The benchmark stock indices have opened the day with gains on the back of positive global cues.
Gold continues to hit new all-time highs as economic uncertainty drives investors to seek abode in the metal.
Join us as we follow the top business news through the day.
1:00 PM
Oil prices steady as demand concerns offset U.S. stimulus hopes
The rally in the oil market seems to be facing some resistance as demand concerns grow.
Reuters reports: “Oil prices were steady on Tuesday, erasing gains earlier in the session, as rising coronavirus cases dampened the outlook for demand and countered optimism over more U.S. stimulus.
Efforts to stimulate the U.S. economy’s recovery from the coronavirus crisis had raised hopes for stronger oil demand. However, a proposal on Monday from Senate Republicans will likely face opposition from Democrats, delaying the passage of a final stimulus package.
Brent crude futures were unchanged at $43.41 a barrel at 0634 GMT while U.S. West Texas Intermediate (WTI) crude futures fell 14 cents, or 0.3%, to $41.46 a barrel. Both benchmarks rose as much as 0.5% earlier in the session.
“A weaker U.S. dollar is supporting both base and precious metals, but oil traders appear focused on the economic signal that the lower dollar is flashing i.e. demand destruction,” said Michael McCarthy, chief market strategist at CMC Markets.
A weakening of the dollar typically helps improve demand as that makes crude cheaper for global buyers.
Gold prices surged to record highs this week, powered by investors seeking cover from COVID-19’s global economic toll, as reflected in faltering stocks and U.S.-China trade tensions.
The U.S. dollar dropped to its lowest in nearly two years against a basket of six other major currencies after a surge in U.S. coronavirus cases. Florida and California have now both overtaken the previous epicentre, New York.
But losses could be capped by fresh government aid packages that could help fuel demand.
“Oil prices will continue to draw support from the Fed’s dovish policy,” AxiCorp market strategist Stephen Innes said in a note.”
12:00 PM
Telecom sector yet to emerge from woods; Govt support must to ensure viability: Sunil Mittal
The woes of the telecom sector which has fallen prey to cut-throat competition don’t seem to end.
PTI reports: “The government must look at rationalising levies on the telecom sector and close long standing legal disputes that are a big drag on the performance of operators, in order to ensure industry viability with 3+1 player structure, Bharti Airtel Chairman Sunil Mittal has said.
Mittal in his message to shareholders in the company’s latest annual report said, while it is clear that the “worst may be behind for India’s telecom industry”, it is yet to emerge from the woods.
“India still has some of the lowest data tariffs globally and the industry is barely able to cover the cost of capital. It requires much more support to repair the deep damage to its finances and make it viable for telecom operators to invest in future technologies,” Mittal said in the company’s FY20 annual report .
Exhorting the government to “look into the urgent needs of operators”, Mittal said that although the recent tariff increase had provided some cushion, the sector is still way below the levels to make the industry viable.
“The government must also look at rationalising the levies on the sector and close long standing legal disputes that are a big drag on performance of operators,” he said.
He added: “These urgent interventions will ensure that we have a viable industry with 3+1 structure, which is essential for serving the digital aspirations of a billion plus Indians“.
Mittal said that world is in the midst of an “unprecedented crisis” in form of the COVID-19 pandemic that has caused disruption for economies, businesses and way of life, and noted that road to recovery is likely to be a long one.
“While I remain highly optimistic that we will soon have a vaccine, the world will have to adjust to the new normal,” Mittal said.
In this backdrop, telecom and digital technologies have become the bedrock of people’s lives, Mittal said terming telecom as the “oxygen for the digital world“.
Airtel now ranks amongst top 3 mobile service providers globally in terms of subscribers, he said adding that 2020 marks 25 years of Airtel’s journey.”
11:40 AM
‘Targeted infra push can reignite economy’
RBI Governor Shaktikanta Das called for a targeted infrastructure push to help give impetus to the economy. Addressing the CII National Council on Monday, Mr. Das said that notwithstanding the progress made in the infrastructure sector, large gaps still remained.
