The benchmark indices opened strongly this morning after the Prime Minister's announcement yesterday of a Rs 20 lakh crore stimulus package.
Join us as we follow the top business news through the day.
Finance Minister announces Rs 20 lakh crore economic package
Highlights from Finance Minister Nirmala Sitharaman's address to the media:
* Economic package to spur growth, build a self-reliant India
* Self-reliant India does not mean cutting off from rest of the world
At 10% of GDP, Modi’s Atma-nirbhar Bharat Abhiyan ranks among biggest in world
How does India's economic rescue package compare against those announced by other economies?
PTI reports: "Prime Minister Narendra Modi’s pledge of a total spending of Rs 20 lakh crore to weather the fallout of coronavirus pandemic is among the largest economic stimulus package announced by nations around the world.
Modi’s Atma-nirbhar Bharat Abhiyan or Self-reliant India Mission is about 10 per cent of India’s GDP in 2019-20 and would rank behind Japan, the US, Sweden, Australia and Germany.
But unlike the most relief packages announced globally, Rs 20 lakh crore is not entirely in new spending and includes Rs 1.7 lakh crore package the government had announced in March as well as the steps taken by the Reserve Bank of India (RBI) such as liquidity enhancing measures and interest rate cuts.
With global lockdowns imposed to check spread of COVID-19 causing economic turmoil that is touted to be worst since the 1930s, nations around the world have announced what came to be known as ‘coronavirus stimulus packages’
The US has committed to the largest rescue package by any country in pure dollar terms of USD 2.7 trillion but as percentage of GDP it trails behind Japan, according to data compiled by economist Ceyhun Elgin in the COVID-19 Economic Stimulus Index (CESI).
Japan has announced a package equivalent to 21.1 per cent of its GDP. It has outlined USD 1.1 trillion recovery package and plans for further spending.
The US measures work out at an estimated 13 per cent of GDP.
It is followed by Sweden with a stimulus equal to 12 per cent of its GDP and Australia (10.8 per cent). Germany has announced a spending of around USD 815 billion, equal to 10.7 per cent of its GDP.
Italy, which endured devastating coronavirus outbreak, has announced an Euro 750 billion (around USD 815 billion) package."
Maruti fourth-quarter profit slumps 28% on weak demand
Maruti's fourth quarter results suggest lackluster demand continues to plague the sector.
Reuters reports: "Maruti Suzuki India's March-quarter profit fell 28% as poor demand for cars during the period was exacerbated by a nationwide lockdown to halt the spread of the novel coronavirus, hurting sales at the country's top-selling carmaker.
India's largest carmaker by market value reported a net profit of 12.92 billion rupees ($171.53 million) for the March quarter, down sharply from 17.96 billion rupees in the same period a year earlier.
Domestic unit sales at the carmaker dropped 16% to 360,428 vehicles for the quarter ended March 31 from a year earlier. Sales in the final month of the quarter were particularly hit as most carmakers had to suspend operations from March 22 due to the country's lockdown."
Rupee settles 5 paise higher at 75.46 against US dollar
The rupee failed to reflect the enthusiasm seen in stocks as it trimmed gains made in the morning.
PTI reports: "The rupee appreciated by 5 paise to 75.46 (provisional) against the US dollar on Wednesday as fiscal stimulus by the government bolstered investor sentiment.
Forex traders said Prime Minister Narendra Modi’s Rs 20 lakh crore economic stimulus package enthused investors.
However, risk sentiments are negative and investor sentiments remain fragile over coronavirus concerns, they added.
At the interbank foreign exchange, the rupee opened on a strong note at 75.31, but during the day the domestic unit lost most of its gains and finally settled at 75.46 against the US dollar, registering a rise of 5 paise over its previous close.
During the trading session rupee witnessed an intra-day high of 75.30 and a low of 75.50.
On Tuesday, the rupee had settled at 75.51 against the US dollar.
In a big push to revive the COVID-hit economy, the Prime Minister on Tuesday announced massive new financial incentives on top of the previously announced packages for a combined stimulus of Rs 20 lakh crore."
