The Nifty and the Sensex have opened the day on a flat note after consecutive days of bullish gains.
Join us as we follow the top business news through the day.
Short interest in Tesla hits near-decade low as stock soars
Sensex jumps 227 points to end above 44,000-mark for 1st time; Nifty tops 12,900
Yet another all-time high for stocks.
PTI reports: “The BSE Sensex jumped 227 points to finish above the 44,000-mark for the first time on Wednesday, tracking gains in financial stocks amid largely positive cues from Asian markets and persistent foreign fund inflows.
After touching its lifetime intra-day high of 44,215.49, the 30-share BSE benchmark ended 227.34 points or 0.52 per cent higher at its record closing of 44,180.05.
Similarly, the broader NSE Nifty advanced 64.05 points or 0.50 per cent to end at its all-time high of 12,938.25. It had touched an intra-day record of 12,948.85.
M&M was the top gainer in the Sensex pack, soaring over 10 per cent, followed by L&T, IndusInd Bank, Bajaj Finserv, SBI, Bajaj Finance, ICICI Bank and Kotak Bank.
On the other hand, HUL, ITC, Titan TCS and Bharti Airtel were among the losers.
According to traders, largely positive cues from global markets and persistent foreign fund inflows buoyed market sentiment.
Domestic equities continued to maintain their northward move mainly led by rebound in financials and automobiles, said Arjun Yash Mahajan, Head Institutional Business at Reliance Securities, adding that strong buying continued in mid-cap and small-cap stocks
“A healthy improvement in earnings outlook of financials and visibility over asset quality continued to support financial stocks. Rotational trade also remained visible where IT, FMCG and Pharma remained laggards and cyclical and beaten down stocks witnessed sharp upmove,” he said.
Elsewhere in Asia, bourses in Shanghai, Hong Kong and Seoul ended on a positive note, while Tokyo was in the red.
Stock exchanges in Europe also largely opened with gains.
Brent crude futures, the global oil benchmark, was trading 0.85 per cent higher at USD 44.12 per barrel.
Meanwhile, foreign institutional investors remained net buyers in the capital market as they purchased shares worth Rs 4,905.35 crore on Tuesday, according to provisional exchange data.”
Most Indian respondents willing to pay more for premium content: Study
A sample of Indian consumer behavior.
PTI reports: “Majority of respondents in India are willing to pay more for a premium subscription for enhanced video and audio quality, said a new consumer study by Wakefield Research conducted in four countries for Dolby Laboratories.
The study was conducted between October 1 and 16, 2020, among respondents in China (2,000), France (1,000), India (1,000), and the US (1,000).
The India leg of the study conducted across six cities, including New Delhi, Mumbai, Chennai, Kolkata, Hyderabad and Ahmedabad, was aimed at understanding the changing content consumption habits during the pandemic, Dolby Laboratories said.
“Indian consumers are now prioritising and seeking better experiences possibly driven by long hours spent at home. Indian consumers are spending more on quality in order to better connect with content and to connect with each other,” the survey said.
As per the survey, 96 per cent Indians say they plan to upgrade their entertainment equipment in the next six months.
Despite all of the challenges of this past year, this study has illustrated the power of entertainment in bringing us together with those that are most important to us, said Pankaj Kedia, Managing Director, Emerging Markets, Dolby Laboratories.
The survey pointed out that COVID-19 has driven many Indians to use entertainment as a way of unwinding and 66 per cent of Indian respondents said they use it as an opportunity to relax.
95 per cent Indian respondents got into new types of content they didn’t watch before, the survey added.
The survey pointed out 97 per cent of Indian respondents have increased their monthly spends on content by 48 per cent on an average compared to the start of the year.
Over 85 per cent of Indians respondents who participated in the survey have in the past six months already invested in upgrading their streaming services.”
Smaller towns emerged as ‘heroes’ for Nestle India during coronavirus pandemic: Suresh Narayanan
Yet another pandemic-induced trend in the economy.
PTI reports: “Smaller towns have emerged as ‘heroes’ for FMCG major Nestle India during the coronavirus pandemic, playing a significant role in the company’s growth, offsetting ‘somewhat muted’ performance in large metros, company Chairman and Managing Director Suresh Narayanan said on Wednesday.
