Business Live: India will indubitably get its financial progress again, says Prime Minister Narendra Modi


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The benchmark stock indices have held their gains this morning after the strong rally of close to 3% yesterday.

Oil has rallied as producers mull further supply cuts.

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

2:30 PM

Moody’s downgrade expected, India unlikely to slip to junk status: BofA

India should not be too concerned by the downgrade of its credit rating by Moody’s, says Bank of America.

PTI reports: “India’s sovereign credit rating downgrade by Moody’s was not unexpected and factors like high quantum of forex reserves and prospects of a good farm harvest would prevent a further slip to the non-investment grade, a foreign brokerage said on Tuesday.

Moody’s Investors Service on Monday downgraded the country’s rating by one notch to ‘Baa3’, the lowest in the investment grade, with a negative outlook on worries over growth and fiscal risks.

Economists at Bank of America (BofA) Securities pitched for the country to continue with the fiscal stimulus measures because of the impact of the coronavirus pandemic.

This (the downgrade) is not unexpected fiscal stimulus is critical for recovery, the brokerage said.

However, the brokerage said India should not fear a further downgrade in the ratings into the non-investment grade category.

It counted on the high quantum of forex reserves, an expected recapitalization of state-owned banks through issuance of dedicated bonds or using RBI’s USD 127 billion revaluation reserves, and the prospect of a good farm harvests as the factors which will prevent another downgrade.

BofA blamed the excessive tightening of rates by the RBI in 2018, a real lending shock due to fall in wholesale price inflation in 2019 and the global COVID-19 shock for the worries on the growth front.”

1:50 PM

Indian carmakers offer teaser loans as banking sources say RBI softens stance

Lenders may be forced to stretch themselves as the RBI and the government try to boost demand.

PTI reports: “Several Indian automakers have hooked up with banks to offer purchase schemes involving long frowned-upon teaser loans, as sources say the central bank has softened its stance amid the pandemic-induced economic slump in India.

So far, at least Maruti Suzuki, Hyundai and Mercedes Benz have launched such schemes, according to press releases over the past week.

Teaser loans offer low interest rates for the first few months or years to attract customers, but rates are later rapidly increased.

For years, the Reserve Bank of India said their terms were not transparent and warned that similar products had been instrumental in the 2007-2008 subprime crisis in the United States.

Although the RBI never banned teaser loans, its disapproving stance kept lenders from offering them in the past, bankers said.

Five banking sources said there was now consensus that the promotional teaser loans were needed to revive car sales, which automakers have warned could fall as much as 45% this fiscal year in a worst-case scenario.

“People will require some easier terms due to COVID-19 and thereafter they can pay higher, so it’s a scheme which is in line with the times,” said one of three sources aware of the RBI’S change in stance.

The RBI and the automakers did not respond to requests for comment.

Banking sources say the Finance Ministry is pressuring banks to increase lending, though they are already saddled with over $120 billion of bad loans, an amount likely to rise in the wake of a two-month lockdown that has pummeled India’s economy.

The Finance Ministry did not immediately respond to a request for comment.”

1:30 PM

Auto sector shows some signs of life

The Indian automobile sector saw some demand returning in May after zero sales in April as partial operations resumed, albeit with supply disruptions and labour issues, after almost two months of nationwide lockdown.

The wholesale figures for May are only a fraction of monthly sales that automobile manufacturers saw in the pre-COVID-19 months. As per industry estimates, wholesales of passenger vehicles (PVs) stood at about 37,000 units in May 2020 against more than 2.39 lakh in May 2019.

The country’s largest carmaker Maruti Suzuki sold a total of 18,539 units in May 2020. This included wholesales of 13,865 units in the domestic market, and sale of 23 units to other OEMs. The company exported 4,651 units following resumption of operations at Mundra and Mumbai ports, it said.


1:00 PM

US banks float in cash


12:40 PM

India’s May gold imports fall 99% from a year ago to 1.4 Tonnes

It’s surprising how the precious metal managed to rally during the lockdown despite the huge drop in use-demand.

PTI reports: “India’s gold imports in May plunged 99% from a year earlier as international air travel was banned and jewellery shops were closed amid a nationwide lockdown to curb the spread of coronavirus, a government source said on Tuesday.

The world’s second-biggest consumer of the precious metal imported around 1.4 tonnes of gold in May, down from 133.6 tonnes a year ago, said the source, who declined to be identified because they are not authorised to speak to the media.

In value terms, May imports dropped to $76.31 million from to $4.78 billion a year ago, he added.”


12:20 PM

Moody’s has rated Modi’s handling of India’s economy step above junk, says Rahul Gandhi

Congress leader Rahul Gandhi on June 2 voiced concern over the state of India’s economy, saying global rating agency Moody’s has termed its handling by Prime Minister Narendra Modi “a step above junk”.

“Moody’s has rated Modi’s handling of India’s economy a step above JUNK. Lack of support to the poor and the MSME sector means the worst is yet to come,” he said on Twitter.

Moody’s Investors Service has downgraded India’s sovereign credit rating for the first time in more than two decades, saying policymakers will be challenged to mitigate risks of low growth, deteriorating fiscal position and financial sector stress.


12:00 PM

India will definitely get its economic growth back: PM

The Prime Minister sounded optimistic about a bounce back in growth as the economy is opened up gradually.

PTI reports: “Prime Minister Narendra Modi on Tuesday said India will definitely get its economic growth back as the government continues to pursue various reforms.

Speaking at industry association CII’s annual session, he said the government has taken tough steps to fight the coronavirus pandemic and has also taken care of the economy.

“On the one hand we have to safe lives of our people and on the other hand we have to stabilise the economy and speed up the economy,” he said.

