Category: Economy

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Business Economy

Equity market, FII inflow witness huge rise

The Indian equity market has been on a fresh record run of late backed by a surge in foreign institutional investments (FII). In the past three days alone, net FII inflow in the Indian capital markets stood at Rs 14,786.57 crore.

On Tuesday, the Sensex crossed the psychological mark of 43,000 points for the first time ever. The surge in the Indian market comes in line with the global markets, after pharmaceutical major Pfizer said its experimental Covid-19 vaccine is more than 90 per cent effective based on initial trial results.

Further, the bull-run started globally along with the domestic markets after it became clear that Joe Biden, the Democratic candidate would be the next US President. This positive trend comes despite the anticipation that Donald Trump’s exit from the White House may trigger a collapse in the stocks markets.

Markets rallied on hopes of fewer regulations, easing of protectionist measures brought in by Trump and a bigger stimulus package for the US economy under a Biden administration. Further, hopes of ease in H-1B visa norms also led to a spike in the IT stocks.

FIIs have been the biggest push for the recent bull-run in the Indian markets. Post the significant outflow in September, foreign funds made a comeback in October and the flow has strengthened further in November.

FII inflows in October stood at $2.5 billion. However, at a time when FIIs have been net buyers, domestic institutional investments (DII) have remained net sellers. In October, DII outflow stood at $2.4 billion, highest monthly outflows since March 2016.

So far in November, net DII outflow stands at Rs 9,826.17 crore, while net FII inflow stands at Rs 17,947.80 crore.

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Business Economy India News

Core Sectors Lead the Demand For Construction Equipment

Work underway on a route of the under-construction Delhi Metro Phase 4 project in East Delhi

“The demand for construction equipment is picking up for the past couple of months and it is expected to accelerate further owing to the demand from sectors like roads, railways, energy, irrigation and others,” Jagadish Bhat, Managing Director and CEO, Ajax Engineering…reports Venkatachari Jagannathan

Construction equipment companies are smiling as demand from core sectors like roads, railways, irrigation, energy and other sectors for their products is picking up, said top officials of industry majors.

Major industry players like Schwing Stetter India and Ajax Engineering are expanding their capacities to cash in on the impending surge in demand.

“It is smiling time for us. Business during September and October was better than corresponding period of 2019. Similarly, November business is also looking good,” VG Sakthikumar, Managing Director, Schwing Stetter India, told IANS.

According to Sakthikumar, the machines of the rental players have got deployed in projects.

“The demand for construction equipment is picking up for the past couple of months and it is expected to accelerate further owing to the demand from sectors like roads, railways, energy, irrigation and others,” Jagadish Bhat, Managing Director and CEO, Ajax Engineering, told IANS.

Both Bhat and Sakthikumar said trade enquiries for their machines have picked up.

“The demand is from highways, railways, metros, and sectors. Bulk of the proposed $1 trillion investment mentioned in the National Infrastructure Pipeline will happen next year,” Sakthikumar said.

The companies are hoping to close this fiscal with better revenues than what they had expected when the Covid-19 pandemic lockdown happened.

“Last year, we closed with a turnover of about Rs 1,730 crore. This year, we hope to close with a business of Rs 1,400-1,500 crore,” Sakthikumar said.

Schwing Stetter India makes concrete mixers and other machinery used in construction works. It also sells earthmoving equipment of XCMG, China.

The Indian company is a wholly-owned subsidiary of German group Schwing Stetter. The German group is owned by the Chinese XCMG group, which is ranked sixth globally among the construction equipment machinery makers.

Sakthikumar said with the demand picking up, the company will take some time to shift some of its plant and machineries to its new Rs 230-crore plant being built in Tamil Nadu.

“The production is going on in full steam at our existing facilities while component suppliers are trying to match our needs,” Sakthikumar said.

Queried about the market trend for Ajax Engineering Bhat said the company started seeing recoveries from August onwards and in October the performance was good.

“We see the recovery to be better than expected. During the first six months, the turnover was about Rs 250 crore. Going by the enquires and orders we expect to close this fiscal with a turnover of about Rs 800 crore,” Bhat remarked.

