Business Live: Gold set for worst month in 4 years on vaccine hopes; Q2 manufacturing rebound puzzles economists

The stock bourses are closed today on account of Gurunanak Jayanti.

Join us as we follow the top business news through the day.

12:00 PM

Paytm Money to facilitate investments in IPO, aims for 8-10{4deaea03d78349d2462fb96996a246ea5d0077172a16867ed072c7a64f0a268c} applications mkt share

An interesting new foray by the payments company.

PTI reports: “Fintech major Paytm on Monday said its wholly-owned subsidiary Paytm Money will now facilitate investments in Initial Public Offers (IPOs).

The move is aimed at benefiting retail investors with wealth creation opportunities, as they will be able to seamlessly apply and join the growth story of rapidly expanding companies, a statement said.

The company has made the process of IPO application completely digital and simple for retail investors to apply for public offers, and will continue to add new tech-savvy features for enhanced user experience, it added.

The company is aiming to capture “8 to 10 per cent of applications market share in the first year of launch”, the statement said.

Paytm Money has enabled investors to instantly apply for all the latest IPOs via UPI ID, linked to their bank accounts to quickly complete the application process. The platform offers an interface to make changes, cancel or reapply the bidding application within the IPO window.

“The Indian start-up ecosystem has a growing appetite for entering the capital market, now more companies want to raise capital from a broader set of investors with a public listing. Likewise, investors are also increasingly willing to diversify their portfolio,” Paytm Money CEO Varun Sridhar said.

This presents a big opportunity and the company intends to make the process more accessible to citizens, he added.

“In the near future, we plan to launch IPO funding, derivatives trading, margin finance and a host of other value-adding features to make investing seamless and convenient. This is aligned with our mission to drive financial inclusion across the country,” he said.

According to an analysis of data available with the stock exchanges, 12 initial public offerings (IPOs) in 2020 so far raised around Rs 25,000 crore, significantly higher than Rs 12,362 crore mopped up through 16 initial share-sales in the entire 2019. This figure could rise further as Burger King’s Rs 810-crore initial share-sale is scheduled to open on December 2.”

11:30 AM

Gold falls, set for worst month in 4 years on vaccine hopes

The bull run in gold comes to an end.

Reuters reports: “Gold slipped on Monday as upbeat equities fuelled by optimism over a coronavirus vaccine-led economic rebound offset a weaker dollar, putting the bullion on course for its worst month in four years.

Spot gold fell 0.3{4deaea03d78349d2462fb96996a246ea5d0077172a16867ed072c7a64f0a268c} to $1,782.72 per ounce by 0049 GMT. U.S. gold futures was down 0.1{4deaea03d78349d2462fb96996a246ea5d0077172a16867ed072c7a64f0a268c} at $1,778.10. Gold is down 5.1{4deaea03d78349d2462fb96996a246ea5d0077172a16867ed072c7a64f0a268c} in November, as growing optimism over a COVID-19 vaccine and greater U.S. political stability under Joe Biden’s incoming administration sparked a sell-off in the metal and favoured traditionally riskier assets.

Vaccine optimism and bets for more monetary easing ahead of testimony in Congress from U.S. Federal Reserve Chairman Jerome Powell this week, helped to push the dollar to a more than two-year low and boosted world shares.

U.S. health authorities will hold an emergency meeting to recommend a coronavirus vaccine for healthcare professionals and people in long-term care facilities, while Britain is set to approve BioNTech SE and Pfizer Inc’s COVID-19 vaccine.

Although U.S. President Donald Trump pledged to continue his legal fight to overturn the Nov. 3 election results, his comments in a Fox News telephone interview suggested he was growing resigned to his Democratic opponent moving into the White House on Jan. 20.

Face-to-face negotiations between the UK and the European Union over a trade deal restarted on Saturday, in a last-ditch attempt to find agreement with just five weeks to go before their current relationship ends. * Gold is used as a hedge against inflation, political and economic uncertainties.

