The benchmark stock indices opened the day on a negative note, falling further after yesterday’s sharp fall.
Join us as we follow the top business news through the day.
2020 was the worst year for contrarians
Indian shares settle 1% higher on IT stocks boost
A surprising recovery by stocks.
Reuters reports: “Indian shares ended higher in volatile trading on Tuesday, boosted by IT stocks, after a massive sell-off in the previous session, while fears of a new coronavirus strain in the UK kept global markets on the edge.
The NSE Nifty 50 index ended 1.03% higher at 13,466.30 and the benchmark S&P BSE Sensex rose 0.99% to 46,006.69.
Both indexes fell nearly 1% earlier in the day, swung between gains and losses, and surged over 1% in afternoon trade.
On Monday, the main indexes tumbled 3% and snapped six straight sessions of gains, with all nifty sub-indexes closing down between 6.9% and 1.7%, as India and other countries suspended travel from Britain on fears over the new virus strain.
On Tuesday, all the nifty sub-indexes finished up between 3.36% and 0.2%. The Nifty IT index advanced the most, closing up 3.36%.
Indian stocks have scaled record peaks in December boosted by record inflows from foreign institutional investors (FIIs) amid news of progress on COVID-19 vaccines, but analysts say a correction is likely as they remain over-valued.
“This is a bull market correction, it will be very fast and the recovery will also be quick and volatile,” said AK Prabhakar, head of research at IDBI Capital in Mumbai.
“Among sectors, IT did not correct as much yesterday. IT companies stand to benefit the most from the pandemic as everything moves online, so we have not seen any correction there.”
The Nifty Midcap 100 Index and the Nifty Smallcap 100 Index, which slid more than 3% earlier in the session, closed up 0.85% and 0.77%, respectively.
The Nifty Media index and the Nifty PSU Bank index which fell the most among sectoral indexes during the session, reversed course to close up 0.73% and 0.97%, respectively.”
Gold dips ₹ 243, silver declines by ₹ 216
Gold prices fell ₹ 243 to ₹ 49,653 per 10 gram in the national capital on Tuesday, reflecting the weakness in global price of the precious metal, according to HDFC Securities.
In the previous trade, the yellow metal had closed at ₹ 49,896 per 10 gram.
Silver prices also declined ₹ 216 to ₹ 67,177 per kilogram from ₹ 67,393 per kilogram in the previous trade.
In the international market, gold and silver were trading lower at $ 1,868 per ounce and $ 25.70 per ounce, respectively.
“Gold prices declined on stronger dollar index,” HDFC Securities Senior Analyst (Commodities) Tapan Patel said.
Indian government appeals to farmers for talks as protests continue
An update on the farm protests.
Reuters reports: “The Indian government on Tuesday appealed to farmers to hold further talks to break a nearly month-long deadlock over their demand for the repeal of agricultural reform laws, but farmers’ leaders declined to relent unless these laws are withdrawn.
Thousands of protesters have camped on the outskirts of New Delhi and blocked national highways for over three weeks to protest against new laws that the government says would increase farmers’ income through more private investments.
Prime Minister Narendra Modi’s government has urged the farmers to engage in talks to end the deadlock over the three reform laws introduced in September, but the farmers insist the laws would hit them economically while benefiting big retailers.
“We assure our farmers that we’ll listen to them with an open mind,” Agriculture Minister Narendra Singh Tomar said on Tuesday.
The government was “open” to amend the new laws, Tomar told foreign journalists.
He, however, declined to say whether the government could consider withdrawal of these laws as demanded by protesters.
Urging India’s diaspora to help the government to convince farmers, Tomar said new policy changes would make agriculture more attractive for farmers.
Protesters have been getting support from tens of thousands of overseas Indians mainly from Punjab, who have organised demonstrations in the United States, the United Kingdom, Canada and Australia in support of the protests.
Farmers’ leaders have decided to continue with protests.
“Farmers have decided they won’t go back till the government takes back all three farm laws,” said Rakesh Tikait, spokesman for Bhartiya Kisan Union, one of over 30 protesting unions.
“It will take more than a month to resolve all issues. Government will come to us,” he said.”
Spot gold may revisit low of $1,764.29 in Q1
The picture doesn’t look good for gold.
Reuters reports: “Spot gold may revisit its Nov. 30 low of $1,764.29 per ounce next quarter, as suggested by its wave pattern and a retracement analysis.
