Rupee recovers 28 paise against US dollar in early trade
Mumbai: The rupee Wednesday rebounded from its all-time low by rising 28 paise to 72.70 against the US dollar in early trade at the Interbank Foreign Exchange market on fresh selling of the US currency by exporters and banks. Besides, dollar-selling by exporters and banks, easing crude prices in the global market and weakness in the dollar against other currencies overseas, helped the domestic currency rebound, forex dealers said.
A higher opening in the equity market also supported the recovery in the rupee, they said. The rupee Tuesday slid further by 47 paise to settle at a record low of 72.98 after scaling an all-time low of 72.99 (intra-day) against the US currency due to surging crude oil prices and escalating trade war worries. Meanwhile, the BSE benchmark Sensex recovered by 142.26 points, or 0.38 per cent, to 37,432.93 in opening trade Wednesday.
Sensex recovers by 142 points in opening trade, Nifty above 11,300
Mumbai: The BSE Sensex rebounded over 100 points in opening trade Wednesday on value-buying in recently battered stocks amid strength in the rupee and positive global cues. The 30-share BSE index recovered by 142.26 points, or 0.38 per cent, to 37,432.93 in opening trade. The index had lost almost 800 points in the previous two sessions as rupee woes and trade war worries spooked investors. The NSE Nifty was up 50.55 points, or 0.44 per cent, at 11,329.45.
Sectoral indices, including metal, healthcare, oil and gas, FMCG, auto, capital goods, realty, and banking were trading in the positive terrain by rising up to 1.06 per cent. The rupee recovered from its record low by rising 28 paise to 72.70 against the dollar at the forex market. The domestic unit had closed at a record low of 72.98 Tuesday.
The top gainers were Coal India, Asian Paint, ONGC, Sun Pharma, Tata Steel, ITC, Tata Motors, L&T, Bharti Airtel, Bajaj Auto, Axis Bank, IndusInd Bank and Kotak Bank rising up to 2.03 per cent. While, PowerGrid, NTPC, SBI, Wipro, HDFC, ICICI Bank and HUL were among the losers, declining up to 0.96 per cent.
Domestic institutional investors (DIIs) made purchases worth a net of Rs 264.66 crore, while foreign portfolio investors (FPIs) continued their selling and offloaded shares worth a net of Rs 1,143.73 crore Tuesday, provisional data showed. Overseas, most Asian shares were trading higher, tracking higher closing in the US market overnight.
Japan’s Nikkei rose 1.52 per cent, Shanghai Composite Index was up by 0.97 per cent and Hong Kong’s Hang Seng gained 1.28 per cent. The US Dow Jones Industrial Average ended 0.71 per cent higher Tuesday.
Rupee nears 73-mark
Rising crude oil prices, global trade spat take toll on currency
Mumbai : The rupee on Tuesday slid further 47 paise to settle at a record low of 72.98 against the US greenback due to surging crude oil prices and escalating trade war worries.
Panic dollar demand from importers and speculative traders sent the home currency sinking to a historic low of 72.99 in late afternoon deals with very little chance of RBI intervention.
A sharp spike in international crude oil prices weighed on the trading front towards the tail-end session even as the US dollar fell to seven-week lows after Donald Trump announced fresh 10 per cent tariffs on Chinese imports.
US President Donald Trump on Monday night announced to impose additional 10 per cent duties on Chinese imports worth $200 billion.
Benchmark Brent crude futures were up $1.14 a barrel to $79.19 a barrel, after hitting a high of $79.37 in early Asian trade.
Since Monday, the rupee has plunged by 114 paise or more than 1.5 per cent as trade war concerns resurfaced and crude oil rebounded. The stubbornly high global crude oil prices are opening up a can of worms to heightened inflation risks and likely to disrupt government’s fiscal maths along with deteriorating global financial conditions.
Considering that India is a net importer of crude oil, the impact of this imported inflation is expected to be significant. The benchmark 10-year sovereign yield also spiked to 8.14 per cent.
