Today's top business news: Stocks rally, Rs 1.14 lakh crore emergency loans sanctioned by banks, rupee tumbles against US dollar, and more

 thehindu.com  07/07/2020 10:39:31  5

Stocks that have had a bit of a bull run in recent weeks got off to a flat start this morning.

The economic war between India and China continues to heat up with the Centre scrutinizing more Chinese investments.

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

Banks sanctions about Rs 1.14 lakh crore loans to MSMEs under credit guarantee scheme

Some important stats on the Centre's emergency credit programme.

PTI reports: "The finance ministry on Tuesday said banks have sanctioned loans of about Rs 1,14,502 crore under the Rs 3-lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) for MSME sector reeling under the economic slowdown caused by the COVID-19 pandemic.

However, disbursements against this stood at Rs 56,091.18 lakh crore till July 4 under the 100 per cent ECLGS for micro, small and medium enterprises (MSMEs).

The scheme is the biggest fiscal component of the Rs 20-lakh crore Aatmanirbhar Bharat Abhiyan package announced by Finance Minister Nirmala Sitharaman in May.

The latest numbers on ECLGS, as released by the finance ministry, comprise disbursements by all 12 public sector banks (PSBs), 20 private sector banks and 10 non-banking financial companies (NBFCs).

As of 4 July 2020, the total amount sanctioned under the 100% Emergency Credit Line Guarantee Scheme by #PSBs and private banks stands at Rs 1,14,502.58 crore, of which Rs 56,091.18 crore has already been disbursed, the finance minister said in a tweet.

Under the ECLGS, the loan amounts sanctioned by PSBs increased to Rs 65,863.63 crore, of which Rs 35,575.48 crore has been disbursed as of July 4, she said.

At the same time, private sector banks have sanctioned Rs 48,638.96 crore and disbursed Rs 20,515.70 crore.

Compared to 1 July 2020, there is an increase of Rs 4,158.51 crore in the cumulative amount of loans sanctioned and an increase of Rs 3,835.65 crore in the cumulative amount of loans disbursed, by both #PSBs and private sector banks combined as on 4 July 2020, Sitharaman said.

Market leader SBI has sanctioned Rs 20,628 crore of loans and disbursed Rs 13,405 crore. It is followed by Punjab National Bank, which has sanctioned Rs 8,689 crore. However, its disbursements stood at Rs 2,595 crore as of July 4."

Sensex advances 187 points; financials show the way

A summary of the day's action in stocks.

PTI reports: "Rising for the fifth straight session, the benchmark Sensex added another 187 points on Tuesday, with gains in financial counters offsetting losses in power and infra stocks.

After a volatile trading session, the 30-share BSE index ended 187.24 points, or 0.51 per cent, higher at 36,674.52. The NSE Nifty was up 36 points, or 0.33 per cent, at 10,799.65.

On the Sensex chart, Bajaj Finance was the top gainer, rallying around 8 per cent, followed by IndusInd Bank, Bajaj Finserv, Infosys, ICICI Bank, Axis Bank and HCL Tech.

On the other hand, NTPC, ITC, PowerGrid and Tata Steel were among the laggards.

According to traders, domestic investors shrugged off weak cues from global markets and focussed on positive factors like sustained foreign fund inflows and hopes of a good monsoon.

Foreign institutional investors were net buyers in the capital market on Monday, purchasing equities worth Rs 348.35 crore, provisional exchange data showed.

Gains in the market were, however, capped as rising COVID-19 cases weighed on investor sentiment."

Diesel price in Delhi scales new high after 25 paise increase

Diesel price in the national capital on July 7 touched an all-time high following a rate hike after a week-long hiatus.

Diesel price on July 7 was increased by 25 paise per litre, according to a price notification of state-owned oil marketing companies.

This took the retail selling price of diesel to 80.78 per litre in the national capital  the highest ever.

There was no change in petrol price for the 8th straight day, and it continues to be priced at 80.43 per litre.

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

Rupee tumbles 25 paise to close at 74.93 against US dollar

The rupee extended the losses and settled 25 paise lower at 74.93 (provisional) against the US dollar on Tuesday amid strengthening American currency and volatile trade in the domestic equity market.

Forex traders said foreign fund inflows and easing crude oil prices supported the rupee, while, factors like strong dollar and rising COVID-19 cases dragged down the local unit.