“There is clearly a need for diversifying financing options,” he said, adding that a big push to certain targeted mega infrastructure projects could reignite the economy. He also mooted the idea of a north-south and east-west expressway together with high-speed rail corridors, both of which would generate large forward and backward linkages for several other sectors of the economy.
11:20 AM
Rupee gains 4 paise to 74.79 against US dollar in early trade
The rupee, which ended flat yesterday, has opened with minor gains with help from the stock bourses.
PTI reports: “The Indian rupee gained 4 paise to trade at 74.79 against the American dollar in early deals on Tuesday amid caution ahead of the two-day US Federal Reserve’s meeting.
At the interbank forex market, the rupee was trading in a narrow range.
It opened at 74.86 against the US dollar but soon recovered the lost ground and touched 74.79 against the US dollar, up 4 paise over its last close of 74.83.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, rose by 0.14 per cent to 93.80.
Forex traders said firm domestic equities and steady crude oil prices supported the local unit, even as foreign fund outflows and rising COVID-19 cases weighed on investor sentiment.
“Asian currencies were stronger against the US dollar this Tuesday morning and could lift sentiments for the local unit,” Reliance Securities said in a research note but added that “markets will remain cautious ahead of the two-day Fed meeting concluding tomorrow“.
The number of cases around the world linked to the disease has crossed 1.64 crore and the death toll has topped 6.53 lakh.
In India, the death toll due to COVID-19 rose to 33,425 and the number of infections rose to 14,83,156, according to the health ministry.
On the equities front, the 30-share BSE benchmark Sensex was quoting 145.04 points higher at 38,079.77; and the broader Nifty rose 44.80 points to 11,176.60.
Foreign institutional investors were net sellers in the capital market, as they sold equity shares worth Rs 453.31 crore on Monday, according to provisional exchange data.”
11:00 AM
Gold tracks real yields
10:40 AM
Gold eyes $2,000 in record run as dollar dips on dovish Fed bets
The bull run in gold continues unabated.
Reuters reports: “Gold jumped more than 1.5% to hit a record and marched towards the $2000 level on Tuesday, boosted by a weaker dollar and expectations of a long, dovish stance from the U.S. Federal Reserve as economic pain from the COVID-19 pandemic grows.
By 0254 GMT, spot gold was up 1.4% at $1,969.76 per ounce after scaling a fresh peak of $1,980.57 in early Asian trade. U.S. gold futures climbed 1.7% to $1,963.30. Silver also surged, rising as much as 6.4% to $26.19 per ounce, its highest since April 2013.
One of the major factors for gold’s run is the weakening of the dollar ahead of the Fed meeting, which is expected to reiterate an “accommodative” stance, said Michael McCarthy, chief strategist at CMC Markets.
“We’ve got increasing global worries, particularly in U.S.-China relations, but also further outbreaks tampering economic recovery, and then highly liquid environment, so the precious metals are making sense to a lot of investors.”
The dollar index held near a two-year low as investors worried about the damage from the novel coronavirus to the U.S. economy and awaited the passage of a new fiscal rescue package. Bullion’s gains also came despite an uptick in equities as investors focus on the Fed’s two-day policy meeting ending Wednesday.
“(This FOMC meeting) is expected to discuss implementing dovish forward guidance which gold investors would consider supportive as real yields, the key driver of gold, would be expected to remain at record lows,” Phillip Futures analysts said in a note.
Lower bond yields reduce the opportunity cost of holding non-interest bearing gold. Gold’s safe-haven appeal was also lifted on deteriorating U.S.-China ties and dimming hopes of a quick economic recovery as the virus showed no signs of slowing. Platinum rose 0.5% to $950.13 and palladium gained 0.9% to $2,331.76.”
