Today's top business news: Stocks drop, S&P expects India's economy to contract 9% in fiscal 2021, 50 years since Milton Friedman’s seminal essay, and more

Updates from the world of economy, markets, and finance

The benchmark stock indices have opened the day with modest gains after last week's choppy trading sessions.

The chief economic advisor to the government expects retail inflation to drop a the easing of lockdowns frees the supply chain.

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

4:30 PM

50 years since Milton Friedman’s seminal essay on greed

4:00 PM

Sensex ends 98 points lower; IT stocks shine

The indices which opened the day on a positive note suffered choppy trading and losses by the end of the day.

PTI reports: "Domestic equity benchmark Sensex pared early gains to end 98 points lower on Monday, tracking losses in index majors HDFC twins, Reliance Industries and Bharti Airtel.

After gyrating 657 points during the day, the 30-share BSE index settled 97.92 points or 0.25 per cent lower at 38,756.63.

The NSE Nifty slipped 24.40 points or 0.21 per cent to close at 11,440.05.

Bharti Airtel was the top loser in the Sensex pack, falling over 3 per cent, followed by Bajaj Finance, PowerGrid, SBI, HDFC Bank and Sun Pharma.

HCL Tech was the top gainer, rallying around 10 per cent, after the company said its revenue and operating margin for the September quarter are expected to be “meaningfully better” than the top end of its previous forecast.

TCS, Infosys, Tech Mahindra and Titan too ended with up to 5 per cent gains.

“Indian markets started off with handsome gains not only following positive Asian and global market peers but also positive domestic sentiments,” said Narendra Solanki, Head- Equity Research (Fundamental), Anand Rathi.

However, during the afternoon session, the gains were lost and benchmarks fell into the negative zone as selling was witnessed in banks and financial stocks, he added.

Bourses in Shanghai, Hong Kong, Seoul and Tokyo ended with gains, while stock exchanges in Europe opened on a tepid note.

Meanwhile, global oil benchmark Brent crude was trading 0.85 per cent lower at USD 39.49 per barrel.

In the forex market, the rupee pared some of its early gains and closed 5 paise higher at 73.48 against the US dollar."

3:30 PM

Riding the roller-coaster market

The quote attributed variously to Charles Darwin as well as to American lawyer Clarence Darrow would probably stand investors in good stead today: “It is not the strongest of the species that survives, nor the most intelligent, but rather the one most adaptable to change.”

In the last six months, investors have seen an extreme roller coaster ride, first on the downside and now, on the upside. Many records were broken on the downside, when we saw the sharpest fall of the last decade in a month’s time and the unusual sight of oil trading in the negative, and the like.

These six months have turned out to be a nightmare for even veteran investors when it came to predicting market movement. As markets in the west have already achieved their highs and ours are close to doing so, what can we learn from the fall and rise so that we can try to apply this learning to future crises and to better our returns?

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3:00 PM

Rupee pares early gains, settles 5 paise higher at 73.48 against US dollar

The mid-day drop in stocks has affected the rupee as well.

PTI reports: "The rupee pared some of its early gains and settled 5 paise higher at 73.48 (provisional) against the US dollar on Monday tracking muted domestic equities.

At the interbank forex market, the domestic unit witnessed high volatility. It opened on a strong note at 73.40 against the US dollar, pared some of its gains and finally closed at 73.48 against the American currency, registering a rise of 5 paise over its previous close of 73.53.

During the trading session, the local unit witnessed an intra-day high of 73.26 and a low of 73.70 against the greenback.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.30 per cent lower at 93.05.

On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 164.47 points lower at 38,690.08, and the broader NSE Nifty fell 46.05 points to 11,418.40.

Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 1,175.81 crore on a net basis on Friday, according to exchange data.

Brent crude futures, the global oil benchmark, fell 0.45 per cent to USD 39.65 per barrel."

2:30 PM

S&P expects India's economy to contract 9% in fiscal 2021

The latest estimate about India's GDP contraction this fiscal is in line with most of the other forecasts.

PTI reports: "S&P Global Ratings said on Monday that it was expecting India's economy to shrink by 9% in the fiscal year ending March 31, 2021, larger than its previous estimate of a 5% contraction, as the country reels under the impact of the COVID-19 pandemic.

The ratings firm joins a host of major banks and ratings agencies, which have made deep cuts to their forecasts on India's economy following a 23.9% contraction in April-June, as consumer spending, private investments and exports collapsed during one of the world's strictest lockdowns.