The rupee opened weak at 74.74 at the interbank forex market, then lost further ground to settle at 74.93 against the US dollar, 25 paise lower than its previous close.

It had closed at 74.68 against the US dollar on Monday.

Retailers see 67% fall in sales during June 15-30: Survey

The easing of lockdown restrictions isn't leading to the expected jump in economic activity.

PTI reports: "Retailers witnessed 67 per cent decline in business during June 15-30 compared to the corresponding period last year, according to a survey by Retailers Association of India (RAI).

In its latest business survey conducted on more than 100 big and small retailers, RAI said there has been no significant growth in business for retailers even during the second half of June.

During the same time frame, malls witnessed 77 per cent degrowth (year-on-year) on account of not being allowed to open uniformly across the country, high street retail showed degrowth of 62 per cent in business despite being allowed to open across India, RAI said in a statement.

RAI said that in June, large size retailers (sales of over Rs 300 crore) witnessed a degrowth of 59 per cent and small retailers ( less than Rs 300 crore sales) witnessed a decline of 69 per cent.

Regionwise, West with a 74 per cent drop and North with 71 per cent decline continued to suffer the most, while East and South witnessed 62 per cent fall in sales each.

Although the quantum of degrowth marginally reduced in June 2020, the first quarter of FY21 continued to witness degrowth of 74 per cent, RAI CEO Kumar Rajagopalan said.

The figures depict a grim situation for not just retailers but the entire economy as retail is the backbone of consumption, he added."

Dependence on advertising biggest bane for media industry: Uday Shankar

As media outlets are hit hard by the plunge in advertising, some insight on the economics that drives the industry.

PTI reports: "Dependence on advertising is the biggest bane for the media and entertainment sector, and there is a need for change by making the consumers pay for content, industry veteran Uday Shankar said on Tuesday.

Shankar, who chairs The Walt Disney Company in Asia Pacific, said the media industrys short sightedness is to be blamed for the disproportionate dependence on advertising continuing over the years.

Biggest bane of this industry, especially for print, TV and now even for digital, has been its disproportionate dependence on advertising, Shankar said in his address to the annual FICCI Frames conference here.

He said the industry has grown to over USD 20 billion and advertising alone contributed over USD 10 billion in revenues as of now.

Globally, the media industry has grown on the back of establishing a clear relationship with the consumers, he said.

All of us are guilty of this, we decided to be shortsighted, we decided to subsidise our products and we decided to create hurdles for small challengers, a candid Shankar said.

He further said, if the industry has to grow to the next level, I think the one thing that must be fixed is our ability and our desire to get people to pay for what they consume. Thats fair and thats the only way this industry can grow, he added.

Shankar said he has been associated with the industry lobby and reflected that a lot has changed over the past few years.

Setback for the industry is going to be very, very severe because of the COVID-19 pandemic this year, and the impact will be more painful because of the disproportionate dependence on advertising, he said, adding that this needs fixing.

Shankar said the Indian ambitions on content are very small, and it is time the industry expands to having global ambitions and does not concentrate only on the ratings or circulation.

We have not done that (focused on content) and worse, we have been even shortsighted and gone and worked with agencies like regulators and other competitors to create hurdles in the way of unlocking the power of the business, he said."

Risk currencies take breather after rally, virus resurgence lifts dollar

Some turmoil in the currency markets.

Reuters reports: "Risk currencies such as the Australian dollar took a breather from recent gains on Tuesday with investors hitting pause on an equity market rally, as new coronavirus flare-ups and regional lockdowns in some countries curbed buying and lifted the dollar.

Riskier currencies such as the commodity-driven Aussie, Norwegian crown, the New Zealand dollar and the Swedish crown have rallied strongly since April alongside increased risk appetite in global markets.

But with a blazing run up in Chinese equities cooling on Tuesday, surging coronavirus infections in places that are attempting a reopening, and regional lockdowns still being introduced, investors appeared to take their foot off the gas.

Lockdown measures were reimposed in Australia's second biggest city on Tuesday, confining Melbourne residents to their homes unless undertaking essential business for six weeks, as officials scramble to contain a coronavirus outbreak.

The Australian dollar sank 0.5% to its U.S. counterpart after the announcement, last trading at $0.6940.

It had no reaction to the country's central bank leaving rates unchanged.

The dollar index in the meanwhile, rose 0.2% to 96.972. It gained 0.2% against the yen, to trade at 107.595 .

