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Sensex falls 343 points on weak global cues

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Mumbai, Oct 25: Indian equities fell on Thursday, as a global sell-off and an uptick in crude oil prices unnerved investors.

The decline was led by banking, finance and healthcare counters.

The Indian rupee weakened to Rs 73.25 to a US dollar, from its previous close of 73.15, as the benchmark Brent crude oil price rose to around $76.39 a barrel.

India imports around 80 per cent of its crude oil requirements, and an increase in prices of the dollar-denominated commodity pressures the country’s current account deficit.

The NSE’s Nifty settled about 100 points, or 0.98 per cent, lower at 10,124.90.

The BSE Sensex, which had opened at 33,778.60, lost 343.87 points, or 1.01 per cent, to close at 33,690.09.

It touched a high of 33,838.76 and a low of 33,553.18 during the day’S trade.

IANS

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‘Economic recovery from next year itself’, says FM Nirmala Sitharaman

India can see a proper recovery next year on the back of positivity and confidence due to Covid-19 vaccines, Union finance minister Nirmala Sitharaman said on Friday, arguing that steady growth and capacity expansion in the past two months had pulled the economy out of its pandemic trough.

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Nirmala Sitharaman

India can see a proper recovery next year on the back of positivity and confidence due to Covid-19 vaccines, Union finance minister Nirmala Sitharaman said on Friday, arguing that steady growth and capacity expansion in the past two months had pulled the economy out of its pandemic trough.

Speaking at the 18th Hindustan Times Leadership Summit, Sitharaman also defended the Centre’s controversial farm reform laws, said she is not worried about food inflation and hailed the spirit of cooperation that steers the running of the GST Council.

The finance minister’s comments came days after UK became the first country in the world to approve a vaccine made by Pfizer-BioNTech, with the United States and European Union expected to grant regulatory clearances later this month to stave off a disease that has killed 1.5 million worldwide.

So far, four vaccine candidates – including one that is being manufactured in India — have declared encouraging late-stage trial results. Hours before the summit, Prime Minister Narendra Modi announced that India is set to get a vaccine within weeks.

“The vaccine coming brings in a certain positivity. A vaccine efficiently delivered…will only bring in confidence among the people, both the workers, employers and also people who are engaged in some or the other economic activity,” Sitharaman said at the 18th Hindustan Times Leadership Summit.

“The vaccine will bring in optimism and positivity. With the vaccine, economic activity will get traction.”

With 2020-21 being seen as when large numbers of Indians will get inoculated, with frontline workers and vulnerable populations prioritised, the finance minister also pointed towards the importance of logistics and distribution networks. She refused to specify how much money would be set aside for Covid-19 immunisation in next year’s Union budget.

“We don’t know what will be the details which come with the vaccine. Will it be one dose or two doses? Will it be two doses with two or three weeks in between? Will two doses be sufficient? Unless we get all these details, I really cannot work towards a number.”

At the HT Summit two weeks ago, Serum Institute of India CEO Adar Poonawalla had said that the Oxford-AstraZeneca vaccine which is being manufactured in India — could become available for the general public by April-May next year and is likely to cost around Rs 500-600 for a dose.

Sitharaman acknowledged that the current situation in the country was drastically different from when she presented the budget in February but added that the government had steered the country through the pandemic with a judicious mixture of fiscal and monetary measures.

The finance minister also touched upon the recovery in the second quarter of 2020-21, when the economy shrank by 7.5, outperforming most expectations and registering is a sharp improvement from the 23.9% contraction in the previous quarter.

Sitharaman attributed this showing to an expansion in the core sectors and said that just pent-up demand and the festive season could not have driven this recovery alone. She also pointed to revenue from the Goods and Services Tax (GST) exceeding Rs 1 lakh crore for the second consecutive month in November, as a clear indication that economic activity was returning to normal.

“Recovery is consistently happening in the last two months…you hear core sector industries, cement, iron and steel, integrated plants are all going in for expansion, not just in one unit but across the country, you’re hearing of expansion,” she said.

“There is an indication that additional demand coming in. It is not pent up or festival demand. It is likely to sustain.”

Sitharaman contested the assumption that private sector investment continued to be weak, and said core sector expansion couldn’t happen without additional private buy in.

“Banks are also seeing industry approach for additional expansion-related funding requests. You are seeing expansion in capacities and it cannot be without private investment,” she said, adding that one may have to wait for a month to see if credit is also equally expanding.

