The benchmark stock indices have lost opening gains to trade in the red.Analysts have come out with GDP estimates ahead of the official GDP numbers that will be released next week.Join us as we follow the top business news through the day.10:40 AMICICI to use satellites for farm creditICICI Bank has announced the introduction of usage of satellite data-imagery from earth observation satellites—to assess credit worthiness of its customers belonging to the farm sector.The bank, the first in India and among a few globally to do so, will use the data to measure an array of parameters related to the land, irrigation and crop patterns and in combination with demographic and financial parameters to make faster lending decisions for farmers, it said.“Use of technology helps farmers with existing credit to enhance their eligibility, while new-to-credit farmers can now get better access to credit,” it added. Since land verification is done in a contactless manner, credit assessments take only a few days as against the industry practice of up to 15 days.
10:20 AMGDP to see contraction of 25% in Q1 numbers: AnalystsAnalysts expect an economic contraction that is much worse than what was earlier predicted.PTI reports: “The country’s gross domestic product (GDP) may have contracted by 25 per cent in the June quarter, which witnessed the strictest coronavirus-induced lockdowns, analysts said on Tuesday.Manufacturing, construction, and trade, hotels, transport and communication will be the worst-affected segments in the official set of numbers to be announced by the government on August 31, they said.A nationwide lockdown was imposed in the country on March 25, as the COVID-19 pandemic came ashore. While the impact to the economy has been the hardest, the number of those infected have continued to grow and the country has crossed a grim milestone after another on COVID-19.Ratings agency ICRA said it is pegging the “contraction in Indian GDP and the gross value added (GVA) at basic prices in year-on-year (y-o-y) terms in Q1 FY21 at around 25 per cent each“.The drag is primarily on account of three key production sub-sectors accounting for 45 per cent of the economy — manufacturing; construction; and trade, hotels, transport, communication and services related to broadcasting, it said.“Our assessment draws from the available data for volumes and profitability for the industrial and services sectors, the expectation of distress in MSME and relatively informal sectors, as well as the favourable rabi harvest and government revenue spending,” its principal economist Aditi Nayar said.Foreign brokerage Barclays estimated the economy to have contracted by 25.5 per cent in the June 2020 quarter saying the virus containment measures have “dealt an unprecedented blow to the economy“.It said the rural economy, government spending and essentials will likely be the only sectors mitigating some of the decline.The brokerage, however, said while the worst will be over in the June quarter, growth is likely to remain weak going forward as well, and estimated the 2020-21 GDP to contract by 6 per cent.Manufacturing volumes are likely to contract 40.7 per cent year-on-year, the construction sector by gross value added growth 45 per cent, ICRA said.It added that GVA for trade, hotels, transport, communication and services related to broadcasting in that quarter is expected to contract by over 50 per cent on a GVA basis.The revenue expenditure of a small set of state governments for which data is available shows an expansion of 18.5 per cent in the first quarter of 2020-21, the rating agency said. It added that coupled with a 9.7 per cent growth in the Government of India’s non-interest revenue expenditure in Q1FY21, this would support the overall economic performance in the quarter.The agriculture sector will come at five per cent in the first quarter of 2020-21 as against the 3 per cent growth in the corresponding quarter of the previous financial year, Nayar said.”10:00 AMSensex rises over 100 points in early trade; Nifty tops 11,500 levelStocks have opened the day with some minor gains after showing weakness yesterday.PTI reports: “The BSE benchmark Sensex rose over 100 points in early trade on Wednesday led by gains in index-heavyweight banking stocks amid persistent foreign fund inflow.After touching a high of 38,980.60 in opening session, the BSE Sensex was trading 98.93 points or 0.25 per cent higher at 38,942.81; while the NSE Nifty was up 35.40 points or 0.31 per cent at 11,507.65.Bajaj Auto was the top gainer in the Sensex pack, surging around 4 per cent, followed by Bajaj Finserv, IndusInd Bank, M&M, PowerGrid, Bajaj Finance, Axis Bank, Kotak Bank and ICICI Bank.On the other hand, Bharti Airtel, Asian Paints, HCL Tech, HDFC and TCS were among the laggards.In the previous session, the Sensex closed 44.80 points or 0.12 per cent higher at 38,843.88, and Nifty inched up 5.80 points or 0.05 per cent to close at 11,472.25.Exchange data showed that foreign institutional investors bought equities worth Rs 1,481.20 crore on a net basis on Tuesday.Traders said extended rally in banking stocks lifted benchmark indices in early trade, despite tepid cues from Asian peers.Persistent foreign fund inflow too buoyed market sentiment, they said.In the international market, bourses in Shanghai, Hong Kong, Tokyo and Seoul were trading with losses in mid-day deals, while stock exchanges on Wall Street ended on a positive note in overnight session.Global oil benchmark Brent crude was trading 0.24 per cent higher at USD 46.40 per barrel.”9:30 AMGovernment may look at second stimulus once COVID-19 infections ebb: Expenditure SecretaryThe government may look at introducing a second set of fiscal stimulus measures once the COVID-19 infections abate and the psychological fears in people’s minds ebb, a top Finance Ministry official said on Tuesday.The government has also observed that 40% of the cash transfers directly into the beneficiaries’ accounts recently have been saved and not spent, leading to a feeling that there are limitations of the stimuli measures and hence, making timing the most important factor, Union Expenditure Secretary T. V. Somanathan said.It can be noted that the government’s first round of fiscal stimulus was announced in late March, and included measures like extra spend of nearly 2 percentage points of GDP. The RBI delivered two deep rate cuts before surprising all with a pause this month, leading some analysts to opine that the government will have to do the heavy lifting now.