Business Live: Shares fall as financials drag, inflation hits three-month high; Centre to propose cryptocurrency ban, penalising miners, traders
The benchmark stock indices opened the day on a negative note as financial stocks suffered even as inflation hit a three-month high.
Join us as we follow the top business news through the day.
Indian shares fall as inflation hits 3-month high, COVID-19 cases rise
Here’s what’s behind today’s fall in stocks.
Reuters reports: “Indian shares fell 1% on Monday, dragged down by financials, after February retail inflation surged to a three-month high, while a jump in COVID-19 cases also weighed on sentiment.
By 0513 GMT, the blue-chip NSE Nifty 50 index declined 1.02% to 14,877.55, while the benchmark S&P BSE Sensex fell 1.05% to 50,259.50.
A combination of rising COVID-19 cases, a jump in core inflation and a fall in industrial output weighed on market sentiment, according to Aishvarya Dadheech, a fund manager at Ambit Asset Management in Mumbai.
After market hours on Friday, government data showed annual retail inflation rose to 5.03% in February on higher fuel prices, which could pressure the central bank’s accommodative stance, while core inflation was estimated in a range of 5.61%-5.9% by four economists.
Data also showed industrial output as measured by the Index of Industrial Production contracted 1.6% year-on-year in January.
India is battling a resurgence in COVID-19 cases, led mainly by a renewed surge in the western state of Maharashtra. The country reported this year’s biggest daily rise in cases of 26,291 on Monday. India is the third-worst affected country globally with 11.39 million cases, behind the United States and Brazil.
Yes Bank Ltd fell as much as 2.8%. The Reserve Bank of India has rejected the lender’s application to set up an asset reconstruction company for bad loans, the Mint newspaper reported https://bit.ly/3tkAHLi.
The Nifty Bank Index shed 2% after rising 0.76% last week. HDFC Bank Ltd was the top drag on the Nifty 50, falling 1.5%.
In its stock market debut, precision engineering solutions company MTAR Technologies Pvt Ltd opened nearly 83% above its issue price of 575 rupees.
Broader global markets were trading higher, as investors bet on a faster economic recovery after the signing of a $1.9 trillion U.S. stimulus bill into law last week.”
Nationwide strike impacts banking services of PSU banks
Banking strike gets underway.
PTI reports: “Banking operations including cheque clearance across the country got affected on Monday as bankers under the aegis of the United Forum of Bank Unions (UFBU) have gone on a nationwide strike to protest against the proposed privatisation of two state-owned lenders.
UFBU, an umbrella body of nine unions, had given a strike call for March 15 and 16, and claimed that about 10 lakh bank employees and officers of the banks will participate in the strike.
However, branches of private sector lenders like ICICI Bank, HDFC Bank and Axis Bank are open as they are not part of the strike.
In the Union Budget presented last month, Finance Minister Nirmala Sitharaman had announced the privatisation of two public sector banks (PSBs) as part of the government’s disinvestment plan.
The government has already privatised IDBI Bank by selling its majority stake in the lender to LIC in 2019, and has merged 14 public sector banks in the last four years.
According to All India Bank Employees Association (AIBEA) general secretary CH Venkatachalam, services at branch level; cheque clearance; and government transactions have been affected.
Besides, money markets and stock markets are also going to face problems as payments would be impacted, he said.
Members of UFBU include All India Bank Employees Association (AIBEA), All India Bank Officers’ Confederation (AIBOC), National Confederation of Bank Employees (NCBE), All India Bank Officers’ Association (AIBOA) and Bank Employees Confederation of India (BEFI).
Others are the Indian National Bank Employees Federation (INBEF), Indian National Bank Officers Congress (INBOC), National Organisation of Bank Workers (NOBW) and National Organisation of Bank Officers (NOBO).”
Only 7 of 17 IT agreements signed during Tamil Nadu GIM 2015 have taken off, data reveals
It’s been five years now, and only 7 of the 17 Memoranda of Understanding (MoUs) signed by the Information and Technology Department during the first edition of the Global Investors Meet (GIM) 2015 have fully fructified and commenced operations.