When asked about inflation – hours after the Reserve Bank of India held rates, indicating inflationary anxieties – Sitharaman said she was not worried by what she termed as seasonal fluctuations.

“There are seasonal ups and downs in prices and the commodities about which we are seeing clear hike in prices are largely seasonal. If you take foodgrains and edible commodities, there are seasonal fluctuations. The government, through inter-ministerial group, has been very frequently looking at changes and taking conscious calls to fill in any supply level shortages through imports and logistical constraints are getting sorted.”

“This blip in inflation, particularly of food items, will ease out.” Hours before, RBI governor Shaktikanta Das said retail inflation is likely to remain elevated and pegged it at 6.8% for the third quarter.

Sitharaman defended the government’s relief measures for the middle class, and said 300 million people received cash transfers during the pandemic lockdown period but acknowledged that the fiscal deficit will certainly be higher than the 3.5% of GDP target set in the 2020 Union budget.

“What has given me most strength is that people of India, given the challenges and difficulties, have still kept going and today, that’s the reason for the revival… It’s the virus and related matters were more of a worry than the economy,” she added.

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Inflationary woes: RBI retains rates, maintains accommodative stance

Reacting to the improved GDP growth forecast, the S&P BSE Sensex crossed the 45,000 mark for the first time ever.

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Shaktikanta Das

Mumbai, Dec 4 : The Reserve Bank of India (RBI) on Friday retained its key short-term lending rates to subdue the unabatedly high inflation rate.

However, the Monetary Policy Committee (MPC) of the central bank maintained the growth-oriented accommodative stance, thus opening up possibilities for more future rate cuts.

Resultantly, MPC voted to maintain the repo rate — or short-term lending rate for commercial banks, at 4 per cent.

Likewise, the reverse repo rate was kept unchanged at 3.35 per cent, and the marginal standing facility (MSF) rate and the ‘Bank Rate’ at 4.25 per cent.

It was widely expected that the Reserve Bank’s MPC will hold rates as recent data showed that retail inflation has been at an elevated level during June.

As per recent data, the Consumer Price Index (CPI), which gauges the retail price inflation, spiked in October to 7.61 per cent from 7.27 per cent in September.

Though not-comparable, India had recorded a retail price inflation of over 3 per cent in the corresponding period of previous year.

The RBI maintains a medium-term CPI inflation target of 4 per cent. The target is set within a band of +/- 2 per cent.

In an online address detailing the MPC’s decision, RBI Governor Shaktikanta Das said: “At the end of its deliberations, the MPC voted unanimously to leave the policy repo rate unchanged at 4 per cent.”

“It also decided to continue with the accommodative stance of monetary policy as long as necessary – at least through the current financial year and into the next year – to revive growth on a durable basis and mitigate the impact of Covid-19, while ensuring that inflation remains within the target going forward.”

According to Das, the MPC was of the view that inflation is likely to remain elevated, with some relief in the winter months from prices of perishables and bumper kharif arrivals.

“This constrains monetary policy at the current juncture from using the space available to act in support of growth. At the same time, the signs of recovery are far from being broad-based and are dependent on sustained policy support,”.

“A small window is available for proactive supply management strategies to break the inflation spiral being fuelled by supply chain disruptions, excessive margins and indirect taxes. Further efforts are necessary to mitigate supply-side driven inflation pressures. The MPC will monitor closely all threats to price stability to anchor broader macroeconomic and financial stability.”

Besides, Das said that India’s economy has witnessed a faster than anticipated recovery and its expected Real GDP growth rate will be at (-) 7.5 per cent in FY21.

He cited that several high frequency indicators have pointed to growth in both rural and urban areas.

“Consumers remain optimistic about the outlook and business sentiment of manufacturing firms is gradually improving. Fiscal stimulus is increasingly moving beyond being supportive of consumption and liquidity to supporting growth-generating investment,” he said.

“On the other hand, private investment is still slack and capacity utilisation has not fully recovered. While exports are on an uneven recovery, the prospects have brightened with the progress on the vaccines.”

“Taking these factors into consideration, real GDP growth is projected at (-) 7.5 per cent in 2020-21, (+) 0.1 per cent in Q3:2020- 21 and (+) 0.7 per cent in Q4:2020-21; and 21.9 per cent to 6.5 per cent in H1:2021- 22, with risks broadly balanced.”

