Today’s top business news: Shares fall as financials drag, inflation hits three-month high, Centre to propose cryptocurrency ban, and more

The benchmark stock indices opened the day on a  negative note as financial stocks suffered even as inflation hit a three-month high.

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

4:00 PM

Sensex tanks 397 pts; Nifty slips below 15K

A bad day for stocks as the markets got spooked by rising coronavirus cases.

PTI reports: “Equity benchmark Sensex tumbled 397 points on Monday, tracking losses in index heavyweights Reliance Industries, HDFC twins and ICICI Bank amid weak macroeconomic cues.

After gyrating 1,035.71 points during the day, the 30-share BSE index ended 397 points or 0.78 per cent lower at 50,395.08. The broader NSE Nifty finished 101.45 points or 0.67 per cent down at 14,929.50.

Bajaj Finserv was the top loser in the Sensex pack, shedding around 3 per cent, followed by Bajaj Auto, Bajaj Finance, L&T, Asian Paints, Dr Reddy’s, ICICI Bank, HDFC Bank and Reliance Industries.

On the other hand, Tech Mahindra, PowerGrid, IndusInd Bank, HCL Tech and NTPC were among the gainers.

According to Binod Modi, Head-Strategy at Reliance Securities, domestic equities witnessed sharp sell-off for the second consecutive trading day as mounting concerns about resurgence of COVID-19 cases in various parts of the country and rising bond yields made investors jittery.

“Further, unexpected contraction in IIP data for January 2021 and sharp spike in CPI print also weighed on sentiments,” he said.

Industrial production growth re-entered the negative territory by contracting by 1.6 per cent in January, while retail inflation soared to a three-month high of 5.03 per cent in February on costlier food items, as per data released post market hours on Friday.

Further, the wholesale price-based inflation rose for the second consecutive month in February to 4.17 per cent, as food, fuel and power prices spiked.

Elsewhere in Asia, bourses in Shanghai and Seoul were in the red, while Hong Kong and Tokyo ended on a positive note.

Stock exchanges in Europe were also trading with gains in mid-session deals.

Meanwhile, the global oil benchmark Brent crude was trading 0.01 per cent lower at USD 69.21 per barrel.”

3:30 PM

Natco Pharma forays into Pheromone based tech for pest management

Natco Pharma plans to launch its first green label Pheromone product for management of Pink Bollworm in cotton crop during Kharif season this year.

The generic drugmaker, which two years ago diversified into agrichemicals, said this announcing foray into Pheromone based mating disruption technology for Integrated Pest Management (IPM) solution in the country.

The company’s Crop Health Science (CHS) division is working with ATGC Biotech (ATGC) for the technology. A release said ATGC is a science based innovative technology company concentrating on developing new biosafe molecules and tools to protect diverse crops from insect pests, in collaboration with US based agricultural biotech company ISCA.

Natco will launch the Pheromone product, for management of Pink Bollworm, under the brand Natmate PBW. This is the first pheromone-based indigenously manufactured product for mating disruption that received approval from Central Insecticide Board (CIB), the release said.

 

3:00 PM

Rupee surges 33 paise to close at 72.46 against US dollar

A good day for the rupee despite the fall in stocks.

PTI reports: “The rupee extended its early gains to close the day 33 paise higher at 72.46 (provisional) against the US dollar amid a lacklustre trend in the domestic equity market.

At the interbank forex market, the local unit opened at 72.71 against the greenback, and witnessed an intra-day high of 72.40 and a low of 72.75.

It finally ended at 72.46 against the American currency, registering a rise of 33 paise over its previous close.

On Friday, the rupee had settled at 72.79 against the American currency.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, climbed 0.12 per cent to 91.78.

Meanwhile, Brent crude futures, the global oil benchmark, fell 0.01 per cent to USD 69.21 per barrel.

On the domestic equity market front, the BSE Sensex ended 397 points or 0.78 per cent lower at 50,395.08, while the broader NSE Nifty declined 101.45 points or 0.67 per cent to 14,929.50.

Foreign institutional investors were net sellers in the capital market as they offloaded shares worth Rs 942.60 crore on Friday, according to exchange data.”

2:30 PM

Some Facebook users can now monetise their short-video posts

Some Facebook users will now be able to make money from their short video posts, provided their viewers watch an ad after 30 seconds into the video.