S&P's latest revision comes three months after it made its projection on India's real GDP for fiscal 2021.

“While India eased lockdowns in June, we believe the pandemic will continue to restrain economic activity ... As long as the virus spread remains uncontained, consumers will be cautious in going out and spending and firms will be under strain,” S&P said in a note.

“The potential for further support monetary support is curbed by India's inflation worries,” said Vishrut Rana, Asia-Pacific economist for S&P Global Ratings. The Reserve Bank of India has cut policy rates by 115 basis points so far this year.

Retail inflation data, due later in the day, is likely to have stayed above the Reserve Bank of India's medium-term target range in August for the fifth straight month, according to a Reuters poll.

India's high deficit also limits the scope for further fiscal stimulus, S&P added. It expects GDP growth of 6% in fiscal 2022 and 6.2% in fiscal 2023.

Moody's on Friday said it was expecting India's real GDP to contract by 11.5% in fiscal 2020."

2:00 PM

WPI inflation rises 0.16% in Aug; food, manufactured items turn costlier

Some nascent signs of the return of demand.

PTI reports: "The wholesale price-based inflation rose 0.16 per cent in August as food items and manufactured products turned costlier.

The Wholesale price index based (WPI) inflation was in the negative territory for four straight months -- April (-) 1.57 per cent, May (-) 3.37 per cent, June (-) 1.81 per cent and July (-) 0.58 per cent.

“The annual rate of inflation, based on monthly WPI, stood at (0.16 per cent) (provisional) for the month of August, 2020 (over August, 2019) as compared to 1.17 per cent during the corresponding month of the previous year,” the commerce and industry ministry said in a statement on Monday.

Inflation in food articles during August stood at 3.84 per cent. The rate of rise in potato prices stood at 82.93 per cent.

Inflation in vegetables stood at 7.03 per cent, while in onion it was (-) 34.48 per cent.

Fuel and power inflation fell 9.68 per cent in August, as against 9.84 per cent in the previous month.

Manufactured products, however, witnessed hardening of inflation at 1.27 per cent in August against 0.51 per cent in July.

The Reserve Bank of India (RBI) in its policy review last month kept interest rates unchanged and said it sees an upside risk to inflation. The apex bank projected retention of inflation to moderate in October-March period."

1:30 PM

TCS becomes second Indian firm to cross Rs 9 lakh cr-market valuation mark

The stock market rally is helping companies reach new milestones.

PTI reports: "Tata Consultancy Services (TCS) on Monday became the second Indian firm to attain a market valuation of over Rs 9 lakh crore after Reliance Industries Limited.

The company’s market valuation went past Rs 9 lakh crore in early trade helped by a rally in its share price.

The stock of the software services firm gained 2.91 per cent to Rs 2,442.80 -- its record high -- on the BSE.

On the NSE, it jumped 2.76 per cent to a lifetime high of Rs 2,439.80.

Helped by the surge in its share price, the company’s market valuation rose to Rs 9,14,606.25 crore on the BSE in early trade. It is the second most-valuable domestic firm in terms of market capitalisation.

Meanwhile, Reliance Industries Limited is the first Indian firm to have crossed the Rs 9 lakh crore market valuation mark.

The country’s most valued firm achieved this milestone in October last year. Its market valuation is currently at Rs 15,78,732.92 crore - the highest for any listed company in the country."

1:00 PM

Infosys to acquire GuideVision for up to €30 million

IT services major Infosys on Monday said it will acquire Czech Republic-based GuideVision for up to €30 million (about ₹260.4 crore).

The acquisition is being carried out by Infy Consulting Company Ltd, a step-down subsidiary of Infosys Ltd, a regulatory filing said.

“GuideVision’s training academy and nearshore capabilities in Czech Republic, Hungary, Poland, and presence in Germany and Finland will strengthen Infosys’ ServiceNow capabilities for its clients in Europe,” Infosys said in a statement.

GuideVision’s end-to-end offerings, including SnowMirror - a proprietary smart data replication tool for ServiceNow instances - enables over 100 enterprise clients to simplify complex business and IT processes.

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12:30 PM

Indian Oil sees gasoil, petrol sales at pre-pandemic levels in H1 FY21

An estimate regarding when things could get back to normal in the domestic fuel market.

PTI reports: "Indian Oil Corp, the country's top refiner, expects local demand for gasoline and gasoil to reach pre-pandemic levels in the first half of next fiscal year beginning April 2021, Chairman SM Vaidya said on Monday.