According to him, apart from demand for self-loading concrete mixers, there is good demand for boom pumps and concrete pumps.

“These machines are bought under finance and the non-banking finance companies (NBFCs) have started loosening their purses. After October, there is a general momentum but has not touched the pre-Covid levels. After November, increased disbursals are expected,” Bhat said.

Ajax Engineering has decided to invest Rs 140 crore this fiscal in setting up a new plant for making slip form concrete pavers, batching plant and also in capacity expansion, Bhat added.

“As a part of Make-in-India or Atmanirbhar Bharat (self-reliant) programme we have built a slip form concrete paver which is now being field-tested. Currently, concrete pavers are imported, each costing about Rs 10 crore. Our product is thus an import substitute,” Bhat said.

With about Rs 800 crore turnover, Ajax Engineering will start commercial production of the 12-metre slip form concrete pavers soon as the first machine was tested and validated in couple of road projects.

“We should be competitive by 20-25 per cent as compared with imported machines. We also plan to export the machines,” Bhat added.

“Slip form concrete pavers are majorly built by German and American companies and Ajax Engineering is the first Indian company to do so,” an industry official preferring anonymity told IANS.

Normally about 100-150 slip form concrete pavers are imported per year by India.

The concrete paver and the boom pumps will be made at the Rs 100 crore new plant proposed to come up at Doddaballapur near Bengaluru where Ajax Engineering has acquired 20 acres of land.

According to Bhat, another Rs 40 crore will be invested at its existing plant in Gowribidanur Industrial Area, Kudumalakunte village, Karnataka to increase production capacity of the transit mixers, and concrete batching plants.

The fresh investments will be made from company’s internal accruals.

According to Bhat, construction of the new plants will begin in three or four months.

Also Read: ‘World to witness massive infrastructure push’

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Economy India News

Corporate fund inflows to empower rupee

Rising corporate fund inflows along with buoyant equities are expected to strengthen the Indian rupee in the coming week.

Analysts have predicted the rupee to range between 73.60 and 74.40 with a “appreciation bias” from last week’s band of 73.80 to 74.88.

“Increase in corona cases globally shall keep casting risk on markets, while vaccine development shall keep the hopes high. Besides, the US Fed’s vow to keep rates low should help market buoyancy,” said Sajal Gupta, Head, Forex and Rates, Edelweiss Securities.

“Another big announcement with regard to Reliance Retail stake sale shall help keep the rupee at a strong footing, and we expect these tranches flowing in at regular intervals for the next two months,” Gupta said.

Last week, the rupee closed at 74.08 to a greenback.

“We expect the rupee to halt its current bout of appreciation near the 74-mark and consolidate near that levels for the next week,” said Devarsh Vakil, Deputy Head of Retail Research at HDFC Securities.

“On the upside, 74.4 will act as a resistance,” Vakil added.

Besides, analysts said that an early outcome of the US presidential elections will buoy sentiments.

On the domestic front, market participants will keep an eye out for the inflation and industrial production numbers.

According to Gaurang Somaiya, Forex and Bullion Analyst, Motilal Oswal Financial Services: “Expectation is that inflation could inch higher and that could keep rupee gains in check. At the same time, volatility for the rupee has been curtailed as the RBI has been intervening to curb any major appreciation or depreciation of the currency.

“Investors will be awaiting for more clarity on the US presidential election results and that could trigger volatility for major crosses.”

In addition, Somaiya expects the rupee to trade positive against the US dollar and quote in the range of 73.50 and 74.50.

Also Read: Uncertain US elections erode rupee value

Also Read: Rupee expected to advance on fund inflows

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Economy USA

US Fed retains low rates with the election result pending

U.S. Federal Reserve Chairman Jerome Powell

The US Federal Reserve on Thursday kept its benchmark interest rate unchanged at the record-low level of near zero amid uncertainty about the final result of Tuesday’s presidential election.

“Economic activity and employment have continued to recover but remain well below their levels at the beginning of the year,” the Fed said in a statement after concluding a two-day policy meeting, adding the path of the US economy will depend significantly on the course of the coronavirus, Xinhua news agency reported.

“The ongoing public health crisis will continue to weigh on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term,” the Fed said.