India sees PE, VC deals worth $45 billion in 2019, highest inflow in 10 years
India's startup ecosystem remains an attractive destination for venture capitalists, a report shows.
PTI reports: "India continued to be the second largest deal market in the Asia-Pacific region in 2019 with over 1,000 private equity and venture capital pacts valued at USD 45 billion - the highest in the last decade, a report by Bain & Company said on Wednesday.
Private equity (PE) and venture capital (VC) investment in the country rose to its 10-year peak primarily due to the increasing number of large deals greater than USD 100 million as well as an increase in their average deal size, the firm’s India Private Equity Report 2020 said.
The report, developed in partnership with the Indian Private Equity & Venture Capital Association (IVCA), also found that exit value in 2019 decreased, finishing at nearly USD 13 billion against USD 17 billion in 2018 (excluding Flipkart’s exit).
This was still the third-highest for the last decade. The dip over last year was led by a decrease in the number of exits from 265 to 200.
India-focused dry powder (marketable securities that are highly liquid and considered cash-like) will remain healthy, but a potential reduction in investments could occur in the first half of 2020, accompanied by a price correction across the board, the report noted.
India continued to be the second largest private equity deal market in Asia-Pacific (APAC) with the most growth in the region, it said adding that India’s share of the APAC deal market increased to nearly 25 per cent in 2019, and the investment value was about 70 per cent higher than in 2018 and nearly 110 per cent higher than the previous five-year average.
Meanwhile, China’s PE market witnessed a decline in both deal value and volume due to trade war concerns, social unrest and stringent Renminbi fundraising regulations, the report said."
Fresh support of only Rs 12-13 lakh crore in PM Modi’s economic stimulus
Some clarity has emerged on the actual size of the fiscal stimulus that is likely to be announced this week.
PTI reports: "Of the Rs 20-lakh-crore package that Prime Minister Narendra Modi announced to defend the economy against coronavirus disruptions, fresh support may be only around 60 per cent of the offer as it counts the first financial stimulus and liquidity support that Reserve Bank has given already, and will overburden bond market, says a report.
In a big push to revive the COVID-hit economy, PM Modi on Tuesday announced massive new financial incentives on top of the previously announced packages for a combined stimulus of Rs 20 lakh crore.
Modi outlined a Rs 20-lakh-crore which is 9.7 per cent of GDP support package, of which new allocations could only be 50-60 per cent of the offer. But until more details are known, financing burden will fall on the bond markets, Radhika Rao, the economist at Singaporean lender DBS Bank said in a note on Wednesday.
She further noted that “the new fiscal package is upsized and its scale lends a positive surprise, at a bigger-than-anticipated size with emphasis on making the economy more self-reliant via local manufacturing and improved supply chains .
It can be noted that the government had in late March announced fiscal measures worth Rs 1.7 lakh crore while the RBI offered liquidity support of Rs 3.7 lakh crore in March and Rs 2 lakh crore in April.
“The new fiscal measures might account to around 60 per cent or Rs 12-13 lakh crore. If this includes a wider net of RBI measures, then the new package might amount to Rs 10 lakh crore,” Rao said."
Indian bond yields spike briefly on PM's announcement of economic package
Investors are increasingly worried about the sustainability of the Centre's debt load after yesterday's announcement.
Reuters reports: "India's benchmark bond yield spiked briefly on Wednesday morning following news of a 20 trillion rupees economic package, before retracing most of the losses due to the absence of details.
Prime Minister Narendra Modi said on Tuesday that India would provide 20 trillion rupees ($266 billion) in fiscal and monetary measures to support an economy battered by a sweeping weeks-long lockdown to fight the novel coronavirus.
The benchmark 10-year bond yield opened 12 bps higher at 6.28% but retreated quickly to trade flat on the day by 0445 GMT.
Traders said market positioning was light and shorting bonds was not working amid a lack of details on the economic package. Yields are expected to hold in a tight range ahead of the finance minister's press conference later in the day which could throw more light on specifics of the stimulus package."
COVID-19: Hetero to make Gilead’s Remdesivir in Hyderabad
Generic pharmaceutical firm and leading producer of anti-retroviral drugs Hetero has entered into a licensing agreement with Gilead Sciences Inc. for the manufacture and distribution of Remdesivir in 127 countries, including India.