The Chinese yuan picked up where it left off after soaring with runaway Chinese equities on Monday, but pulled back from an offshore top of 6.9965 per dollar as caution crept in."

Maruti Suzuki India partners with Axis Bank for easy vehicle financing options

The trend of auto manufacturers tying up with financiers to boost sales continues.

PTI reports: "The countrys largest carmaker Maruti Suzuki India Ltd (MSIL) on Tuesday said it has collaborated with Axis Bank to offer easy vehicle financing options for potential car buyers.

Under the partnership, Axis Bank will offer a variety of options to customers, including 100 per cent on-road funding for salaried customers for eight years, step-up EMI scheme starting at Rs 1,250 per lakh and balloon EMI scheme with final EMI being 25 per cent of loan amount, the company said in a statement.

Besides, the company said as part of the partnership, customers can also choose low equated monthly installment (EMI) scheme for first three months starting with Rs 899. These offers are valid up to July 31.

The flexi EMI options are aimed to ease liquidity and repayment stress of customers during these tough times, the company said adding Axis Bank offers auto loans to a wide category of customer segments -- salaried, self-employed and with or without income proof customers.

Commenting on the partnership, MSIL Executive Director (Marketing & Sales) Shashank Srivastava said, one of the impacts of COVID-19 pandemic has been change in peoples behaviour when it comes to mobility. Concern over safety and maintaining social-distancing has uptick the preference for having a personal vehicle.

He further said, we are confident that this association with Axis Bank will help our customers in offering convenient, affordable and cost-effective finance solution for buying cars.

Axis Bank Executive Director (Retail Banking) Pralay Mondal said the COVID-19 pandemic has created a need for more creative and flexible financing options and the banks financing solutions will provide the much-needed hassle-free experience of car buying and financing.

Axis Bank is one of the key partners of Maruti Suzuki for dealer inventory as well as retail financing solutions.

The two partners will leverage the strong reach of over 3,000 Maruti Suzuki outlets and more than 4,500 Axis Banks branch network to reach out to a wide cross-section of customers across the nation, the statement said."

Indian shares run out of steam after 4-day rally, surging virus cases weigh

An update on the sentiment in the stock bourses.

Reuters reports: "Indian shares traded little changed on Tuesday after a four-session rally as COVID-19 cases climbed unchecked, with losses in energy firms wiping out gains notched by finance and IT stocks.

The NSE Nifty 50 index was down 0.02% to 10,761.45 by 0512 GMT, while the benchmark S&P BSE Sensex was up 0.06% at 36,510.87. Both indexes gained around 4.5% in the last four sessions, hitting their highest in four months.

Coronavirus cases in the world's second-most populous country jumped to 719,665 by Tuesday morning, including 20,160 deaths, health ministry data showed. India on Monday overtook Russia to become the third-most affected country by the novel coronavirus.

Markets need a breather, and of course, there is nervousness after such a stellar rally as you don't want to be the last to cash in, said Ajay Bodke, chief executive officer and chief portfolio manager (PMS) at Prabhudas Lilladher in Mumbai.

The Nifty has rallied more than 40% from a four-year low hit in March, when virus fears had gripped markets.

In a market that has been rallying purely on momentum in the absence of solid fundamentals, any whiff of decelerating momentum indicators will dampen sentiment significantly, said Bodke.

Sentiment was also tempered as Asian stocks hit a speed bump following their recent rally.

Power Grid Corporation of India Ltd was the biggest loser on the Nifty, falling as much as 3.5% to a more than two-week low, while refiner BPCL slid 3.1%.

The Nifty Energy Index dropped as much as 1.5%.

Heavyweight shadow lender Bajaj Finance Ltd was among the top boosts to the Nifty, jumping 4.3% to its highest level since mid-March, after it said assets under a moratorium provided by the central bank had fallen at June-end.

IT firm Infosys Ltd rose as much as 3.6% to its highest since Feb. 26, pushing the Nifty IT index 2.2% higher."

Oil PSUs implementing 3.57 lakh-cr. projects

Oil public sector undertakings (PSUs) such as IOC and ONGC are implementing about 3.57 lakh crore worth of projects across the entire hydrocarbon value chain that will further enhance energy accessibility, create jobs and boost the economy, the Petroleum Ministry said on Monday.

In Twitter posts, the Ministry of Petroleum and Natural Gas said out of 3.57 lakh crore being spent on 859 projects, more than 60,000 crore will be invested during fiscal 2020-21.