The social network had earlier permitted monetisation through in-stream ads on videos longer than three minutes, when ads will be flashed after the video runs 60 seconds.

Ads on videos longer than three minutes can now display ads at the 45-second mark, the company said in a statement.

Facebook launched in-stream ads in 2017, allowing creators to earn from videos in the Watch section, including on-demand and live videos. The move was said to help creators boost visibility and enhance engagement. In-stream ads payout grew more than 55% from 2019 to 2020, according to Facebook.

 

2:00 PM

Domestic ship-breaking industry’s revenue to rise by 10% this fiscal, says Crisil

A forecast from Crisil for India’s ship-breaking industry.

Reuters reports: “The domestic ship-breaking industry’s revenue is expected to see a 10 per cent year-on-year increase this fiscal due to improved availability of condemned vessels and higher rates for steel scrap, ratings agency Crisil said on Monday.

Further, with India enacting the Recycling of Ships Act, 2019, and joining the Hong Kong International Convention (HKC), which sets the standards for ship recycling,the move has bolstered the country’s leadership position globally, it said.

According to the report, a plunge in global trade due to the COVID-19 pandemic weighed on sea freight, hurting viability of shippers and making more vessels available for dismantling at cheaper rates.

Consequently, from the second quarter starting July 2020, there was a sharp rise in the number of vessels bought for breaking, compared with muted activity in the first quarter.

Usually, the vessel procurement rate is about USD 20-30 per tonne higher than the steel scrap selling rate, which indicates ship-breaking is a loss-making proposition. But the key to profitability lies in the sale of higher-value non-ferrous metals, oil, and furniture found on condemned ships, which form a sizeable part of the vessel scrap beyond steel, as per Crisil.

A vessel typically comprises 30 per cent of such non-ferrous products and 70 per cent steel. Sales of non-ferrous products offset the loss incurred in scrap steel sales and operating overheads, it said.

The procurement price of ships condemned for dismantling was down by over USD 75 per tonne, averaging at about USD 320 per tonne for the first six months in the current fiscal, when compared to corresponding period of previous fiscal, thereby making it lucrative for ship breakers, it said.

“Indian ship-breakers are set to procure between 230 and 240 vessels, with a combined weight of over 1.9 million light displacement tonnage (LDT) this fiscal, compared with 214 vessels weighing 1.77 million LDT bought last fiscal.

“Meanwhile, steel scrap realisation has also improved to Rs 27,624 per tonne on average this fiscal compared with Rs 26,558 per tonne last fiscal. As a result, the industry’s revenue is likely to increase 10 per cent on-year,” Rahul Guha, Director, Crisil Ratings.

According to Crisil, the government envisages doubling India’s ship recycling capacity by fiscal 2024 by targeting more scrap vessels from the European Union leveraging HKC.

That should help the domestic ship-breaking industry, which is looking to widen the gap with neighbours and cement its pole position, it said.

Of India’s 150 ship-breaking yards, 90 are HKC-certified, giving it an edge over its closest competitors, Pakistan and Bangladesh, which have not yet acceded to the HKC. These three Asian neighbours dismantle more than three-fourths of the ships globally, Crisil said.

“While steady demand for steel and continued momentum in vessels beaching for dismantling would drive industry revenue up 10-15 per cent annually next fiscal. This will bolster the overall credit risk profile of the ship-breakers over the medium-term,” said Neha Sharma, Associate Director, Crisil Ratings.

Meanwhile, the Union Budget for next fiscal announced a reduction in duty on imported steel, which could lead to dumping from China and softer scrap rates. Increasing trade volumes in the post lockdown period, has sent freight rates soaring, thereby bringing back lucrativeness in sailing vessels, said the release.

As a result, the supply of vessels for dismantling has been restrained in turn leading to firming up of procurement rates in the past three months. This could lead to moderation of operating profitability next fiscal, it added.”

1:30 PM

WPI inflation rises to 4.17% in Feb on costlier food, fuel

Inflation continues to overshoot the RBI’s target.

PTI reports: “The wholesale price-based inflation rose for the second consecutive month in February to 4.17 per cent, as food, fuel and power prices spiked.

The WPI inflation was 2.03 per cent in January and 2.26 per cent in February last year.