A five-wave cycle from $1,159.96 has ended. The wave 4 bottomed at the June 5 low of $1,670.14. The metal is riding on a bigger wave (4), which is expected to travel close to $1,670.
A retracement analysis on the cycle reveals a similar target of $1,724, the 38.2% level. Following its strong bounce from $1,764.29 over the past few weeks, gold seems to be struggling around a falling trendline.
The sideways move around this line suggests a completion of the bounce. Most likely, the downtrend would resume towards $1,724.
A break above the trendline does not confirm a resumption of the uptrend, as the metal will face another major barrier at $1,939.
Only after a break above this resistance the uptrend could be considered to have resumed. Support is at $1,857, a break below which could open the way towards $1,724-$1,764 range.
On the daily chart, a projection analysis reveals a target of $1,740, the 100% level of a downward wave C from $1,965.33. This wave seems to consist of three smaller waves. The bounce from $1,764.29 has been driven by a wave b, which will be totally reversed by a downward wave c.
A break above $1,912 may lead to a gain to $1,965.”
Embassy REIT raises $501 million through Institutional Placement of Units
Embassy REIT said on December 21 that it completed a unit capital raise of $501 million through an Institutional Placement of units.
The Securities Committee of the Board of Directors of Embassy Office Parks Management Services Private Limited (EOPMSPL), Manager to Embassy REIT, approved the issuance and allotment of 111,335,400 new units through this Institutional Placement on December 22 said the company in a release.
Trading of these units is expected to commence on or around December 24 on NSE and BSE exchanges. The Institutional Placement launched on December 15 and witnessed strong demand from both existing as well as new institutional investors — both global and domestic, pension funds, insurers, and alternative asset managers, it further said.
The Placement issue price of ₹331.00 per unit represents a discount of 4.99% to the applicable floor price of ₹348.38 per unit calculated in accordance with SEBI regulations.
Cryptocurrency exchange Coindcx raises Rs 100 crore in third round of funding during pandemic
More action in the cryptocurrency space in India.
PTI reports: “Coindcx, a cryptocurrency exchange, on Tuesday announced a Rs 100 crore or USD 13.9 million fund infusion in a funding round led by Block.one.
This is the third funding round for the company, which claims to be the largest cryptocurrency exchange, in the last nine months and comes amidst a strong rally in Bitcoin.
The Supreme Court had in early March allowed trade in cryptocurrency, quashing curbs imposed by the Reserve Bank after a strong rally in the unregulated cryptocurrencies like Bitcoins on exchanges.
Many constituencies have concerns on cryptocurrencies because of their non-fiat character, and the complex or non-transparent way in which its supply is governed, unlike money supply that happens in a regulated way.
“Coindcx plans to use the newly raised funds to drive crypto adoption in India, with cutting-edge innovative products,” a statement issued on Tuesday said.
It has raised USD 19.4 million across the three funding rounds since March and the latest round saw participation from DG, Jump Capital, Uncorrelated Ventures, Coinbase Ventures, Polychain Capital, Mehta Ventures and Alex Pack, it said, adding Polychain and Coinbase are returning investors.
“While the pandemic forced everyone indoors, Coindcx scaled up exponentially and continues to do so. Our team tripled in number from 30 in March to 90 in December, and we are continuing to hire aggressively,” its co-founder and chief executive Sumit Gupta said.
The funds raised in the past as well as the current round will help develop a newly launched Bitcoin and Crypto Investment App making it the easiest and the safest way to onboard everyday Indian into cryptocurrencies, he added.
He reiterated the company’s aim is to onboard 50 million Indians into the cryptocurrency market and it is running a campaign for the same.
“Leading up to 2020, interest in digital assets was growing consistently as more investors explored these new liquidity options. With the global events this year, we’re seeing this trend accelerate exponentially, as both institutional and individual investors embrace these new asset classes to diversify their portfolios,” Block.one’s CEO Brendan Blumer said.”
Watchdog highlights shortcomings in EU rules to curb tech companies
A watchdog has criticised the EU’s new rules that aim to curb the power of Alphabet unit Google, Facebook, Apple and Amazon, potentially providing scope for companies that are targeted to challenge them.
The Regulatory Scrutiny Board, which reviews policies and legislation proposed by the European Commission, eventually gave its green light to the draft rules, but also said they did not clarify how online gatekeepers are singled out.
