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PremiumIndian indices on Friday were hammered by major losses in market heavyweights Reliance Industries and ONGC after govt announced export duties on oil products to boost domestic supplies as the indices closed the first session of the second quarter on a negative note. However, fag-end buying in ITC, Bajaj twins, and HDFC helped the indices trim some of the decline. The Indian rupee rose 6 paise to close at 79.00 (provisional) against US dollar. European shares edged higher after Asian benchmarks finished lower on Friday, as a quarterly report by Japan’s central bank rekindled worries about the world’s third largest economy. Shares fell in Japan, Australia, Hong Kong, South Korea, and Shanghai.
Indian indices on Friday started the fresh month of July on a negative note amid continuing volatility in global markets.
The Sensex lost 111.01 points, or 0.21%, to close at 52,907.93, while Nifty50 declined 28.20 points to end at 15,752.05. Sectorally, oil & gas and energy stocks tumbled, while FMCG and realty advanced.
On the 30-stock index, ITC, Bajaj twins, Asian Paints, and HUL were the top performers, while Reliance Industries, PowerGrid, and Bharti Airtel were among the biggest losers.
On the Nifty50 index, ITC, Bajaj Finance, Bajaj Finserv, Cipla, and BPCL registered the biggest gains, while ONGC, Reliance, and PowerGrid were the biggest laggards.
Finance Minister Nirmala Sitharaman on Friday said the government will review every fortnight the new taxes levied on crude, diesel and ATF based on international prices.
She said these are "extraordinary times" and oil prices are internationally unbridled.
"We do not want to discourage export, but want domestic availability to increase," Sitharaman told reporters here.
She said that if oil is not being available and exports are happening at such phenomenal profit, we need at least some of it for our own citizens.
"We need to take this twin-pronged approach," the minister added.
The government on Friday slapped an export tax on petrol, diesel and jet fuel (ATF) while also joining nations like the UK in imposing a windfall tax on crude oil produced locally.
The risk of a renewed selloff in equity markets is still high as investors are only pricing a mild recession, according to Goldman Sachs Group Inc. strategists.
“Much of the valuation de-rating this year has been due to higher rates/inflation," strategists led by Christian Mueller-Glissmann wrote in a note dated June 30. “Unless bond yields start to decline and buffer rising equity risk premiums due to recession fears, equity valuations could decline further."
Stock markets globally have just experienced one of their worst six months on record as stubbornly high inflation and hawkish central banks raised the specter of a sharp economic slowdown. The US S&P 500 Index had its worst first-half performance since 1970, losing over $8 trillion in market capitalization.
The second half of the year started with another first class drubbing for global stock markets on Friday, as the recession concerns that have built in recent weeks also shoved oil and metals lower again.
MSCI's world stocks index has had its worst start to a year since its 1990 creation over the last six months and a 1% early tumble in Europe and for Wall Street futures pointed to more pain ahead.
Asia had thudded lower too with the heaviest fall in Taiwan, where the growth-sensitive benchmark index slid more than 3% to its lowest since late 2020.
Japan's Nikkei fell 1.75%. The Australian and New Zealand dollars each fell 1% to two-year lows. Growth-sensitive copper was down 2.7% and heading for its forth straight weekly drop, while U.S. Treasuries and German Bunds rallied in the bond markets.
The Indian rupee plunged on Friday to mark the fourth straight session of record lows, breaking below the 79-per-dollar mark, weighed down by broad strength in the greenback and as investors retreated from the domestic share markets.
The U.S. dollar remained strong against major peers due to the prospects of aggressive U.S. interest rates and fears of a widespread recession. [USD/]
As of 0820 GMT, the partially convertible rupee was trading at 79.10/11 per dollar, after touching a record low of 79.1150. The unit had ended at 78.9675 on Thursday.
"The rupee-dollar exchange rate will remain volatile with a depreciation bias in near term due to a widening trade deficit, foreign portfolio investment outflows and strengthening of the U.S. dollar index," economists at rating agency CRISIL wrote in a note on Friday.
"We expect the exchange rate to settle at 78/$ by March 2023, compared with 76.2/$ in March 2022," the economists added.
Traders said there was sporadic dollar-selling intervention seen in the market, but the depreciation pressure on the rupee was large.
The country's largest carmaker Maruti Suzuki India (MSI) on Friday reported a 5.7% increase in total wholesales at 1,55,857 units in June. The automaker had dispatched 1,47,368 units to dealers in June 2021, the company said in a statement.
