The benchmark stock indices opened the day on a positive note with significant gains on the back of positive global cues.
Join us as we follow the top business news through the day.
4:30 PM
TPG’s Rise Fund to invest $200 million in Airtel Africa mobile money business
Investment firm TPG’s Rise Fund will invest $200 million in Airtel Africa’s mobile money business at a valuation of $2.65 billion, Bharti Airtel said on Thursday.
Airtel Mobile Commerce BV is currently the holding company for several of Airtel Africa’s mobile money operations, and is now intended to own and operate the mobile money businesses across Airtel Africa’s 14 operating countries.
The Rise Fund will hold a minority stake in AMC BV upon completion of the transaction, with Airtel Africa continuing to hold the remaining majority stake.
“The transaction is the latest step in the Group’s pursuit of strategic asset monetization and investment opportunities, and it is the aim of Airtel Africa to explore the potential listing of the mobile money business within four years,” Airtel said.
4:00 PM
Indian shares slip on fears of fund outflow
Stocks couldn’t carry on their morning momentum.
Reuters reports: “Indian shares slipped into a sell-off on Thursday, closing more than 1% lower for a second straight session, on fears of foreign institutional investors shunning emerging markets following the U.S. Federal Reserve’s dovish stance.
“U.S. 10-year yields are now up to 1.72%, its highest since January last year and it is tough to ignore sentiment from the bond market which is spilling over to equity markets,” said Amit Kumar Gupta, portfolio manager, Adroit Financial Services Pvt. Ltd.
The NSE Nifty 50 index shed 1.11% to end at 14,557.85, while the S&P BSE Sensex slipped 1.17% to close at 49,216.52.
Both the indexes had advanced roughly 1% each earlier in the session amid broad-based gains, as global sentiment was boosted after the U.S. central bank pledged to keep its benchmark overnight interest rate near zero.
Indian benchmark indexes have now fallen every day so far this week. Rising COVID-19 cases domestically have also weighed on market sentiment.
The country reported its highest rise in daily COVID-19 cases in more than three months on Thursday.
India’s central bank may have to delay the start of liquidity normalisation by three months amid the rising cases, analysts say.
In domestic trading, selling was broad based, with almost all major sectors closing in the red. Information technology stocks were the biggest losers, with the Nifty IT index closing down 3.09%.
Software services provider Infosys Ltd fell 3.6% and was the top drag on the Nifty 50.
Amongst individual stocks, Edelweiss Financial Services Ltd ended 5% lower after a report that India’s Ministry of Corporate Affairs ordered an inspection of a Edelweiss unit’s books after a whistleblower complaint.
Meanwhile, equities in Asia held on to gains after the Fed’s views but U.S. futures slipped due to rising bond yields.”
3:00 PM
Rupee up by 2 paise at 72.53 against U.S. dollar
The rupee erased some of its initial gains to end 2 paise higher at 72.53 against the U.S. dollar on Thursday, tracking subdued equity market sentiment and a stronger dollar overseas.
Persistent foreign fund inflows and lower crude prices supported the domestic unit, forex traders said.
At the interbank forex market, the local unit opened strong at 72.48 against the greenback but failed to hold on to gains following a massive selloff in the domestic equity markets.
During the session, it witnessed an intra-day high of 72.43 and a low of 72.60. It finally settled 2 paise higher at 72.53 against the American currency. On Wednesday, the rupee had settled at 72.55 against the American currency.
2:00 PM
Retail jewellers likely to sustain recovery with 30-35% growth in FY22, outlook stable: Report
A tale of recovery.
PTI reports: “Despite the steep fall in gold prices and the resultant fall in realisations, retail jewellers are likely to sustain the ongoing demand recovery into the next fiscal with a 30-35 per cent spike in demand, according to a report.
There was strong demand recovery in the third quarter of FY21 due to the festive season, pent-up wedding demand, and a 10 per cent correction in gold prices during festival period from its peak in last August, said India Ratings in a report on Thursday, revising the sectoral outlook to stable from stable-to-negative.
With economic activities reaching pre-pandemic levels, the agency expects the momentum to continue into FY22, backed by a softening of gold prices.
The agency expects the jewellery demand to grow 30-35 per cent in FY22 over FY21, primarily because of a low base and rising demand. But the overall sectoral demand will be only be 5-10 per cent above FY20 as the recovery in FY22 will be V-shaped.
During the first three quarters of FY21, the overall operating margins of the top jewellers put together expanded to 7.7 per cent against 5.9 per cent in FY20 because of improved realisation, and a reduction in selling and promotional expenses, among others.
Though price realisation gains may not continue in FY22, lower operating leverage and improved efficiencies in terms of lower marking expenses and lower rentals are likely to support margins, which is expected to be 25-50 bps above FY20 levels.
