Business Live: Sensex rises over 200 points in early trade; financial stocks extend gains

The benchmark stock indices have  opened on a positive note this morning after significant gains recorded in yesterday’s session.

The head of telecom giant Airtel has opined on the headwinds facing the sector.

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

12:00 PM

Big leap in mobile transactions during lockdown: SBI chairman

Mobile banking may become the most-preferred banking channel, superseding Internet banking, in the days to come, SBI Chairman Rajnish Kumar said.

“Out of 100 transactions at SBI, only nine transactions are being made at branches. While transactions at ATMs at the time of demonetisation stood at about 55%, these are down to about 30% now. Mobile banking has risen to to 55% now,” Mr. Kumar said, addressing the seventh G. Ramachandran Memorial Lecture organised by the Southern India Chamber of Commerce and Industry.

According to him, transactions via digital banking had risen due to the lockdown. “During the pandemic, SBI delivered all its services without any interruption. Mobile transactions were almost on a par with Internet banking,” he said.


11:30 AM

Exxon removed from the Dow


11:00 AM

Sunil Mittal hints at mobile services rate hike

Is the era of cheap telephone services about to end?

PTI reports: “Bharti Airtel founder and Chairman Sunil Bharti Mittal on Monday hinted at an increase in mobile services rates while stating that the average revenue per user is expected to cross Rs 200 in the next six months.

He said 16 GB data consumption a month for Rs 160 is a tragedy.

“You either consume 1.6 GB of capacity per month either at this price point or you may prepare to pay a lot more. We are not wanting USD 50-60 like the US or Europe but certainly USD 2 for 16 GB a month is not sustainable,” Mittal said at an event.

He said that ARPU of Rs 300 is required to make industry sustainable with lower end still paying Rs 100 a month.

“But if your consumption is largely around watching TV, movies, entertainment and depriving other vital special services on to the networks, then you need to pay for that,” Mittal said.

He was speaking at the launch event of book ‘Some Sizes Fit All’ written by his colleague at Bharti Enterprises, Akhil Gupta.

Airtel reported an increase in average revenue per user at Rs 157 in the first quarter ended June 30, 2020. The rise in ARPU comes following an increase in tariff by Bharti Airtel in December 2019.

Mittal said that while telecom operators have served the nation during the difficult times, the industry needs to invest in 5G, more optical fibres, submarine cables etc.

“Businesses which are not telecom, also need to adopt digital stories around them. You should see solid ARPUs building up in the next 5-6 for industry to be sustainable. We are down to 2-3 players now. India is a very price conscious market. In six month time we should be crossing the mark of Rs 200 for sure and Rs 250 would be ideal,” Mittal said.

Telecom operator Bharti Airtel has reported widening of losses to Rs 15,933 crore for June quarter — its fifth straight quarter of decline — as the telco made additional provision for statutory dues.

The company had been struggling to make margins due to tariff war triggered by Reliance Jio in 2016 and the Supreme Court order in favour of the government on statutory dues added to its woes.”

10:50 AM

Rupee surges 15 paise to 74.17 against US dollar in early trade

The rupee has gained backed by positive sentiment in the domestic stock bourses.

PTI reports: “The rupee surged 15 paise to 74.17 against the US dollar in opening trade on Tuesday tracking positive domestic equities and weak American currency.

At the interbank forex market, the domestic unit opened at 74.17 against the US dollar, registering a gain of 15 paise over its previous close.

It had settled at 74.32 against the US dollar on Monday.

Forex traders said positive trend in the equity markets, weak American currency and sustained foreign fund inflows aided the rupee’s movement.

“Optimism surrounding the US-China Phase 1 deal also lent support after both sides saw progress on trade issues and are committed to making the Phase 1 agreement reached in January a success,” Reliance Securities said in a research note.

Further, Asian currencies have started stronger against the US dollar and could boost the domestic unit, the report added.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.17 per cent to 93.14.

On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 93.52 points higher at 38,892.60 and broader NSE Nifty advanced 23.62 points to 11,490.05.

Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 219.07 crore on Monday, according to provisional exchange data.

