Evening wrap:
Oil prices continued to trend up, rising to $84 a barrel as global demand rebounds. The impact was felt on the Indian rupee, which continued its slide against the U.S. dollar. Indian shares scaled a new high, led by banking and consumer stocks.
As the power situation worsens, India’s Power Ministry has asked states to use unallocated power from central generating stations (CGS). Unassigned units are usually supplied to needy states to meet their power requirement. The ministry has also asked power companies to first meet their customers’ needs before selling units in power exchanges.
Tata Power Solar bagged orders worth ₹538 crores to set up multiple distributed ground-mounted solar projects totalling 100MW. In other corporate development, Akasa Air received the nod from the Ministry of Civil Aviation. The airline is backed by investor Rakesh Jhunjhunwala and ex-Jet Airways CEO Vinay Dube. Former IndiGo president Aditya Ghosh will be on the airline’s board. – John Xavier
To get a quick snapshot of the top economy and business developments of the day, please read further.
4:00 P.M.
India shares scale new high
Indian equity benchmark indices closed high after a volatile trading session. Sensex rose 149 points to close at a record 60,284, led by banking and consumer durables stocks. Nifty soared 0.26{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} to its fresh closing peak of 17,991.95.
Titan was the top gainer in the Sensex pack, followed by Bajaj Auto, Bajaj Finserv, and SBI. HCL Tech, Tech Mahindra, and UltraTech Cement were among the laggards.
In Asia, Shanghai, Hong Kong, Tokyo and Seoul ended with losses, and stock exchanges in Europe were trading in red in early deals.
3:30 P.M.
Spectrum auctions | Govt scraps bank guarantee requirement
The government has removed the submission of financial bank guarantees (FBG) for future spectrum auctions.
The telecom department would address the eligibility conditions for participation in the auction for participants to have sufficient financial capacity.
While access spectrum would be assigned for 30 years, tenure for radiowaves acquired will remain unchanged.
The notification follows the last month’s reforms and support package that offered a breather to the telecom industry.
3:00 P.M.
Encashing of bank guarantees in Airtel, VIL penalty case put on hold
Telecom tribunal TDSAT has asked the Department of Telecom to put the encashment of bank guarantees of Bharti Airtel and Vodafone Idea on hold till the next date of hearing.
According to the Department of Telecom, companies are required to pay the penalty by October 21. The telecom tribunal did not grant a stay on the penalty notice.
The Department of Telecom (DoT) slapped a penalty of ₹2,000 crores on Vodafone Idea and ₹1,050 crores on Bharti Airtel based for violating norms by denying Reliance Jio points of interconnect (PoIs) way back in 2016.
Bharti Airtel and Vodafone Idea moved the telecom tribunal to challenge Telecom Department’s demand notices for payment of ₹3,050 crore cumulative penalties in the points of interconnecting matter the Future Technology.
2:30 P.M.
Oil rises to $84
Oil prices rose close to $84 a barrel as global demand rebounded, leading to energy shortages in major economies including China. Despite an increase in demand, the Organization of the Petroleum Exporting Countries and allied producers, or OPEC+, is sticking to plans to gradually increase output, rather than quickly boost supply.
Brent crude rose 0.3{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} to $83.89 a barrel and U.S. oil gained 0.3{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} to touch $80.73. As power prices have soared to record high in recent weeks, OPEC+ is under pressure from consumer nations to do more
2:00 P.M.
Tata Power Solar bags orders worth ₹538 cr
Tata Power Solar has bagged orders worth ₹538 crores to set up multiple distributed ground-mounted solar projects totalling 100MW.
Tata has received a Letter of Award” (LoA) of distributed ground-mounted solar projects for state-run Energy Efficiency Services Ltd (EESL).
Tata Power Solar is a leading solar rooftop EPC player with a successful background in executing large projects, like 150MW Ayana at Ananthapur, 50 MW Kasargod at Kerala, 56MW Greenko, 30MWp Solar Power Plant in Lapanga, Odisha, 105MWp of Floating solar at Kayamkulam (under implementation).
1:30 P.M.
Power Ministry asks states to utilise unallocated power
The Power Ministry has asked states to use unallocated power of the central generating stations (CGS) to meet consumer requirements as India suffers from a coal shortage crisis.
As per the guidelines, 15{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} of power from CGS is kept unallocated which is allotted to needy states to meet their power requirement.
The power ministry has asked distribution companies to first serve their customers, and not sell the power in the power exchange. If any state is found not providing power to their customers first and taking advantage by selling power in power exchanges at higher rates, the unallocated power will be withdrawn, it added.
India is facing outrages as several plants have low coal inventories amid a sharp rise in global energy prices.
1:10 P.M.