At the inter-bank foreign exchange (forex) market, the rupee opened weak at 72.51 against Monday’s close of 72.55 on sustained dollar demand. However, overcoming the initial volatility, the local unit rebounded to hit a session high of 72.35 before taking a big reversal.
Foreign investors withdrew Rs 1,143.73 crore on a net basis from capital markets Tuesday, provisional exchange data showed.
‘Real’ depreciation only 6-7%: IMF
MUMBAI: The Indian rupee has ‘effectively’ depreciated only 6-7 per cent this year after adjusting it to inflation, almost half of the actual drop in the value of the currency this year, according to the International Monetary Fund (IMF). The IMF, however, warned that the rupee depreciation would jack up the prices of imported goods such as oil and petroleum products, potentially putting an upward pressure on inflation. IMF spokesperson Gerry Rice said the currencies of many of India’s trading partners, including those in the emerging markets, too have depreciated against the dollar. “As a result, so far this year the real effective depreciation of the Indian rupee compared to December 2017, by our estimates, is between six and seven per cent,” Rice said.
The real effective exchange rate (REER) is the weighted average of a country’s currency in relation to an index or basket of other major currencies, adjusted for the effects of inflation.
The Indian currency has since the beginning of the year lost almost 13 per cent in value vis a vis the US dollar.
Observing that India is a relatively closed economy, he said the contribution of the net exports to growth in April to June quarter was again stronger than expected and the real depreciation of the rupee can be expected to reinforce this trend.
Market rout continues
MUMBAI: The BSE benchmark Sensex extended losses for the second session on Tuesday by plummeting 295 points to close at an over one-month low of 37,291 owing to hectic selling in financial and auto stocks amid escalating US-China trade tariff tensions and worsening rupee woes.
The broader NSE Nifty too fell over 98 points to crack below the 11,300-mark. Besides, rising crude oil prices further dampened investors’ mood. The domestic currency was trading lower by 27 paise at 72.78 (intra-day) against the US dollar in late afternoon deals. The 30-share Sensex opened Tuesday on a somewhat better note at 37,660.19 and advanced to touch a high of 37,745.44 but later turned choppy and hit a low of 37,242.85 as selling pressure gathered momentum towards the fag-end, before settling 294.84 points, or 0.78 per cent, down at 37,290.67. This was the lowest closing since August 2 when it had settled at 37,165.16.
The 30-scrip gauge had lost 505.13 points Monday.
The 50-share NSE Nifty Tuesday plunged 98.65 points, or 0.87 per cent, to end at 11,278.90.
During the session, it moved between 11,411.45 and 11,268.95.
Domestic institutional investors (DIIs) sold shares worth Rs 180.36 crore, while foreign portfolio investors (FPIs) also offloaded shares to the tune of Rs 106.54 crore Monday, provisional data showed.
“In the near term, we continue to maintain a cautious stance on the markets as volatility and choppiness is likely to remain high led by uncertain global cues, crude oil price movement, depreciating rupee (vs dollar) and muted domestic sentiments. However any further correction at this juncture should be considered as a healthy buying opportunity for investors in quality companies with strong financials and bright outlook,” an analyst commented.
Sensex crashes 505 points on rupee woes, global worries
Mumbai: After rallying for two sessions, the BSE benchmark Sensex Monday tumbled over 505 points to slip below the 38,000-level as worries about global trade war and prevailing rupee crisis dampened investors mood despite the government announcing steps to stem a steep fall in the Indian currency. The broader Nifty too nosedived over 137 points to end below the 11,400-mark. Subdued Asian and European markets due to escalating trade war between the US and China mainly led to a caution on domestic bourses, brokers said.
The government Friday announced an array of steps, including removal of withholding tax on Masala bonds, relaxation for FPIs and curbs on non-essential imports to contain the widening CAD and check the rupee fall. The Indian currency once again breached the 72-mark to hit a low of 72.69 (intra-day) against the US dollar. The BSE 30-share barometer, after a lower start at 38,027.81, quickly cracked the 38,000-mark to hit a low of 37,548.93 on across-the-board selling in recent gainers and finally settled 505.13 points, or 1.33 per cent, down at 37,585.51. The gauge had gained 677.51 points in the previous two sessions.