Brent crude futures, the global oil benchmark, rose 0.09 per cent to USD 45.17 per barrel.”

10:20 AM

Soaring price, higher LTV pose asset quality risks to gold loan cos: Report

A report flags possible risks in the gold loan market.

PTI reports: “Surging gold prices and the RBI’s decision to allow banks to lend more against the yellow metal pose risks to gold loan focused non-banking lenders, warns a report.

Gold prices have rallied more than 35 per cent since April, which has helped support higher loan growth by some gold loan companies.

Though this will bolster their interest income, it also raises potential risks associated with a fall in gold prices, ratings agency Fitch said in its report.

Growth in gold-backed lending may outperform other parts of the financial sector in the near-term due to the higher prices, it said.

While Manappuram Finance and IIFL Finance saw loan growth of 4-5 per cent between March and June, the largest player Muthoot Finance saw a 1 per cent decline in gold loans as it played more cautious during the lockdown months. As against this, banks saw a 1 per cent contraction in lending.

“Higher gold price increases asset quality and collateral risks that gold lenders will face if price falls,” the report said, adding gold prices can fall if the global economic growth outlook improves.

“A lower gold price may trigger intentional defaults by some borrowers, particularly if outstanding loan amounts start to exceed the market value of collateral pledged, as they did during periods of significant decline in 2012 and 2013,” it said.

The RBI’s move to retain the loan-to-value (LTV) cap for gold loan companies at 75 per cent provides a buffer against these risks. Some lenders have reduced internal LTV caps below the regulatory ceiling to better manage collateral risks. As a result the average LTVs are in the 55-65 range, it said.

However, the RBI raised the LTV to 90 per cent for gold loans by banks until next March.

If banks opt to exploit this higher LTV rate, they could pose a competitive threat to gold loan companies and may pressure smaller entities to lend at higher LTVs, increasing risks associated with their new lending, the report said.”

10:00 AM

Sensex rises over 200 points in early trade; financial stocks extend gains

Stocks have opened marginally higher this morning after yesterday’s gains.

PTI reports: “The BSE benchmark Sensex advanced over 200 points in early trade on Tuesday, tracking gains in financial stocks amid largely positive trend in global markets.

After touching a high of 39,008.89 in opening session, the BSE Sensex was trading 157.31 points or 0.41 per cent higher at 38,956.39; while the NSE Nifty was up 46.70 points or 0.41 per cent at 11,513.15.

IndusInd Bank was the top gainer in the Sensex pack, rising around 2 per cent, followed by SBI, Bajaj Finance, Bajaj Finserv, Axis Bank, ICICI Bank, HDFC, M&M and Maruti.

On the other hand, HCL Tech, Nestle India, UltraTech Cement and Tech Mahindra were among the laggards.

In the previous session, the Sensex closed 364.36 points or 0.95 per cent higher at 38,799.08, while the broader Nifty jumped 94.85 points or 0.83 per cent to 11,466.45.

Exchange data showed that foreign institutional investors bought equities worth Rs 219.07 crore on a net basis on Monday.

Traders said, besides stock-specific action, domestic bourses followed largely positive trend in global equities.

Bourses in Tokyo and Seoul were trading with gains in mid-day deals, while those in Shanghai and Hong Kong were in the red.

Stock exchanges on Wall Street ended on a positive note in overnight session

Global oil benchmark Brent crude was trading 0.22 per cent higher at USD 45.74 per barrel.”


9:30 AM

‘WhatsApp leads Zoom among video-calling apps’

The most preferred video calling apps in India continue to be WhatsApp and Zoom with user shares of 35% and 27%, respectively, while Jio has 4%, as per a study by LocalCircles.

Among the top video-calling apps being used in the country, there is no Indian app. The popular group video-calling apps used in India include Zoom, WhatsApp, Microsoft Teams, Google Meet and Skype.

While some 11% used Microsoft Teams, 5% said Skype, 13% used Google Meet/Hangout and 5% used other group video calling apps

More than 35,000 people across 247 districts participated in a survey conducted by LocalCircles.


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