The benchmark stock indices continued to trade in a choppy manner just as yesterday.
RIL shares are up as the company has entered yet another stake sale deal, this time with General Atlantic.
Join us as we follow the top business news through the day.
India’s current account surplus rises to USD 19.8 billion in June quarter
India’s external situation improves with drop in imports.
PTI reports: “The country’s current account surplus rose to USD 19.8 billion or 3.9 per cent of GDP in the June quarter as merchandise imports declined amid the COVID-19 pandemic, the Reserve Bank said on Wednesday.
The current account surplus stood at USD 0.6 billion or 0.1 per cent of GDP in the March quarter while there was a current account deficit of USD 15 billion or 2.1 per cent of GDP in the year-ago period.
“The surplus in the current account in Q1 of 2020-21 was on account of a sharp contraction in the trade deficit to USD 10.0 billion due to steeper decline in merchandise imports relative to exports on a year-on-year basis,” Reserve Bank of India said.”
Cairn seeks $1.4 bn from Centre due to losses from tax demand
British oil explorer Cairn Energy Plc. said it is seeking $1.4 billion (about ₹10,300 crore) from the Indian government in losses arising from the expropriation of its investments to enforce a retrospective tax demand.
In its half-yearly earnings statement, the company said it expected an international arbitral tribunal to shortly give a decree on its challenge to the Indian government seeking ₹10,247 crore in retrospective taxes.
“The main evidentiary hearing of Cairn’s claim under the (U.K.-India Bilateral Investment) Treaty took place in August 2018 in The Hague with a final hearing in December 2018. All formal hearings and submissions have now been made and the tribunal is in the process of drafting its award,” the firm said. The tribunal, it said, has indicated that “it expects to be in a position to issue the award after the end of the summer of 2020, with no significant delay expected as a result of COVID-19.”
Investors rush out of Hong Kong stocks
Government extends BPCL bid deadline till November 16
The government on Wednesday extended the deadline for submission of initial bids for Bharat Petroleum Corp. Ltd. (BPCL) by one and half months.
“In view of further requests received from the interested bidders (IBs) and the prevailing situation arising out of COVID-19 pandemic, the last date for submission of expressions of interest (EoIs) is further extended to November 16, 2020 (by 5.00 pm),” an official order said.
Amazon India creates over 1 lakh seasonal job opportunities ahead of festive season
Amazon’s boost to India’s pandemic-hit economy.
PTI reports: “E-commerce major Amazon India on Wednesday said it has created more than one lakh seasonal job opportunities ahead of the festive season across its operations network in the country.
E-tailers like Amazon and Flipkart usually hire thousands of people in temporary delivery and support roles to handle the high volume of orders during sale period.
The new seasonal positions will help elevate its delivery experience and boost the company’s fulfilment and delivery capabilities to meet the surge in customer demand this festive season, Amazon India said in a statement.
The company has also generated tens of thousands of indirect opportunities through its partner networks such as its trucking partners, packaging vendors, ‘I Have Space’ delivery partners, Amazon Flex partners and housekeeping agencies among others, it added.
In May this year, Amazon India had created close to 70,000 seasonal opportunities across its operational network and customer service centres.
“This, along with today’s announcement, is another step forward in Amazon India’s commitment to create one million new job opportunities in India by 2025 through continued investments in technology, infrastructure, and its logistics network,” it said.
In 2019, Amazon India and rival Flipkart had announced creation of over 1.4 lakh temporary jobs across supply chain, last-mile connectivity and customer support in preparation for their festive sales.
A report by RedSeer estimates that about three lakh jobs are expected to be created by various e-commerce and logistics companies during this year’s festive season.
E-commerce companies see a large chunk of their business coming in during the festive sales and they make significant investments ahead of time to ramp up their capacity to be able to handle the spike in orders. Festive season sees players holding multiple sale events, timed around Dussehra and Diwali.
Electronics, fashion and home furnishing are some of the categories that see a huge demand during the festive season.
Another report by RedSeer had said festive sales are expected to almost double this year and touch USD 7 billion in gross merchandise value (GMV) as compared to USD 3.8 billion in the same period last year.
“This festive season, we are looking forward to serving customers in every part of the country by providing fast, safe and a more seamless ecommerce experience to them from the safety of their homes. This year, more than 1,00,000 seasonal associates will join us to fulfil customer promises,” Amazon India Vice President – APAC, MENA and LATAM Customer Fulfilment Operations Akhil Saxena said.
Amazon India remains committed to creating job opportunities across the country, specially at a time when the COVID-19 pandemic has posed challenges in earning livelihood for many, he added.
In the last few months, Amazon India has announced plans to launch 10 new warehouses and expand 7 existing centres across the country this year. The company now has more than 32 million cubic feet of storage capacity and supports more than 6.5 lakh sellers across regions.”
Amazon unit gets ₹1,125-cr. festive boost
U.S.-based e-commerce giant Amazon has infused fresh capital to the tune of ₹1,125 crore into one of its India units, Amazon Seller Services, according to regulatory documents.
