BQuick On July 30: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. U.S. Economy Shrinks At Record 32.9% Pace
The U.S. economy suffered its sharpest downturn since at least the 1940s in the second quarter, highlighting how the pandemic has ravaged businesses across the country and left millions of Americans out of work.
Gross domestic product shrank 9.5% in the second quarter from the first, a drop that equals an annualized pace of 32.9%, the Commerce Department’s initial estimate showed on Thursday.
That’s the steepest annualized decline in quarterly records dating back to 1947 and compares with analyst estimates for a 34.5% contraction.
Personal spending, which makes up about two-thirds of GDP, slumped an annualized 34.6%, also the most on record.
The figures lay bare the extent of the economic devastation from Covid.
2. U.S. Stocks Slump; Heavyweights Drag Nifty Lower
U.S. stocks slumped and Treasuries climbed after economic data added to concern over a slow and uneven recovery amid a resurgence of coronavirus cases around the globe.
A third day of falling bond yields sent financial shares to their worst decline in a month.
All major groups in the S&P 500 dropped as reports showed the world’s largest economy had its sharpest contraction on record, while the number of Americans filing for unemployment benefits rose.
Investors also assessed corporate earnings,with Apple Inc., Amazon.com Inc., Alphabet Inc. and FacebookInc. due to report their numbers after the market close.
Gold weakened 0.9% to $1,953.83 an ounce.
Get your daily fix of global markets.
Indian equity markets ended the July F&O series on a weak note.
S&P BSE Sensex ended 0.88% lower at 37,736
NSE Nifty 50 index ended 0.9% lower at 11,102.
Most sectoral indices ended lower. The Nifty Pharma was the outperformer for the second straight day, ending 3.1% higher.
Follow the day’s trading action here.
3. RIL's Exceptional Boost; Jio's ARPU Streak
Reliance Industries Ltd.’s quarterly profit rose even as demand for fuel and refining margins fell due to Covid-19-related disruptions.
Net profit of India’s largest company by market value rose 31% year-on-year to Rs 13,233 crore in the quarter ended June, according to its exchange filing. Analysts’ estimates compiled by BloombergQuint had pegged the bottom line at Rs 7,755 crore.
Profit rose mainly as RIL recorded a one-time gain of Rs 4,966 crore from the transfer of its petrol marketing business to the joint venture between RIL and BP Plc.
Revenue came in much lower than the Rs 1.03-lakh-crore estimate
Reliance Jio Infocomm Ltd. saw its quarterly profit rise as the delayed impact of tariff hikes and subscriber additions meant Mukesh Ambani’s telecom venture earned more from each customer.
Net profit rose 8.1% sequentially to Rs 2,520 crore in the quarter ended June, according to its exchange filing. Analysts’ estimates compiled by BloombergQuint had pegged the bottom line at Rs 2,589 crore.
Revenue rose 11.6% over the previous quarter to Rs 16,557 crore—higher than the Rs 15,859-crore estimate.
Average revenue per user rose for the third straight quarter.
4. HDFC’s Profit Falls; Deepak Parekh Calls For ‘Sweeteners’
Housing Development Finance Corp.’s profit declined in the first full quarter affected by the coronavirus pandemic.
India’s biggest mortgage lender saw its profit fall 4.7% year-on-year to Rs 3,051 crore.
Net interest income rose 10% to Rs 3,392 crore.
Get more details on asset quality, loan moratorium and provisioning here.
The chairman of HDFC, Deepak Parekh, urged state governments to offer sweeteners to homebuyers to boost the housing sector.
“Customers today prefer ready-to-move in homes over those under construction. I do hope some state governments will offer some sweeteners like say, a temporary stamp duty waiver, to encourage more homebuyers,” Parekh said at the company’s 43rd annual general meeting.
Reduction of stamp duty as well as ready reckoner rates are some of the key demands from several real estate bodies in the country.
Read more for Parekh’s view on the commercial real estate sector.
