June quarter numbers of many domestic banks may have looked impressive, but there is a hole in them. Most of them counted interest accrued, but not collected, in net interest income, and that amount could be 15-40% of the total. Credit Suisse has raised the red flag on the reliability of these profit numbers, saying the concentration of interest-accrued component in net interest income is high. That's, even when the share of moratorium loans for most banks fell to 10-25% in June from 30-70% in April. Credit Suisse also says moratorium benefit helped banks report less slippages, ramping up coverage on existing NPAs by 300-900 basis points.
MARKET CUES: Where do we stand >>>  | Nifty futures on the Singapore Exchange traded 61 points higher at 7 am (IST) this morning, showing signs of a good start for Dalal Street. |
| On Thursday, Nifty50 shed 100 points to settle July F&O series at 11,102. Analysts said the formation of a bearish candle on the daily scale in follow-up to an indecisive Spinning Top candle in the previous session suggested that the index remains negatively biased. |
| Asian shares traded mixed this morning. Stocks slipped in Japan and Australia, while those in China and Hong Kong rose, with South Korea flat. |
| The S&P500 and Dow closed lower overnight after data painted a worrying economic picture. Dow fell 225 points, or 0.85%, the S&P500 12.22 points, or 0.38%, but the Nasdaq added 44.87 points, or 0.43%. After the bell, shares in Facebook rose 8% and Amazon climbed 6% following their earnings reports while Alphabet climbed 2%. |
| The rupee fell 4 paise to close at 74.84 against the US dollar on Thursday tracking weak domestic equities and strong American currency. |
| The dollar slipped to two-year lows on Friday and is on track to post its biggest monthly decline in 10 years. The euro hit a two-year high. Against the yen, the dollar hit a four-and-a-half-month low as did the British pound. |
| Oil prices rose, recovering further ground after touching three-week lows in the previous session, hit by a record decline in US growth. Brent crude was up by 40 cents, or 0.9 per cent, at $43.34 a barrel. |
| Gold prices moved lower in Indian markets on Thursday, marking their first loss in 10 days. On MCX, August gold futures slipped 0.2% to Rs 53,065 per 10 gm. Silver futures plunged 2% to Rs 63,909 a kg. In global markets, spot gold fell 0.3% to $1,965.90 an ounce. |
| LOOK WHO'S |  |
Big Tech Quartet beats Street with earnings… The Big Tech quartet reported quarterly earnings on the same day for the first time ever, all topping Wall Street estimates. Facebook beat analysts' estimates and forecast similar growth ahead. Apple delivered blowout quarterly results, reporting revenue gains across every category and in every geography. Amazon.com posted the biggest profit in its 26-year history, as online sales and its lucrative business supporting third-party merchants surged during the coronavirus pandemic. Alphabet reported $38.3 billion revenues, down 2% — a first — from $38.94 billion in Q2 of 2019, with operating income at $6.38 billion.
Read More Big-ticket direct tax reforms in the works… The government is working on big-ticket direct tax reforms and improve ease of compliance to complement the sharp reduction in the rates to make the regime more attractive for investors. Under the new regime that is in advance stage of preparation there will be zero physical interface between taxpayers and officials, cutting discretion of officers, government officials said.
Read More Guarantee-based loans to small biz soon… Amid complaints of exclusion, the government is looking to expand the coverage of the guarantee-based loans for small businesses. The sanctioned limit is proposed to be doubled to up to Rs 50 crore and annual turnover eligibility may be increased to Rs 200 crore. The finance and MSME ministries are working on the changes following discussions at the highest level, amid concerns that several businesses were not getting funds meant to help them navigate the coronavirus crisis.
Read More Parekh bullish about economy rebound… HDFC chairman Deepak Parekh on Thursday said a host of economic indicators are showing improvement and growth would return to the economy if there are no more lengthy and complete lockdowns. "My view is that one should not be too perturbed with forecasts of negative GDP growth rates," he told shareholders at the company's AGM via videoconferencing. "Most believe India's GDP growth will contract by about 5% this year. But recovery will happen assuming no further lengthy and complete lockdowns in future."
Read More Tata Group claims good growth under Chandra… Tata Group companies, under Tata Sons chairman N Chandrasekaran, have seen annual incremental revenue growth of around Rs 70,000 crore between 2017 and 2019. Further, return on equity on funds infused by shareholders has risen to 46%, excluding impairment. This was stated by Tata Sons in an affidavit filed in the Supreme Court on Thursday in response to earlier submissions by Cyrus Investments and other Shapoorji Pallonji Group companies.
Read More | AND WHO'S |  |
Traders less bullish on market now…. Traders carried forward fewer bullish bets to the August derivatives series on expiry of July contracts on Thursday on growing worries about fatigue in the market after the near 50% uninterrupted rally since late March. Analysts said bullish positions in heavyweights such as RIL and large-cap technology companies could push the Nifty higher while banks could put a cap on gains. Provisionally, Nifty futures rollovers stood at 72%, lower than the three-month average of 75.3% and June rollover figure of 79%.
Read More Maruti Q1 nos fail to impress brokers… Brokerages have a mixed view on Maruti Suzuki India after the carmaker reported a net loss of Rs 249.4 crore for the June quarter — its first loss in 17 years. Antique, CLSA, and Kotak Institutional Equities maintained sell rating on Maruti, while Investec downgraded the stock to sell. Nomura has maintained hold recommendation. Emkay Global and Jefferies have maintained buy and Morgan Stanley has an overweight recommendation.
Read More RBI asks govt to cut PSU bank stake… The government should cut its stake in PSU banks to 26% and give their chiefs a long-enough tenure so that these can be run more professionally, RBI has said in a presentation to PM Narendra Modi, people with knowledge of the matter said. The government's holding in state-run banks currently exceeds 50%. It was also suggested that the government should retain significant control over the banks. Lowering it to 26% might require a fresh legislation.
Read More US gets a feel of Great Depression… The US economy contracted at its steepest pace since the Great Depression in the second quarter as the pandemic shattered consumer and business spending, and a nascent recovery is under threat from a resurgence in new cases of the coronavirus. US stock futures, Treasury yields and the dollar slipped on Thursday after the commerce department said GDP collapsed at a 32.9% annualised rate last quarter, the deepest decline in output since the government started keeping records in 1947.
Read More Minus BP deal, RIL Q1 profit would shrink 41%... Reliance Industries saw its first quarter profit rise 31% to Rs 13,248 crore on the back of a gain it made from the sale of its 49% stake in the petro retail venture to BP. If this gain of Rs 4,966 crore is excluded, then RIL's profit before tax is lower by 41% to Rs 8,542 crore for Q1 of fiscal 2021. The company's revenue declined 41% to Rs 91,238 crore as operations were impacted by the Covid-19 pandemic. Operating profit, too, fell 12% to Rs 21,585 crore in the April through June period.
Read More Meanwhile... Licence raj returns to colour TV import... India on Thursday imposed restrictions on the import of colour TV sets, bringing back curbs it had lifted almost two decades ago, in a measure to encourage domestic production. Imports of TVs in certain categories will now require a licence from the government. "Import policy of colour television sets... is amended from 'free' to 'restricted'," the DGFT said in a notification. The curbs are applicable to TV sets included in the 'other colour' category that covers LCD TVs among the goods.
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