The benchmark stock indices opened the day on a negative note, with volatility shooting up this morning.
Join us as we follow the top business news through the day.
Sensex tanks 470 points; Nifty drops below 14,300
A bad day for stocks amid the larger bull run.
PTI reports: «Equity benchmark Sensex plunged 470 points on Monday, tracking losses in index majors Infosys, HDFC and ICICI Bank amid a weak trend in global markets.
After a choppy session, the 30-share BSE index ended 470.40 points or 0.96 per cent lower at 48,564.27.
Similarly, the broader NSE Nifty tumbled 152.40 points or 1.06 per cent to 14,281.30.
ONGC was the top loser in the Sensex pack, shedding around 5 per cent, followed by Sun Pharma, PowerGrid, Bajaj Finance, IndusInd Bank, Dr Reddy’s and Maruti.
On the other hand, Reliance Industries, Titan, HDFC Bank and ITC were the gainers.
Domestic equities witnessed pullback for the second consecutive day as weak global cues continued to weigh on investors’ sentiments, said Binod Modi, Head-Strategy at Reliance Securities.
«Barring FMCG, most of the key sectoral indices witnessed sharp correction and volatility index soared over 5 per cent today before recovering from top. A sharp rebound in RIL along with buying interest in HDFC Bank after strong 3Q numbers offered support to benchmark Nifty index,» he said.
Elsewhere in Asia, bourses in Shanghai and Hong Kong ended in the positive zone, while Seoul and Tokyo were in the red.
Stock exchanges in Europe were also trading on a negative note in early deals.
Meanwhile, the global oil benchmark Brent crude was trading 0.22 per cent lower at USD 54.98 per barrel.»
Trump’s China tech war backfires on automakers as chips run short
Automakers around the world are shutting assembly lines because of a global shortage of semiconductors that in some cases has been exacerbated by the Trump administration’s actions against key Chinese chip factories, industry officials said.
The shortage, which caught much of the industry off-guard and could continue for many months, is now causing Ford Motor Co, Subaru Corp and Toyota Motor Corp to curtail production in the United States.
Automakers affected in other markets include Volkswagen, Nissan Motor Co Ltd and Fiat Chrysler Automobiles.
The problems stem from a confluence of factors as auto manufacturers compete against the sprawling consumer electronics industry for chip supplies. Consumers have stocked up on laptops, gaming consoles and other electronic products during the pandemic, creating tight chip supplies throughout 2020.
Japanese firm Daicel to set up manufacturing plant in Chennai
Japanese firm Daicel Corporation will be setting up an airbag inflator manufacturing plant at CapitaLand’s OneHub Chennai, an industrial township located on Old Mahabalipuram Road, entailing investments to the tune of ₹230 crore in the first phase. Daicel is scheduled to start operations by December 2023.
“Until now, we have been supplying products to the Indian market from our production site in Thailand and other countries,” said Takase Yoshifumi, Managing Director, India Operations, Daicel Corporation. He added, “However, due to the growth potential of the Indian automobile market, and the need to strengthen automobile manufacturer and airbag module manufacturer supply chains in India, we have decided to establish a local production site at OneHub Chennai.”
He further said, “We will further strengthen our presence in the Indian market through stable production and supply of products, contributing to the development of the Indian economy through both inflator production and parts’ procurement in the country.”
Indian shares fall as shadow lenders slide on fears of tighter rules
The RBI’s new proposal has got investors worried.
Reuters reports: «Indian shares fell on Monday as non-banking financial companies slipped on reports that the country’s central bank could propose tighter rules for the sector, while HDFC Bank rose to a record high after strong quarterly results.
The blue-chip NSE Nifty 50 index fell 1% to 14,286 and the benchmark S&P BSE Sensex was down 0.8% at 48,635.84 by 0506 GMT.
«Markets have run up from 13,200 levels continuously. A little of consolidation is perfectly fine. Unless we see a substantial correction in global markets all these dips will be bought in,» said Samrat Dasgupta, chief executive officer at Esquire Capital Investment Advisors in Mumbai.
The Reserve Bank of India is expected to set out proposals in a discussion paper this week, recommending that bigger shadow banks hold a share of deposits in cash, gold or government securities, Reuters reported.
«If there are regulations in terms of statutory appropriations like cash reserve ratio and statutory liquidity ratio, then HDFC Ltd along with other NBFCs will get affected,» Macquarie analyst Suresh Ganapathy said in a note to clients on Monday.
«Any such strict regulations if implemented at a time when economic growth is very weak could severely constrain ability of NBFCs to lend and further jeopardise growth.»
Shares of HDFC Ltd fell 2%, while Bajaj Finance and Bajaj Finserv dropped over 3%, dragging down the Nifty 50 index.
Dewan Housing Finance Corp, however, rose 5% after the company’s creditors voted for a 372.5 billion rupees ($5.09 billion) takeover bid by the Piramal Group for the troubled «shadow» lender on Friday.
Meanwhile, HDFC Bank shares rose as much as 2.1% to hit a record high, after India’s top private sector lender reported 18% jump in December quarter profit on Saturday.»
