Business Live: Shares at record high on boost from Reliance, banking stocks

The benchmark stock indices have opened the day on a  positive note, recording fresh highs as investors rushed to buy.

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

1:00 PM

The Hindu Explains | How is the Indian economy faring, and what are the predictions on growth for 2021?

The story so far: The year 2020 upended India’s economy as much as it disrupted the rest of the world, along with all aspects of normal life, thanks to the novel coronavirus. But unlike most other peers, India’s economy had already been hurtling downhill before the pandemic hit, and a snap national lockdown announced in late March scuppered virtually all activity for a while to come. There were two quarters of negative growth and widespread mayhem across the economy, barring some solace from agriculture. But as the year draws to a close, there is a glimmer of hope that the economy may see some recovery in 2021.

12:30 PM

Commercial vehicle sales in India may take longer to recover than expected: Ind-Ra

A long road to recovery awaits the auto sector.

PTI reports: “Commercial vehicle sales in India could take longer to recover than expected despite improving macro-economic indicators, according to India Ratings and Research (Ind-Ra).

The light commercial vehicles (LCVs) segment has started to recover as they provide last mile connectivity and because of increased e-commerce activities but medium and heavy commercial vehicle (MHCV) sales are unlikely to recover before the fourth quarter of 2021-22, it said.

The ratings agency reiterated that MHCV sales could decline by 35-45 per cent year-on-year (y-o-y) in FY21, though the decline in LCV sales is likely to be contained within 20-25 per cent.

“In FY22, the industry could see sales growth in double digits, especially due to the low base of FY20-FY21,” it said in a statement.

Stating that there is excess system capacity and reduced lower fleet utilisation, Ind-Ra said during April-September 2020, CV sales volumes declined 56 per cent y-o-y, with a steeper decline of 76 per cent recorded in MHCVs.

Citing Federation of Automobile Dealers Associations (FADA) data, it said that CV retail sales grew sequentially in November 2020 (up 13 per cent from October). However, it remains far behind the average monthly sales recorded during FY19-FY20. Sales volume in November was down 31 per cent y-o-y.

“The MHCV sub-segment, which was already grappling with the excess capacity created in the system post implementation of the revised axle load norms in July 2018 and peak sales achieved during FY18-FY19, suffered significantly with the onset of COVID-19 as economic activities reached an all-time low coupled with capex deferrals across sectors,” the ratings agency said.

The latest macro-economic indicators show a gradual improvement in economic activities, however, it is only likely to inch up the existing fleet utilisation. While the incremental demand for vehicles would need a sharper recovery, it added.

The CV industry remains heavily reliant on industrial activities, which have gradually improved, as indicated by 3.6 per cent y-o-y growth in Index of Industrial Production for October 2020.

Besides, the output of eight core industries in October 2020 also improved sequentially, though it dropped 2.5 per cent y-o-y, it said.

“Moreover, expecting a better demand and improving capacity utilisation, manufacturing companies are revisiting their capex plans which were deferred at the beginning of FY21, thus necessitating the higher movement of goods and improved existing fleet utilisation. However, since scaling up of capex could take time, the benefits of the same are likely to accrue in FY22,” it said.

Ind-Ra also said some uncertainty continues as part of the traction in manufacturing activities could be attributed to the festival demand while the full recovery could still take longer.

“Moreover, certain sectors such as real estate, hotel, aviation are still depressed which may contain the overall recovery to an extent. Furthermore, as a second wave of COVID-19 outbreak impacts certain key exporting nations, exports could be a bit gloomy in the near term,” it added.”

12:00 PM

India’s mining sector to witness reforms, flurry of activities in 2021

2021 outlook for the mining sector.

PTI reports: “The country”s mining sector will see “hectic activities” in the new year with the central government”s approvals for pending mining reforms expected in January itself and efforts continuing to bolster overall mineral output.

The reforms will pave the way for auctioning of at least 500 mineral blocks, Mines Secretary Anil Kumar Jain told PTI and emphasised that calendar year 2021 will be a “bridge year between the past and the future”.

On account of market forces, there is a fluctuation in steel prices but the COVID-19 pandemic did not impact the country”s mineral production this year, he noted.

While many sectors had to bear the brunt of the pandemic-induced lockdown, Jain said India has “registered in iron ore some of the best export numbers in the last seven-eight months as compared to previous years”.

