The benchmark stock indices opened the day on a positive note as the coronavirus crisis continues to recede.
Join us as we follow the top business news through the day.
Indian equity market showing ‘unbreakable nature’ amid COVID-19 second wave: Julius Baer
Kudos to India’s stock bourses.
PTI reports: “The Indian equity market is showing an “unbreakbale nature” amid the second COVID-19 wave and the benchmark Sensex might well hit 58,500-level by March next year, according to global wealth management major Julius Baer.
Emphasising that India is a “very strong market”, Julius Baer MD and Head (Research) Mark Matthews also said companies’ earnings would ultimately drive share prices.
Notwithstanding the second COVID-19 wave that has also impacted economic activities, domestic equity market has been surging in recent months, with key indices — Sensex and Nifty — touching fresh lifetime highs.
Currently, the 30-share BSE Sensex is trading above the 52,500-level. It touched a lifetime high of 52,641.53 on June 11 in intra-day trade.
“Clearly, we were shocked and horrified by the second wave (of the pandemic). But, I was also shocked the way the market barely reacted to it at all… So, that mere fact in itself speaks to the almost unbreakable nature of the Indian market.
“I mean if it wasn’t gonna go down on that kind of a disaster, I don’t know what can take it down. So, I think it is a very strong market,” Matthews said.
About the factors that will drive the Indian market, he stressed that earnings would ultimately drive share prices, adding that the latest results season was absolutely fine. “I saw very few disappointments.” Matthews said the Indian equity markets may continue its northward journey as the earnings growth is supportive and projected that the Sensex may hit 58,500 level by March next year.
So far this year, the benchmark index has gained 4,800.2 points or 10 per cent. Reflecting a bullish trend, the domestic equity market reached many milestones this year and Sensex hit the 50,000-mark in intra-day trade on January 21, 2021. It closed above 50,000 for the first time on February 3 and crossed the 51,000-mark in intra-day trade on February 5.
On February 8, it closed above the 51,000-level and on February 15, it rallied above the 52,000-mark.
Further, the market capitalisation of all the BSE-listed companies touched USD 3 trillion on May 24.
On whether COVID-19 will continue to have a major impact on equity markets, Matthews replied in the negative.
“I mean in America, you really don’t see much reference to it anymore. COVID-19 is clearly not dominating financial headlines.
“People are preoccupied with inflation conversation. So, the more vaccinations the country’s get, the more the COVID-19 will go away,” he said.
Citing India’s immunisation programme done for polio and smallpox, Matthews said the country already has a vaccination system in place that may help in increasing the vaccination pace.
“I look at India which has a very successful immunisation programme for infants for diseases like polio, measles and smallpox. So, it is clear that distribution system exists in India to vaccinate a very large amount of people over here.
“So, I am confident even in India the vaccinations are only going to go up and up and that will mean that COVID-19 recedes from the headlines,” he pointed out.
On what more needs to be done to attract investors, Matthews said they would really love to see more of a digital economy reflected in the market.
“I don’t think investors are so fixated on reforms actually. I think what investors would really love to see is more of a digital economy reflected in the market because in the entire world, the economy is digitalising, including in India,” he added.
He also hoped that probable initial public offerings from companies like Zomato and Flipkart would draw investors attention towards India.
“I think when we see more companies like Zomato, Flipkart, Grofers… (coming up with) IPOs, I think these kind of internet-based companies will draw a lot of attention to India because that’s the kind of thing investors are looking to invest in,” he said.”
Udaan invested over Rs 4,000cr in supply chain, other areas; eyes 100% y-o-y growth in FY’22
The B2B firm ups its investments.
PTI reports: “Udaan has invested over Rs 4,000 crore in the past 12-18 months across technology, supply chain, and others areas, and is aiming for 100 per cent year-on-year growth this financial year, according to co-founders of the B2B e-commerce firm.
Udaan co-founders Amod Malviya, Sujeet Kumar, and Vaibhav Gupta, in an internal mail on Tuesday, highlighted that the company has completed five years of operations this week.
“What started off as an idea to transform the trade ecosystem in the country by solving problems of millions of small businesses across “Bharat” leveraging technology, is today a reality. We are well on track to become India’s largest Commerce platform, not just the biggest e-commerce platform,” the founders said.
Over the years, Udaan’s business model has continued to evolve as per the market requirements and become sharper, the founders said in their note, a copy of which PTI has seen.
“We have invested more than Rs 4,000 crore in the past 12-18 months across different pillars of business – technology, supply chain, category, credit, people, compliance, etc – to accelerate and strengthen our capabilities. This is already showing in our growth and we continue to aim for 100 per cent y-o-y growth this financial year,” they said.