Data collated from the Electronics Corporation of Tamil Nadu Limited (ELCOT) through a Right To Information (RTI) application shows that five projects are still in the under-construction stage and in various stages of implementation. A firm called W.S. Industries India Limited had signed a deal with the State government for constructing an IT park involving investments of ₹1,517 crore but there are no details about that MoU now.
Four projects from GIM 2015 that were inked with Hewlett Packard India Private Limited, Intel Technology India Private Limited, Sutherland Global Services Limited and ASV Constructions Private Limited have been dropped. But ASV Constructions had signed another deal with the State government during the second edition of GIM that happened in 2019.
Adani Welspun JV discovers gas in Mumbai offshore basin
Adani Welspun Exploration Ltd. (AWEL), a joint venture between the Adani Group and Welspun Enterprises Ltd., has announced its first-ever gas discovery in the NELP-VII block MB-OSN-2005/2 located in Mumbai offshore basin.
AWEL holds 100% participative interest (PI) and is the operator of this block. Spread across 714.6 sq.km., the block is located in the prolific gas-prone Tapti-Daman Sector of the Mumbai offshore basin.
“The pay zones and flow rates encountered have exceeded the company’s initial estimates. With the information gleaned from adjoining fields/areas, this discovery is of substantial significance for both the company and the nation,” AWEL said in a statement.
AWEL was awarded the block under the New Exploration Licensing Policy VII bid round.
“Early indications pointed to the occurrence of gas-bearing reservoirs within the sandstone reservoirs of the Mahuva and Daman formations,” the company said.
India to propose cryptocurrency ban, penalising miners, traders -source
Govrnments are no fans of cryptocurrencies.
Reuters reports: “India will propose a law banning cryptocurrencies, fining anyone trading in the country or even holding such digital assets, a senior government official told Reuters in a potential blow to millions of investors piling into the red-hot asset class.
The bill, one of the world’s strictest policies against cryptocurrencies, would criminalise possession, issuance, mining, trading and transferring crypto-assets, said the official, who has direct knowledge of the plan.
The measure is in line with a January government agenda that called for banning private virtual currencies such as bitcoin while building a framework for an official digital currency. But recent government comments had raised investors’ hopes that the authorities might go easier on the booming market.
Instead, the bill would give holders of cryptocurrencies up to six months to liquidate, after which penalties will be levied, said the official, who asked not to be named as the contents of the bill are not public.
Officials are confident of getting the bill enacted into law as Prime Minister Narendra Modi’s government holds a comfortable majority in parliament.
If the ban becomes law, India would be the first major economy to make holding cryptocurrency illegal. Even China, which has banned mining and trading, does not penalise possession.
The Finance Ministry did not immediately respond to an email seeking comment.
Bitcoin, the world’s biggest cryptocurrency, hit a record high $60,000 on Saturday, nearly doubling in value this year as its acceptance for payments has increased with support from such high-profile backers as Tesla Inc CEO Elon Musk.
In India, despite government threats of a ban, transaction volumes are swelling and 8 million investors now hold 100 billion rupees ($1.4 billion) in crypto-investments, according to industry estimates. No official data is available.
“The money is multiplying rapidly every month and you don’t want to be sitting on the sidelines,” said Sumnesh Salodkar, a crypto-investor. “Even though people are panicking due to the potential ban, greed is driving these choices.”
User registrations and money inflows at local crypto-exchange Bitbns are up 30-fold from a year ago, said Gaurav Dahake, its chief executive. Unocoin, one of India’s oldest exchanges, added 20,000 users in January and February, despite worries of a ban.
ZebPay “did as much volume per day in February 2021 as we did in all of February 2020,” said Vikram Rangala, the exchange’s chief marketing officer.
Top Indian officials have called cryptocurrency a “Ponzi scheme”, but Finance Minister Nirmala Sitharaman this month eased some investor concerns.
“I can only give you this clue that we are not closing our minds, we are looking at ways in which experiments can happen in the digital world and cryptocurrency,” she told CNBC-TV18. “There will be a very calibrated position taken.”
The senior official told Reuters, however, that the plan is to ban private crypto-assets while promoting blockchain – a secure database technology that is the backbone for virtual currencies but also a system that experts say could revolutionise international transactions.