While the tier II, III and IV towns are still counted as part of the urban market for the company, these smaller places are witnessing twice the growth rate seen in larger metros, even as the company has seen its rural markets outpacing urban counterparts this year.
“One of the themes I would be having for the future is our smaller towns — our tier II, III and IV towns which are towns with population of up to 5 lakh, up to 1 lakh and below a lakh population — have really become the heroes of this pandemic,” Narayanan told reporters in a video conference.
Stating that these places have “come back very strongly”, he said, “these have been really resilient and that has also accounted for the strong performance despite the fact that the large urban centres were somewhat muted.”
Narayanan said mega-metros and metros felt the adverse impact of the pandemic much more due to the lockdown, the stop-starts that have happened in the retail space.
On the other hand, he said the growth rate in the smaller towns is “at least twice the growth rate that we have in the large mega-metros and metros. The business holding up has been much better in the smaller towns for a variety of reasons“.
He said, “most importantly, in terms of the (COVID-19) wave, (it) probably hit with less impact on some of these smaller towns as it has hit some of the larger metros and mega-metros. Therefore the operational efficiencies have been much better as a consequence of that.”
Narayanan further said increasing levels of e-commerce has also played a part in delivering products to consumers, who were looking out for good, safe, hygienic and nutritious brands during the pandemic even “where the normal channels of distribution was somewhat stunted“.
He said the company’s efforts to double “outreach points” from about 6,000 in the last three years has also helped in driving sales in smaller towns.
“We have now what we call as wholesale hub in addition to distributors and re-distributors, which are auxiliary distribution points in smaller towns to enhance the geographic reach of distribution and also to have the width of distribution in terms of outlets. This is also something that is helping us and this is a conscious decision that we have done as part of clusterisation,” Narayanan added.
Other than that, he said tweaking the company’s product portfolio “to the requirement of the consumer sentiment and to the purchase patterns in the smaller towns” has also helped.
Commenting on the growth witnessed in urban and rural markets, Narayanan said these were equal till the fourth quarter of 2019.
“In quarter 1 of 2020 we had a situation where urban growth surpassed rural growth quite significantly. Urban grew by almost 13 odd per cent and rural growth was somewhere around 8-9 per cent,” he said.
In quarter 2 for Nestle, the urban growth was about 0.7 per cent and rural growth was 1.7 per cent. In quarter 3 the urban growth was 6 per cent and the rural growth was upwards of 12 per cent, Narayanan said adding, “So this year there has been a reversal“.
He, however, said how long will the rural growth outpace that of urban remains to be seen as “only time will tell” how sustainable in the longer term will be the impact of monsoon effect, the kharif crop effect, and all the measures that the government has taken to uplift the rural sector.
For Nestle India, the urban market contributes about 75-80 per cent of total business and remaining 20-25 per cent coming in from rural centres, Narayanan added.
In order to enhance growth in the rural market, he said the company has enhanced its distribution network in villages.
“Last year we were close to about 40-45,000 villages. We have kind of doubled our distribution in the last 12 to 18 months to 90,000 villages overall… These have been on the back of creating some of the wholesale hubs. The wholesale hubs are also quite significant now, more than 7,000-8,000 have been set up nationally,” he added.”
Vedanta says interested in buying govt’s stake in BPCL
The Centre’s divestment efforts attract some interest.
Reuters reports: “India’s Vedanta Ltd, the billionaire Anil Agarwal-controlled metals-to-oil conglomerate, said on Wednesday it was interested in buying the government’s stake in the state-run Bharat Petroleum Corp Ltd, India’s largest fuel retailer.
Vedanta’s expression of interest (EoI) for BPCL is to evaluate potential synergies with our existing oil & gas business,” the company said in a statement, adding that The EoI was at a “preliminary stage and exploratory in nature.”
India’s government, which is looking to finance welfare schemes and bridge a fiscal deficit that has already topped the annual target, had aimed to raise $8 billion to $10 billion through the sale of its stake in BPCL. But BPCL’s share price has plunged by nearly a fourth over the past year.
The government, which had closed the window for submitting preliminary bids to buy its entire stake in BPCL on Monday, had said it received interest from multiple parties. The bids are being currently evaluated.”
Opinion: Indian bank rescue moves in right direction
by Una Galani, Reuters
“A small Indian bank deal has big implications. Singapores $47 billion DBS Group will absorb a stricken mid-sized lender under a draft rescue plan outlined by the central bank. Its a refreshing solution to a long-standing problem.