The NSE Nifty hit a low of 11,366.90 and finally ended 137.45 points, or 1.19 per cent, down at 11,377.75. Financials, led by HDFC twins HDFC Ltd and HDFC Bank, emerged as the biggest draggers of the session, pulling down the key indices from their key levels. Meanwhile, on a net basis, foreign portfolio investors (FPIs) bought shares worth Rs 1,090.56 crore, while domestic institutional investors (DIIs) made purchases to the tune of Rs 115.14 crore on Friday, provisional data showed.
Vodafone-Idea merger complete, becomes operational
New Delhi: The merger of Vodafone India and Idea Cellular is complete after the National Company Law Tribunal (NCLT) approved the merger, creating India’s largest telecom operator with over 400 million subscribers, a joint statement by the two companies said on Friday.
The clearance from the tribunal was the last leg of official approvals after the Department of Telecommunications (DoT) cleared the merger last month.
“Idea Cellular (renamed as ‘Vodafone Idea Limited’) — an Aditya Birla Group and Vodafone Group partnership — becomes operational as India’s leading telecom service provider with a subscriber base of over 408 million,” the statement said on Friday.
The new Board of Directors constituted for Vodafone Idea comprises 12 Directors, including six “independent Directors”, with Kumar Mangalam Birla as the Chairman. The Board has appointed Balesh Sharma as the CEO, it said.
The new company will have a market share of 32.2 per cent, as per the statement.
“The merger is expected to generate Rs 140 billion annual synergy, including opex synergies of Rs 84 billion, equivalent to a net present value of approximately Rs 700 billion,” it said.
Vodafone Group owns a 45.2 per cent stake and Aditya Birla Group owns a 26 per cent stake, both on fully diluted basis.
Adani Power net loss widens to Rs 825 cr in Apr-Jun qtr
New Delh : (PTI) Adani Power today said its consolidated net loss widened by 82 per cent to Rs 825.15 crore in the quarter ended June 30, 2018.
The company's consolidated net loss stood at Rs 452.84 crore in the quarter ended June of the previous fiscal, a BSE filing said.
According to the statement, the company's total income in the quarter under review declined to Rs 3,959.40 crore from Rs 5,601.25 crore a year ago.
The company said that this reduction in income was due to lower PLFs and billed availability.
The Average Plant Load Factor (PLF) or capacity utilisation achieved during the first quarter of 2018-19 fiscal was 38 per cent, compared to 63 per cent achieved in Q1 of 2017-18 financial year. The drop was on account of lower domestic coal availability at Tirada and Kawai, as well as commercial shutdowns due to high imported coal prices, it added.
Gautam Adani, Chairman, Adani Group in the statement said, "The government's commendable efforts in providing power connectivity to each household under the SAUBHAGYA Scheme and 100 per cent village electrification will help the power sector by expanding the addressable market and growing base demand. Meeting this demand will require timely assurance of key enablers such as domestic fuel availability, power offtake by DISCOMs and distribution reforms through focused action."
"We are enthused by rapid progress in regulatory outcomes that will help us get compensated for increase in the cost of generation. With the constitution of the High Powered Committee by the Government of Gujarat. we are hopeful of finding a lasting and sustainable solution to the cost under-recovery issue of the Mundra power plant soon," he further said.
Vneet S. Jaain, CEO, Adani Power, said, "Sustained economic growth continues to drive electricity demand in India as well as significant changes in the Power sector. We are confident of improving PLFs owing to improved availability of domestic coal. With the constitution of the high powered committee. We are confident of determining a sustainable roadmap to profitability for the Mundra power plant.
Sensex turns choppy after hitting all-time high in opening trade
Mumbai: The benchmark Sensex turned volatile after hitting a new high of 36,928.06 in early session as investors turned cautious ahead of July futures and options (F&O) expiry amid mixed quarterly earnings.
The 30-share index rose by 201.97 points, or 0.27 per cent, to hit a new high of 36,928.06, bettering its previous intra-day record of 36,902.06 hit yesterday. However, the index soon turned choppy and was trading 16.05 points, or 0.04 per cent, higher at 36,841.15 at 0940 hrs. The gauge had rallied 473.87 points in the previous three sessions. The 50-share NSE Nifty too turned cautious and was trading 4.40 points, or 0.04 per cent, lower at 11,129.90.