Most companies have deferred new showroom launches to FY23 and are consolidating their less profitable showrooms. The sector is likely to deleverage in FY22, backed by a revival in demand and no significant showroom launches.
On the upward revision in the sectoral outlook to stable for FY22, it said, although there have been no rating upgrades in FY21 till date, about 11 per cent of the ratings have been put on a positive outlook in view of a sharper-than-anticipated recovery, adequate liquidity buffers and margins supported by high realisations. There were no downgrades of any big players in FY21.”
1:30 PM
Indian shares rise after Fed holds rates; private-sector banks gain
An update on stocks.
Reuters reports: “Indian shares clocked broad-based gains on Thursday, as global sentiment improved after the U.S. Federal Reserve pledged to keep its benchmark overnight interest rate near zero.
The NSE Nifty 50 index rose 0.66% to 14,818.10 by 0440 GMT, while the S&P BSE Sensex gained 0.62% to 50,113.67, ahead of the weekly expiry of derivative contracts.
Indian benchmark indexes have fallen every day this week and they closed 1% lower on Wednesday, as a fresh surge in domestic COVID-19 cases and rising U.S. bond yields hurt risk appetite.
The country reported its highest rise in daily COVID-19 cases in more than three months on Thursday.
However, the focus was off rising infections as Indian equities joined a global rally, with 12 major sectoral indexes trading higher.
Equities in Asia gained on the U.S. central bank’s views, with the MSCI’s broadest index of Asia-Pacific shares outside Japan adding nearly 1%.
“Fed action has been decent. This will ensure that foreign institutional investor flows will not get disturbed and India is in a very sweet spot right now,” said Rusmik Oza, head of fundamental research at Kotak Securities.
Private-sector lenders HDFC Bank and ICICI Bank were the top two boosts to the Nifty 50, adding over 1% each. While both the stocks slid in every session this week, Thursday’s gains bring their weekly rise to roughly 1.35% each.
State-run banks, which slumped 3.77% on Wednesday, rose 1.92%.
Shares of Vodafone Idea jumped 3.55% after data showed that the telecom operator added customers to its network for the first time in 15 months in January.
Recent high-flying IT stocks gave up gains and the Nifty IT index inched 0.57% lower. Still, it is up nearly 1% so far this week.”
1:00 PM
New DFI must curb reliance on foreign funds, says K.V. Kamath
Making a case for an upgrade in India’s sovereign rating, former New Development Bank president K.V. Kamath on Wednesday said the new development finance institution (DFI) cleared by the Union Cabinet must be careful about preventing ‘excessive reliance’ on foreign funds.
“With all the efforts that the government is making, I would think that the sovereign rating itself would need to move up. I don’t think that they can hold India’s rating where it is; wherever you look at, this rating is misplaced by at least a notch, if not more,” Mr. Kamath said. The Economic Survey 2020-21 had also argued India’s sovereign ratings did not reflect its fundamentals. “Never in the history of sovereign credit ratings has the fifth-largest economy in the world been rated at the lowest rung of the investment-grade (BBB-/Baa3),” it had noted, adding that it also damages foreign portfolio investment flows.
12:30 PM
India central bank may have to delay liquidity normalisation amid rising virus cases
Monetary policymakers have once again been put on the spot.
Reuters reports: “India’s central bank may have to delay the start of monetary policy normalisation by three months amid rising COVID-19 cases, but barring the return of stringent lockdowns there is no significant threat to the economy’s recovery, analysts say.
Having seen a peak of daily cases of nearly 100,000 in late September, infections had been on a steady decline but have now started rising again over the last month.
“Even as the increase in the current caseload points to the risk of a second wave, more localised and less stringent restrictions (on activity) will help contain the economic impact versus the initial wave,” said Radhika Rao, an economist with DBS Bank.
DBS has retained its assumptions for a stronger pick-up in March quarter growth versus the December 2020 quarter, and expects a double-digit rebound in fiscal year 2021/22.
India reported 35,871 new coronavirus cases on Thursday, the highest in more than three months, with the worst-affected state of Maharashtra, which houses the country’s financial capital Mumbai, alone accounting for 65% of that.
India needs to take quick and decisive steps soon to stop an emerging second “peak” of COVID-19 infections, Prime Minister Narendra Modi said on Wednesday.
Though analysts are unlikely to rush to review their long-term growth forecasts, several believe policy normalisation on interest rates and liquidity, may now take a backseat.
“Monetary policy normalisation might be pushed back by a quarter as authorities monitor developments closely, with status quo on the cards on the repo as well as liquidity management plans for H121,” Rao said.
The Reserve Bank of India has repeatedly assured bond markets of ample liquidity being maintained to support the recovery, but in early January said it wanted to start restoring normal liquidity operations in a phased manner.