Founded in 2016, Udaan has over 3 million users and more than 30,000 sellers on its platform. It has over 1.7 million, including retailers, Kirana shops, HoReCa, chemists, and farmers, and more than 5 lakh different products curated across 2,500 brands.
It delivers around 1.5-1.75 lakh orders daily, and 4.5 million deliveries a month.
In February this year, Udaan had said it planned to expand warehouse capacity by fivefold to 50 million square feet across several states in the next 7-8 years. These would include states such as Uttar Pradesh, Bihar, Madhya Pradesh, Chhattisgarh, Odisha, and Karnataka, among others. Udaan’s current warehousing capacity is at over 10 million square feet with 200 warehouses.
The executives, in their mail, said the second wave of the pandemic did “slow down momentum by a quarter”.
“Our cost of doing business went up as we decided to serve our customers within the lockdown restrictions. Our commitment and resilience to continue serving our customers in a better way, no matter how hard the challenges, have taught us to adapt quickly and manage these short-term disruptions…As we approach the period of July-December’ 21, it is very crucial for all of us to work relentlessly…,” they said.
In January, Udaan had announced raising USD 280 million (about Rs 2,048 crore) in funding from investors, including Lightspeed Venture Partners, Tencent, DST Global, GGV Capital, Altimeter Capital, Octahedron Capital, and Moonstone Capital. The company, which has raised USD 1.15 billion in total to date, was valued at over USD 3 billion posts the transaction.
While Udaan had not disclosed its GMV numbers, a report by Bernstein stated that the company’s GMV was at about USD 2.1 billion ARR (annual recurring revenue) in December 2020.
GMV is a term used in online retailing to indicate the gross merchandise value of products sold through the marketplace over a certain period.
In April, Udaan had announced an employee stock ownership plan (ESOP) liquidity programme worth about Rs 175 crore.”
Surging fuel prices push wholesale inflation up to nearly 13%
India’s wholesale price inflation shot up to a record 12.94% in May, up from 10.5% in April, driven largely by a sharp spike in fuel and power inflation, which rose to 37.6%, and the low base effect from May 2020.
Fuel and power inflation nearly quadrupled to 37.6% from the 9.75% recorded in March this year, and is significantly higher than the 20.94% mark attained in April. Manufactured products’ inflation rose to 10.83% from 9% in April.
While the wholesale food prices inflation climbed marginally from 7.58% in April to 8.11% in May, on a sequential basis, the food price index cooled off from April significantly.
Billionaire admits cheating to beat Indian chess champ
Bad rap for India’s youngest billionaire.
AFP reports: “A young Indian billionaire has admitted to cheating in a shock win over five-time chess world champion Viswanathan Anand, saying it was for “fun and charity”.
Online brokerage firm founder Nikhil Kamath took on Anand during an online charity event on Sunday and caused quite a stir when he came out on top in a 30-minute rapid game.
The next day he admitted to using “computers” and the help of “people analyzing the game” to gain the upper hand.
“It is ridiculous that so many are thinking that I really beat Vishy sir in a chess game, that is almost like me waking up and winning a 100mt race with Usain Bolt,” Kamath tweeted.
“In hindsight, it was quite silly as I didn’t realise all the confusion that can get caused due to this. Apologies.”
Anand, acclaimed as the greatest player India has produced, played — and beat — a number of celebrity guests including cricketer Yuzvendra Chahal and Bollywood actor Aamir Khan during the event.
The 51-year-old grandmaster appeared to play down the whole affair.
“Yesterday was a celebrity simul for people to raise money It was a fun experience upholding the ethics of the game,” he wrote on Twitter.
“I just played the position (on the) board and expected the same from everyone.”
India’s chess federation saw the incident as violating the spirit of the game.
“We don’t expect anybody to get help from computers, at the national and state level we are following the protocols,” the federation’s secretary Bharat Chauhan told local media.
“(Kamath) was doing it for charity, he shouldn’t have done. This is really bad,” he added.
Anand won his first world title aged 30, and enjoyed great rivalries with the likes of Russian champions Gary Kasparov, Vladimir Kramnik and Soviet-born Israeli Boris Gelfand.”
Adani group calls reports of freezing of investors’ accounts erroneous
Billionaire Gautam Adani’s group on Monday said it has written confirmation that accounts of three foreign funds that are among its top shareholders are not frozen and reports to the contrary are “blatantly erroneous and misleading”.