Rupee falls 15 paise to 73.22 against U.S. dollar in early trade
The rupee depreciated by 15 paise to 73.22 against the U.S. dollar in opening trade on Monday tracking muted opening in domestic equities and strengthening American currency.
Traders said the rupee opened on a weak note against the greenback amid the dollar index reaching a near one-month high on risk aversion.
At the interbank forex market, the domestic unit opened at 73.21 against the U.S. dollar, then fell further to 73.22, registering a fall of 15 paise over its previous close.
On Friday, the rupee had settled at 73.07 against the American currency.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.09% to 90.85.
Steel companies engage with vaccine makers for bulk supply of doses for employees
Back to work.
PTI reports: «Leading steel-producing companies in the country are drawing up plans to vaccinate their employees across offices and plant sites with the start of the nationwide COVID-19 vaccination drive.
Domestic steel makers like — Tata Steel, ArcelorMittal Nippon Steel India (AMNS India) and Rashtriya Ispat Nigam Ltd (RINL) said they will continue to support the government in the nationwide drive and will wait till vaccines are available for corporates.
Meanwhile, players like JSW Steel and Jindal Steel and Power Limited (JSPL) are already in talks with Indian vaccine makers to place orders according to their requirements.
JSPL Chief Human Resource Officer Pankaj Lochan said «we are reaching out to vaccine manufacturers for bulk supply of doses and will try to get these doses after completion of all frontline COVID warriors’ vaccination.» The company has already categorised employees in order of vulnerability, so the ones above the age of 50 years and those who were infected from COVID-19 can be vaccinated first.
JSPL will seek the guidance of the government and will try to get all its employees vaccinated, he said adding the company has been conducting RT-PCR test, a test which detects COVID-19 virus, of all employees twice a month since September 2020.
Meanwhile, JSW Group which employs 55,000 people directly and indirectly, has plans to vaccinate its staff working at its corporate offices, plants and townships in next financial year.
The group is in talks to buy 2 lakh doses initially from one of the Indian vaccine makers and inject double shots once authorities allow private corporate vaccination programme.
The first COVID-19 vaccine shots in India were given on Saturday to nearly two lakh frontline healthcare and sanitary workers as Prime Minister Narendra Modi rolled out the world’s largest inoculation drive against the pandemic that has caused 1,52,093 deaths and upended millions of lives in the country.
Oxford COVID-19 vaccine Covishield, manufactured by the Serum Institute of India, and Covaxin of Bharat Biotech are the two vaccines being given to frontline workers including doctors, nurses, paramedical staff, ambulance drivers and other medical staff besides sanitation workers, police etc.
State-owned RINL and Steel Authority of India Limited (SAIL) have sent details of its employees to the administration and who will be vaccinated based on priority.
Both SAIL and RINL also run hospitals at their plant sites.
A Tata Steel Spokesperson said the company has been working very closely with the government and respective state governments of Jharkhand and Odisha from the start of the pandemic and serving the community with medical facilities at various locations of its operations.
Tata Main Hospital (TMH) at Jamshedpur, in Jharkhand has been the largest COVID care facility in the state with over 1,000 beds dedicated for the purpose. As on date, TMH is the designated hospital for conducting COVID vaccine trials.
In line with the priority decided by the government, the vaccination is being started with 3,000 health workers at TMH from January 16 onwards.
«We will continue to work with the government and as and when further vaccines are made available, we would vaccinate our employees as per the guidelines. As always, Tata Steel stands committed to the safety and security of its employees across locations of its operations,» the spokesperson said.
AMNS India CEO Dilip Oommen said, «AMNS India has always given the highest priority to the health and safety of its employees. Whenever the vaccines are available to the corporates, we shall certainly take them on priority and provide it free of cost to all the employees.»»
Trump admin slams China’s Huawei, halting shipments from Intel, others: sources
The Trump administration notified Huawei suppliers, including chipmaker Intel, that it is revoking certain licenses to sell to the Chinese company and intends to reject dozens of other applications to supply the telecommunications firm, people familiar with the matter told Reuters.
The action – likely the last against Huawei Technologies under Republican President Donald Trump – is the latest in a long-running effort to weaken the world’s largest telecommunications equipment maker, which Washington sees as a national security threat.
The notices came amid a flurry of U.S. efforts against China in the final days of Trump’s administration. Democrat Joe Biden will take the oath of office as president on Wednesday.
Huawei and Intel Corp declined to comment. Commerce said it could not comment on specific licensing decisions, but said the department continues to work with other agencies to «consistently» apply licensing policies in a way that «protects U.S. national security and foreign policy interests.»
RBI likely to propose stricter rules for shadow banks: sources
India’s central bank is likely to propose tightening rules on “shadow banks” in a bid to strengthen solvency and sustainability of a sector that has been showing signs of stress in recent years, two sources said.
The Reserve Bank of India has been trying to tighten regulatory norms on the sector since Infrastructure Leasing &Financial Services, the largest non-bank financial company, went bankrupt in 2018, and Dewan Housing Finance Corp. and Altico Capital defaulted on payments in 2019.