“The year 2021 will see hectic activity on the mining side because the reforms which have been in waiting for some time, they (reforms) are likely to be approved in the month of January which will involve some changes in the MMDR Act (Mines and Minerals (Development and Regulation) Act, 1957) and some changes in the rules all meant to liberate the sector.

“It is going to bring into play a large number of mining blocks so the production in most of the minerals resources will see quantum jump because of these mines which will become available for interested parties in the calendar year 2021,” Jain said.

As per official figures, India”s iron ore export increased by 70.26 per cent to 29.261 MT in the April-September period of ongoing fiscal over 17.186 MT in the year-ago period.

“At the outset when it (government) identified essential sectors, for which the lockdown was not imposed, it included the mining sector in that (essential sectors). So that has helped and it kept the people employed and it kept the ore coming.

“India has registered in iron ore some of the best export numbers in the last seven-eight months as compared to previous years. In that sense, the Government of India was very cognizant of the importance of this sector and it has served the nation well,” the secretary said.

However, miners” body FIMI is of the view that 2020 has been very tough and challenging year due to the pandemic and subsequent lockdown.

“(For the) Mining sector, which was already under the phase of slowdown, the impact of COVID-19 proved to be a double whammy,” FIMI Secretary General R K Sharma said.

The government declared mining as an ”essential service” and allowed the production and transportation of minerals during the country-wide lockdown, he said.

Despite the adversity, mining companies showed remarkable resilience and continued mining operations to the extent possible, he added.

The government amended the mining law to facilitate enhancing coal production and reducing imports.

It also aims to smoothen transitions of expiring non-captive operating mines to new bidders and deemed validity of statutory clearances for a period of two years.

After implementation of the amended mining law, 28 operative mines (24 iron ore, iron and manganese ore, and chrome ore mines in Odisha, and 4 iron ore mines in Karnataka) that expired on March 31, 2020 have been successfully auctioned.

The government”s endeavour is to enhance the mining sector”s contribution to the country”s GDP, Sharma said.”

11:30 AM

Catering to consumers in coronavirus times, IRDAI pushes new products, easier KYC norms

The insurance regulator tries to ease in reforms.

PTI reports: “From Corona Kavach to Corona Rakshak, insurance regulator IRDAI made intense efforts throughout the pandemic-disrupted 2020 to ensure adequate choice of insurance policies for individuals that cover treatment costs for coronavirus-related health issues.

This year, the regulator”s noteworthy initiatives include introduction of standard products with a view to enhance consumer confidence as well as easier Know Your Customer (KYC) norms.

As COVID-19 started spreading in March, the watchdog asked insurers to expeditiously settle hospitalisation claims concerning treatment related to coronavirus infections.

And the Insurance Regulatory and Development Authority of India (IRDAI) also directed insurance companies to design specific products to cover the cost of treatment related to coronavirus. Soon, short-term Corona Kavach policy was launched.

In the last six months, the regulator introduced several new insurance products, including Arogya Sanjeevani, Corona Rakshak and Corona Kavach.

“The insurance regulatory body maintains that introduction of standard insurance plans will make it easier for consumers to select services owing to the standardisation of the process and easy availability of offered services,” Tarun Mathur, Chief Business Officer of Policybazaar.com, said.

Niraj Shah, Chief Financial Officer of HDFC Life said the regulator has been proactive and customer-centric, supporting the creation and distribution of products that offer relevant benefits to customers.

According to him, facilities such as alternatives to wet signature where OTP (One Time Password)-based consent can be obtained for insurance plans and introduction of video KYC were in the interest of customers as well as the industry.

“We remain optimistic about the medium to long term prospects of the insurance industry in India. We believe protection and retiral categories are multi-decade opportunities and will grow faster than savings.

“We expect insurance demand to remain robust on the back of higher awareness and the need to accumulate savings for the long term and protecting one”s existing assets,” he said.

In an attempt to make insurance affordable and available for all sections of the society, Mathur said IRDAI issued a circular to all life insurers directing them to come up with a standard individual term life insurance product named ”Saral Jeevan Bima”.

“The introduction of the Saral Jeevan Bima plan will be a revolutionary move in the life insurance sector as the plan is aimed at providing protection to citizens of Bharat who otherwise are left behind without any cover and financial protection,” he said.

The product will be launched on January 1, 2021.

The COVID-19-specific products came out in July. Prior to that, there were a handful of such covers but those were mostly low sum-assured products.

