The benchmark stock indices have opened the day with modest gains after last week’s choppy trading sessions.The chief economic advisor to the government expects retail inflation to drop a the easing of lockdowns frees the supply chain.Join us as we follow the top business news through the day.12:00 PMMFIs must build capital buffers, says RBI articleAs COVID-19 is likely to pose financial risks for microfinance institutions (MFIs), there is a need to build capital buffers and manage cash positions for microlenders to protect their balance sheets from any disruptions, according to an article published in RBI’s monthly bulletin.The article, prepared by Snimardeep Singh of Department of Supervision, Reserve Bank of India, said though COVID-19 presents new challenges and significant financial risks for the microfinance sector, it also presents an opportunity to build long-term resilience.“Going forward, building capital buffers and managing liquidity would be crucial for MFIs in fortifying their balance sheets against COVID-19 led disruptions,” it said.The article termed COVID-19 as the biggest tail risk event in a long time.
11:30 AMFossil fuel demand to take historic knock amid COVID-19 scarsAn unprecedented change in fossil fuel demand owing to the global lockdown.Reuters reports: “Fossil fuel consumption is set to shrink for the first time in modern history as climate policies boost renewable energy while the coronavirus epidemic leaves a lasting effect on global energy demand, BP said in a forecast.BP’s 2020 benchmark Energy Outlook underpins Chief Executive Bernard Looney’s new strategy to “reinvent” the 111-year old oil and gas company by shifting renewables and power.London-based BP expects global economic activity to only partially recover from the epidemic over the next few years as travel restrictions ease. But some “scarring effects” such as work from home will lead to slower growth in energy consumption.BP this year extended its outlook into 2050 to align it with the company’s strategy to slash the carbon emissions from its operations to net zero by the middle of the century.It includes three scenarios that assume different levels of government policies aimed at meeting the 2015 Paris climate agreement to limit global warming to “well below” 2 degrees Celsius from pre-industrial levels.Under its central scenario, BP forecasts COVID-19 will knock around 3 million barrels per day (bpd) off by 2025 and 2 million bpd by 2050.In its two aggressive scenarios, COVID-19 accelerates the slow down in oil consumption, leading to it peaking last year. In the third scenario, oil demand peaks at around 2030.In the longer term, demand for coal, oil and natural gas is set to slow dramatically.While the share of fuels has shrunk in the past as a percentage of the total energy pie, their consumption has never contracted in absolute terms, BP chief economist Spencer Dale told reporters.“(The energy transition) would be an unprecedented event,” Dale said. “Never in modern history has the demand for any traded fuel declined in absolute terms.”At the same time, “the share of renewable energy grows more quickly than any fuel ever seen in history.”Even with energy demand set to expand on the back of growing population and emerging economies, the sources of energy will shift dramatically to renewable sources such as wind and solar, Dale said.The share of fossil fuels is set to decline from 85% of total primary energy demand in 2018 to between 20% and 65% by 2050 in the three scenarios.At the same time, the share of renewables is set to grow from 5% in 2018 to up to 60% by 2050.In its forecast, BP said the growth in global economic activity slows “considerably” over the next 30 years from its past 20-year average, due in part to lasting effects of the epidemic as well as the worsening impact of climate change on economic activity, particularly in Africa and Latin America.BP starts on Monday a three-day investor event where it will detail its energy transition strategy.”11:00 AMCould Sweden be proved right?
