and outdoors companies like Patagonia, Eddie Bauer and REI; film company Magnolia Pictures; jeans maker Levis and dozens of smaller companies.

Rupee opens on flat note, rises 5 paise to 75.60 against US dollar in early trade

Not much cheer in the currency market for the rupee as domestic equities suffer losses.

PTI reports: "The rupee opened on a flat note and rose 5 paise to 75.60 against the US dollar in early trade on Monday as weak greenback restricted the losses stemming from concerns over rising COVID-19 cases.

Forex traders said weak domestic equities, foreign fund outflows and rising COVID-19 cases weighed on investor sentiments. However, weak American dollar supported the local unit and restricted the decline.

The rupee opened on a flat note at the interbank forex market at 75.64 against the US dollar, then gained some ground and touched 75.60 against the US dollar, up 5 paise over its last close.

It had settled at 75.65 against the US dollar on Friday.

Cues from Asia remained mixed as most Asian currencies were flat this Monday, Reliance Securities said in a research note adding that weak US dollar could offset losses stemming from fears of slowdown in the economy due rise in COVID-19 cases back home and globally.

The number of cases around the world linked to the disease has crossed 1.01 crore and the death toll has topped 5.01 lakh.

Meanwhile, in India, the death toll due to COVID-19 rose to 16,475 and the number of infections rose to 5,48,318, according to the health ministry.

On the equities front, the 30-share BSE benchmark Sensex was quoting 470.15 points lower at 34,701.12 and the broader Nifty fell 93.85 points to 10,289.15.

Foreign institutional investors were net sellers in the capital market, as they sold equity shares worth Rs 753.18 crore on Friday, according to provisional exchange data."

Government extends deadline to bid for Air India by 2 months till August 31

The government has again extended the deadline to bid for Air India by two months till August 31 as the COVID-19 fallout has disrupted economic activities globally.

This is the third time the deadline has been extended.

The divestment process for the national carrier was initiated on January 27.

Issuing a corrigendum to the Expression of Interest (EoI) for the sale of Air India, the Department of Investment and Public Asset Management (DIPAM) said the deadline has been extended in view of the request received from the IBs (interested bidders) in view of the prevailing situation arising out of COVID-19.

Dollar stymied as mood swings between recovery hopes and virus fears

The fluctuations in the currency market could point to indecisiveness among global investors.

Reuters reports: "The dollar struggled to make headway on Monday, and riskier currencies inched ahead, as investor sentiment swung between hopes for a global economic recovery and fears that a fresh wave of coronavirus cases could undermine the revival.

Against a basket of currencies the greenback retreated from a one-week high hit on Friday and dipped 0.2% to 97.303. The trade-exposed Australian and New Zealand dollars rose about 0.2% to near the middle of recent ranges.

California ordered some bars to close on Sunday, following similar moves in Texas and Florida, as cases nationwide soar to record levels. Washington state and the city of San Francisco have paused re-opening plans.

Yet elsewhere - from New York to Europe and Asia - re-openings continue apace and data illustrates a swift rebound.

The debate is still very live, said Westpac FX analyst Sean Callow. How seriously are you going to bet that retreats in reopening in selected U.S. states are enough to actually puncture the rally?

For now the dollar has dithered rather than deflated.

The Aussie and kiwi are headed for monthly gains around 3% but made most of that ground in the early days of June and have tracked sideways since then.

The Aussie, which has gained nearly 25% from a more than 17-year low hit in March, was last up 0.2% at $0.6877. The kiwi rose by the same margin to $0.6431.

Simultaneous safe-haven gains also point to heightened caution, even as the thirst for dollars has eased off as the U.S. Federal Reserve has flooded markets with liquidity."

Sensex tumbles over 300 points in early trade; Nifty below 10,300

A moderately bearish start to the day for domestic equities.

PTI reports: "Equity benchmark Sensex tumbled over 300 points in early trade on Monday dragged by losses in index-heavyweights HDFC twins, ICICI Bank and Infosys amid negative cues from global markets.

The 30-share index was trading 323.91 points, or 0.92 per cent, lower at 34,847.36, while the NSE Nifty fell 83.65 points, or 0.81 per cent, to 10,299.35.

Bajaj Finance was the top loser in the Sensex pack, dropping around 4 per cent, followed by Axis Bank, IndusInd Bank, ICICI Bank, SBI, HDFC duo and Infosys.

On the other hand, ITC, Sun Pharma, Nestle India and PowerGrid were among the gainers.

In the previous session, the BSE barometer closed 329.17 points, or 0.94 per cent, higher at 35,171.27, and the broader Nifty surged 94.10 points, or 0.90 per cent, to finish at 10,383.

Foreign institutional investors were net sellers on Friday, offloading equities worth Rs 753.18 crore, provisional exchange data showed."

Diesel price hits new high

Diesel price on Monday scaled a new high after prices were hiked for the 22nd time in just over three weeks, taking the cumulative increase to 11.14 per litre.

Petrol price was increased by 5 paise per litre and diesel 13 paise a litre across the country, according to a price notification of state oil marketing companies.

In Delhi, a litre of petrol now comes for 80.43 per litre as compared to 80.38 earlier. Diesel rates have been increased to 80.53 per litre from 80.40.

Rates vary from state to state depending on the incidence of local sales tax or VAT.

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