Physical gold demand in India remained healthy as a drop in prices to a near five-month low encouraged retail consumers and jewellers to raise purchases amid wedding season. * Silver fell 0.9{4deaea03d78349d2462fb96996a246ea5d0077172a16867ed072c7a64f0a268c} to $22.50 per ounce, while platinum rose 0.1{4deaea03d78349d2462fb96996a246ea5d0077172a16867ed072c7a64f0a268c} to $964.71 and palladium was up 0.1{4deaea03d78349d2462fb96996a246ea5d0077172a16867ed072c7a64f0a268c} at $2,426.31.”

11:00 AM

Deadliest week of the pandemic

10:40 AM

U.S. second biggest FDI source for India during April-September 2020

The U.S. has emerged as the second biggest source of foreign direct investment (FDI) into India, replacing Mauritius, during the first half of the current financial year, according to data of the Commerce and Industry Ministry.

During April-September 2020, India attracted FDI worth $7.12 billion from the U.S. and $2 billion from Mauritius, which slipped to fourth position, the DPIIT (Department for Promotion of Industry and Internal Trade) data showed.

Mauritius was the second biggest FDI source during the same period previous year. The U.S. was the fourth biggest investor during that period.

Singapore with $8.30 billion foreign inflows continued to be the top source of FDI for India in April-September 2020-21. The country has received $2.1 billion inflows from Cayman Isands.


10:20 AM

Q2 manufacturing rebound puzzles economists

The turnaround in India’s manufacturing sector, which rebounded from a 39.3{4deaea03d78349d2462fb96996a246ea5d0077172a16867ed072c7a64f0a268c} contraction in GVA (gross value added) in the April-June quarter to clock 0.6{4deaea03d78349d2462fb96996a246ea5d0077172a16867ed072c7a64f0a268c} growth in the second quarter, has left economists scrambling to reconcile conflicting data from the government as they try to come to terms with the latest GDP estimates that suggest the economy fared better-than-expected.

India’s GDP contracted by 7.5{4deaea03d78349d2462fb96996a246ea5d0077172a16867ed072c7a64f0a268c} over the July-September period, as per official data released on Friday, beating most estimates, including a ‘nowcast’ in the RBI’s November monthly bulletin that projected an 8.6{4deaea03d78349d2462fb96996a246ea5d0077172a16867ed072c7a64f0a268c} decline in the last quarter .

While services continued to suffer from the COVID-19 pandemic’s impact, the industrial sector’s contraction narrowed to just 2.1{4deaea03d78349d2462fb96996a246ea5d0077172a16867ed072c7a64f0a268c} in the second quarter, after shrinking by a steep 38{4deaea03d78349d2462fb96996a246ea5d0077172a16867ed072c7a64f0a268c} in the preceding three-month period. Most of these gains were attributable to the improved performance of the manufacturing sector.

“Though the whole press release [on GDP estimates] is full of surprising numbers, the most astonishing number is the positive growth in manufacturing,” SBI group’s chief economic advisor Soumya Kanti Ghosh observed in a research report titled ‘Q2 GDP shows surprising resilience: Is it good enough to last?’. “Despite being the worst affected sector in Q1 due to the lockdown, it is quite puzzling how manufacturing turned itself around,” he wrote.

10:00 AM

Battle of the billionaires: Bezos, Ambani gun for India retail supremacy

An analysis of the battle between the business giants.

Reuters reports: “Jeff Bezos and Mukesh Ambani, two of the world’s richest men, face a turning point in a battle for preeminence in India’s booming, nearly trillion-dollar retail market.

The outcome of a legal dispute which has embroiled the billionaires’ and Reliance Industries Ltd empires – where a court ruling is imminent – may shape India’s retail landscape for years to come.

The winner in the fight for Future Retail Ltd, Amazon’s estranged local partner, will get pole position in the race to meet the daily needs of more than a billion people.