The central bank decided to maintain the target range for the federal funds rate at 0-0.25 per cent, pledging to use its full range of tools to support the US economy “in this challenging time”.

The Fed expects it will be appropriate to maintain this target range until labour market conditions have reached levels consistent with its assessments of maximum employment and inflation has risen to 2 per cent and is on track to moderately exceed 2 per cent for some time, according to the statement.

At a virtual press conference on Thursday afternoon, Fed Chairman Jerome Powell reiterated that the outlook for the economy is “extraordinarily uncertain” and will depend in large part on the success of efforts to keep the virus in check.

Combo photo shows U.S. Democratic presidential candidate Joe Biden (L) and U.S. President Donald Trump attend their respective events on different occasions. (Xinhua/IANS)

“The recent rise in new Covid-19 cases, both here in the US and abroad, is particularly concerning. All of us have a role to play in our nation’s response to the pandemic,” Powell said, adding a full economic recovery is unlikely until people are confident that it’s safe to re-engage in a broad range of activities.

Powell noted that the pace of US economic recovery “has moderated” in recent months, and more fiscal and monetary policy support is needed to bring the economy back to pre-pandemic levels.

“It will take a while to get back to the levels of economic activity and employment that prevailed at the beginning of this year. And it may take continued support from both monetary and fiscal policy to achieve that,” he said.

The Fed meeting came as the United States added record-breaking 100,000 plus new Covid-19 cases in a single day on Wednesday, while people nationwide are waiting for the outcome of the presidential election.

“Although there was no policy change, the Federal Reserve, facing the possibility of a divided government in Washington, remains the only game in town when it comes to providing sustained accommodation to an impaired economy,” said Joseph Brusuelas, chief economist at accounting and consulting firm RSM US LLP.

The Fed cut interest rates to near zero at two unscheduled meetings in March and began purchasing massive quantities of US treasuries and agency mortgage-backed securities to repair financial markets. It also unveiled new lending programs to provide up to $2.3 trillion to support the economy in response to the coronavirus outbreak

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Economy EU News

Second waves expected to slow down EU economic recovery

European Commission Executive Vice-President Valdis Dombrovskis

The European Union’s (EU) economic recovery from the impact of the ongoing coronavirus pandemic is expected to be slower than previously thought due to a second wave in several countries of the bloc, a top official said in Brussels.

“The months ahead will be challenging for everyone, so it is especially important that we discuss and coordinate our policies,” Xinhua news agency quoted European Commission Executive Vice-President Valdis Dombrovskis as saying at a press briefing.

His remarks came after a virtual meeting of the EU’s economy and finance ministers.

The ministers met to discuss the economic recovery in the bloc against a backdrop of tightened measures to curb the second wave of the pandemic.

The Commission will publish its autumn economic forecast on Thursday, Dombrovskis said.

He highlighted the urgency of reaching an agreement within the EU institutions on the 750-billion-euro recovery plan, the bulk of which is a 672.5-billion-euro tool named Recovery and Resilience Facility.

European Commission

Dombrovskis stressed that the member states need to prepare and implement the ambitious plans with reforms and investments to support the recovery and transformation of their economies.

At the meeting, the Ministers renewed the discussion of new fiscal rules, which was disrupted by the pandemic early this year.

“We shall come back to it once this acute phase of the crisis is over,” said Dombrovskis.

Wednesday’s meeting also adopted conclusions on an action plan against money laundering and terrorism financing presented by the European Commission in May.

The continent’s overall coronavirus caseload and death toll currently stood at 10,866,134 and 277,125, respectively, according to the latest update by the European Centre for Disease Prevention and Control.

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Economy World News

Uncertain US elections erode rupee value

The uncertainty regarding the US election outcome impacted the Indian rupee which plunged to a two month low mark during Wednesday’s trade session.

The rupee hit an intraday low of 74.88 as there were indications that the US presidential results might be contested in courts.

At around 3.15 p.m., the rupee traded at 74.80 to a greenback.

“Markets would not like a delayed result, which can lead to prevalence of more risk-off sentiment,” Sajal Gupta, Head, Forex and Rates, Edelweiss Securities.