The European Commission’s draft rules, announced last week, are its most serious attempt yet to rein in tech companies, relied on by thousands of companies and millions of Europeans.The rules include potential fines up to 10% of annual turnover and break-up.
“The report should better justify the identification and selection of the core platform services. It should present evidence of what determines persistent misuse of gatekeepers’ power vis-a-vis dependent business users and customers,” theboard said in an opinion seen by Reuters.
Indian TikTok clone gets Google, Microsoft backing in $100 mln fund raise
Betting on desi alternatives to TikTok.
Reuters reports: “The parent of a TikTok copycat from India has raised more than $100 million from investors including Alphabet Inc’s Google and Microsoft , months after the Chinese-owned short-video app was banned in the country.
The app, Josh, is one of several home-grown short-video platforms that have sprung up since India blocked the wildly popular TikTok in June amidst a border crisis with China, attracting global investor interest in applications filling the gap.
Bengaluru-based VerSe Innovation, which owns Josh, is valued at more than $1 billion following the investment, it said in a statement.
AlphaWave, a part of global asset manager Falcon Edge Capital, also invested in VerSe, as did existing investors Sofina Group and Lupa Systems, VerSe said, adding that it would use the funds to scale up Josh.
VerSe also owns news and content platform Dailyhunt, which offers content in multiple Indian languages.
In September, Indian content-sharing platform ShareChat raised $40 million from investors including Twitter Inc and Lightspeed Ventures, in an effort to drive growth for its new short-video app Moj.
Both Josh and Moj have been installed on more than 50 million devices each, according to data from Google’s Play Store.
Google also separately announced the investment in VerSe, adding it had also invested in mobile advertising technology firm InMobi, which runs lock-screen content app Glance and short-video app Roposo.
Google, which had set aside $10 billion for digital investments in India, did not provide any financial details for the investments.”
Indian shares adrfit in volatile session, Reliance top drag
An update on the stock indices.
Reuters reports: “Indian shares swung between gains and losses on Tuesday as investors parsed through news of a new fast-spreading strain of the coronavirus in Britain that could slow global economic recovery.
The NSE Nifty 50 index was down 0.34% at 13,282.65 by 0520 GMT, while the benchmark S&P BSE Sensex fell 0.33% to 45,401.30.
Both the indexes rose as much as 0.8% in early trade before changing course to fall up to 0.8%.
On Monday, the indexes tumbled 3% and snapped six straight sessions of gains as countries across the globe, including India, shut travel from Britain due to concerns over the new virus variant.
Among the losers on Tuesday, airline operators Interglobe Aviation and SpiceJet Ltd dropped 5.4% and 10%, respectively.
“The news related to the new coronavirus is being absorbed by the market and that explains the panic, most people seem to be reacting to it now and we are seeing some pressure after the initial bounce,” said Anand James, chief market strategist at Geojit Financial Services in Kochi.
“People who have joined late are limiting the loss or locking up profits in the first bounce, with only two days to pack all the action, we are seeing volatility.”
India’s volatility index rose as much as 4.14% to its highest in more than five weeks on Tuesday in a holiday-shortened trading week.
The Nifty Media index and the Nifty PSU Bank index fell the most among sectoral indexes, down as much as 4.37% and 3.93%, respectively.
Shares of India’s most valuable company, Reliance Industries Ltd, slipped as much as 2.64% and were the top drag.
Bucking the trend, the Nifty IT index rose as much as 1.53%, led by a 4% rise in MindTree Ltd.”
‘Can’t stop Amazon from writing to regulators on FRL’
The Delhi High Court on Monday declined to restrain U.S.-based e-commerce major Amazon from writing to Indian statutory authorities such as the SEBI and CCI about an arbitral order against the assets sale deal between Future Retail Ltd. (FRL) and Reliance Retail.
The high court said that though a prima facie case was made out by FRL for grant of interim injunction, “the balance of convenience lies both in favour of FRL and Amazon”.
FRL, in its plea before the high court, had accused Amazon of interfering with its assets sale deal with Reliance by writing to various regulatory authorities about an order passed by the Singapore International Arbitration Centre on October 25, restraining FRL from taking any steps to transfer its retail assets. Amazon has 49% stake in Future Coupons Pvt. Ltd. (FCPL), which holds 9.82% in FRL.
Justice Mukta Gupta opined that a combination of the shareholding agreements (SHA) of FRL and FCPL and the FCPL SSA (share subscription agreement), besides “creating protective rights in favour of Amazon for its investments, also transgress to ‘control’ over FRL requiring government approvals and in the absence thereof are contrary to FEMA FDI Rules”.