The RBI is expected to set out proposals in a discussion paper next week, recommending that bigger shadow banks maintain a statutory liquidity ratio, the sources said.
The officials asked not to be named as the discussions on the proposals are not public.
India’s banks must maintain at least 18% worth of deposits that they must hold in cash, gold or government securities.
Planning for the preventable
If immunisation is insurance against disease, what about insurance for immunisation? I just checked my policy and immunisation procedures such as vaccination and inoculation are expressly excluded. Some policies exclude them except after a bite, as in the case of rabies.
To be fair, it is a hospitalisation policy and does not cover out-patient procedures but listed day-care procedures. Even those have initial waiting periods before coverage kicks in.
Many general insurance companies offer vaccination cover only as part of maternity benefits under the hospitalisation policy. Vaccination expenses for the new-born, up to a limit, typically ₹10,000, is covered under the policy.
So, what does one do? If your company offers vaccinations as an add-on cover, it makes sense to opt for it. There could be a waiting time for you to become eligible. If you are buying health insurance anew, you can try to buy a policy that offers this as part of the basic cover and there are options available and here, you can claim immediately when the policy commences for some types of vaccines.
How Jim Simons proved finance textbooks wrong
China economy grows 2.3% in 2020 as rebound from coronavirus gains
China’s economy grew 2.3% in 2020 as a recovery from the coronavirus pandemic accelerated while the United States, Europe and Japan struggled with disease flare-ups.
Growth in the three months ending in December rose to 6.5% over a year earlier, up from the previous quarter’s 4.9%, according to official data released Monday.
Activity contracted by 6.8% in the first quarter in 2020 as factories and shops shut down to fight the virus. The following quarter, China became the first major country to grow again with a 3.2% expansion after the Communist Party declared victory over the virus in March and reopened the economy.
That was China’s weakest growth in decades but ahead of the United States and other major economies. They have yet to report 2020 growth but all are on track to show full-year activity contracting before vaccines are rolled out and commerce returns to normal.
Sensex drops over 200 points in early trade; Nifty slips below 14,400
A down day for stocks this Monday.
PTI reports: «Equity benchmark Sensex dropped over 200 points in early trade on Monday tracking losses in index majors Infosys, HDFC and TCS amid a mixed trend in global markets.
In a highly volatile opening session, the 30-share BSE index was trading 203.52 points or 0.42 per cent lower at 48,831.15.
Similarly, the broader NSE Nifty fell 70.60 points or 0.49 per cent to 14,363.10.
IndusInd Bank was the top loser in the Sensex pack, shedding around 3 per cent, followed by PowerGrid, Maruti, Bajaj Finance, Bajaj Finserv and ONGC.
On the other hand, HDFC Bank, HCL Tech, SBI, Tech Mahindra and ICICI Bank were among the gainers.
In the previous session, Sensex slumped 549.49 points or 1.11 per cent to finish at 49,034.67. The broader NSE Nifty tumbled 161.90 points or 1.11 per cent to 14,433.70.
Foreign portfolio investors (FPIs) were net buyers in the capital market as they purchased shares worth Rs 971.06 crore on Friday, as per exchange data.
According to Binod Modi Head-Strategy at Reliance Securities, domestic equities look to be soft at the moment.
«While underlying strength of markets remains intact considering the rebound in key economic data, sustained growth in corporate earnings in 3QFY21 with upbeat management commentaries and commencement of the vaccination process,» he said.
Additionally, «favourable monetary policies of global central bankers, weak dollar and large fiscal stimulus in the US are expected to ensure sustained FPI flow in domestic equities,» he noted.
US markets witnessed high volatility last week especially after the announcement of USD 1.9 trillion stimulus program by President-elect Joe Biden.
«Sell on news tendency led US indices to register weekly loss of 0.9-1.5 per cent. Further, indications by Biden about reversal of lower tax rates sooner also weighed on investor sentiments,» Modi added.
Elsewhere in Asia, bourses in Shanghai and Hong Kong were trading in the positive zone, while Seoul and Tokyo were in the red.
Meanwhile, the global oil benchmark Brent crude was trading 0.93 per cent lower at USD 54.59 per barrel.»
Winner’s Curse — when luck overtakes skill
When we have success in our lives, we tend to attribute that success to skill or hard work. When we fail, we attribute it to bad luck. Sounds familiar?
I know I do this all the time. It is easier than admitting that there was some luck involved in our wins and a lack of skill in our losses, says Michael Mauboussin.
A key differentiator for long-term success in investing is understanding outcomes based on the role of skill versus luck. Investing is more of science combined with art, where the end outcome is a function of luck and skill. In the short term, though, luck plays a crucial role due to market timing.
During the eight months ended November, as an economy, we added, roughly, a record 76 lakh demat accounts. And all those investors experienced tremendous tailwinds in terms of market performance in the last nine months, during which the Nifty’s return stood at about 62%. More than 148 stocks in the BSE 500 delivered more than 100% returns during the period.