Business Live: Government withdraws order on rate cut on small savings schemes; shares of four public sector banks jump up to 10% after capital infusion

The Nifty and the Sensex opened the day on a optimistic notice backed by momentum in car and PSU shares.

Join us as we observe the highest enterprise information by the day.

1:00 PM

Commodity market individuals search FM’s intervention as volumes shrink in Feb-Mar

Liquidity troubles come to the fore.

PTI studies: “The Commodity Participants Association of India (CPAI) on Thursday met Finance Minister Nirmala Sitharaman and sought her immediate intervention and policy support following a sharp decline in the volumes of exchange-traded commodities.

During the meeting, the CPAI representatives expressed their concerns pertaining to current challenges and hurdles that the industry is facing, which are contributing to diminishing liquidity on Indian commodity exchanges.  Commodity markets’ average daily turnover (ADT) has shrunk further by 27 per cent between February and March 2021. Besides, equity markets have also seen a sharp fall of 19 per cent in ADT in this period, while equity futures volumes are down by 14 per cent.

Indian commodity exchanges are failing to recover from liquidity issues owing to existing challenges pertaining to IGST, peak margin and commodity transactions tax (CTT) and securities transactions tax (STT), CPAI, the pan-India apex association of commodity market participants, said in a statement.

“In at present’s pandemic occasions, when GoI (Government of India) is supporting industries with schemes like production-linked incentive (PLI), commodity market individuals have additionally urged the MoF (Ministry of Finance) for coverage assist to enhance market depth and liquidity, and allow India to emerge as a value setter of commodities,” Narinder Wadhwa, President, CPAI, said.

“Implementing our options will scale back the price of hedging in commodity markets, carry ease of doing enterprise,” he added.

The CPAI has placed their concerns and sought the FM’s intervention on three key issues — rationalising the peak margin requirement to maintain market depth and turnover; rationalising cost of transactions and amending IGST Act owing to the challenges faced by market participants while delivering or receiving goods at the  designated centres.  Sebi implemented a peak margin requirement for all clients from December 1, 2020. Under the plan, clients were to be allowed reduced leverage on intraday positions in phases.  In first phase from December 2020, the client was required to have 25 per cent of the peak margin available with the broker. In the next phase (Mar-May 2021), the peak margin that needs to be available with the broker is 50 per cent while in the third phase (June-August 2021), the client needs to have 75 per cent peak margin wih the broker. By September 2021, clients need to have 100 per cent peak margins.  With margins slated to increase in phases, the CPAI said markets are likely to witness a significant drop in volumes and participation.  “Our markets are already saddled with greater prices as in contrast to international markets. A big half of the prices is regulatory prices. Further with the elevated margin necessities on day trades, general liquidity and depth might go down additional,” it added.

The CPAI, therefore, urged the Finance Minister to help the industry for rationalising peak margin requirement to maintain market depth and turnover.  On cost of transactions, CPAI said the cost of transaction started increasing from 2004 when STT was introduced and incidentally the turnover to market ratio fell more steeply when section 88E was withdrawn in 2008 and STT started getting treated as an expense instead of a tax.

Similarly, introduction of CTT in 2012 led to a sharp fall in commodity market volumes as well, it added.

With regard to IGST, the association urged the FM to suitably amend the IGST Act in order to allow the seller of commodities to raise the tax invoice from the state where he is already registered. It also requested  FM to do away with the need of obtaining a casual taxable person registration in the state where the accredited warehouse is located.

The CPAI further submitted that the place of supply of goods should be the registered address of buyer and not the physical location of the goods at the time of delivery– either actual or constructive.  All trades which result in delivery on the exchange platform are covered under IGST except for where the buyer and seller are located in the same state.  If the buyer and seller are located in different states from the place of delivery, challenges are faced by market participants on IGST registrations, which increases their compliance burden, CPAI said.”

12:30 PM

Shares of four public sector banks jump up to 10% after capital infusion

An enormous enhance for presidency banks.

PTI studies: “Shares of four public sector banks — Indian Overseas Bank, Bank of India, Central Bank of India and UCO Bank — on Thursday gained up to 10 per cent after the government infused Rs 14,500 crore to improve their financial health.