Shares of Adani group companies plunged on Monday after reports that the National Securities Depository Ltd (NSDL) froze the accounts of the three foreign funds that are among the top stakeholders in the firms.
Adani Enterprises, the conglomerate’s flagship company, as also Adani Ports and Special Economic Zone, Adani Green Energy Ltd, Adani Transmission Ltd, Adani Power and Adani Total Gas Ltd in identical filings to the stock exchanges said the reports of NSDL freezing accounts of Albula Investment Fund, Cresta Fund and APMS Investment Fund holding shares in the group firms were “blatantly erroneous and is done to deliberately mislead the investing community.” “This is causing irreparable loss of economic value to the investors at large and reputation of the group,” they said.
PNB Housing Finance shares further tumble 5%
Today’s big loser.
PTI reports: “Shares of PNB Housing Finance further fell by 5 per cent to its lowest trading permissible limit for the day on Tuesday amid concerns over its proposed deal with private equity firm Carlyle and others.
The stock declined 4.99 per cent to Rs 738.05 — its lower circuit — on the BSE.
At the NSE, it dipped 5 per cent to Rs 736.25 — its lowest trading permissible limit for the day.
In the previous trading session also, it had fallen by 5 per cent.
Reserve Bank of India as well as Sebi will look into various regulatory issues related to the proposed Rs 4,000 crore-investment by US-based private equity firm Carlyle and others in PNB Housing Finance, sources said on Monday.
Last month, the board of PNB Housing Finance cleared a proposal to raise up to Rs 4,000 crore by issuing preference shares and convertible warrants to Carlyle Group firms and other entities.
According to the sources, concerns of minority shareholders, corporate governance and other regulatory aspects would be looked into by the RBI and Securities and Exchange Board of India (Sebi).
Earlier this year, RBI had shot down a proposal of Punjab National Bank (PNB) to infuse capital into its subsidiary PNB Housing Finance through a rights issue on concerns of the lender’s financial health.
Currently, PNB as a promoter holds 32.64 per cent stake in PNB Housing Finance.
PNB Housing Finance’s Extraordinary General Meeting (EGM) is scheduled to be held on June 22, to seek shareholders’ approval for the preferential allotment of shares on a private placement basis to Carlyle and other entities, besides other proposals.”
Retail sales decline 79% in May over pre-COVID levels in 2019: Report
Lockdown hits retail sales once again.
PTI reports: “Retail sales in India slipped 79 per cent in May compared to pre-COVID sales in the same month of 2019, as businesses across states were closed due to the second wave of the pandemic, as per a survey by Retailers Association of India (RAI).
The decline in sales was the steepest in West and North India, which witnessed an 83 per cent dip last month as compared to May 2019, RAI said in a statement.
Eastern region saw a decline of 75 per cent, while South was relatively better with degrowth of 73 per cent as compared to the same month in 2019.
On a sequential basis, the decline in May was much steeper compared to the previous month, when overall sales across India were down 49 per cent as compared to April 2019, according to the RAI survey.
In terms of retail categories, beauty, wellness and personal care saw the steepest decline at 87 per cent, followed by footwear with a dip of 86 per cent last month as against May 2019.
Food and grocery, however, was the best among the categories with a decline of 34 per cent as compared to May 2019, while the quick service restaurants witnessed a dip of 70 per cent.
“Retailers are looking forward to some improvement in the month of June with gradual unlocking. However, the retail industry needs the collective support of various government bodies to tide over the present situation,” RAI CEO Kumar Rajagopalan said.
The retailers’ body is optimistic as many of the states have now slowly begun to open all forms of retail in a calibrated manner.
It, however, said retail businesses continue to face financial pressures on various fronts such as salaries, rentals, electricity charges and various taxes and license fees, among others, due to the pandemic-induced restrictions.
“Easing the burden will require collaborative efforts by various stakeholders,” RAI said.”
Indian shares at record highs as COVID-19 curbs ease, cases fall
An update on the stock indices.
Reuters reports: “Indian shares traded at all-time highs on Tuesday, as declining COVID-19 infections prompted more parts of the country to open businesses, with sentiment aided by upbeat broader markets.
The blue-chip NSE Nifty 50 index rose 0.52% to 15,894.15 and the benchmark S&P BSE Sensex climbed 0.56% to 52,851.33 by 0457 GMT.
“Globally, there is an upbeat mood on asset prices and we are also moving along with that. The sentiment (for India) is primarily driven by both benign liquidity conditions and optimism that the economy will open up,” said Samrat Dasgupta, chief executive of Esquire Capital Investment Advisors.