10:40 AMRupee rises 21 paise to 73.32 against US dollar in early tradeThe bullish sentiment in stocks has helped the rupee gain against the dollar.PTI reports: “The rupee strengthened by 21 paise to 73.32 against the US dollar in opening trade on Monday supported by weak American currency and positive domestic equities.At the interbank forex market, the domestic unit opened at 73.40 against the US dollar, gained further ground to touch 73.32 against the US dollar, registering a rise of 21 paise over its previous close.On Friday, the rupee had settled at 73.53 against the US dollar.The dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.15 per cent to 93.19.Meanwhile, a COVID-19 vaccine is likely to be available by early next year and the government is considering its emergency authorisation for high-risk people, Union Minister Harsh Vardhan Sunday said, asserting he will take the first shot to address any trust deficit over its safety.According to a Health Ministry statement, he said while no date has been fixed for the launch of a vaccine, it may be ready by the first quarter of 2021, and made available first to those who need it the most, irrespective of their paying capacity.On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 299.17 points higher at 39,153.72, and the broader NSE Nifty advanced 81.75 points to 11,546.20.Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 1,175.81 crore on a net basis on Friday, according to exchange data.Brent crude futures, the global oil benchmark, rose 0.38 per cent to USD 39.98 per barrel.”10:20 AMThe Hindu Explains | Has economic slowdown hit EPFO earnings? The story so far: In March, the Central Board of Trustees (CBT) of the Employees’ Provident Fund Organisation (EPFO) had recommended an 8.5% interest payout to members for FY20. At a meeting earlier this month, the CBT reiterated its recommendation, after a review, to the Centre. The payout would comprise 8.15% interest based on income from debt instruments and the balance 0.35% would be credited from the sale of a part of its investments in exchange traded funds (capital gains), subject to their redemption by December 31. The CBT also recommended that such capital gains be accounted for as income on an exceptional basis for 2019-20.
10:00 AMSensex rallies over 300 points in early trade; Nifty tops 11,550A good start to the week for stocks after last week’s choppy trading.PTI reports: “Domestic equity benchmark Sensex jumped over 300 points in early trade on Monday tracking gains in index majors Reliance Industries, HDFC twins and HCL Tech amid positive global cues and fresh foreign fund inflow.The 30-share BSE index was trading 340.10 points or 0.88 per cent higher at 39,194.65; while the NSE Nifty rose 89.15 points or 0.78 per cent to 11,553.60.HCL Tech was the top gainer in the Sensex pack, surging around 5 per cent, followed by Tech Mahindra, HDFC duo, Reliance Industries, TCS, SBI and IndusInd Bank.On the other hand, HUL, Asian Paints, Maruti, Bajaj Auto and Nestle India were among the laggards.In the previous session, Sensex ended 14.23 points or 0.04 per cent higher at 38,854.55, while the broader Nifty rose 15.20 points or 0.13 per cent to close at 11,464.45.Exchange data showed that foreign institutional investors bought equities worth Rs 1,175.81 crore on a net basis on Friday.Domestic equities opened on a positive note tracking positive cues from global markets and persistent foreign fund inflow, traders said.Bourses in Shanghai, Hong Kong, Seoul and Tokyo were trading with gains in mid-day deals after Biopharmaceutical giant AstraZeneca and the University of Oxford on Saturday resumed trials for their coronavirus vaccine in the UK after the Medicines Health Regulatory Authority’s approval.The human trials resumed days after a pause was announced in the trials after an adverse reaction in one of the participants.Meanwhile, global oil benchmark Brent crude was trading 0.35 per cent lower at USD 39.97 per barrel.”
-U.S. futures rise after reports on signs of progress toward a vaccine-Japan, South Korea, Australia, Hong Kong, China stocks ⬆️-Oil ⬆️ to $37.54-Gold ⬆️-SoftBank shares surge after reaching a deal to sell chipmaker Arm to Nvidiahttps://t.co/klG2Iigf7E pic.twitter.com/j98gFGlEhf— Bloomberg Asia (@BloombergAsia) September 14, 2020
9:30 AMRetail inflation to come down with easing of lockdowns: CEA Attributing the rise in inflation to supply-side frictions, Chief Economic Adviser K V Subramanian has exuded confidence that retail inflation will come down in the days ahead with the easing of lockdowns.According to the government data, retail inflation rose to 6.93% in July, mainly driven by rising prices of food items like vegetables, pulses, meat and fish.However, wholesale price-based inflation declined 0.58% in July, even as food items turned costlier.“If you look at inflation…it’s primarily because of those supply-side frictions, but as local lockdowns are actually being reduced, these frictions should basically go down,” he said.