“Yes, we will definitely get our growth back,” he asserted.

He said he gets the confidence from farmers, small businesses and entrepreneurs for getting the economic growth back.

“Corona may have slowed our speed (of growth) but India has now moved ahead from lockdown with the phase one of unlock. Unlock Phase-1 has reopened a large part of the economy,” he said.

He said intent, inclusion, investment, infrastructure and innovation are crucial for India to revert back to a high-growth trajectory.

“For us, reforms are not any random or scattered decisions. For us reforms are systemic, planned, integrated, inter-connected and futuristic process,” he said.

He further noted that “for us reforms mean courage to take decisions and taking them to logical conclusion.””


11:40 AM

Retailers’ body calls for uniformity in reopening

The Retailers Association of India (RAI) has stressed the need for uniform reopening of retail stores across India, after the Ministry of Home Affairs allowed States to open such stores as per their own guidelines.

“This has led to multiple interpretations and rules that have inconvenienced customers and retailers, while continuing to severely impact demand and sales. The problem has been compounded by the change in the definition of stores,” RAI said. Large standalone stores are considered malls in Gujarat, Punjab, Uttar Pradesh, Andhra Pradesh, Telangana, Tamil Nadu and Assam and this has led to issues, it said. Also, States like Karnataka, Kerala and Tamil Nadu have prohibited stores from operating air-conditioners inside stores.


11:10 AM

Prime Minister Narendra Modi addresses CII’s annual session

Highlights from the PM’s speech (with inputs from PTI):

* We have to take tough steps to fight coronavirus and also take steps to take care of economy

* Getting growth back has started with Unlock 1.0; have confidence in India’s capabilities, crisis management

* Coronavirus may have slowed economy, but India will get its growth back; have taken decisions that will help country in long run

* Reforms are not random, scattered decisions; they are systemic, planned, integrated, inter-connected and futuristic process

* More than Rs 53,000 crore of financial assistance given under Pradhan Mantri Garib Kalyan Scheme of free ration to poor and migrant workers

* World is looking for a trusted, reliable partner; India has potential, strength, ability

* Modi tells India Inc that he as Prime Minister is standing with them; “Trust me, getting growth back is not so difficult.”

* Products are made in India but for the world; imports are reduced

10:50 AM

Oil prices rise ahead of OPEC+ meeting on extended output cuts

The rally in oil over the past few weeks seems set to continue as producers mull further supply cuts.

PTI reports: “Oil prices rose on Tuesday, with traders waiting to see whether major producers agree to extend their huge output cuts to shore up prices at a virtual meeting expected later this week.

Brent crude futures rose 0.91%, or 35 cents, to $38.67 a barrel as of 0427 GMT.

West Texas Intermediate (WTI) crude futures rose 0.56%, or 20 cents, to $35.64 a barrel.

Brent has doubled over the past six weeks, thanks to supply cuts by the Organization of the Petroleum Exporting Countries and allies, including Russia, a grouping dubbed OPEC+.

Both Brent and WTI prices, however, are still down about 40% for the year so far.

“The whole story is very much based around the supply cuts and the demand recovery,” said Commonwealth Bank commodities analyst Vivek Dhar.

OPEC+ producers are considering extending their output cut of 9.7 million barrels per day (bpd), about 10% of global production, into July or August, at an online meeting likely to be held on June 4.

“Most likely, OPEC+ could extend current cuts until Sept. 1, with a meeting set before then to decide on next steps,” said Citi’s head of commodities research Edward Morse.

Under the OPEC+ plan agreed in April, the record supply cut was to be for May and June, scaling back to a cut of 7.7 million bpd from July through December. Saudi Arabia has been leading talks to push for extending the heftier cuts, sources told Reuters last week.”


10:20 AM

MakeMyTrip lays off 350 employees due to COVID-19 impact

Online travel firm MakeMyTrip has laid off 350 employees due to the impact of the COVID-19 pandemic on its business.

Most of the fired employees are in international holidays and related line of business, according to sources.

In an email to employees, MakeMyTrip Group Executive Chairman and founder Deep Kalra and Group CEO Rajesh Magow said even as times remain unpredictable, what is evident is that the impact of COVID-19 crisis is going to be long drawn for the company.

It is unclear when travelling will become a way of life, as it was pre-COVID, they added.


10:00 AM

Sensex surges over 300 points in early trade; Nifty tops 9,900

The easing of lockdown restrictions continues to enthuse investors in stocks.

PTI reports: “Equity benchmark Sensex jumped over 300 points in early trade on Tuesday, led by index-heavyweights Kotak Bank, HDFC, TCS and Reliance Industries amid positive cues from global markets.

After opening on a tepid note, the 30-share index was trading 309.68 points or 0.93 per cent higher at 33,613.20.

Similarly, NSE Nifty advanced 98.10 points or 1 per cent to 9,924.25.

Kotak Bank was the top gainer in the Sensex pack, rising around 7 per cent, followed by M&M, Sun Pharma, Hero MotoCorp, Bajaj Finance, Tata Steel, Bharti Airtel and HCL Tech.

On the other hand, L&T, ITC, ICICI Bank and SBI were among the laggards.

In the previous session, the BSE barometer settled 879.42 points or 2.57 per cent higher at 33,303.52 and the broader Nifty surged 245.85 points or 2.57 per cent to finish at 9,826.15.

On a net basis, foreign portfolio investors bought equities worth Rs 1,575.46 crore in the capital market on Monday, provisional exchange data showed.

According to analysts, gradual easing of the lockdown boosted investor sentiment which further strengthened with the buoyancy in the global markets. Besides, the news of the timely arrival of monsoon also aided the surge.”


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