After witnessing months of softening of prices, the food articles in February saw 1.36 per cent inflation. In January it was (-) 2.80 per cent.

In vegetables the rate of price rise was (-) 2.90 per cent in February, against (-) 20.82 per cent in January.

Inflation in pulses was 10.25 per cent in February, while it fruits it was 9.48 per cent, and in fuel and power basket it was 0.58 per cent.

The RBI in its monetary policy last month kept interest rates unchanged for the fourth consecutive meeting and said that the near-term inflation outlook has turned favourable.

Retail inflation, based on the consumer price index, was at 5.03 per cent in February, data released last week showed.”

1:00 PM

Indian shares fall as inflation hits 3-month high, COVID-19 cases rise

Here’s what’s behind today’s fall in stocks.

Reuters reports: “Indian shares fell 1% on Monday, dragged down by financials, after February retail inflation surged to a three-month high, while a jump in COVID-19 cases also weighed on sentiment.

By 0513 GMT, the blue-chip NSE Nifty 50 index declined 1.02% to 14,877.55, while the benchmark S&P BSE Sensex fell 1.05% to 50,259.50.

A combination of rising COVID-19 cases, a jump in core inflation and a fall in industrial output weighed on market sentiment, according to Aishvarya Dadheech, a fund manager at Ambit Asset Management in Mumbai.

After market hours on Friday, government data showed annual retail inflation rose to 5.03% in February on higher fuel prices, which could pressure the central bank’s accommodative stance, while core inflation was estimated in a range of 5.61%-5.9% by four economists.

Data also showed industrial output as measured by the Index of Industrial Production contracted 1.6% year-on-year in January.

India is battling a resurgence in COVID-19 cases, led mainly by a renewed surge in the western state of Maharashtra. The country reported this year’s biggest daily rise in cases of 26,291 on Monday. India is the third-worst affected country globally with 11.39 million cases, behind the United States and Brazil.

Yes Bank Ltd fell as much as 2.8%. The Reserve Bank of India has rejected the lender’s application to set up an asset reconstruction company for bad loans, the Mint newspaper reported https://bit.ly/3tkAHLi.

The Nifty Bank Index shed 2% after rising 0.76% last week. HDFC Bank Ltd was the top drag on the Nifty 50, falling 1.5%.

In its stock market debut, precision engineering solutions company MTAR Technologies Pvt Ltd opened nearly 83% above its issue price of 575 rupees.

Broader global markets were trading higher, as investors bet on a faster economic recovery after the signing of a $1.9 trillion U.S. stimulus bill into law last week.”

12:30 PM

Nationwide strike impacts banking services of PSU banks

Banking strike gets underway.

PTI reports: “Banking operations including cheque clearance across the country got affected on Monday as bankers under the aegis of the United Forum of Bank Unions (UFBU) have gone on a nationwide strike to protest against the proposed privatisation of two state-owned lenders.

UFBU, an umbrella body of nine unions, had given a strike call for March 15 and 16, and claimed that about 10 lakh bank employees and officers of the banks will participate in the strike.

However, branches of private sector lenders like ICICI Bank, HDFC Bank and Axis Bank are open as they are not part of the strike.

In the Union Budget presented last month, Finance Minister Nirmala Sitharaman had announced the privatisation of two public sector banks (PSBs) as part of the government’s disinvestment plan.

The government has already privatised IDBI Bank by selling its majority stake in the lender to LIC in 2019, and has merged 14 public sector banks in the last four years.

According to All India Bank Employees Association (AIBEA) general secretary CH Venkatachalam, services at branch level; cheque clearance; and government transactions have been affected.

Besides, money markets and stock markets are also going to face problems as payments would be impacted, he said.

Members of UFBU include All India Bank Employees Association (AIBEA), All India Bank Officers’ Confederation (AIBOC), National Confederation of Bank Employees (NCBE), All India Bank Officers’ Association (AIBOA) and Bank Employees Confederation of India (BEFI).

Others are the Indian National Bank Employees Federation (INBEF), Indian National Bank Officers Congress (INBOC), National Organisation of Bank Workers (NOBW) and National Organisation of Bank Officers (NOBO).”

12:00 PM

Only 7 of 17 IT agreements signed during Tamil Nadu GIM 2015 have taken off, data reveals

It’s been five years now, and only 7 of the 17 Memoranda of Understanding (MoUs) signed by the Information and Technology Department during the first edition of the Global Investors Meet (GIM) 2015 have fully fructified and commenced operations.