Sentiment remained cautious ahead of July series F&O expiry scheduled tomorrow amid mixed quarterly earnings, brokers said. Prominent gainers were Vedanta, Hero MotoCorp, Tata Steel, Adani Ports, ONGC, Sn Pharma, SBI, Bajaj Auto, Tata Motors, HDFC, Wipro, L&T and PowerGrid, rising up to 1.92 per cent. Top losers include Bharti Airtel, Asian Paints, NTPC, Coal India, Maruti and TCS falling up to 2 per cent.
Meanwhile, on a net basis, foreign funds bought shares worth Rs 104.34 crore, while domestic institutional investors made purchases worth Rs 513.78 crore yesterday, provisional data showed. Elsewhere in Asia, Shanghai Composite Index rose 0.09 per cent, Hong Kong’s Hang Seng was up 0.85 per cent, while Japan’s Nikkei gained 0.54 per cent in early deals. The US Dow Jones Industrial Average ended 0.79 per cent yesterday.
Arohan Financial Services MD Manoj Nambiar: Beyond financial requirements, we try to cater to customers’ core needs
Kolkata-headquartered Arohan Financial Services is a rapidly growing player in the microfinance space. Manoj Nambiar, MD of the company, talks about the focus of the group and how the same is an enabler for Arohan to grow as rapidly as it has done in the past. He talks about all this in a chat with Pankaj Joshi.
What is the reason behind two entities in the NBFC space?
Our lending business is split between two entities, Arohan and Intellegrow. Arohan has been in existence since 2006 and was acquired by the Avishkar-Intellecap group in September 2012. Arohan is into the standard non-banking financial company-micro finance institution (NBFC-MFI) space. This is aimed at the bottom of the pyramid clientele and is highly regulated. It is defined in terms of products, pricing, the target segment, tenure and other things. The other business looks at the institutional lending, by which I mean the micro, small and medium enterprises (MSME) clients. This is not so much regulated.
When we acquired Arohan, it had a net worth of Rs 13 crore and a portfolio of around Rs 25 crore. Today, the portfolio is around Rs 2,500 crore and the net worth has correspondingly grown to Rs 400 crore. The footprint is across ten states with 490 branches, 20 regional offices and 3,800 employees catering to around 13 lakh end-customers. The promoter group has around 24 per cent of equity and institutional investors hold 71 per cent, with the rest divided among high net-worth individuals (HNIs), employees and the ESOP trust.
FY2014 FY2015 FY2016 FY2017 FY2018
Gross disbursements (in Rs mn)
2,608.29 5,139.49 8,465.42 13,356.06 26,935.90
Disbursement growth (%)
160.12% 97.04% 64.71% 57.77% 101.68%
How does this fit into the group focus?
Let us have some perspective about the group. The Avishkaar-Intellecap group has interests in equity investment, advisory services and NBFC businesses. The total assets under management would be around Rs 3,000 crore. Equity investment is under Avishkaar, which looks at early-stage businesses with a social sector focus, such as water management, green energy, healthcare, education and so on.
The advisory business is under the Intellecap brand, which provides business consulting to developmental financial institutions, as well as small private businesses. Here again, the focus is on socially-relevant businesses. The investment banking activity helps raise capital for the same, and beyond that are initiatives like Sankalp, which is a platform where entrepreneurs can showcase their ideas and vision in an ecosystem of investors, lenders, industry observers, regulators and growth facilitators. Basically, enterprises in the developmental social space get a convening platform and attract investment and growth opportunities and scale up better. Today through Intellecap, we are facilitating building of businesses in Africa and the Far East as well. We also have a fintech business, Tribe Tech, which looks at machine scrutiny of credit proposals and credit approval and recommendations to banks and NBFCs.