Indian Overseas Bank jumped 10 per cent, Bank of India surged 6.55 per cent, Central Bank of India gained 4.89 per cent and UCO Bank rose 4.64 per cent on the BSE.

The government has infused Rs 14,500 crore, mainly into banks that are under the RBI’s prompt corrective action framework to improve their financial health.

Indian Overseas Bank, Central Bank of India and UCO Bank are currently under this framework that puts several restrictions on them, including on lending, management compensation and directors’ fees.

Of the total infusion, Rs 11,500 crore has gone to these three banks while the remaining Rs 3,000 crore has been infused into Bank of India.

According to a government notification, Rs 4,800 crore has been provided to Central Bank of India, Rs 4,100 crore to Indian Overseas Bank and Kolkata-based UCO Bank has got Rs 2,600 crore.

The capital infusion will help these banks to come out of the Reserve Bank of India’s prompt corrective action framework.”

12:00 PM

Do not agree with declare that Huawei might be blocked: Jay Chen

Amid uncertainty over the inclusion of China’s Huawei within the record of ‘trusted sources’ for buy of telecom tools, Jay Chen, the corporate’s Vice-President for the Asia-Pacific area, on Wednesday expressed confidence that Huawei is not going to be blocked, and as a substitute might be welcomed by the Indian authorities.

The assertion follows the Department of Telecom amending the licence situations earlier this month, mandating that companies suppliers procure telecom tools solely from ‘trusted sources’ as outlined by the federal government. The transfer, which comes into impact from June 15, can even require service suppliers to take permission from the National Cyber Security Coordinator (NCSC) for upgradation of present networks utilising tools not designated as trusted merchandise.

“…Not only 5G, but India as a market is very important for Huawei. We entered this market almost 20 years back and have the full operation function in India. We even put an international business centre here such as the network service centre in Bengaluru, which serves the global customer from almost 40 countries. So obviously India is very important,” Mr. Chen stated whereas replying to a question throughout a digital roundtable.

11:30 AM

Toyota Kirloskar sells 15,001 items in March, its highest dispatch throughout March in 8 yrs

An essential milestone for Toyota in India.

PTI studies: “Toyota Kirloskar Motor (TKM) on Thursday said it sold a total of 15,001 units in March, registering the highest ever domestic sales in the month of March since 2013.

The automaker had sold 7,023 units in March 2020, amid a nationwide lockdown due to the COVID-19 pandemic.

In February this year, the company had reported wholesales of 14,075 units.

“We have been in a position to maintain the expansion momentum as we closed the final quarter registering a 73 per cent progress in home gross sales, in comparison to the gross sales within the corresponding interval final yr (January-March 2020). In truth, final month witnessed the very best ever home gross sales within the month of March since 2013,” TKM Senior Vice President Naveen Soni said in a statement.

The company’s sales performance in the last quarter proved to be better than the sales in the festive season of the third quarter (October- December 2021), he added.

“The demand for private mobility nonetheless continues to develop as we witness a surge in each enquiries and buyer orders thereby registering a 7 per cent progress in home gross sales in March 2021 in comparison to the gross sales in February 2021,” Soni noted.

This reiterates the popularity of the brand amidst customers which has been further enhanced by the two new recent launches of the new Innova Crysta and the New Fortuner, as well as the Legender, he said.”

11:00 AM

NSE reduces mkt lot measurement for Nifty 50 by-product contracts

An essential regulatory change.

PTI studies: “The National Stock Exchange (NSE) has slashed the market lot size for derivative contracts on Nifty 50, a move that will reduce the burden of excessive upfront margins for retail traders.

The lot size has been reduced to 50 from the existing 75, NSE said in a circular on Wednesday.

The reduction in the lot size for NIFTY will reduce the margin requirements for futures trading by one-third, stockbroking firm FYERS CEO Tejas Khoday said.

Currently, traders need approximately Rs 1,73,000 to trade one lot, he said.

From July onwards, the margin requirement will reduce to approximately Rs 1,16,000 (at current Nifty prices). This is a great move by NSE to reduce the burden of excessive upfront margins for retail traders, he added.

