Business Live: Stocks open strongly; rupee positive aspects in opposition to US buck
Stocks are off to a strong start this morning after suffering huge losses yesterday. The benchmark stock indices are u well over 2% after a loss of over 4% yesterday.
Meanwhile, the world economy continues to struggle as lockdowns imposed by government pushing the world into a recession. But there has been positive economic news coming from pockets of the Chinese economy.
Join us as we cover the top business news through the day.
India bets on Chinese protective health gear
Faced with a severe lack of domestic supplies, the Indian government is looking to import essential medical equipments from China to deal with the coronavirus pandemic.
Reuters reports: “India will buy ventilators and masks from China to help it deal with the coronavirus, a government official said on Tuesday, even though some countries in Europe had complained about the quality of the equipment.
Prime Minister Narendra Modi’s government said it was trying to procure medical gear, including masks and body coveralls, both from domestic firms and from countries like South Korea and China, to meet shortages.
“China, definitely we are going to buy … Because scaling up our domestic production will take time,” said a top Indian policy official aware of the plan, who declined to be identified due to sensitivity of the discussions.
China was emerging as a favourite possible supplier at this stage as new virus infections were slowing there and its factories were being pushed to reopen, the second source said.
India needs at least 38 million masks and 6.2 million pieces of personal protective equipment as it confronts the spread of coronavirus, according to a report by its investment agency seen by Reuters.”
The fiscal cost of the coronavirus pandemic
Indian refiners hit by lockdowns, oil price war, and a faltering global petro-order
The steep fall in domestic energy demand driven by the COVID-19 pandemic has impacted India’s oil refining sector amid an oil price war and a severely stressed global petro-order.
Reuters had earlier reported that Indian Oil Corporation (IOC), the refining heavyweight, and Mangalore Refineries and Petrochemicals Ltd. (MRPL), have served force majeure notices to their Middle Eastern crude suppliers, citing the Coronavirus epidemic — a Black Swan event. Force majeure notices are built into contracts, which relieve companies from making payments due to unforeseen calamities such as wars and natural disasters.
According to Reuters, IOC, which owns about a third of the country’s 5 million barrels per day (bpd) refining capacity, has sent a force majeure notice to most Middle Eastern suppliers. MRPL has already shuttered a third of its 300,000 bpd refining capacity.
China reports expansion in manufacturing activity
A flicker of hope for the global economy coming from China even as the rest of the world still struggles to contain the economic effects of the coronavirus pandemic.
Reuters reports: “China’s official manufacturing purchasing managers’ index (PMI) bounced to 52.0 in March, up from a record-low 35.7 in February and topping forecasts of 45.0.
Analysts cautioned the index could overstate the true improvement as it measures the net balance of firms reporting an expansion or contraction in activity.
If a company merely resumed working after a forced stoppage, it would read as an expansion without saying much about the overall level of activity.
The number was enough of a relief to help MSCI’s broadest index of Asia-Pacific shares outside Japan rise 1.1%. That still left it down 22% for the quarter, its worst performance since 2008.”
Covid-19: Panic among stranded truck drivers may cripple supply chain, says transporters’ body
One of the ill-effects of the total lockdown of the economy has been the troubles faced by workers involved in the transport of essential goods to customers.
With workers in the sector being harassed by red tape and rent-seeking authorities, there is the risk of supply of essential goods being hit hard causing prices to shoot up.
PTI reports: “Panic among stranded truckers at various places without proper provisions could escalate the problem of drivers’ shortages and cripple supply chain, transporters’ body AIMTC on Monday cautioned.
“Today we are in 6th day of countrywide lockdown and the situation at the ground has not eased a bit and if the same conditions persist than the unfolding scenario could be quite scary… it has come to light that because of the total ban on movement of vehicles carrying non-essential goods and empty vehicles, the majority drivers have left for home in ‘panic’ as they were stranded on the highways for days bereft of food, water and safety,” the AIMTC said in a statement.
Thousands of vehicles are abandoned by the drivers at whatever places possible, it said.
“This type of insensitivity to the …the drivers – who are in public service, providing the essential services to the people of the country will further dishearten them and make them run to their homes. This will create scarcity of drivers for carrying the essential goods,” the statement said.”
Rupee rises marginally against US dollar in early trade
The Indian rupee appreciated by 8 paise to 75.51 against the US dollar in early trade on Tuesday tracking positive opening in domestic equities.
Forex traders said the rupee is trading in a narrow range as the higher opening in domestic equities supported the local unit, while sustained foreign fund outflows and strengthening of the American currency weighed on it.
At the interbank foreign exchange the rupee opened at 75.52, then gained ground and touched 75.51, registering a rise of 8 paise over its previous close.
Stocks give back opening gains
The Nifty and the Sensex opened this morning with significant gains but soon gave up some of it. The benchmark indices are still up over 1.5% at the moment.
The Sensex has gained close to 500 points while the Nifty is trading over the 8,400 mark.
Overnight, the Dow Jones Industrial Average was up over 3%, rallying close to 700 points.
Ashish Rukhaiyar reports from Mumbai:
Equity induces opened on a strong note on Tuesday with the benchmark indices gaining nearly 2% in the first hour of the session.
At 9:20 AM, the Sensex was trading at 29,013.50, up 573.18 points or 2.02%. The broader Nifty was up 8,455.20, up 174.10 points or 2.10%.
As many as 721 stocks in BSE gained ground as against 143 declines. In the Sensex pack, stocks like Axis Bank, Tata Steel, Reliance Industries, HDFC, ICICI Bank, M&M, Infosys and ONGC all gained over 2% each.