Accusations of insider trading and contractual breaches, as well as nationalistic cries to keep the U.S. giant at bay, mark the high-stakes fight, which has snowballed from what began as a dispute between Amazon and Future.

If Amazon succeeds, it may slow Reliance’s plans to expand its e-commerce and brick-and-mortar operations. If Amazon loses, its hopes of expanding its interests in India’s second-largest retailer and cashing in on its key grocery supply chain will be dashed, industry insiders say.

Amazon is trying to stop Reliance’s $3.4 billion purchase of Future Group’s retail assets. The U.S. company, which won an injunction from an arbitrator to block the Reliance-Future deal, accuses its partner of breaching some pre-existing agreements, misleading the public and insider trading. Future denies the allegations.

Amazon, Reliance and Future did not respond to requests for comment.

Bezos’s behemoth is a formidable foe, but Ambani has a history as a disrupter. He has shaken foreign telecom firms by offering dirt-cheap data. Industry executives see his e-commerce plans as a threat for Amazon and Walmart Inc’s Flipkart.

“If Reliance moves faster and faster, obviously it’ll become very difficult for anyone else to gain,” said Himanshu Bajaj, head of consulting firm Kearney’s India retail practice.

Reliance, seeking to expand its JioMart e-commerce business, this month completed a $6.4 billion fund-raising by selling a stake in its retail arm to such investors as Silver Lake Partners and KKR & Co.

India’s retail market will grow 46{4deaea03d78349d2462fb96996a246ea5d0077172a16867ed072c7a64f0a268c} over the next four years to an annual $1.3 trillion, reckons Forrester Research. The key battle is over groceries, expected to be worth around $740 billion a year by 2024.

Founded by Kishore Biyani, dubbed India’s retail king, Future transformed the country’s retailing in recent decades, before COVID-19 hit the business so hard this year that Biyani was forced to find a new buyer.

Around 1,300 of Future’s more than 1,700 retail outlets in 400 cities sell groceries. Its budget supermarkets cater to middle-class shoppers, while its upmarket stores offer products like imported cheese and fresh guacamole, relatively rare in India’s retail landscape.

That makes Future a prized asset for both Reliance and Amazon.

Reliance and Future dominate the market, with the next competitor, Avenue Supermarts Ltd’s DMart, having just 220 outlets in around 70 cities.

While Reliance boasts around 11,000 retail stores, just 800 of those offer food and groceries, UBS estimates. Future’s retail assets would nearly triple Reliance’s footprint in the grocery segment and boost its e-commerce plans, said Forrester analyst Satish Meena.

Amazon sees Future as a long-term play to optimise its supply chain for grocery delivery, an area where it has lagged, Meena said.

“Grocery is the category in which you fight,” he said, while losing Future to Reliance would “slow Amazon”.

Amazon, Future and Reliance this month hired some of India’s top lawyers, who argued at length before a New Delhi judge. She is expected to decide soon whether to restrain Amazon from approaching regulators to block the Future-Reliance deal.

Amid heated legal arguments and patriotic appeals, Future’s lawyer attacked Amazon as “Big Brother” in America, arguing Future faces bankruptcy if the Reliance deal fails.

“Please don’t allow this American giant to kill Future,” the lawyer urged the judge.”

9:30 AM

Watch | What is a moratorium?

On November 17, the Centre, acting on the recommendation of the Reserve Bank of India, imposed a moratorium on Lakshmi Vilas Bank for a period of 30 days.

The 94-year-old bank has been struggling with losses for three years.

What is a moratorium?

The RBI has the power to ask the government to have a moratorium placed on a bank’s operations for a specified period of time. Under such a moratorium, depositors will not be able to withdraw funds at will.

Usually, there is a ceiling that limits the amount of money that can be withdrawn by the bank’s customers.

In the case of Lakshmi Vilas Bank, depositors cannot withdraw more than ₹25,000 during the one-month moratorium period.