Hero MotoCorp has announced that it will increase the prices of its motorcycles and scooter from today, July 1, 2022. The company, it its regulatory filing on June 23, notified that it will raise the prices of its motorcycles and scooter by up to ₹3,000 across the entire range from 1 July, 2022 onwards.
The value of the Indian rupee with respect to the US dollar has fallen significantly in 2022. The primary reason for this has been the strength of the US dollar.
Fears of aggressive quantitative tightening by the US Federal Reserve to tame inflation has triggered selling of Indian stocks by foreign portfolio investors (FPIs). In fact, the current spree FPI selling in Indian equities is turning out to be the highest ever since the global financial crisis of 2008, as per an analysis by ICICI Securities Ltd.
To ease the domestic fuel supply crunch the government has decided to slap an export tax on petrol, diesel and jet fuel (ATF) shipped overseas by firms like Reliance Industries. It has also imposed a windfall tax on crude oil produced locally by companies such as ONGC and Vedanta.
The government has announced taxes on windfall gains made by crude oil producers. The government slapped a ₹23,230 per tonne additional tax on domestically produced crude oil to take away windfall gains accruing to producers from high international oil prices.
Shares of Indian Oil Corporation (IOC) plunged more than 1% to ₹73 apiece on the BSE in Friday's trading session on the record date of the bonus shares issue. The stock started trading ex-bonus from Thursday, June 30, 2022.
Investors cut holdings in exchange-traded funds for silver, platinum and palladium in the second quarter on fears that a potential recession will reduce industrial demand, but gold assets held up because of its role as a haven, and that may persist.
Gold-backed ETFs shrank by just over 1% in the three months through June, or 43 tons, after an 8% surge in the first quarter helped by Russia’s invasion of Ukraine, according to data compiled by Bloomberg. By contrast, silver holdings contracted almost 5%, and the outflow in tonnage terms was the biggest since 2011.
The amount in gold ETFs is the lowest since March, while assets in the other three precious metals are around the smallest since 2020.
Gold has held up well relative to silver and platinum. One ounce of gold now buys 90 ounces of silver, the most in almost two years.
Competition Commission of India (CCI) on Thursday approved Google's proposed acquisition of a minority stake in telecom major Bharti Airtel.
The deal has been cleared on the basis of modifications offered by the acquirer, according to an official release.
Google International LLC and Airtel have entered into an investment agreement to buy a minority and non-controlling stake of 1.28 per cent of equity share capital in the telecom player.
Drug maker Lupin on Thursday said it has received approval from the US health regulator to market Paliperidone extended-release tablets, used to treat Schizophrenia, in the American market.
Treasuries began the second half of the year on the front foot Friday as concerns continued to mount that Federal Reserve rate hikes will lead to a recession.
Benchmark 10-year yields fell six basis points to 2.95% in a fourth day of declines and looked set for their biggest weekly drop in seven weeks. The move spread to other markets with Australia’s three-year yields tumbling as much as 21 basis points, just days before its central bank is expected to announce a half-point rate increase.
“The focus is shifting away from inflation and is now centered on growth as fears of a recession grow, hence markets are scaling back expectations for near-term and terminal rate hikes," said Prashant Newnaha, a rates strategist for TD Securities. “Friday’s moves accelerated because of thin liquidity and key breaks in technical levels."
India banned some single-use or disposable plastic products Friday as part of a federal plan to phase out the ubiquitous material in the nation of nearly 1.4 billion people.
For the first stage, it has identified 19 plastic items that aren't very useful but have a high potential to become litter and makes it illegal to produce, import, stock, distribute or sell them. These items range from plastic cups and straws to ice cream sticks. Some disposable plastic bags will also be phased out and replaced with thicker ones.
Thousands of other plastic products — like bottles for water or soda or bags of chips — aren't covered by the ban. But the federal government has set targets for manufacturers to be responsible for recycling or disposing of them after their use.
Oil headed for a third weekly drop, its longest losing run this year, on concern that a potential recession will cut into energy demand.
West Texas Intermediate fell toward $105 a barrel after tumbling on Thursday as commodities were pummeled. The US benchmark has shed more than 2% this week despite signs that the physical crude market remains tight.