India, the world's third-biggest oil importer and consumer, has experienced a sharp decline in its fuel demand, mirroring a global trend following the coronavirus outbreak.

India's fuel demand in August slipped further and saw its biggest monthly decline since April, while petroleum consumption during April-July witnessed a weak growth of nearly 22.5%.

However, Vaidya said at the virtual Asia Pacific Petroleum Conference that a recent uptick in local sales of automobiles, including tractors, and the forthcoming festive season may lift fuel demand towards the pre-COVID-19 levels by the end of this year.

“We also expect motor spirit and diesel demand to catch up to the pre-COVID level in the first half of 2021-22 as the pandemic probably should have be under control by then,” Vaidya added.

Consultancy Energy Aspects in a recent note lowered its fourth-quarter forecast for oil demand in India by 0.43 million barrels per day, citing a surge in COVID-19 infections and uncertainty over further restrictive measures that will continue to limit the pace of recovery.

India, which has consistently reported more than 1,000 COVID-19 deaths daily this month, has now recorded at least 78,586 fatalities from the disease. It lags only the United States globally in overall number of infections, but it has been adding more daily cases than the United States since mid-August.

Vaidya said IOC may have to review some of its long-term expansion plans as the pandemic is expected to affect the “pace and time” of India's fuel demand growth.

To diversify its revenue streams, IOC is also looking at expanding its petrochemical capacity by 70% from the current 3.2 million tonnes a year, Vaidya said, adding that “the integration of petrochemicals and niche products in our core business is key for sustaining competitive margins and growth.”"

12:00 PM

MFIs must build capital buffers, says RBI article

As COVID-19 is likely to pose financial risks for microfinance institutions (MFIs), there is a need to build capital buffers and manage cash positions for microlenders to protect their balance sheets from any disruptions, according to an article published in RBI’s monthly bulletin.

The article, prepared by Snimardeep Singh of Department of Supervision, Reserve Bank of India, said though COVID-19 presents new challenges and significant financial risks for the microfinance sector, it also presents an opportunity to build long-term resilience.

“Going forward, building capital buffers and managing liquidity would be crucial for MFIs in fortifying their balance sheets against COVID-19 led disruptions,” it said.

The article termed COVID-19 as the biggest tail risk event in a long time.

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11:30 AM

Fossil fuel demand to take historic knock amid COVID-19 scars

An unprecedented change in fossil fuel demand owing to the global lockdown.

Reuters reports: "Fossil fuel consumption is set to shrink for the first time in modern history as climate policies boost renewable energy while the coronavirus epidemic leaves a lasting effect on global energy demand, BP said in a forecast.

BP's 2020 benchmark Energy Outlook underpins Chief Executive Bernard Looney's new strategy to “reinvent” the 111-year old oil and gas company by shifting renewables and power.

London-based BP expects global economic activity to only partially recover from the epidemic over the next few years as travel restrictions ease. But some “scarring effects” such as work from home will lead to slower growth in energy consumption.

BP this year extended its outlook into 2050 to align it with the company's strategy to slash the carbon emissions from its operations to net zero by the middle of the century.

It includes three scenarios that assume different levels of government policies aimed at meeting the 2015 Paris climate agreement to limit global warming to “well below” 2 degrees Celsius from pre-industrial levels.

Under its central scenario, BP forecasts COVID-19 will knock around 3 million barrels per day (bpd) off by 2025 and 2 million bpd by 2050.

In its two aggressive scenarios, COVID-19 accelerates the slow down in oil consumption, leading to it peaking last year. In the third scenario, oil demand peaks at around 2030.

In the longer term, demand for coal, oil and natural gas is set to slow dramatically.

While the share of fuels has shrunk in the past as a percentage of the total energy pie, their consumption has never contracted in absolute terms, BP chief economist Spencer Dale told reporters.

“(The energy transition) would be an unprecedented event,” Dale said. “Never in modern history has the demand for any traded fuel declined in absolute terms.”

At the same time, “the share of renewable energy grows more quickly than any fuel ever seen in history.”

Even with energy demand set to expand on the back of growing population and emerging economies, the sources of energy will shift dramatically to renewable sources such as wind and solar, Dale said.

The share of fossil fuels is set to decline from 85% of total primary energy demand in 2018 to between 20% and 65% by 2050 in the three scenarios.

At the same time, the share of renewables is set to grow from 5% in 2018 to up to 60% by 2050.

In its forecast, BP said the growth in global economic activity slows “considerably” over the next 30 years from its past 20-year average, due in part to lasting effects of the epidemic as well as the worsening impact of climate change on economic activity, particularly in Africa and Latin America.