“Growth concerns due to rising pandemic cases amid a negative output gap could push back market expectations on the timing of policy normalisation in the near term,” Nomura economists Sonal Varma and Aurodeep Nandi wrote in a note.
Though surplus liquidity is a positive from the perspective of ensuring credit flows to productive sectors, economists fear it may add to inflationary pressures if it remains in the system for too long.
“Although inflation has moderated from the high level, the surge in global crude oil price has added to the upside risk,” said Arun Singh, global chief economist at Dun and Bradstreet. “The central bank thus, has a difficult task of managing the inflation target while preventing a rise in borrowing cost to the government.””
12:00 PM
U.S.: Worker says Amazon hung anti-union signs in bathroom stalls
When Amazon found out that its workers were trying to form a union, the company put up signs across the warehouse in Bessemer, Alabama, including in bathroom stalls, a worker said.
“No place was off limits,” said warehouse employee Jennifer Bates, who testified at a Washington hearing on income inequality.
Ms. Bates, who supports the unionising effort, described on March 17 how Amazon is pushing back against the biggest unionisation efforts at the company since its founding as an online bookstore in 1995.
Besides signs, she said Amazon sends messages to workers’ phones and forces employees to attend meetings a couple of times a week that can go on for nearly an hour.
“The company would just hammer on different reasons why the union was bad for us,” Ms. Bates said. “If someone spoke up and disagreed with what the company was saying, they would just shut the meeting down.” The stakes are high for Amazon. If organisers succeed in Bessemer, it could set off a chain reaction across Amazon’s operations nationwide, with more workers rising up and demanding better working conditions.
11:30 AM
BHEL shares jump over 7%
A boost for the public sector entity.
PTI reports: “Shares of BHEL on Thursday surged over 7 per cent after the state-owned engineering firm said it had emerged as the lowest bidder for supply of equipment for 6×700 MW nuclear power projects of Nuclear Power Corporation of India.
The stock, after a bullish start, further rose by 7.38 per cent to Rs 53.80 on both BSE and NSE.
“In an open competitive bidding process, Bharat Heavy Electricals Ltd (BHEL) has emerged as the lowest bidder (Rs 10,800 crore) for the fleet mode tender floated by Nuclear Power Corporation of India Ltd (NPCIL) for the 6×700 MW Turbine Island Package Projects,” the company said on Wednesday.
With this tender, BHEL has retained its market leadership position of being the sole Indian supplier of nuclear steam turbines.
The Pressurised Heavy Water Reactors (PHWRs) are the mainstay of the Indian Nuclear Power Programme and 12 out of 18 operating PHWRs of the NPCIL are equipped with the BHEL-supplied Steam Turbine Generator sets (10×220 MWe + 2×540 MWe) with the balance from Canada and Ukraine.”
11:00 AM
Automakers risk fines if they don’t flag defects
Automakers may face fines of up to ₹1 crore from April 1 for defects in vehicles they fail to voluntarily flag.
As per the mandatory recall norms notified by the Centre, a recall of more than six lakh two-wheelers, one lakh-plus four-wheelers and more than three lakh three-wheelers and quadricycles would attract a penalty of up to ₹1 crore. For recalling up to 6,000 two-wheelers, a manufacturer would have to pay up to ₹10 lakh.
The move signals a shift from the prevailing voluntary vehicle-recall regime.
The government has set the percentage of complaints for different vehicle categories, which would trigger a recall, in the Central Motor Vehicles (Fifth Amendment) Rules, 2021.
For two-wheelers, with annual sales of up to 3,000 units, the government would order mandatory recall if 20% of vehicle owners report an identical problem. For those with up to 6,000 units in yearly sales, there would be a recall if the complaints equal 11% to 30% of total sales.
10:30 AM
FDI policy in e-commerce sector should be enforced in letter and spirit: CAIT
Concerns prevail over the domination of big businesses in the e-commerce space.
PTI reports: “Domestic traders’ body CAIT on Wednesday said the foreign direct investment policy in the e-commerce sector should be enforced in letter and spirit so that global players do not violate the rules.
The issue was raised by Confederation of All India Traders (CAIT) Secretary General Praveen Khandelwal at a meeting called by the Department for Promotion of Industry and Internal Trade (DPIIT) to discuss about FDI in e-commerce.
The present policy, that allows 100 per cent FDI in marketplace e-commerce platforms and prohibits FDI in inventory-based model of e-commerce, is absolutely correct and in line with government’s intent to protect the small merchants, he said.
“The policy should be enforced in letter and spirit,” he added.
According to him, due to creative interpretations about the relationship between marketplace and sellers, global companies are controlling either the sellers on their platform or their inventory.
“The control of foreign marketplace platform entities, over the sellers on their platform, enables them to do anti-competitive practices such as predatory pricing and deep discounting through capital dumping that has led to closure of a large number of small merchants/ kiranas leading to job loss for lakhs of people every month,” he said.