Data collated from the Electronics Corporation of Tamil Nadu Limited (ELCOT) through a Right To Information (RTI) application shows that five projects are still in the under-construction stage and in various stages of implementation. A firm called W.S. Industries India Limited had signed a deal with the State government for constructing an IT park involving investments of ₹1,517 crore but there are no details about that MoU now.

Four projects from GIM 2015 that were inked with Hewlett Packard India Private Limited, Intel Technology India Private Limited, Sutherland Global Services Limited and ASV Constructions Private Limited have been dropped. But ASV Constructions had signed another deal with the State government during the second edition of GIM that happened in 2019.

 

11;30 AM

Adani Welspun JV discovers gas in Mumbai offshore basin

Adani Welspun Exploration Ltd. (AWEL), a joint venture between the Adani Group and Welspun Enterprises Ltd., has announced its first-ever gas discovery in the NELP-VII block MB-OSN-2005/2 located in Mumbai offshore basin.

AWEL holds 100% participative interest (PI) and is the operator of this block. Spread across 714.6 sq.km., the block is located in the prolific gas-prone Tapti-Daman Sector of the Mumbai offshore basin.

“The pay zones and flow rates encountered have exceeded the company’s initial estimates. With the information gleaned from adjoining fields/areas, this discovery is of substantial significance for both the company and the nation,” AWEL said in a statement.

AWEL was awarded the block under the New Exploration Licensing Policy VII bid round.

“Early indications pointed to the occurrence of gas-bearing reservoirs within the sandstone reservoirs of the Mahuva and Daman formations,” the company said.

 

10:40 AM

India to propose cryptocurrency ban, penalising miners, traders -source

Govrnments are no fans of cryptocurrencies.

Reuters reports: “India will propose a law banning cryptocurrencies, fining anyone trading in the country or even holding such digital assets, a senior government official told Reuters in a potential blow to millions of investors piling into the red-hot asset class.

The bill, one of the world’s strictest policies against cryptocurrencies, would criminalise possession, issuance, mining, trading and transferring crypto-assets, said the official, who has direct knowledge of the plan.

The measure is in line with a January government agenda that called for banning private virtual currencies such as bitcoin while building a framework for an official digital currency. But recent government comments had raised investors’ hopes that the authorities might go easier on the booming market.

Instead, the bill would give holders of cryptocurrencies up to six months to liquidate, after which penalties will be levied, said the official, who asked not to be named as the contents of the bill are not public.

Officials are confident of getting the bill enacted into law as Prime Minister Narendra Modi’s government holds a comfortable majority in parliament.

If the ban becomes law, India would be the first major economy to make holding cryptocurrency illegal. Even China, which has banned mining and trading, does not penalise possession.

The Finance Ministry did not immediately respond to an email seeking comment.

Bitcoin, the world’s biggest cryptocurrency, hit a record high $60,000 on Saturday, nearly doubling in value this year as its acceptance for payments has increased with support from such high-profile backers as Tesla Inc CEO Elon Musk.

In India, despite government threats of a ban, transaction volumes are swelling and 8 million investors now hold 100 billion rupees ($1.4 billion) in crypto-investments, according to industry estimates. No official data is available.

“The money is multiplying rapidly every month and you don’t want to be sitting on the sidelines,” said Sumnesh Salodkar, a crypto-investor. “Even though people are panicking due to the potential ban, greed is driving these choices.”

User registrations and money inflows at local crypto-exchange Bitbns are up 30-fold from a year ago, said Gaurav Dahake, its chief executive. Unocoin, one of India’s oldest exchanges, added 20,000 users in January and February, despite worries of a ban.

ZebPay “did as much volume per day in February 2021 as we did in all of February 2020,” said Vikram Rangala, the exchange’s chief marketing officer.

Top Indian officials have called cryptocurrency a “Ponzi scheme”, but Finance Minister Nirmala Sitharaman this month eased some investor concerns.

“I can only give you this clue that we are not closing our minds, we are looking at ways in which experiments can happen in the digital world and cryptocurrency,” she told CNBC-TV18. “There will be a very calibrated position taken.”

