The benchmark stock indices opened the day on a negative note after overnight losses in US stocks.
Join us as we follow the top business news through the day.
ITC slides as second wave curbs likely to hit cigarette business
The second wave hits hard the FMCG behemoth.
Reuters reports: “Shares of cigarettes-to-hotel conglomerate ITC Ltd fell nearly 3% on Wednesday, after the company warned that lockdown restrictions could cause disruptions in its supply chain in the near future.
For fast-moving consumer goods companies (FMCG) such as ITC, selling everything from instant foods, snacks, groceries to cigarettes, supply chain is a key part of operations, allowing them to hawk their wares across the country. A hit to the supply chain would possibly dent volumes and sales.
ITC’s warning on Tuesday came as its money-making cigarette business barely staged a recovery from last year’s nationwide lockdown, with March quarter revenue rising 14% to 58.50 billion rupees ($799.10 million).
Cigarette volumes were slightly short of pre-COVID-19 levels towards the end of the year, according to analysts at Antique Stock Broking.
“ITC’s cigarette division posted a strong outperformance versus peers during the year indicating market share gains. However, fresh restrictions in urban and rural markets may delay cigarette volume recovery going ahead.”
A record surge in coronavirus infections in April and May drove many Indian states to reintroduce limited lockdowns.
ITC reported 1% drop in March quarter profit due to tax expenses, while revenue jumped 24%.
The owner of several brands, including Sunfeast, Savlon and Aashirvaad, said its overall business saw strong recovery in discretionary and out of home products.
Analysts at Prabhudas Lilladher, however, said the lockdowns were temporary hiccups and expect a smart pickup post the first quarter.
ITC shares, which have gained 3% so far this year as of last close, were down 2% at 211 rupees as on 0542 GMT.”
Future of cryptocurrency in India continues to hang in the balance
The Reserve Bank of India (RBI) on May 31 asked banks not to cite its 2018 order as a reason to deny banking services to customers who dealt in cryptocurrencies. It stated that its 2018 order was set aside by the Supreme Court in March this year and that it would be inappropriate for banks to cite the order any longer.
However, the central bank asked banks to continue other due diligence procedures on cryptocurrency traders under rules linked to anti-money laundering and prevention of terrorism.
Rupee falls 27 paise to 73.17 against US dollar in early trade
The Indian rupee slumped 27 paise to 73.17 against the US dollar in opening trade on Wednesday tracking weak domestic equities and strong American currency.
At the interbank foreign exchange, the domestic unit opened lower at 73.13 against the dollar, and lost further ground and touched 73.17, registering a fall of 27 paise over its previous close.
On Tuesday, the rupee had settled at 72.90 against the US dollar.
“The course ahead for the currency could remain uneven amid uncertainties around the development of the pandemic situation and the economic recovery,” Reliance Securities said in a research note.
Sensex tanks over 300 pts in early trade; Nifty tests 15,500
A poor start to the day for stocks.
PTI reports: “Equity benchmark Sensex tumbled over 300 points in early trade on Wednesday, tracking losses in index-heavyweights HDFC, Infosys and ICICI Bank amid a largely negative trend in global markets.
The 30-share BSE index was trading 309.54 points or 0.60 per cent lower at 51,625.34 in initial deals, and the broader NSE Nifty fell 70.45 points or 0.45 per cent to 15,504.40.
Tech Mahindra was the top loser in the Sensex pack, shedding over 3 per cent, followed by ITC, HDFC, HCL Tech, Kotak Bank, Infosys and ICICI Bank.
On the other hand, NTPC, PowerGrid, Sun Pharma, Maruti and Reliance Industries were among the gainers.
In the previous session, Sensex ended 2.56 points lower at 51,934.88, while the broader NSE Nifty slipped 7.95 points or 0.05 per cent to 15,574.85.
Foreign institutional investors (FIIs) were net sellers in the capital market as they offloaded shares worth 449.86 crore on Tuesday, as per provisional exchange data.
The steady decline in fresh COVID cases and rising recovery rates indicate that India is succeeding in bending the pandemic’s curve, said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
“With no short-term risks to the market, consolidation is likely in the near term with a stock-specific action in response to the news. Since markets are over-bought and over-valued investors should exercise caution even when the markets are exhibiting surprising resilience,” he added.
Elsewhere in Asia, bourses in Shanghai, Hong Kong and Seoul were trading in the negative territory in mid-session deals, while Tokyo was trading in the positive territory.
Equities on Wall Street closed with losses in the overnight session.
International oil benchmark Brent crude was trading 0.24 per cent higher at USD 70.42 per barrel.”
Auto sales decline from April levels
Amid multiple state-wise lockdowns and disruptions to production, automakers posted muted wholesales of vehicles last month.
Maruti Suzuki India, the country’s largest carmaker, said it sold 32,903 passenger vehicles (PVs) in the domestic market, compared with 1.35 lakh in April 2021, and 13,702 in May 2020. “The company shut production from May 1 through May 16, so as to divert oxygen from industrial use for medical purposes. In May 2020, the company witnessed production disruption owing to lockdowns. Since neither of the two months had normal production, the sales volume of May 2021 are not comparable with May 2020,” the company said.
Hyundai Motor India’s domestic sales stood at 25,001 last month. It had dispatched 6,883 in May 2020, and 49,002 units in April 2021.
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