India on Friday increased levies on exports of gasoline and diesel as part of a drive to control a fast-widening currency deficit. The nation has become an important destination for Russian crude this year as other nations shun flows because of the war in Ukraine. The new levies may crimp product exports.
Oil fell about 8% in June as investors fretted over a potential global slowdown, eroding a rally spurred by the war in Ukraine, interruptions to supplies and rising demand. The jump in prices alarmed President Joe Biden, who’s spearheading efforts to get producers in the Middle East to boost crude output.
General Motors (GM) said on Friday it had called off the sale of a shuttered Indian plant to China's Great Wall Motor after they failed to obtain regulatory approvals, amid a tougher stance by New Delhi towards investments from Beijing.
GM struck a deal in January 2020 to sell the plant to Great Wall, with the Chinese SUV-maker expected to pay up to $300 million as part of a broader plan to invest $1 billion to establish a presence in India's growing car market.
The agreement, which was extended twice, expired on June 30.
Tokyo stocks ended lower Friday, following falls on Wall Street with investors spooked by a lacklustre rise in US consumer spending.
The benchmark Nikkei 225 index dropped 1.73 percent, or 457.42 points, to end at 25,935.62 yen, while the broader Topix index ended down 1.38 percent, or 25.78 points, at 1,845.04.
India's factory output expanded at its slowest pace in nine months in June as elevated price pressures continued to dampen demand and output, according to a private survey, which also showed business confidence was at its lowest in over two years.
Although inflation eased in May to 7.04% after touching an eight-year high of 7.79% in April, a meaningful decline is not seen anytime soon even as the Reserve Bank of India is expected to continue with aggressive rate hikes.
While the Manufacturing Purchasing Managers' Index, compiled by S&P Global, remained resilient, it fell to a nine-month low of 53.9 in June from May's 54.6, lower than the Reuters poll median prediction of 54.5.
It has been above the 50-level separating growth from contraction for a year, indicating growth in the sector has remained solid.
India tightened exports of oil and imports of gold in an all-out effort to rein in the rupee that plunged to a fresh record Friday.
The administration raised import taxes on gold, while increasing levies on exports of gasoline and diesel as it sought to control a fast-widening currency deficit. The measures sent Reliance Industries Ltd. and other energy exporters tumbling, bringing down the benchmark index by as much as 1.7%. The currency fell again.
The rupee has tested a series of record lows, underscoring the economic challenges faced by Prime Minister Narendra Modi’s government as inflation accelerates and external finances worsen. The central bank has been battling to slow the currency’s decline, and runway rupee depreciation will worsen price pressures, and may spur more rate hikes that weigh on growth.
Global risk assets were at the epicenter of a selling spree Friday as investors kicked off the second half of the year with recession concern front and center.
Stocks and equity futures from Japan to the US tumbled, extending their historic first-half rout, while every Group-of-10 currency fell against havens, the dollar and the yen. Commodities retreated while global bonds continued their late-June rally.
With an aim to provide further clarity and transparency in the disclosure of shareholding pattern to investors, Sebi on Thursday came out with a new format for disclosing shareholding pattern of the public shareholders. Also, the regulator has specified that all listed entities will have to disclose details pertaining to foreign ownership limits in the a prescribed format, according to a circular.
The government on Friday slapped a ₹6 per litre tax on exports of petrol and ATF and ₹13 per litre on exports of diesel.
The government also slapped a ₹23,230 per tonne additional tax on domestically produced crude oil to take away windfall gains accruing to producers from high international oil prices, a separate government notification showed.
The tax on exports follows oil refiners, particularly the private sector, reaping huge gains from exporting fuel to markets such as Europe and the US.
The tax on domestically produced crude oil follows local producers reaping windfall gains from the surge in international oil prices.
Reliance Industries Ltd. slumped the most since December after the Indian government raised taxes on exports of petroleum products such as gasoline, diesel and jet fuel.
The heavyweight’s stock fell as much as 7.6%, dragging the benchmark S&P BSE Sensex lower amid broad declines in Asian equities.