“We don’t have a problem with technology. There’s no harm in harnessing the technology,” said the official, adding the government’s moves would be “calibrated” in the extent of the penalties on those who did not liquidate crypto-assets within the law’s grace period.
A government panel in 2019 recommended jail of up to 10 years on people who mine, generate, hold, sell, transfer, dispose of, issue or deal in cryptocurrencies.
The official declined to say whether the new bill includes jail terms as well as fines, or offer further details but said the discussions were in their final stages.
In March 2020, India’s Supreme Court struck down a 2018 order by the central bank forbidding banks from dealing in cryptocurrencies, prompting investors to pile into the market. The court ordered the government to take a position and draft a law on the matter.
The Reserve Bank of India voiced its concern again last month, citing what it said were risks to financial stability from cryptocurrencies. At the same time, the central bank has been working on launching its own digital currency, a step the government’s bill will also encourage, said the official.
Despite the market euphoria, investors are aware that the boom could be in danger.
“If the ban is official we have to comply,” Naimish Sanghvi, who started betting on digital currencies in the last year, told Reuters, referring to existing concerns about a potential ban. “Until then, I’d rather stack up and run with the market than panic and sell.””
India filing appeal against Cairn arbitration award, say sources
India is in the process of filing an appeal against an arbitration panel ruling asking it to return $1.2 billion to British oil firm Cairn Energy Plc, sources said on Wednesday.
If enforcement proceedings are initiated, India is confident of addressing them and will strongly defend its interests, the sources said, adding it is open to a constructive settlement of tax disputes within the existing legal framework.
India is in the process of filing an appeal in the Cairn arbitration award case, they said, adding it was well within India’s sovereign powers to redress the situation of Double Non-Taxation and tax abuse.
Cairn CEO Simon Thomson had last month met the then Finance Secretary Ajay Bhushan Pandey to discuss the arbitration award.
The sources said Cairn is yet to respond based on the discussions.
Indian shares fall as financials drag, inflation hits three-month high
Macro factors weigh on stocks.
Reuters reports: “Indian shares fell on Monday, dragged down by heavyweight financial stocks, after data showed that the country’s retail inflation jumped to a three-month high in February, while a fresh surge in COVID-19 cases also weighed on sentiment.
The blue chip NSE Nifty 50 index fell 0.77% to 14,914.50 and the benchmark S&P BSE Sensex fell 0.77% to 50,401.72 by 0352 GMT.
Government data on Friday showed India’s annual retail inflation rose 5.03% in February on higher fuel prices, above the 4.83% forecast in a Reuters’ poll, though remaining within the central bank’s targeted range.
Also, India on Sunday reported this year’s biggest daily rise in COVID-19 cases. The country is the third-worst affected globally with 11.36 million cases, behind the United States and Brazil.
Shares of Yes Bank Ltd fell 1.9%. The Reserve Bank of India has rejected the lender’s application to set up an asset reconstruction company for bad loans, the Mint newspaper reported https://bit.ly/3tkAHLi.
The Nifty Bank Index, which rose 0.76% last week, shed 1.50%. HDFC Bank Ltd was the top drag on Nifty 50, falling 1.3%.
Broader global markets were trading higher, as investors bet on a faster economic recovery after the signing of a $1.9 trillion U.S. stimulus bill into law last week.
Reuters also reported on Monday that India would propose a law banning cryptocurrencies, citing a senior government official.”
Drastic changes in monetary policy framework can upset bond market: Rajan
As the economy slowly comes out of the pandemic blues, former RBI Governor Raghuram Rajan on Sunday cautioned that “drastic changes” in India’s monetary policy framework can upset the bond market as the current system has helped in containing inflation and promoting growth.
Mr. Rajan, also a noted economist, opined that the government’s ambitious target to make India a $ 5-trillion economy by 2024-25 was “more aspirational, rather than a carefully computed one even before the pandemic”.
“I believe the (monetary policy) framework has helped bring inflation down, while giving the RBI some flexibility to support the economy. It is hard to think of what would have happened if we had to run such large fiscal deficits without such a framework in place,” Mr. Rajan told PTI in an interview.