Furthermore, Das elaborated that RBI will take additional measures to enhance liquidity support to targeted sectors having linkages to other sectors, deepen financial markets and conserve capital among banks, NBFCs through regulatory initiatives amongst other steps

Later on during a press interaction, Das, while answering to a question replied that RBI has not ‘junked’ inflation targeting via monetary policy mechanism.

He admitted that past inflation expectations have not materialised.

Citing extraordinarily situation, he said: “Our expectations on inflation, which we had over the last two months obviously that has not materialised. And we have to keep in mind that we are dealing with an extraordinary situation. A once in hundred years kind of event, and the kind of impact it has produced on the economy as well as on human lives, not just in India but across countries. It’s huge. So, we have to respond to this particular situation.”

Corroborating the assessment, RBI’s Deputy Governor Michael D. Patra said:

“You will see the trajectory of inflation completely changing. But what we have given you is the baseline with things, standing as they are today.”

“But, if you read into the guidance that Governor is giving. He sees this window as a chance for supply side management which is the prime instrument to use at this juncture, to produce a different trajectory of inflation.”

On the RBI’s internal working group’s recommendations on banking guidelines, he said that the final decision on the same has not been taken.

Reflecting back on the volatile calender year 2020, the governor explained that liquidity inducing measures have attained their desired objectives.

In addition, the Reserve Bank has decided to bring the 26 stressed sectors identified by the K.V. Kamath Committee under the ambit of on-tap targeted long-term repo operation (TLTRO).

The measure has been adopted under its regulatory and development policies which are independent of the MPC.

So far five sectors were eligible for the scheme as announced on October 21, 2020.

The policy review, the last one for the calendar year 2020, garnered positive response from the markets and India Inc.

Reacting to the improved GDP growth forecast, the S&P BSE Sensex crossed the 45,000 mark for the first time ever.

It touched a new intraday record high of 45,033.19 points.

The NSE Nifty50, also touched a fresh record high of 13,250.30 points.

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63 moons to challenge SEBI order on STP Gate Services

63 moons said it has always had the utmost faith in the judiciary and will be taking appropriate legal action in the higher judiciary forum.

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SEBI

New Delhi: 63 moons technologies on Friday said it would challenge the SEBI order, which rejected its renewal application for providing STP Gate Services, and take appropriate legal action in the higher judiciary forum.

Expressing disbelief at the SEBI order rejecting the approval for providing STP Gate Services on the basis of ‘Fit & Proper’ order passed by FMC seven years ago, the company said the Fit and Proper order passed against 63 moons in 2014 specifically deals with barring persons or entities from holding an equity stake in any exchange platform and has no bearing on providing technology services.

In an order passed by the SEBI last night, the application for renewal (for the period June 30, 2016 to June 29, 2019) by 63 moons technologies, earlier known as Financial Technologies India Limited, to act as STP Service provider under the SEBI (STP Centralised Hub and STP Service Providers) Guidelines, 2004 has been rejected. It held that 63 Moons has been providing the STP services to brokers, custodians, and fund houses without the approval of SEBI.

63 moons said it has been almost seven years since the order of Fit and Proper has been passed and has already been challenged by 63 moons in the court of law. “The matter is, therefore, sub judice.”

The latest order of SEBI is with regards to STP gate service only and it has nothing to do with any other technology services by the group, it added.

Notably, since 2003 till date, 63 moons technology has been the pioneer and market leader as well as most stable and credible technology service provider for all segments of the market. While it holds more than 75 per cent market share in all segments including its service offerings to MCX and MSEI, it has the distinction of having 97 per cent market share in STP gate.

In the backdrop of NSE withdrawing its trading platform ‘NOW’, 63 moons’ ODIN remains the best solution available across multiple asset classes in the market. In this condition, the company said, the intention of SEBI’s present order is unexplainable.

SEBI coming out with such an order after over seven years, especially when the issue of Fit & Proper is still sub-judice will be disturbing the smooth functioning of the market. The timing and intent of the SEBI order is totally in contradiction to the purpose for which SEBI exists for fair and transparent regulation and growth and stability of the market.

In a statement, the company said the management of 63 moons is completely professional, having eminent administrators, judges, bankers among others on its board. “It is being run with a high standard of governance as envisaged in the rule book. The allegation of undue influence of the promoter is unfounded and is to be dismissed,” it added.

63 moons said it has always had the utmost faith in the judiciary and will be taking appropriate legal action in the higher judiciary forum.

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