Lakshmi Vilas Banks troubles were well-flagged. The 94-year old lender based in the southern state of Tamil Nadu has been losing money for three years after loans to big companies turned sour. It was placed under tough regulatory restrictions more than a year ago and has been having a hard time finding a buyer: one suitor was knocked back by the Reserve Bank of India. Another struggled to finalise terms.
The welcome of a foreign owner is a surprise. India tends to be wary of overseas strategic and financial investments into the banking sector. Citigroup, HSBC and others that do operate in the country require separate permissions to open branches. The well-capitalised DBS subsidiary in India was already different, operating more like a local bank, and will spend just $336 million upfront to support credit growth at the enlarged group. In return, it will bag over 550 local branches, a massive increase on the few dozen it has now. Standard Chartered , Indias largest international bank, has about 100 locations.
The LVB proposal unveiled late on Tuesday marks a sharp contrast to recent efforts to prop up failing lenders. In March, officials lined up a gaggle including State Bank of India and privately run HDFC Bank to inject funds into Yes Bank, which had a $31 billion loan book at the time. In 2018, Life Insurance Corp of India agreed to take a majority stake in IDBI Bank, giving the lender much-needed capital.
Bringing in Temasek-backed DBS is a tacit admission that local resources to fund lifelines are diminished. The new owners focus on small- and medium-sized businesses and its capacity to grow into a larger healthy financial institution will have helped smooth any niggling protectionist concerns. Friendly political ties between Singapore and India will help too. Other foreigners may struggle to tick all the same boxes, but the RBIs rescue programme is finally moving in the right direction.”
ONGC doubles down on capex to make up for COVID-19 delays
ONGC on Tuesday said capital expenditure during the current fiscal is likely to be close to the ₹32,500-crore target as it is redoubling efforts to make up for the time lost due to the pandemic.
On an investor call, Oil and Natural Gas Corp. (ONGC) Director (Finance) Subhash Kumar said the COVID-19 outbreak and the global restrictions that followed had disrupted the supply chain, hitting project implementation.
Oil and gas exploration and production projects are highly dependent on foreign vendors for the supply of equipment and services. Also, facilities like rigs are operated by foreign crews.
Monthly active users for Flipkart, PhonePe at ‘all-time high’: Walmart
Walmart flaunts its most important investment in India.
PTI reports: “E-commerce giant Walmart has clocked 1.3 per cent increase in net sales in its international business at USD 29.6 billion in the third quarter ended October 31, supported by strong results of Flipkart and PhonePe that saw “all-time high” monthly active users.
The US-based company had picked up a majority stake in the Indian e-commerce major, Flipkart, for USD 16 billion in 2018. Earlier this year, Walmart led a new USD 1.2 billion financing round that valued Flipkart at USD 24.9 billion.
In a statement, Walmart said its ‘international’ segment’s net sales were at USD 29.6 billion, an increase of 1.3 per cent, and that changes in currency rates had negatively affected net sales by approximately USD 1.1 billion.
“Excluding currency, net sales would have been USD 30.6 billion, an increase of 5 per cent, led by Flipkart, Canada and Walmex. Strong growth in net sales at Flipkart was helped by a record number of monthly active customers,” it added.
During the earnings call too, Walmart President, CEO and Director C Douglas McMillon noted the strong performance of its India units. “In India, Flipkart and PhonePe had strong results for the quarter. The number of monthly active customers for these platforms is at an all-time high,” he said.
The strong growth for Flipkart and its payment app, PhonePe, have come on the back of ‘Big Billion Day’ sales (held from October 16-21). E-commerce companies in general are witnessing strong growth in their business amid the pandemic as shoppers turn to digital platforms to maintain social distancing.
“Flipkart continues to perform well and recently completed its best-ever Big Billion Day sales event in October. Their third quarter Gross merchandise value (GMV) continued to reflect strong demand post-COVID lockdowns with significant growth in monthly active customers,” Walmart Chief Financial Officer and Executive Vice President Brett M Biggs said.
Flipkart, which competes head-on with Amazon in the Indian market, has been focussing on strengthening its presence in various categories like fashion and grocery. It is also investing aggressively in the Indian market and has announced picking up stakes in augmented reality company Scapic and premium youth-focused fashion firm USPL and buying Intellectual Property from Mech Mocha.