“No matter who wins. Stimulus shall be coming. So expect US dollar to weaken in two week’s time after a clear win.”

At the end of the day’s trade, the rupee stood at 74.7462 from its previous close of 74.4063 to a greenback.

“A lack of clarity on the outcome of the US Presidential Election has created a lot of uncertainties,” said Nish Bhatt, Founder and CEO, Millwood Kane International.

“Global equity and currency market have reacted according to it. With the US Dollar gaining strength, the Indian rupee saw a decline, as it slipped towards the crucial 75 per US dollar mark.”

Rahul Gupta, Head of Research, Currency, at Emkay Global Financial Services, said: “The USDINR spot is respecting the immediate resistance of 75, but the caution and volatility will keep the appreciation intact.”

“For the coming sessions, we expect USD-INR spot to trade in between 74-75.50.”

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Business Economy

SBI net jumps 51.88% in Q2

Lending major State Bank of India on Wednesday reported a rise of 51.88 per cent in its standalone net profit for Q2FY21 on a year-on-year basis.

Accordingly, the lenders’ net profit increased to Rs 4,574 crore from Rs 3,012 crore reported for the corresponding period of the previous fiscal.

Besides, the Net Interest Income (NII) increased to Rs 28,181 crore in Q2FY21 from Rs 24,600 crore in Q2FY20, an increase of 14.56 per cent YoY.

“Bank has delivered a strong performance in Q2FY21 with all round improvement in ‘Profitability, Capital Adequacy and Provision Coverage Ratio, including Additional Provision over Minimum Regulatory Provisions’ required,” the lender said in a statement.

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Economy India News

Anti farm bill protests rips off railway’s Rs 1,200 revenue

Amid the farmers protest at 32 locations in several parts of Punjab and Haryana, the Railways has lost revenue from freight to the tune of Rs 1,200 crore, the Railway Ministry said on Wednesday.

A railway spokesperson in a statement said the Railways continue to lose revenue as freight operations remain forcibly suspended due to the track blockages in Punjab.

“Till Date more than 2,225 freight rakes could not be operated upon carrying vital commodities. Loss already expected to have crossed Rs 1,200 crore already,” the spokesperson said.

He said that the agitators have continued dharna at platforms and near railway tracks. “Train movement again suspended due to operational and safety considerations as agitators have suddenly stopped some train movements and sporadic blockade continued at various places, especially around Jandiala, Nabha, Talwandi Sabo and Bathinda,” he said.

He said, as per the report at 6 a.m. on Wednesday, the farmers’ agitation was continuing at 32 places — 31 in Northern Railway and one in North Western Railway division.

Farmers are protesting against the three controversial Agriculture Bills that were passed in Parliament in September.

Railway Minister Piyush Goyal had written to Punjab Chief Minister Captain Amarinder Singh on October 26 seeking assurance about the safety of tracks and running staff to resume operations.

The official said that due to the continued blockages at sections of tracks in Punjab, there has been a major adverse impact on the freight movement and, hence, on the availability of vital commodities for the farm, industrial and infrastructure sector as well.

He said that all passenger trains passing through the state of Punjab have been adversely impacted and till date more than 1,350 passenger trains have been cancelled, diverted or short terminated.

“All inward and outward goods transportation, including essential commodities have been affected adversely in Punjab, Jammu and Kashmir, Ladakh and Himachal Pradesh. Number of freight trains, including loaded trains remained stuck as such for periods upto 15-20 days,” he said.

The official also pointed out that many freight customers, after having suffered business losses, are getting diverted to other modes of transportation.

The farmers agitation started on September 24 in Punjab after blocking railway tracks and stations. From October 1 onwards all movements had to be suspended as agitation spread all over Punjab which affected complete train operations in Firozpur Division, partially in Punjab area of Ambala, Delhi and Bikaner Division.

The Railways resumed operation of limited goods trains on October 22. However, within two days the services were again suspended due to operational and safety considerations as sporadic blockade continued at various places, especially around Amritsar, Nabha, Talwandi Sabo, Firozpur, Moga, Jandiala and Bathinda.