The global IPO euphoria
Rupee depreciates 16 paise to 73.95 against US dollar in early trade
The fall in stocks has hit the rupee too.
PTI reports: “The rupee depreciated 16 paise to 73.95 against the US dollar in opening trade on Tuesday tracking muted domestic equities and weakened risk appetite amid concerns about a new virus strain.
Traders said rupee is trading on a weak note against the US dollar as the greenback rebounded amid safe haven appeal for the currency.
At the interbank forex market, the domestic unit opened at 73.95 against the US dollar, registering a fall of 16 paise over its previous close.
On Monday, the rupee plunged 23 paise to end at a two-week low of 73.79 against the US dollar.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.26 per cent to 90.27.
“The risk sentiment was jolted by the news of a new strain of virus emerging in the UK and consequently about 40 countries imposing bans on flights arriving from the UK,” said Abhishek Goenka, Founder and CEO, IFA Global.
The variant, which officials say is up to 70 per cent more transmissible than the original, triggered concerns about a wider spread which has prompted several European countries to take measures to prevent people arriving from Britain, including bans on flights and trains, Reliance Securities said in a research note.
Further, Asian currencies were weak this morning and could weigh on sentiments, the note added.
On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 6.65 points lower at 45,547.31 and the broader NSE Nifty fell 2.10 points to 13,326.30.
Foreign institutional investors were net sellers in the capital market as they offloaded shares worth Rs 323.55 crore on a net basis on Monday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, fell 0.51 per cent to USD 50.56 per barrel.”
GDP growth likely to turn positive in Q3: NCAER
Having witnessed a contraction in the first half of the current financial year, India’s GDP growth is likely to turn positive at 0.1% in the October-December quarter, economic think-tank NCAER said.
The NCAER, in its mid-year review of the Indian economy, also forecast 2% growth in the fourth-quarter (January-March 2021). The overall contraction in the current fiscal is likely to be contained at 7.3%.
India’s economy contracted by 23.9% in the first quarter of the current fiscal on the account of the impact of the COVID-19 pandemic. The contraction narrowed to 7.5% in the second quarter. “The sharp recovery of GDP in Q2, the bowstring effect, was a welcome surprise. We have accordingly revised our forecast of annual contraction to (-) 7.3%. The revised growth forecasts for Q3 and Q4 are 0.1% and 2% respectively,” the NCAER said in its mid-year economic review.
Indian shares extend losses on worries over new virus strain
This week’s fall in stock values continues.
Reuters reports: “Indian shares reversed from early gains to trade lower on Tuesday, extending a sell-off from the previous session, as worries deepened over a fast-spreading new strain of the coronavirus detected in Britain.
The NSE Nifty 50 index was down 0.85% at 13,243.30 by 0411 GMT, while the benchmark S&P BSE Sensex fell 0.54% to 45,317.91.
Both the indexes rose as much as 0.8% in early trade.
Both the Nifty and Sensex tumbled 3% on Monday, snapping six straight sessions of gains as the new virus strain dimmed hopes of a global economic recovery.
On Tuesday, the Nifty Media index was down 4.25% and the Nifty PSU Bank index fell 3.3%.
Shares of India’s most valuable company, Reliance Industries Ltd, slipped as much as 2.64% and were the top drag.
Airline stocks also extended losses after India announced suspension of all flights from the UK to the country until the end of the year.
Interglobe Aviation fell as much as 5.44% and SpiceJet Ltd slid 10%. Broader Asian shares extended a pullback from multi-year highs hit last week on concerns over the highly infectious new strain of COVID-19.”
Rising input costs drive four auto firms to bump up prices
Four automobile firms — Tata Motors, Mahindra & Mahindra (M&M), Isuzu Motors India and BMW Group India — on Monday announced an increase in prices of their products, passing on rising input costs to consumers.
Industry analysts attributed this is to the sharp rise in prices of commodities that go into the manufacture of automobiles.
“All input costs have gone up substantially. Be it steel, rubber [or] copper, all commodity prices have go up,” said Jinesh Gandhi, auto analyst, Motilal Oswal Financial Services.
“The magnitude of the price hike is such that the auto companies do not have the capacity to absorb even half of it,” he added.
The farm equipment sector of Mahindra & Mahindra said it would raise prices for its tractors across models effective January 1, citing the rise in commodity prices.
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