Flipkart Group has also made a Rs 1,500-crore investment in Aditya Birla Fashion and Retail Ltd (ABFRL), and Rs 260-crore investment in Arvind Youth Brands.
Walmart said its total revenue was at USD 134.7 billion, an increase of USD 6.7 billion. Consolidated operating income was USD 5.8 billion, an increase of 22.5 per cent.
“This was another strong quarter on the top and bottom line… We think these new customer behaviours will largely persist and we’re well positioned to serve customers with the value and experience they’re looking for,” McMillon said.”
AirAsia India ‘draining cash’; reviewing investment in joint venture: Malaysia’s AirAsia Group
Indicating possible exit, Malaysia’s AirAsia Group Berhad on Tuesday said it is reviewing its investment in low-cost carrier AirAsia India, which has been “draining cash” and causing much financial stress.
AirAsia India — a joint venture between AirAsia Investment Ltd and Tata Sons that started operations more than six years ago — has been facing headwinds for quite sometime.
In a statement, AirAsia Group expressed confidence of returning stronger, more robust and faster than many competitors in this new world of travel.
However, it also flagged concerns about its businesses in Japan and India.
“Our businesses in Japan and India have been draining cash, causing the Group much financial stress. Cost containment and reducing cash burns remain key priorities evident by the recent closure of AirAsia Japan and an ongoing review of our investment in AirAsia India,” President (Airlines) of AirAsia Group, Bo Lingam said in the statement.
Lakshmi Vilas Bank shares tank 20% after getting placed under moratorium
Shares of the troubled lender tanked as uncertainty rose.
PTI reports: “Shares of Lakshmi Vilas Bank on Wednesday tanked as much as 20 per cent to hit its lowest permissible trading limit on Wednesday after the government placed the lender under a one-month moratorium and superseded its board.
The scrip cracked 20 per cent on BSE to hit its lower circuit limit of Rs 12.4.
On NSE, the shares plunged 19.94 per cent to lock in the lower circuit of Rs 12.45.
On Tuesday, the government placed Lakshmi Vilas Bank under a one-month moratorium, superseded its board and capped withdrawals at Rs 25,000 per depositor.
The step was taken by the government, on the advice of the Reserve Bank, in view of the declining financial health of the private sector lender.
T N Manoharan, former non-executive chairman of Canara Bank, has been appointed as the administrator of the bank.
Besides, the central bank has also placed in public domain a draft scheme of amalgamation of Lakshmi Vilas Bank with DBS Bank.”
India set to hand troubled Lakshmi Vilas Bank to Singapore’s DBS
Th troubled lender may have a suitor, after all.
Reuters reports: “Lakshmi Vilas Bank is set to be folded into the Indian unit of Singapore’s DBS under a plan proposed by the Reserve Bank of India (RBI), which took over LVB on Tuesday due to a ”serious deterioration” in its finances.
India’s government said it had also temporarily capped withdrawals from LVB, which has been scouting for a partner since last year amid mounting bad loan and governance issues.
The RBI’s proposed plan would give the Singaporean bank’s expansion ambitions a fillip as it would vastly increase the footprint of DBS in India, where it only has around 30 branches.
Chennai-headquartered LVB, by contrast, has a vast network of more than 550 branches and 900-plus ATMs across India.
“It’s positive for DBS as it will get a ready customer base, branch network with this merger, and this works in their favour as they’ve been looking to expand in India,” Asutosh Mishra, a research analyst at Ashika Stock Broking, said.
Analysts also noted that despite the crippling size of LVB’s non-performing assets, a merger would give DBS a valuable client base.
“DBS will gain a ready customer and deposit base worth 210 billion rupees which otherwise would be challenge to build for a foreign bank,” said Mona Khetan, an analyst at Dolat Capital.
In a regulatory filing on Tuesday, DBS said it will pump 25 billion rupees ($336 million) into its India unit, if the RBI’s plan is approved. This will be funded from DBS’ existing resources, it added.
LVB did not respond to an email seeking comment.
The proposal took many by surprise as LVB had been locked in talks with Clix Capital around a potential deal.
Clix, part of a company owned by Mumbai-based private equity firm AION Capital, a partnership between New York-based Apollo Global Management and a unit of India’s ICICI Bank , had submitted a non-binding offer for LVB in June.