As of March 2018, Arohan was the seventh-largest NBFC MFI in India and the largest in Eastern India. Our footprint in Central, Eastern and North-Eastern India –we start from Madhya Pradesh and go up to Arunachal Pradesh and Tripura – encompasses 10 out of the 14-15 low-income states of India. When you look at states like Uttar Pradesh, Madhya Pradesh, Bengal, you can see they have a good population and good demand but MFI penetration is very low. This signifies good potential.
Where this fits into the group vision is that Arohan goes beyond credit to focus on financial inclusion. Be it bank accounts, pension accounts, insurance needs, remittances, even investments, Arohan tries to play a part. We are corporate insurance agents, both in life and non-life categories. We are banking correspondents for IndusInd Bank and have a tie-up with Paytm. Once the customer gets a bank account, savings and remittances and other things become easier.
Going beyond financial requirements, we try to cater to certain core needs of our customers. Things like a solar lamp, mobiles across different budgets, bicycles, water purifiers, cooking products – we have an Arohan e-bazaar app which offers such a curated range of products. We believe that such an offering would deepen our relationship and make it stronger and multi-dimensional.
Given that your space is so much regulated, how do you create differentiation?
We have quite a few tech-based differentiators. At the front end, all our 2,500 loan officers are tab-enabled. This ensures the loan process – KYC, Aadhaar-based linking, credit bureau report access – is paperless and the feedback (again algorithm-based) is instant. The tab reports sync into profile, a core banking system of FIS. Our quality control hub, apart from checks on the KYC and documents, also focuses on incremental disbursements being cashless. Our post-disbursement file storage is again in hard and soft form.
The call centre is trained in customer relationship management. The HR platform, Adrenalin, is again state-of-the-art. It takes care of complete personnel requirements. Our risk management model goes beyond individual checks to a regional geography check. We can zero on into a location and check the quality of credit demand there. We can benchmark ourselves vis-a-vis the geography and find out how we are growing against the benchmark. We have a real-time internal audit process which does online monitoring of the field work programme.
Business-wise another USP we have is that we are perhaps the only NBFC which has a ticket from Rs 10,000 – Rs 1,00,000 (the MFI vertical) and then from Rs 1 lakh to Rs 1 crore (MSME vertical). Typically our average ticket sizes across both verticals are Rs 20,000 and Rs 25 lakh respectively.
In our MFI business, we also use the business correspondent model which is a tie-up with smaller players who are our agents. It helps our penetration to improve at lower cost and the credibility and customer connect of the local players is used to our advantage. We provide liquidity and the end-user gets funding, so it benefits all.
What is the strategic importance of the MSME business and how are you looking at it?
Both our businesses have separate sourcing and processing functions, but ultimately it is about using the infrastructure investment to optimum levels. We understand the MSME market is highly under-penetrated and that is the opportunity. We started in mid-2015 with a merchant cash advance product, based on POS receipts. As of March, we have a portfolio of Rs 76 crore in this segment.
Here the key factor is risk mitigation, which we achieved through repayment innovation – an automated clearing house link set to the customer’s bank account which gives us a percentage on the borrower’s revenues. So when the customer receives revenues in his bank accounts, we generate our repayments side by side. This also reduces his obligation on a regular basis rather than through the end-of-month procedure. We grow without undue risk and can broaden our portfolio and help us penetrate more in our chosen territories.
MSME penetration is roughly one-third of what is needed and penetration is now needed into interiors and rural areas because the urban areas are well-serviced. Therefore, greater penetration and lower overheads is our focus.
How does Arohan stand in terms of pricing which is a key factor?
Pricing today, under regulation, is a function of the cost of funds. At 20.75 per cent, we are the second lowest in India. Most of our contemporaries operate in the 23-25 per cent range.
Pricing again is one factor in our favour. We believe that under the community programme, which is mostly women-oriented, we are an exception in that as we have introduced a bazaar for men. Beyond these basic products, we have the premium segment which caters to borrowers in the Rs 50,000 to Rs 1 lakh segment. We firmly believe that we have the building blocks in place and like you have seen in the past, we will continue to grow at an excellent pace.
RBI may not get more teeth to fix NPA mess
Apex bank has wide-ranging powers to deal with various situations: Govt.