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Categories
Economy India News

PM to chair global investor meet on Thursday

Prime Minister Narendra Modi

Prime Minister Narendra Modi will chair the Virtual Global Investor Roundtable (VGIR) on Thursday.

The VGIR will be organised by the Union Ministry of Finance and the National Investment and Infrastructure Fund. It is a dialogue between leading global institutional investors, Indian business leaders and the highest decision makers from the government of India and financial market regulators.

Union Finance Minister Nirmala Sitharaman, Union Minister of State for Finance Anurag Thakur, RBI Governor Shaktikanta Das and other dignitaries will also be present on the occasion.

The roundtable will witness participation from 20 of the world’s largest pension and sovereign wealth funds with a total assets under management (AUM) of about $6 trillion.

These global institutional investors represent key regions including the US, Europe, Canada, Korea, Japan, Middle East, Australia and Singapore. Some of these include funds like Singapore’s Temasek Holdings, Canadian Investment Fund, Korean funds, JBIC, Australian Super etc.

The event will witness the participation of key decision makers of these funds, i.e., the CEOs and CIOs. Some of these investors would also be engaging for the first time with the government of India.

Apart from global investors, the roundtable will also see the participation of several top Indian business leaders.

Addressing the media here, Economic Affairs Secretary Tarun Bajaj said that Ratan Tata, Mukesh Ambani, Nandan Nilekani, Deepak Parekh, Uday Kotak and Dilip Sanghvi will be the major Indian business personalities present at the roundtable to provide the Indian perspective on investments and opportunities.

The event will focus on discussions around India’s economic and investment outlook, structural reforms and the government’s vision for the path to a $5 trillion economy.

The event will provide an opportunity to leading global investors and Indian business leaders to engage and deliberate with senior policymakers on how to further accelerate the growth of international investments in India.

Further, in the next two weeks, the Prime Minister will also meet global investors on a one-to-one basis virtually.

The upcoming roundtable and the following meetings are part of the government’s push to attract foreign investments and boost the economy.

Also Read: India’s exports go down 5.4% in October

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Economy India News

India’s exports go down 5.4% in October

India’s merchandise exports in October 2020 fell 5.4 per cent to $24.82 billion, as compared to $26.23 billion in the same month last year as Covid-19 pandemic shrank global demand for oil, resulting in sharp contraction of petroleum products exports from the country.

Exports during April-October 2020-21 also declined 19.05 per cent to $150.07 billion as global economies remain subdued affecting trade.

The value of India’s merchandise imports in October 2020 was $33.6 billion, as compared to $37.99 billion in October 2019, a decline of 11.56 per cent. Merchandise imports during April-October 2020-21 were $182.29 billion, as compared to $286.07 billion during the same period last year, exhibiting a negative growth of 36.28 per cent.

India was, thus, a net importer in October with a trade deficit of $8.78 billion, as compared to trade deficit of $11.76 billion, an improvement by 25.34 per cent, a Commerce Ministry statement said.

As the ministry release, in October, the value of non-petroleum exports stood at $23.21 billion, registering a positive growth of 1.84 per cent over October 2019. The value of non-petroleum and non-gems and jewellery exports in October 2020 was $20.28 billion, as compared to $19.07 billion in October 2019, registering a positive growth of 6.34 per cent.

In October, oil imports were $5.98 billion, as compared to $9.73 billion in October 2019, a decline by 38.52 per cent.

Non-oil imports were estimated at $27.62 billion, as compared to $28.26 billion in October 2019, showing a decline of 2.26 per cent.

Major commodities of export which have recorded positive growth during October 2020 vis-a-vis October 2019 are: cereals (369.30 per cent), Rice (112.15 per cent), oilmeal (76.62 per cent), iron ore (73.89 per cent), oilseeds (54.06 per cent), carpet (37.67 per cent), ceramic products and glassware (34.62 per cent), drugs and pharmaceuticals (21.82 per cent), and spices (21.61 per cent) etc.

But, exports in the month largely remained affected due to negative growth recorded in October by petroleum products (53.30 per cent), cashew (21.57 per cent), gems and jewellery (21.27 per cent), leather and leather manufactures (16.69 per cent), man-made yarn/fabrics/made-ups etc. (12.82 per cent) etc.

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