“Only the far month contract i.e. July 2021 expiry contracts might be revised for market heaps. Contracts with maturity of May 2021 and June 2021 would proceed to have the prevailing market heaps. All subsequent contracts (i.e. July 2021 month-to-month expiry and past) could have revised market heaps,” NSE said.

According to the bourse, the day spread order book will not be available for the combination contract of May-July 2021 and June-July 2021 expiries.

Contracts with August 2021 weekly expiry and beyond will have revised market lots.

“The lot measurement of all present NIFTY long run choices contracts (having expiry better than 3 months) shall be revised from 75 to 50 after expiry of June 2021 contracts (i.e. June 25, 2021),” the exchange said.”

10:40 AM

In February, output of core sectors contracts by 4.6%

The output of eight core sectors declined by 4.6% in February, the steepest contraction within the final six months, which, consultants stated, might drag the general industrial manufacturing within the month into the unfavourable territory.

All the important thing segments, together with coal, crude oil, pure gasoline, and refinery merchandise, witnessed a decline in manufacturing, in accordance to the official knowledge launched on Wednesday.

The progress rate of the eight infrastructure sectors — coal, crude oil, pure gasoline, refinery merchandise, fertilizers, metal, cement and electrical energy — stood at 6.4% in February 2020.

Last time in August 2020, the sectors had recorded a unfavourable progress of 6.9%. In January this yr, the segments have registered a optimistic progress of 0.9%.

 

10:20 AM

Government withdraws order on rate cut on small savings schemes

Hours after notifying significant cuts in small savings devices’ returns for this quarter, the federal government has backtracked on these sharp cuts. This is the primary time that the Centre has scrapped the notified rates of interest on small savings schemes after switching to a quarterly curiosity rate setting system in April 2016.

The authorities seems to have had a rethink owing to a pointy backlash on social media concerning the center class being squeezed. Retail inflation has been breaching the 6% mark and the federal government has additionally determined to tax Employees PF savings beginning this yr.

“Interest rates of small savings schemes of GoI shall continue to be at the rates which existed in the last quarter of 2020-2021, ie, rates that prevailed as of March 2021. Orders issued by oversight shall be withdrawn,” Finance Minister Nirmala Sitharaman stated in a tweet early Thursday morning.

 

10:00 AM

Indian shares rise as auto, PSU banks acquire

The optimistic momentum continues for shares.

Reuters studies: “Indian shares edged up on Thursday, led by auto stocks ahead of monthly sales data and gains in public sector banks after capital infusion by the government.

Meanwhile, India has rolled back its decision to lower interest rates on the small savings scheme, Finance Minister Nirmala Sitharaman said on Thursday.

The blue-chip NSE Nifty 50 index rose 0.6% to 14,772 and the benchmark S&P BSE Sensex gained 0.9% to 49,821, by 0417 GMT.

India’s government on Wednesday infused a total of 145 billion rupees in four state-run banks including Indian Overseas Bank, Bank of India, Central Bank of India and UCO Bank.

The Nifty public sector bank index rose 1.7%, the IT index gained 1.3% and the Nifty auto index gained 1.2%

Auto companies will post their monthly sales data for March later in the day.”

9:30 AM

Govt. retains 4% inflation goal for RBI’s rate panel for 2021-26

The Centre has determined to retain the inflation goal of 4%, with a tolerance band of +/- 2 proportion factors for the Monetary Policy Committee of the Reserve Bank of India for the approaching 5 years, a high finance ministry official stated on Wednesday.

“The inflation target for the period April 1, 2021, to March 31, 2026, under the Reserve Bank of India Act, 1924, has been kept at the same level as it was for the previous five years,” stated Economic Affairs Secretary Tarun Bajaj. “So there’s no change,” he added.

He dismissed queries on whether or not the main target had shifted to core inflation or another element of retail inflation and hinted that the framework would stay ‘the same’ as earlier.

Economists welcomed the continuity within the framework, regardless of the current spate of excessive inflation prints past the 6% higher threshold of the inflation goal.

 

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