New Delhi : The Reserve Bank of India (RBI) has “wide-ranging and comprehensive” powers to address various situations in banks, the government said on Tuesday against the backdrop of RBI Governor Urjit Patel seeking more powers to deal with the problem of bad loans at public sector banks.
Listing out RBI’s powers to deal with banks, Minister of State for Finance Shiv Pratap Shukla said the central bank can inspect the lenders, examine on oath any officer, direct special audit and give directions to banks.
Also, whole-time directors of nationalised banks and State Bank of India are appointed in consultation with the RBI, he said in a written reply in the Rajya Sabha.
“… the powers of RBI are wide-ranging and comprehensive to deal with various situations that may emerge in all banks, including public sector banks,” he said.
RBI Governor Urjit Patel in his presentation before the Parliamentary Standing Committee on Finance had last month (rpt) month pitched for more powers saying that the central bank has “inadequate” control over state-owned lenders.
Replying to another question on whether less money was being put in ATMs after the demonetisation, Shukla replied in the negative.
RBI has informed that the total amount of Notes in Circulation (NIC) as on July 18, 2018 was Rs 19.28 lakh crore as compared to Rs 17.74 lakh crore as on November 4, 2016, he said.
“RBI has ensured adequate supply of notes to meet the cash requirement of public and the currency supply is monitored continuously to ensure distribution of adequate currency to various parts of the country,” he said. The government, he added, has requested all banks to efficiently manage the cash to ensure that adequate cash is available for ATMs and people do not face any problems.
No proposal before panel on PSB merger
New Delhi: There is currently no proposal before the ministerial panel for merger of public sector banks, Minister of State for Finance Shiv Pratap Shukla said in a written response to a question in the Rajya Sabha on Tuesday.
“No timeline has been fixed for merger of public sector banks,” Shukla added. The government, in November, had formed a three-member panel, led by Arun Jaitley, to examine and clear merger proposals of public sector banks. Besides taking up plans sent by banks, the panel was empowered to direct state-owned lenders to examine proposals for mergers. The other members of the panel on banks’ consolidation are Piyush Goyal and Nirmala Sitharaman.
He said the government had sought comments from states and sponsor banks on its roadmap for consolidation of regional rural banks within a state.
“The roadmap has been prepared in consultation with NABARD (National Bank for Agriculture and Rural Development) and proposes to bring down the number of RRBs (regional rural banks) to 38 from the present 56,” Shukla said.
Sensex opens 100 points higher after GST Council cuts rates
Mumbai: The benchmark BSE Sensex advanced over 100 points in early trade today led by gains in FMCG stocks after the GST Council on Saturday cut rates on over 100 items, amid fresh capital inflows by foreign funds and strengthening rupee.
The 30-share index was trading higher by 114.10 points, or 0.31 per cent, at 36,610.47. All the sectoral indices, led by FMCG, consumer durables and power stocks were trading in the positive zone, rising up to 1.21 per cent. The gauge had gained 145.14 points in the previous session. The NSE Nifty too rose by 42.60 points, or 0.39 per cent, to 11,052.80. Top gainers include Asian Paint, ITC, Bharti Airtel, NTPC, Adani Ports, Coal India, ICICI Bank, Sun Pharma, L&T, Axis Bank, Yes Bank, SBI and Vedanta, gaining up to 3.77 per cent.
Brokers said investor sentiment got a boost after the GST Council, on Saturday, cut rates on over 100 items, including footwear, refrigerator, washing machine and small screen TV, while the widely demanded sanitary napkins have been exempted from the levy. The revised tax rates will come into effect from July 27. Meanwhile, the rupee surged by 19 paise to quote at 68.65 against the dollar at the forex market in early trade today.
However, other Asian markets were trading mixed after the Bank of Japan offered to buy bonds at the first fixed-rate operation since February, in a sign the central bank was trying to rein yields. Japan’s Nikkei was down 1.27 per cent, Hong Kong’s Hang Seng shed 0.09 per cent in early trade today, while Shanghai Composite edged 0.37 per cent higher. The US Dow Jones Industrial Average ended 0.03 per cent down on Friday.