The senior official told Reuters, however, that the plan is to ban private crypto-assets while promoting blockchain – a secure database technology that is the backbone for virtual currencies but also a system that experts say could revolutionise international transactions.

“We don’t have a problem with technology. There’s no harm in harnessing the technology,” said the official, adding the government’s moves would be “calibrated” in the extent of the penalties on those who did not liquidate crypto-assets within the law’s grace period.

A government panel in 2019 recommended jail of up to 10 years on people who mine, generate, hold, sell, transfer, dispose of, issue or deal in cryptocurrencies.

The official declined to say whether the new bill includes jail terms as well as fines, or offer further details but said the discussions were in their final stages.

In March 2020, India’s Supreme Court struck down a 2018 order by the central bank forbidding banks from dealing in cryptocurrencies, prompting investors to pile into the market. The court ordered the government to take a position and draft a law on the matter.

The Reserve Bank of India voiced its concern again last month, citing what it said were risks to financial stability from cryptocurrencies. At the same time, the central bank has been working on launching its own digital currency, a step the government’s bill will also encourage, said the official.

Despite the market euphoria, investors are aware that the boom could be in danger.

“If the ban is official we have to comply,” Naimish Sanghvi, who started betting on digital currencies in the last year, told Reuters, referring to existing concerns about a potential ban. “Until then, I’d rather stack up and run with the market than panic and sell.””

10:20 AM

India filing appeal against Cairn arbitration award, say sources

India is in the process of filing an appeal against an arbitration panel ruling asking it to return $1.2 billion to British oil firm Cairn Energy Plc, sources said on Wednesday.

If enforcement proceedings are initiated, India is confident of addressing them and will strongly defend its interests, the sources said, adding it is open to a constructive settlement of tax disputes within the existing legal framework.

India is in the process of filing an appeal in the Cairn arbitration award case, they said, adding it was well within India’s sovereign powers to redress the situation of Double Non-Taxation and tax abuse.

Cairn CEO Simon Thomson had last month met the then Finance Secretary Ajay Bhushan Pandey to discuss the arbitration award.

The sources said Cairn is yet to respond based on the discussions.

 

10:00 AM

Indian shares fall as financials drag, inflation hits three-month high

Macro factors weigh on stocks.

Reuters reports: “Indian shares fell on Monday, dragged down by heavyweight financial stocks, after data showed that the country’s retail inflation jumped to a three-month high in February, while a fresh surge in COVID-19 cases also weighed on sentiment.

The blue chip NSE Nifty 50 index fell 0.77% to 14,914.50 and the benchmark S&P BSE Sensex fell 0.77% to 50,401.72 by 0352 GMT.

Government data on Friday showed India’s annual retail inflation rose 5.03% in February on higher fuel prices, above the 4.83% forecast in a Reuters’ poll, though remaining within the central bank’s targeted range.

Also, India on Sunday reported this year’s biggest daily rise in COVID-19 cases. The country is the third-worst affected globally with 11.36 million cases, behind the United States and Brazil.

Shares of Yes Bank Ltd fell 1.9%. The Reserve Bank of India has rejected the lender’s application to set up an asset reconstruction company for bad loans, the Mint newspaper reported https://bit.ly/3tkAHLi.

The Nifty Bank Index, which rose 0.76% last week, shed 1.50%. HDFC Bank Ltd was the top drag on Nifty 50, falling 1.3%.

Broader global markets were trading higher, as investors bet on a faster economic recovery after the signing of a $1.9 trillion U.S. stimulus bill into law last week.

Reuters also reported on Monday that India would propose a law banning cryptocurrencies, citing a senior government official.”

9:30 AM

Drastic changes in monetary policy framework can upset bond market: Rajan

As the economy slowly comes out of the pandemic blues, former RBI Governor Raghuram Rajan on Sunday cautioned that “drastic changes” in India’s monetary policy framework can upset the bond market as the current system has helped in containing inflation and promoting growth.

Mr. Rajan, also a noted economist, opined that the government’s ambitious target to make India a $ 5-trillion economy by 2024-25 was “more aspirational, rather than a carefully computed one even before the pandemic”.

“I believe the (monetary policy) framework has helped bring inflation down, while giving the RBI some flexibility to support the economy. It is hard to think of what would have happened if we had to run such large fiscal deficits without such a framework in place,” Mr. Rajan told PTI in an interview.