Rating: BUY | CMP: Rs2,596 | TP: Rs3,277
We increase our FY23/24E earnings estimate by 23%/13% as we increase our refining margin assumptions to USD18/13/bbl (+USD6.5/1.5/bbl), while we increase our input price assumptions for petchem. Low product inventory (US diesel inventory lowest since CY08), reduced Chinese exports (May 22 diesel exports down 75% vs CY18-21 avg) and low exports from Russia have pushed Q1 diesel margins to USD42/bbl (Q4: USD18) and gasoline margins to USD 34/bbl (Q4: 16). RIL with access to discounted Russian crude (discount at over USD 30/bbl) and EU exports is best placed to capitalize on tight market conditions, given high refining complexity. We believe higher gas prices along with strong growth in telecom (continued tariff hikes) and retail (store expansion), make RIL a preferred play in challenging times. Reiterate ‘BUY’ with revised PT of Rs3,277 (Rs3,000).
State-owned Hindustan Copper on Thursday said that its board has suggested seeking shareholders' approval to raise up to ₹500 crore through debentures.
The board has also recommended taking the approval of the shareholders in the ensuing annual general meeting for raising funds by issue of equity shares through Qualified Institutional Placement.
"The board of directors of Hindustan Copper Ltd ...has recommended seeking approval of the shareholders in the ensuing AGM to authorise the board... to offer, issue and allot secured or unsecured non-convertible debentures or bonds on private placement basis up to ₹500 crore," the state-owned company said in a filing to BSE.
State-owned Indian Bank on Thursday said it has raised the Marginal Cost of Funds based Lending Rates (MCLR) across tenors by 0.15 per cent with effect from Sunday.
The benchmark one-year tenor MCLR -- against which most of the consumer loans are based upon -- will be 7.55 per cent as against 7.40 per cent presently, Indian Bank said in a regulatory filing.
Other MCLRs ranging from overnight to 6 months tenors have been raised by similar margins in the range of 6.75 to 7.40 per cent per annum.
Besides, the bank has also hiked the Treasury Bills Linked Lending Rates (TBLR), base rate and Benchmark Prime Lending Rate (BPLR).
Bitcoin dip buyers are hoping things won’t get much worse for cryptocurrencies in the remainder of this year judging by the latest surge in the virtual coin.
The largest digital token rallied as much as 11.3% in Asia on Friday, briefly closing in on the $21,000 level. The climb cooled to 5% as of 1 p.m. in Tokyo, leaving Bitcoin at about $19,660.
Some optimism was also evident for coins such as Ether, Solana and Avalanche, but the crypto universe was off session highs as a bout of risk aversion swept across global markets.
Bitcoin has been gyrating around the $20,000 mark after a 57% slide this year. The retreat has become emblematic of depressed investor spirits as liquidity evaporates amid tightening monetary policy to fight inflation.
The rupee depreciated 5 paise to a record low of 79.11 against the US dollar in opening trade on Friday as persistent foreign funds outflows weighed on investor sentiments.
At the interbank foreign exchange, the rupee opened on a weak note at 78.99 against the American dollar, then lost ground to quote at 79.11 -- its all-time low level, registering a fall of 5 paise from the last close.
On Thursday, the rupee fell 3 paise to close at a fresh lifetime low of 79.06 against the US dollar.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.21 per cent higher at 104.90.
India has raised its basic import duty on gold to 12.5% from 7.5%, the government said in a notification on Friday, as the world's second biggest consumer of the precious metal tries to dampen its demand.
India fufills most of its gold demand through imports, which were putting pressure on the rupee which hit a record low earlier this week.
Capital markets regulator Sebi on Thursday slapped penalties totalling ₹1.6 crore on seven entities, including Kotak Mahindra Trustee Company and Managing Director of Kotak AMC Nilesh Shah, for flouting rules pertaining to mutual funds while investing in Essel Group companies.
The Securities and Exchange Board of India (Sebi) on Thursday imposed a penalty of ₹11 crores on Ajay Shah, National Stock Exchange, Ravi Narain, Chitra Ramakrishna and four others in a case of misuse of exchange data for commercial gains.
Asia's manufacturing activity stalled in June as many companies were hit by supply disruptions caused by China's strict COVID-19 lockdowns, while sharp economic slowdown risks in Europe and the United States reinforced fears of a global recession.
A string of surveys on Friday showed China's factory activity bouncing solidly in June though a slowdown in Japan and South Korea, as well as a contraction in Taiwan, highlighted the strain from supply disruptions, rising costs and persistent material shortages.
China's manufacturing activity expanded at its fastest in 13 months in June, a private survey showed, as the lifting of COVID lockdowns sent factories racing to meet solid demand.
The roll-backs of China's lockdowns could ease supply chain snags, and allow automakers and other manufacturers to resume operations after suffering severe disruptions.