The infusion will provide ammunition to Amazon to compete aggressively against Flipkart and JioMart in the festive season. Amazon Corporate Holdings Private Limited, Singapore and Amazon.com Inc. Limited, Mauritius pumped in ₹1,125 crore into Amazon Seller Services, documents sourced by business intelligence platform Tofler showed.
General Atlantic to invest $498.31 mln in Reliance’s retail arm
More details on RIL’s latest deal.
Reuters reports: “India’s Reliance Industries Ltd said on Wednesday private equity firm General Atlantic will invest 36.75 billion rupees ($498.31 million) for a 0.84% stake in its retail arm, sending shares of the country’s most valuable company up as much as 1%.
The deal underscores growing investor interest in the Mukesh Ambani-led company’s expansion plans as it diversifies from its mainstay oil-and-gas business. Reliance is being seen as a formidable rival to Amazon.com Inc and Walmart Inc’s Flipkart as they battle for market dominance in India.
Wednesday’s investment gives Reliance Retail a pre-money valuation of 4.29 trillion rupees ($58.17 billion), the company said.
Reliance, which in May launched an online grocery service, also operates around 12,000 brick and mortar stores.
Chairman Mukesh Ambani said Reliance would leverage General Atlantic’s “extensive expertise at the intersection of technology and consumer businesses” to expand its new commerce venture, tying neighbourhood stores for online deliveries of groceries, apparel and electronics.
With the latest investment from General Atlantic which has also invested in Airbnb, Slack and Uber Reliance has now raised around $2.3 billion for its retail arm.
General Atlantic is also an investor in Reliance’s digital business Jio platforms, and sources told Reuters this week Abu Dhabi state fund Mubadala Investment Co is in advanced talks to invest up to $1 billion in the company’s retail unit. (https://reut.rs/3kWQmfu)
In India, competition for market share has prompted e-commerce players to look for new partnerships. Financial daily Mint reported on Tuesday U.S. retailer Walmart was in talks to invest up to $25 billion in Tata Group’s planned “super-app”, which will tie in all of the conglomerate’s consumer businesses.
Reliance Industries’ shares rose as much as 1% to 2,267 rupees as of 0413 GMT.”
Housing sales fall 46% in July-Sep; 57% in Jan-Sep on low demand amid COVID: Report
Yet another report that captures the disastrous effect of the lockdown.
PTI reports: “India’s top seven cities witnessed 46 per cent drop in sales of residential properties during the July-September quarter at 29,520 units, amid muted demand due to COVID-19 pandemic, according to property consultant Anarock.
Housing sales in July-September 2019, stood at 55,080 units across Delhi-NCR, Mumbai Metropolitan Region (MMR), Kolkata, Chennai, Bengaluru, Hyderabad and Pune.
During the January-September period this year sales have declined by 57 per cent to 87,460 units, from 2,02,200 units a year ago.
Commenting on the numbers, Anarock Chairman Anuj Puri said sales during July-September have more than doubled from the previous quarter when the coronavirus pandemic had brought sales down to just 12,730 units.
He said the Indian housing sector has made a decisive comeback in the third quarter of 2020 calendar year, with sales rebounding to 65 per cent of the pre-COVID-19 levels. In the January-March quarter, sales were at 45,200 units, the leading residential brokerage firm said.
According to Anarock data, sales have declined in all seven cities during July-September 2020 from the year-ago period.
Housing sales in NCR fell to 5,200 units in July-September, from 9,830 units a year ago. In MMR, sales declined to 9,200 units from 17,180 units.
Sales of residential properties in Bengaluru dipped to 5,400 units, from 10,500 units, while in Pune demand slid to 4,850 units from 8,550 units.
Hyderabad witnessed sales of 1,650 units, as against 3,280 units in the year-ago period. Housing sales in Chennai during the third quarter of this calendar year stood at 1,600 units, as against 2,620 units a year ago.
Kolkata, too, witnessed a fall in demand to 1,620 units from 3,120 units.
Even during the January-September period of 2020, sales have fallen drastically over the corresponding period last year, the Anarock data showed.
In Delhi-NCR, the sales of residential properties declined to 15,450 units in January-September this year, from 36,210 units in the year-ago period.
MMR saw a significant drop in sales to 26,730 units, from 62,550 units, while Bengaluru witnessed a dip in demand to 17,020 units from 39,240 units.
Housing sales in Pune decreased to 14,200 units from 31,380 units, while residential demand in Hyderabad softened to 4,980 units from 13,110 units.
Chennai witnessed a drop in sales to 4,280 units from 9,040 units.
Housing sales in Kolkata fell to 4,800 units during January-September this year, from 10,670 units a year ago, Anarock said.”
Indian Bank to merge 325 branches
Consequent to the amalgamation of Allahabad Bank with Indian Bank, the latter plans to merge over 300 branches of the former with itself, said a top official.
Indian Bank would be amalgamating more than 325 branches that would not only help reduce cost but also provide better services to the customers, said M.K. Bhattacharya, executive director (ED), Indian Bank. On Tuesday, Indian Bank ED V. Shenoy Vishwanath opened one of the amalgamated branches in Chennai. He said so far, Indian Bank had amalgamated eight branches in the city and 33 branches pan India.