Akasa Air gets Civil Aviation Ministry’s nod
Rakesh Jhunjhunwala-backed airline ‘Akasa Air’ gets clearance from the Ministry of Civil Aviation to operate in India. The holding company, SNV Aviation Private Limited, said in a statement, it received a no-objection certificate from the ministry.
Other than Rakesh Jhunjhunwala, Akasa Air is backed by ex-Jet Airways CEO Vinay Dube and has former IndiGo president Aditya Ghosh on its board.
The airline plans to operate approximately 70 planes in the next four years.
12:35 P.M.
Rupee slips to 75.42 against US dollar
The Indian rupee fell 6 paise to 75.42 against the US dollar in opening trade on greenback strength in the overseas market coupled with firm crude oil prices.
The rupee opened on a weak note at 75.41, before further falling to 75.42, a decline of 6 paise from the last close. On Monday, the rupee dropped 37 paise to a 15-month low of 75.36 against the US dollar. Besides, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.03{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} to 94.34.
12:10 P.M.
Embattled Evergrande’s unit to make EVs next year
China’s Evergrande unit aims to start producing electric vehicles (EV) early next year. The New Energy Vehicle (NEV) is building a car plant in the coastal city of Tianjin, and according to the management, the plant will mass-produce next year.
NEV is linked to developer Evergrande Group, which is struggling to manage its over $300 billion debt.
11:30 A.M.
U.S. 2-year Treasury yield hits 18-month high
U.S. 2-year Treasury yield jumped to an 18-month high after investors sold U.S. debt in anticipation that rising energy prices would fuel inflation. This could further add pressure on the U.S. Federal Reserve to raise interest rates.
The yield rose 3.6 basis points to 0.3560{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} and touched its highest since late March 2020, when the Fed lowered its benchmark rate to almost zero.
Bonds are also under pressure globally. 10-year Australian government bond yield rose almost 50 bps over the same period and, 10-year Japanese yield surged 5.5 bps.
10:45 A.M.
IMF backs Kristalina Georgieva
The International Monetary Fund (IMF) expressed full confidence in its Managing Director Kristalina Georgieva in response to allegations that she pressured World Bank staff to alter data in favour of China.
The fund’s 24-member executive board noted that the law firm WilmerHale did not conclusively demonstrate that Georgieva played an improper role as CEO of the World Bank.
The law firm in its report alleged that Georgieva and other senior officials applied “undue pressure” on the bank’s staff to boost China’s ranking in the Doing Business 2018 report.
10:15 A.M.
Oil falls amid global energy crisis
Oil prices fall for the first time in four days after weeks of gains even as the global energy crisis pushes up demand. Brent crude fell 0.3{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, to $83.39 a barrel while U.S. oil fell 0.4{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, to $80.19 a barrel.
Power prices have risen to records amid the energy crisis in India, China, the United States, and parts of Europe in the last few weeks. Major industrial regions in China are witnessing power shortages, leading to an increase of over 10{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} in the prices of thermal coal futures.
9:35 A.M.
Asian markets open|Sensex update
The Indian benchmark indices opened in red today amid weak global cues. The Sensex opened 0.19{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} lower at 60018.70, and the Nifty opened 11.70 points lower at 17934.30.
Asian shares fell in early trade as the global energy crunch fuelled inflation fears and clouded investor sentiment.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.9{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, Australia was down 0.29{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} and Japan’s Nikkei slid 1.03{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}. China’s blue-chip CSI 300 Index fell 0.75{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, and Hong Kong’s Hang Seng Index opened 1.35{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} lower.
China Evergrande group missed paying all of its offshore bondholders by the Monday deadline which could weigh on investor sentiment. The company’s troubles have sent shockwaves across global markets.
Morning note:
The International Monetary Fund (IMF) has decided to let Kristalina Georgieva remain as head of the fund. After reviewing the accusations that she improperly influenced a World Bank report in favour of China, the lender’s board reaffirmed its full confidence in her. U.S. Treasury Secretary Janet Yellen told on Monday that WilmerHale’s report into World Bank data-rigging allegations against the Georgieva “raised legitimate issues and concerns”, but a lack of direct evidence meant a leadership change was unwarranted.
Our blog will track developments in the energy markets as oil continues its climb to about $80 a barrel. Futures on Brent crude, the global oil benchmark, rose 1.5{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} to $83.65 a barrel, their highest settle value in three years. In India, some states experienced electricity blackouts because of coal shortages, while in China the government ordered miners to ramp up coal production as power prices surged.
According to a government report on Monday, cited by Reuters, volatility in the prices of crude oil, edible oils and metal products pose concerns for India’s economy, though inflation is expected to ease in the coming months.
Later today, the Union government is expected to release September consumer price inflation, and August Industrial production data. – John Xavier
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