There was also good growth in demand for traditional health products till July.

“But after the standard COVID products were introduced, people, who earlier were not able to afford the comprehensive policies, started buying COVID-specific products,” Mathur said.

Anand Roy, Managing Director of Star Health and Allied Insurance, said the pandemic also forced insurers to hasten digital initiatives in both customer acquisition and also on the claims services front.

This year also saw few health insurers launch unique initiatives like tele-medicine consultation and bring about products with enhanced focus on wellness of the mind and the body.”

11:00 AM

US real yields at record low

10:40 AM

Rupee rises 4 paise to 73.51 against US dollar in early trade

The rupee rose in tandem with stocks this morning.

PTI says: “The rupee appreciated by 4 paise to 73.51 against the US dollar in opening trade on Monday as sustained foreign fund inflows and strong domestic equities strengthened investor sentiment.

Traders said the weakness of the American currency in the overseas market also supported the domestic unit.

At the interbank forex market, the domestic unit opened at 73.52 against the US dollar, then inched higher to 73.51 against the greenback, registering a rise of 4 paise over its previous close.

On Thursday, the rupee had settled at 73.55 against the US dollar.

Forex and equity market were closed on Friday on account of Christmas.

Meanwhile, the dollar index, which gauges the greenback”s strength against a basket of six currencies, fell 0.05 per cent to 90.18.

On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 227.35 points higher at 47,200.89, and the broader NSE Nifty advanced 75.60 points to 13,824.85.

Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 1,225.69 crore on a net basis on Thursday, according to provisional exchange data.

Brent crude futures, the global oil benchmark, fell 0.43 per cent to USD 51.07 per barrel.”

10:20 AM

Keeping a watch on your financial health

The economic uncertainty caused by the COVID-19 pandemic led to widespread job losses, income disruptions, liquidity crisis and debt repayment failures for a large section of people. On the investment front, equity markets officially entered the bearish market zone during the months of March and April, creating panic among many investors while presenting a wealth creation opportunity for the more seasoned ones.

With 2020 drawing to a close, it would be prudent to apply the lessons learnt for long-term financial fitness.

Income disruptions and job losses caused by the pandemic have re-emphasised the importance of having an adequate emergency fund in place.

These disruptions caused a large number of borrowers and credit card holders to opt for a moratorium on loan and credit card repayments.

10:00 AM

Indian shares at record high on boost from Reliance, banking stocks

Another boost for stocks.

Reuters reports: “Indian shares hit a record high on Monday as Reliance Industries and financial stocks gained, while investor sentiment remained upbeat globally due to U.S. President Donald Trump approving a $2.3 trillion stimulus package he had been threatening to veto.

The NSE Nifty 50 index was up 0.7% at 13,844.75 by 0347 GMT, while the S&P BSE Sensex was 0.71% higher at 47,307.78. Both indexes hit record highs.

Broader Asian shares rose at the start of the final trading week of 2020 as a source said Donald Trump signed into law a pandemic aid and spending package, averting a partial federal government shutdown in the United States.

In Mumbai, all the main Nifty sub-indexes were up in early trade.

HDFC Bank and Reliance Industries were the top two boosts to the Nifty 50.

The Nifty PSU banking index, which tracks India’s state-owned lenders, rose more than 1% led by a 2% rise in Central Bank of India.

Shares of India’s most valuable company, Reliance Industries, gained 1.1%. Reliance said it would buy out IMG Worldwide LLC from its sports management joint venture for about $7 million.”

9:30 AM

Govt. defends new rule under GST regime

The government has defended its new rule under the Goods and Services Tax (GST) regime, mandating cash payment of at least 1% of tax liabilities for businesses with a turnover of over ₹50 lakh per month, instead of using their input tax credits to discharge their entire tax dues.

The rule, introduced last Wednesday, has attracted criticism from several chartered accountants and tax payers over social media, stoking fears that the mandatory cash payment will adversely affect small businesses, increase their working capital requirement and make GST a more complex indirect tax system.

Department of Revenue sources, however, said that these fears are misplaced and “only risky or suspicious dealers and fly-by-night operators” will be affected by the move aimed at curbing fake GST invoice fraud. Several entities with a turnover of ₹6 crore a year (or ₹50 lakh a month) would be excluded from the ambit of the rule, they pointed out, and the actual number of entities affected may be as little as 45,000 out of GST’s 1.2 crore registered entities.