Many Indian states eased coronavirus restrictions on Monday, including the national capital New Delhi, where authorities allowed all shops and malls to open as the number of new cases dropped to the lowest in more than two months.
On Tuesday, India reported 60,471 new infections, the lowest since March 31.
Meanwhile, broader Asian markets tracked overnight gains on Wall Street, with investors looking to a much-anticipated Federal Reserve policy meeting.
Many investors expect the Fed to maintain its dovish stance at its two-day meeting from Tuesday. Some board members, however, have said the central bank should start discussing tapering its bond-buying.
In Mumbai trading, Reliance Industries Ltd and HDFC Bank Ltd were the top performers on the Nifty 50, adding 1.3% and 0.7%, respectively. Shares of Reliance have gained in the last five consecutive sessions.
Adani Ports and Special Economic Zone Ltd opened 4.5% higher after a steep drop in the previous session. The company rejected of a media report that said accounts of three foreign investor funds that own Adani Group stocks had been frozen. Shares were last down 0.8%.
Adani Power, Adani Transmission and Adani Total Gas fell 5% and were locked in their lower circuits.”
U.S. Supreme Court revives LinkedIn bid to shield personal data
The U.S. Supreme Court on Monday gave Microsoft Corp’s LinkedIn Corp another chance to try to stop rival hiQ Labs Inc from harvesting personal data from the professional networking platform’s public profiles – a practice that LinkedIn contends threatens the privacy of its users.
The justices threw out a lower court ruling that had barred LinkedIn from denying hiQ access to the information that LinkedIn members had made publicly available.
At issue is whether companies can use a federal anti-hacking law called the Computer Fraud and Abuse Act, which prohibits accessing a computer without authorization, to block competitors from harvesting or “scraping” vast amounts of customer data from public-facing parts of a website.
PNB Housing Fin deal under RBI, SEBI lens
The Reserve Bank of India (RBI) as well as SEBI will look into various regulatory issues related to the proposed ₹4,000 crore-investment by U.S.-based private equity firm Carlyle and others in PNB Housing Finance, sources said on Monday.
According to the sources, concerns of minority shareholders, corporate governance and others regulatory aspects would be looked into by the RBI and SEBI. The Carlyle Group along with other entities on Monday floated a “draft letter offer” with regard to an open offer for acquisition of over 7 crore equity shares representing 26% stake in PNB Housing Finance.
Indian shares hit record highs as Asian peers gain; Fed meeting eyed
A good start to the day for stocks.
Reuters reports: “Indian shares rose to all-time highs on Tuesday as gains in broader markets helped investors look past data that showed retail inflation hit a six-month high, with the focus shifting to the outcome of the U.S. Federal Reserve’s policy meeting later this week.
The blue-chip NSE Nifty 50 index rose 0.39% to 15,873.15 and the benchmark S&P BSE Sensex climbed 0.46% to 52,781.57 by 0347 GMT.
India’s retail inflation accelerated in May, at its fastest pace in six months as fuel and food prices rose at a higher pace.
Broader Asian markets tracked overnight gains on Wall Street, with investors looking to a much-anticipated Federal Reserve policy meeting to see if the central bank would signal any change to the U.S. monetary policy outlook.
Many investors expect the Fed to maintain its dovish stance at its two-day meeting from Tuesday. Some Fed board members, however, have said the central bank should start discussing tapering its bond-buying.
In Mumbai trading, Reliance Industries Ltd and HDFC Ltd were the top performers on the Nifty 50, adding 0.6% and 0.5%, respectively. Shares of Reliance have gained in the last five consecutive trading sessions.”
Retail inflation soars to 6.3%, a 6-month high
Retail inflation hit a six-month high of 6.3% in May, thanks to a persistent rise in fuel and edible oil prices, which also played a part in pushing wholesale prices to a record 12.94% inflation in the month, as per data released on Monday.
Consumers experienced an inflation of 11.58% for the ‘fuel and light’ category in May, with urban India bearing a bigger hit of 14.24% on the same account. Food inflation reheated to 5.1% from just 1.96% in April.
Overall retail prices, however, saw a sharper spurt in rural areas from 3.75% in April to 6.5% in May, while it was less pronounced in urban India at a little more than 6% from 4.7% in April, as per the National Statistical Office. At the wholesale level, fuel and power inflation nearly quadrupled to 37.6% from the 9.75% recorded in March this year, and is significantly higher than the 20.94% mark attained in April. Manufactured products’ inflation rose to 10.83% from 9% in April.