BP starts on Monday a three-day investor event where it will detail its energy transition strategy."

11:00 AM

Could Sweden be proved right?

10:40 AM

Rupee rises 21 paise to 73.32 against US dollar in early trade

The bullish sentiment in stocks has helped the rupee gain against the dollar.

PTI reports: "The rupee strengthened by 21 paise to 73.32 against the US dollar in opening trade on Monday supported by weak American currency and positive domestic equities.

At the interbank forex market, the domestic unit opened at 73.40 against the US dollar, gained further ground to touch 73.32 against the US dollar, registering a rise of 21 paise over its previous close.

On Friday, the rupee had settled at 73.53 against the US dollar.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.15 per cent to 93.19.

Meanwhile, a COVID-19 vaccine is likely to be available by early next year and the government is considering its emergency authorisation for high-risk people, Union Minister Harsh Vardhan Sunday said, asserting he will take the first shot to address any trust deficit over its safety.

According to a Health Ministry statement, he said while no date has been fixed for the launch of a vaccine, it may be ready by the first quarter of 2021, and made available first to those who need it the most, irrespective of their paying capacity.

On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 299.17 points higher at 39,153.72, and the broader NSE Nifty advanced 81.75 points to 11,546.20.

Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 1,175.81 crore on a net basis on Friday, according to exchange data.

Brent crude futures, the global oil benchmark, rose 0.38 per cent to USD 39.98 per barrel."

10:20 AM

The Hindu Explains | Has economic slowdown hit EPFO earnings?

The story so far: In March, the Central Board of Trustees (CBT) of the Employees’ Provident Fund Organisation (EPFO) had recommended an 8.5% interest payout to members for FY20. At a meeting earlier this month, the CBT reiterated its recommendation, after a review, to the Centre. The payout would comprise 8.15% interest based on income from debt instruments and the balance 0.35% would be credited from the sale of a part of its investments in exchange traded funds (capital gains), subject to their redemption by December 31. The CBT also recommended that such capital gains be accounted for as income on an exceptional basis for 2019-20.

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10:00 AM

Sensex rallies over 300 points in early trade; Nifty tops 11,550

A good start to the week for stocks after last week's choppy trading.

PTI reports: "Domestic equity benchmark Sensex jumped over 300 points in early trade on Monday tracking gains in index majors Reliance Industries, HDFC twins and HCL Tech amid positive global cues and fresh foreign fund inflow.

The 30-share BSE index was trading 340.10 points or 0.88 per cent higher at 39,194.65; while the NSE Nifty rose 89.15 points or 0.78 per cent to 11,553.60.

HCL Tech was the top gainer in the Sensex pack, surging around 5 per cent, followed by Tech Mahindra, HDFC duo, Reliance Industries, TCS, SBI and IndusInd Bank.

On the other hand, HUL, Asian Paints, Maruti, Bajaj Auto and Nestle India were among the laggards.

In the previous session, Sensex ended 14.23 points or 0.04 per cent higher at 38,854.55, while the broader Nifty rose 15.20 points or 0.13 per cent to close at 11,464.45.

Exchange data showed that foreign institutional investors bought equities worth Rs 1,175.81 crore on a net basis on Friday.

Domestic equities opened on a positive note tracking positive cues from global markets and persistent foreign fund inflow, traders said.

Bourses in Shanghai, Hong Kong, Seoul and Tokyo were trading with gains in mid-day deals after Biopharmaceutical giant AstraZeneca and the University of Oxford on Saturday resumed trials for their coronavirus vaccine in the UK after the Medicines Health Regulatory Authority’s approval.

The human trials resumed days after a pause was announced in the trials after an adverse reaction in one of the participants.

Meanwhile, global oil benchmark Brent crude was trading 0.35 per cent lower at USD 39.97 per barrel."

 
9:30 AM

Retail inflation to come down with easing of lockdowns: CEA

Attributing the rise in inflation to supply-side frictions, Chief Economic Adviser K V Subramanian has exuded confidence that retail inflation will come down in the days ahead with the easing of lockdowns.

According to the government data, retail inflation rose to 6.93% in July, mainly driven by rising prices of food items like vegetables, pulses, meat and fish.

However, wholesale price-based inflation declined 0.58% in July, even as food items turned costlier.

“If you look at inflation...it’s primarily because of those supply-side frictions, but as local lockdowns are actually being reduced, these frictions should basically go down,” he said.

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