5. Amnesty For Citizens Hoarding Illegal Gold?
Finance Ministry is considering an amnesty programme for residents with illicit stash of gold, as part of an effort to crackdown on tax evasion and cut its dependence on imports, people with knowledge of the matter told Bloomberg News.
Under the proposition made to Prime Minister Narendra Modi, the government plans to ask people with unaccounted holdings of the metal to declare it to tax authorities and pay levies plus penalty, the people said, asking not to be identified citing rules on speaking to the media.
The proposal is at an early stage and authorities are seeking feedback from concerned officials, they said.
Consumers who declare their hoard will need to deposit some of the legalised gold with the government for a few years.
6. The RBI’s Next Move
The RBI has a choice to make:
Should it extend the moratorium again?
Should it end the moratorium but replace it with a one-time restructuring scheme?
Should it do nothing and allow bank balance sheets to reflect underlying economic realities?
One of those is ideal, writes Ira Dugal.
7. No Growth For FMCG Companies In 2020?
India’s fast-moving consumer goods industry is expected to register no growth in sales in 2020 on account of the Covid-19 pandemic, lockdowns and the resultant demand destruction, market research firm Nielsen India said in its report on the industry released today.
At the start of the year the research agency had pegged the industry to grow at 9-10% which it then revised lower in April to 5-6%.
Nielsen now expects the industry’s annual growth to remain in the range of -1 to 1% on the back of a 17.1% decline in the April-June quarter (including e-commerce) as only essential goods were permitted to be sold, and also due to severe disruptions in distribution.
April and May were the worst hit as sale of consumer goods contracted 27.7%, with growth reviving to 4.5% in June as the nation began its first phase of unlocking commercial and social activity.
In the corresponding quarter last year, the industry grew at 10.8%.
8. Trump Floats Idea Of Delaying U.S. Elections
President Donald Trump raised the notion of delaying the next U.S. election scheduled for November, suggesting without offering evidence that mail-in voting will be subject to fraud.
In a tweet Thursday morning, Trump repeated false criticisms that vote-by-mail is rife with fraud, saying that the election should be delayed “until people can properly, securely and safely vote.”
Under a law signed by President John Tyler, the presidential election is held on the first Tuesday after the first Monday in November.
It cannot be changed without an act of Congress, which would be difficult to pass in the Democratic-controlled House.
The U.S. Constitution mandates an end to a president’s term on Jan. 20 in the year following election.
9. India’s Uniquely ‘Socialist’ State, Random And Whimsical!
The Government of India is staring at three failed companies. Which one is it most likely to bail out?
A quasi-sovereign entity.
A private but systemically critical company.
A merely private company.
Between 2009 and 2020, the government faced all three situations.
Raghav Bahl narrates what happened next.
10. Covid-19: India Adds Over 52,000 Cases
As India geared up for the next phase of reopening its economy, the country's daily Covid-19 tally broke through another grim checkpoint.
India added 52,123 fresh cases in 24 hours, taking the total tally to over 15.8 lakh, according to the Health Ministry’s 8 a.m. update.
Over 10 lakh of these, however, have recovered. Nearly 35,000 have died.
This is the first time India has reported over 50,000 fresh cases, after hovering around it for nearly a week.
India's health ministry today said herd immunity cannot be a strategic choice for India to combat the pandemic.
It could lead to more deaths with India's population, Health Secretary Rajesh Bhushan said in a press briefing.
Bhushan also said that 50 out of 739 districts contribute 80% of the total cases, reiterating that there is still no community transmission.
Track news and developments around the Covid-19 outbreak in India here.
Globally, cases crossed 1.7 crore with deaths exceeding 6.6 lakh.
Almost 10,000 people in the U.K. have been given an experimental Covid-19 vaccine from AstraZeneca Plc and the University of Oxford, a key step toward finding a shot that will help control the pandemic.
Germany reported the highest number of new coronavirus cases in about six weeks.
The number of Americans killed by the virus exceeded 1.5 lakh as death tolls surged.
Follow the global spread of the virus here.