However, RBI said on Tuesday that LVB had failed to submit any concrete proposal and it had therefore appointed an administrator and superseded the bank’s board.”
Zombie firms sit on unprecedented amount of obligations
Rupee opens on flat note against US dollar
The Indian currency has mirrored 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 rising COVID-19 cases in the US and Europe offset positive sentiments surrounding the progress on the vaccine front.
At the interbank forex market, the domestic unit opened at 74.49 against the US dollar, then gained ground and touched 74.44 against the American currency. In volatile trade, the local unit also touched 74.52 against the greenback.
The rupee on Tuesday appreciated 16 paise to settle at 74.46 against the US dollar.
The Indian currency opened on a flat note as “as rise in COVID-19 cases in Europe and the US offset positive sentiments surrounding the potential vaccine,” Reliance Securities said in a research note, adding that the rebound in the US dollar this Wednesday morning in Asian trade could also cap gains.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, was down 0.02 per cent to 92.40.
“The US and countries across Europe are enforcing stricter measures to tackle the rising second wave of cases. This has stalled the global risk rally as of now. However, with progress on the vaccine front, there are no signs of panic as yet,” said Abhishek Goenka, Founder and CEO, IFA Global.
On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 12.03 points lower at 43,940.68, and the broader NSE Nifty fell 14.10 points to 12,860.10.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 4,905.35 crore on a net basis on Tuesday, according to exchange data.
Brent crude futures, the global oil benchmark, rose 0.07 per cent to USD 43.78 per barrel.”
Cities need a reset as pandemic exposed frailties: PM Modi
The pandemic has exposed the vulnerabilities of cities that served as the world’s growth engines till now, Prime Minister Narendra Modi said on Tuesday, calling for a post-COVID-19 change in protocols, similar in scale to the post-war rebuilding efforts, to develop more sustainable and resilient cities.
“Many cities around the world declared themselves on the brink of the worst economic downturn since the Great Depression. The very things which represented living in a city, are facing a question mark. Things like community gatherings, sports activities, education and recreation are not the same as before. The biggest question before the entire world is how to restart,” Mr. Modi said, in an address to the Bloomberg New Economy Forum.
Stressing that the restart would not be possible without a reset of mindsets, processes and practices, he said the historic reconstruction efforts after the two World Wars offered several lessons. “Post the World Wars, the entire world worked on a new world order, new protocols were developed and the world changed itself,” he said, adding that COVID-19 had provided a similar opportunity to develop new approaches in every field.
Indian shares flat as focus shifts to rising coronavirus cases
A flat opening for the stock indices this morning after significant gains over the last few days.
Reuters reports: “Indian shares were little changed on Wednesday after rising for two straight sessions, as surging global coronavirus cases stoked fears of a slower economic recovery and dampened optimism around vaccine trial results.
The NSE Nifty 50 index was up 0.09% at 12,885.95 by 0355 GMT, while the S&P BSE Sensex rose 0.12% to 44,010.18. The Nifty 50, which gained 1.4% in the last two sessions, hit a record high on Tuesday.
Shares in Lakshmi Vilas Bank fell 20% after India on Tuesday placed the troubled lender under a moratorium.
Globally, equities stepped back after soft U.S. retail sales data and new coronavirus restrictions in several U.S. states dampened euphoria from vaccine trial breakthroughs.
In India, New Delhi planned more curbs including lockdowns of some markets, as the capital city battles its worst phase in the pandemic, although new infections elsewhere in the country are falling.”
‘Barely 1% may opt for RBI’s debt recast’
Confirming a trend reported by commercial banks, a study by Crisil indicated that there would be few takers for the one-time COVID-19 debt restructuring offered by the Reserve Bank of India (RBI) to help stressed companies and lenders to tide over the crisis.
Improving business sentiment and the ongoing, gradual recovery has minimised the need to avail of the facility, according to Crisil.
It said about 99% of companies (excluding MSMEs) rated by it are unlikely to opt for the RBI’s one-time-debt-restructuring announced on August 6. This is as per a preliminary analysis of 3,523 such non-MSME companies.
The RBI had, on August 6, 2020, announced the scheme as a relief measure for non-MSME corporate borrowers having an aggregate exposure of greater than Rs 25 crore and were under stress due to the COVID-19 pandemic.