10:20 AM
Growth depends on social norms, political culture, institutions; not just economic policies: Basu
An institutional perspective on growth, and other views from the former chief economist of the World Bank.
PTI reports: “Economic growth of a country depends on social norms, political culture and institutions, and these are deteriorating in India visibly from 2016, former World Bank chief economist Kaushik Basu said on Monday, emphasising that if these trends are not reversed then Indian dream will come to an end.
Participating in a webinar organised by the Institute for Human Development, Basu charged that the breakdown of social cohesion is beginning to hurt India.
“India’s sharp economic slowdown started two years before the COVID-19 pandemic. The economy does not rely on economic policy alone.
“The economy depends on social norms, on political culture, on institutions and on morals. And these are deteriorating in India visibly from 2016 and almost in tandem with the drop in growth,” he said.
Basu, a professor of economics at Cornell University and former chief economic adviser to the finance ministry during the UPA regime, said that India’s growth rate is coming down.
In 2006, India was among the top three fastest-growing economies, India was beginning to look like East Asian economies, adding that now, India is 43rd fastest-growing economy in the world, Basu stated.
The eminent economist also alleged that Uttar Pradesh is an example of a break down of social cohesion in India.
“What happened in the last 2-3 years in Uttar Pradesh is disturbing. The breakdown in law and order and rise in bigotry, the preaching of hatred against the minority, the silencing of dissent, goes against India’s own tradition,” he alleged.
Talking about the handling of India’s COVID-19 pandemic, Basu said that India’s poor management of the pandemic and economy worries him.
“Clearly (nationwide) lockdown has not worked…we did lockdown without a supportive plan,” he said.
Basu pointed out that India’s savings and investment rates are going down since 2009-10 when it was 38 per cent.
Basu also said that health and education sectors are going to grow post COVID-19 pandemic.
Asked his views on monetisation of the budget deficit, he said he is in favour of monetisation of the budget deficit because it is a very special situation.”
10:00 AM
Sensex, Nifty open higher tracking global peers
A good start to the day for stocks on the back of positive global cues.
PTI reports: “Indian equity benchmarks Sensex and Nifty opened higher in early trade on Tuesday tracking positive cues from global markets.
The BSE Sensex was trading 182.41 points or 0.48 per cent higher at 38,117.14; while the NSE Nifty was up 50.80 points or 0.46 per cent at 11,182.60.
On Monday, the 30-share Sensex had settled 194.17 points, or 0.51 per cent, lower at 37,934.73; and the broader Nifty had ended 62.35 points, or 0.56 per cent, down at 11,131.80.
Asian shares were also trading higher tracking cues from upbeat Wall Street.
Meanwhile, exchange data showed that foreign institutional investors sold equities worth Rs 453.31 crore on a net basis on Monday.
Global oil benchmark Brent crude was trading 0.27 per cent higher at USD 44.02 per barrel.
Investors, however, continued to pay a close attention to constantly rising COVID-19 cases globally and US-China friction, experts said.
Meanwhile, the number of cases around the world linked to COVID-19 has crossed 1.66 crore and the number of deaths has topped 6.6 lakh.
In India, the death toll due to the disease has surpassed 33,000-mark and the number of infections neared 15 lakh.”
9:30 AM
Govt. to go ahead with divestment of 23 PSUs cleared by Cabinet: Nirmala Sitharaman
The government is working on completing the stake sale process of about 23 public sector companies whose divestment has already been cleared by the Cabinet, Finance Minister Nirmala Sitharaman said on Monday.
The Minister also said she would soon meet small finance firms and non-banking finance companies (NBFCs) to review the credit being extended by them to businesses.
Ms. Sitharaman, in a conversation with Hero Enterprise Chairman Sunil Kant Munjal, said the government as part of the Aatmanirbhar Bharat package had announced opening up of all sectors for private participation.
“The final call as to which are the secto₹ which are going to be called ‘strategic’ is not made yet, that has to be announced and I can’t preempt what announcement is likely to come.