While Indian Oil Corporation (IOC) is implementing projects to upgrade oil refineries as well as expand pipeline network to take fuel to every nook and corner, Oil and Natural Gas Corporation (ONGC) is exploring for oil and gas from deserts to the deep sea.

Gold steadies near 8-year high as virus cases surge

The price of gold is holding steady as economic uncertainty continues to keep some investors on their feet.

Reuters reports: "Gold prices held steady near an eight-year high on Tuesday as investors weighed a spike in COVID-19 cases around the world against a survey showing a rebound in U.S. services industry activity and expectations of a revival in China's economy.

Spot gold was almost unchanged at $1,784.06 per ounce by 0453 GMT, just $4.90 shy of a near eight-year high hit last week. U.S. gold futures edged 0.1% higher to $1,794.30.

The proliferation of new COVID-19 cases globally has added to lingering nerves, with investors preferring to hedge that risk via gold, even as they load up on equities again, said Jeffrey Halley, a senior market analyst at OANDA. India on Monday overtook Russia to record the world's third-highest number of COVID-19 cases, while U.S. coronavirus deaths crossed 130,000.

Gold also followed moves in the dollar index , which recouped some losses, but still held near a two-week low. A stronger dollar makes the metal more expensive for those holding other currencies. Meanwhile, growing expectations of an economic rebound in China and better-than-expected U.S. services sector data lifted investor sentiment towards riskier assets.

Gold remains at risk of a short-term correction, given current market positioning, said IG Markets analyst Kyle Rodda. Nevertheless, a break above $1,800 is on the cards, with buyers probably waiting on the other side of that level. In the bigger picture, fundamentals remain very constructive for gold.

Indicative of sentiment, speculators increased their bullish positions in COMEX gold and silver contracts in the week to June 30."

Rupee slips 6 paise to 74.74 against US dollar in early trade

The flat sentiment on equities hasn't help the rupee this morning.

PTI reports: "The rupee depreciated 6 paise to 74.74 against the US dollar in opening trade on Tuesday on strengthening American currency even as domestic equities started on a positive note.

Forex traders said, while firm start of the equity market and foreign fund inflows supported the rupee, factors like strong dollar, and rising COVID-19 cases dragged down the local unit.

The rupee opened weak at 74.74 at the interbank forex market, down 6 paise over its last close.

It had settled at 74.68 against the US dollar on Monday.

Govt. reviewing 50 investment proposals from Chinese firms

The Centre is reviewing about 50 investment proposals involving Chinese companies under a new screening policy, three sources familiar with the matter told Reuters.

Under new rules announced in April, all investments by entities based in neighbouring countries need to be approved by the Government, whether for new or additional funding. China is the biggest of these investors and the rules drew criticism from Chinese investors and Beijing, which called the policy discriminatory.

The new investment rules were aimed at curbing opportunistic takeovers during the COVID-19 outbreak. However, industry executives say a deterioration in bilateral relations since a border clash last month, in which 20 Indian soldiers were killed, could further delay approvals.

Sensex opens over 100 points higher on firm global cues

Stocks got off to a decent start on the back of strong global cues but are close to flat at the moment.

PTI reports: "Equity benchmark Sensex jumped over 100 points in early trade on Tuesday tracking positive cues from global indices, easing border tension with China and foreign fund inflows.

However, profit-booking at higher levels capped the gains on key indices, traders said.

After touching a high of 36,660.35 in opening session, the 30-share index turned range-bound to trade 64.56 points, or 0.18 per cent, higher at 36,551.84. The NSE Nifty was up 8.50 points, or 0.08 per cent, at 10,772.15.

Vistara hopes to start long-haul international flights by FY21 end

Full-service carrier Vistara is likely to add long-haul international destinations in the later part of the current fiscal if there is an appropriate pick-up in demand along with lifting of travel restrictions, the airlines Chief Commercial Officer Vinod Kannan said on Monday.

Since embarking on international operations last year with flights to south-east Asia and middle-east countries, Vistara planned to expand its international footprint by adding destinations like London and Tokyo around March 2020. But the pandemic and accompanying travel restrictions put a brake on its ambitions.

I believe in third or fourth quarter, but the decision [to launch long-haul international flights] will be a function of bilateral bubbles. It will also be a function of when countries re-open, which has been a moving target, Mr. Kannan replied during a web-conference with the press to a query on when it was hoping to widen its international presence.

« Go back