CAIT has time and again alleged that large multinational e-commerce companies have continued to indulge in prohibited inventory-based model of e-commerce by direct and indirect control over the seller’s/inventory.
He also said the government should have the right to seek information and audit the accounts of the entities involved in e-commerce.
“An independent regulatory body should be constituted to regulate the sector and take immediate action on violations such as deep discounting, preferential arrangements with sellers, discriminatory treatments,” he said.
The meeting was also attended by representatives of Retailers Association of India (RAI) and All India Consumer Products Distributions Federation. It was chaired by DPIIT Secretary Guruprasad Mohapatra.
In a statement, RAI said the FDI rules applicable to retail should be the same across channels and formats of retail to facilitate consumer experience and market balance.
“There is a need to support modernisation of retail in the country, especially since it means increased employment and higher contribution to the country’s GDP,” it said.
Indian-owned Indian-managed retail enterprises should be given better access to funds, local and international, to become globally competitive, RAI said, adding that there is a strong need to ensure better implementation of the FDI policy in letter and spirit.
Meanwhile, CAIT submitted its recommendations for the proposed national e-commerce policy in a representation to Commerce and Industry Minister Piyush Goyal.
According to CAIT, the policy must include provision for setting up of an e-commerce regulator having enforcement/ adjudicatory powers.
“Past experiences suggest that complaints are made at a relevant stage against growing e-commerce platforms, however, inaction on the part of the regulators lead to such players growing so big that their anti-competitive business models become the norm of the market. Hence, the framework to be laid down must comprise a timely dispute redressal mechanism,” it added.
Further, CAIT said there is a pressing need to maintain and ensure non-discriminatory nature of e-commerce marketplace platforms.
There is also a necessity for enacting a data protection law to ensure that data collected by e-commerce operators is processed and maintained in India and is not used to the detriment of customers, it noted.”
10:00 AM
Sensex surges over 400 points in early trade; Nifty tops 14,850
A good start to the day for stocks.
PTI reports: “Equity benchmark Sensex rallied over 400 points in early trade on Thursday, led by gains in ICICI Bank, HDFC Bank and Reliance Industries amid positive cues from global markets and foreign fund inflows.
The 30-share BSE index was trading 436.79 points or 0.88 per cent higher at 50,238.41, and the broader NSE Nifty was up 131.55 points or 0.89 per cent at 14,852.85.
Bajaj Finance was the top gainer in the Sensex pack, rising around 3 per cent, followed by ONGC, M&M, Maruti, ICICI Bank, SBI, HFC twins and Reliance Industries.
On the other hand, Infosys and Dr Reddy’s were the laggards.
In the previous session, Sensex ended 562.34 points or 1.12 per cent lower at 49,801.62, while Nifty slumped 189.15 points or 1.27 per cent to finish at 14,721.30.
Foreign institutional investors (FIIs) were net buyers in the capital market on Wednesday as they bought shares worth Rs 2,625.82 crore, as per exchange data.
According to V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, the outcome of the US Federal Reserve’s policy meet is very positive for equity markets.
“Fed’s accommodative monetary stance is appropriate and will continue through 2023 mean the ample liquidity condition and the low-interest rate will sustain for an extended period of time.
“The better than expected news is the Fed raising US GDP growth to 6.5 per cent and signal at inflation above 2 per cent will be tolerated for some time – Very good news for the bulls,” he noted.
After its two-day policy meeting, the US Fed reassured investors that it expects to keep its key interest rate near zero through 2023.
Stock exchanges on Wall Street ended with gains in the overnight session.
A concern in India, however, is the second wave of COVID-19 attack in parts of the country, particularly in Maharashtra. But, going by experiences this is unlikely to impact the market much, he said, adding that the second wave in the US and Europe (much less in intensity) didn’t impact markets.
Elsewhere in Asia, bourses in Shanghai, Hong Kong, Tokyo and Seoul were trading on a positive note in mid-session deals.
Meanwhile, the global oil benchmark Brent crude was trading 0.76 per cent lower at USD 67.48 per barrel.”
9:30 AM
India readies Saudi oil import cut as stand-off escalates
State-owned refiners are planning to cut oil imports from Saudi Arabia by about a quarter in May, in an escalating stand-off with Riyadh following OPEC’s decision to ignore calls from New Delhi to help the global economy with higher supply.
Two sources familiar with the discussions said the move was part of the government’s drive to cut dependence on crude from the Middle East.
Indian Oil Corporation, Bharat Petroleum, Hindustan Petroleum, and Mangalore Refinery and Petrochemicals Ltd are preparing to lift about 10.8 million barrels in May, the sources said on condition of anonymity.
State refiners, which control about 60% of 5 million barrels per day (bpd) refining capacity, together import an average 14.7-14.8 million barrels of Saudi oil in a month, the sources said.
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