The amalgamation of Allahabad Bank with Indian Bank came into force on April 1, 2020.As of December 2019, both the banks had overmore than over 6,000 branches and post- amalgamation, they would come down to 5,700 branches.
Markets bet on herd immunity
Rupee opens on flat note against US dollar
The rupee mirrored the performance of stocks this morning.
PTI reports: “The rupee opened on a flat note and was trading in a narrow range against the US dollar in opening session on Wednesday, as investors were cautious after the first US Presidential debate.
At the interbank forex market, the domestic unit opened at 73.81 against the US dollar, then gained ground and touched 73.79 against the American currency. In volatile trade, the local unit also touched 73.86.
Rupee was later trading at 73.77 against the greenback, amid selling seen in domestic equity market.
On Tuesday, the Indian rupee settled at 73.86 against the US dollar.
Traders said investors were cautious after the first US Presidential debate. Moreover, month-end dollar bids and equity-related outflows also weighed on market sentiments.
During the first of the three presidential debates between President Donald Trump and his Democratic challenger, Joe Biden in Cleveland, Ohio, the two contenders clashed over each other’s personality, past record, family and their visions.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.04 per cent to 93.92.
On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 5.61 points lower at 37,967.61, and the broader NSE Nifty rose 4.25 points to 11,226.65.
Foreign institutional investors were net sellers in the capital market as they offloaded shares worth Rs 1,456.66 crore on a net basis on Tuesday, according to exchange data.
Brent crude futures, the global oil benchmark, fell 1.15 per cent to USD 40.56 per barrel.”
Stimulus inadequate, could have done more: Abhijit Banerjee
Nobel Laureate Abhijit Banerjee on Tuesday said India was among the worst-performing economies in the world and that the government’s economic stimulus was inadequate to tackle the problem.
He, however, said that the country will see a revival in growth in the July-September quarter of the current fiscal.
Speaking at a virtual event, Dr. Banerjee said the country’s economic growth was slowing down even before the COVID-19 pandemic hit. Dr. Banerjee, a professor at Massachusetts Institute of Technology, said he did not think that India’s economic stimulus was adequate.
“India’s economic stimulus was limited. It was a bank bailout. I think we could have done more,” he said. The stimulus measures “did not increase consumption spending of lower income people as the government was not willing to put money in the hands of the low-income population,” he noted.
Sensex, Nifty turn choppy in volatile trade
The stock indices have opened marginally down.
PTI reports: “Equity benchmarks Sensex and Nifty opened on a choppy note on Wednesday tracking losses in financial stocks amid mixed cues from global markets as investors turned cautious after the first US presidential debate.
After opening in the positive territory, the 30-share index turned volatile and was trading 49.01 points or 0.13 per cent lower at 37,924.21, and the NSE Nifty slipped 1.45 points or 0.01 per cent to 11,220.95.
IndusInd Bank was the top loser in the Sensex pack, shedding around 2 per cent, followed by ICICI Bank, Axis Bank, SBI, PowerGrid, NTPC and HDFC Bank.
On the other hand, Sun Pharma, ONGC, M&M and HUL were among the gainers.
In the previous session, Sensex ended 8.41 points or 0.02 per cent lower at 37,973.22, while Nifty slipped 5.15 points or 0.05 per cent to 11,222.40.
Exchange data showed that foreign institutional investors sold equities worth Rs 1,456.66 crore on a net basis on Tuesday.
According to traders, domestic equities opened on a choppy note following mixed cues from global markets after the first US presidential election debate failed to cheer investors.
US President Donald Trump and Democratic rival Joe Biden sparred in their first of three debates, hoping to sway undecided voters planning to cast ballots by mail and in person in the final weeks leading up to the November 3 election.
Further, the rising number of COVID-19 cases in the country too kept market participants on edge, traders said.
India’s COVID-19 caseload has touched 62,25,763, while the death toll has risen to 97,497, government data showed.
Meanwhile, bourses in Shanghai, Hong Kong and Seoul were trading with gains in mid-day deals, while Tokyo was in the red.
Stock exchanges on Wall Street ended on a negative note in the overnight session.
International oil benchmark Brent crude was trading 1.06 per cent lower at USD 41.13 per barrel.”
‘Credit demand from priority sectors drops’
Despite efforts by the government to boost credit supply by offering many a scheme to MSMEs and other priority sectors, the same has plunged to a low 1.9% in the June quarter from 10.2% a year ago, says a report.
To help small business tide over the impact of the pandemic, the government has offered credit-driven boost to the economy.
Quoting data from the Reserve Bank’s quarterly statistics on deposits and credit for the June quarter, Care Ratings on Tuesday said in absolute terms, overall bank deposits stood at ₹141.3 lakh crore in June 2020, up 11.5% from ₹126.7 lakh crore in June 2019. Outstanding credit stood at ₹103.3 lakh crore, up 6.4% but lower than 11.7% in the same period in June 2019. But on a sequential basis, credit growth has seen a negative 1.1% during the reporting period, which was also a negative 1% in the March 2020 quarter.