An investigational drug, Gilead’s Remdesivir had received emergency use authorisation (EUA) from the U.S. Food and Drug Administration (USFDA) for treatment of hospitalised patients with severe COVID-19 .
Announcing the deal, Hetero said Remdesivir will be manufactured at its formulation facility in Hyderabad. The facility has been approved by regulators such as the USFDA and EU, among others.
Stan Druckenmiller calls V-shaped recovery "a fantasy"
COVID-19 hits hotel industry; revenue per room drops 13-29% in Jan-Mar in top cities
Here are some stats from a report that sheds light on the impact of the coronavirus crisis on the hotel industry.
PTI reports: "The outbreak of COVID-19 has adversely impacted the occupancy levels at hotels across 11 major cities, resulting in a decline of up to 29 per cent in revenue per available room (RevPAR) during January-March this year, according to JLL India.
While occupancy level fell in a range of 5-17 percentage points, the RevPAR was down 13-29 per cent across 11 cities -- Ahmedabad, Bengaluru, Chennai, Delhi, Goa, Gurugram, Hyderabad, Jaipur, Mumbai, Pune and Kolkata.
“The impact of COVID-19 has severely impacted the domestic hotel and hospitality sector in Q1 2020,” property consultant JLL India said in a report.
According to the data, both the occupancy level and RevPAR went down in all the 11 cities individually.
The occupancy level fell most in Delhi at 16.9 percentage points during January-March 2020 as compared with the year-ago period, followed by Jaipur at 16.4 percentage points.
There was a decline of 15.2 percentage points each in the occupancy level in hotels across Mumbai, Bengaluru and Gurugram."
Rupee rises 21 paise to 75.30 against US dollar in early trade
The strength in domestic equities has helped prop up the rupee against the US dollar.
PTI reports: "The rupee appreciated 21 paise to 75.30 against the US dollar in early trade on Wednesday as Prime Minister Narendra Modi’s Rs 20 lakh crore economic stimulus package enthused investors.
Forex traders said PM’s economic booster aided sentiments. Besides, a positive opening in domestic equities also supported the local unit.
At the interbank foreign exchange, the rupee opened at 75.31, then gained ground to touch 75.30, registering a rise of 21 paise over its previous close.
On Tuesday, the rupee had settled at 75.51 against the US dollar.
In a big push to revive the COVID-hit economy, Prime Minister Narendra Modi on Tuesday announced massive new financial incentives on top of the previously announced packages for a combined stimulus of Rs 20 lakh crore.
Domestic bourses were trading on a positive note on Wednesday with the benchmark Sensex up 691.49 points at 32,062.61 and broader Nifty rising 195.80 points to 9,392.35.
Foreign institutional investors were net sellers in the capital market, as they offloaded equity shares worth Rs 1,662.03 crore on Tuesday, according to provisional exchange data."
Package to unleash economic growth, drive post pandemic recovery, says India Inc
India Inc seems to be excited about the economic stimulus package that is expected to be announced this week, which it believes will kickstart growth.
PTI reports: "India Inc on Tuesday said Prime Minister Narendra Modi’s announcement of a Rs 20 lakh crore stimulus package was the “need of the hour” as it will pave the way for post pandemic recovery and unleash the next wave of economic growth.
In his speech, Modi announced that the total stimulus India is marshalling together to limit the impact of the COVID-19 crisis on the economy will be a little less than 10 per cent of the GDP and Finance Minister Nirmala Sitharaman will be announcing the exact details soon.
Industry bodies said the Make In India flagship will emerge as a key catalyst for attracting new investment, driven by much needed bold reforms in the areas of land, labour and liquidity.
“We appreciate that the Prime Minister spoke about the areas of land, labour, liquidity and simplification of laws which are the key challenges of the economy. Reforms in these four areas will truly unleash the next wave of economic growth within this crisis situation,” CII Director General Chandrajit Banerjee said.
Ficci President Sangita Reddy said the strengthening of the five pillars — economy, infrastructure, system, demography and demand will pave the way for India returning to a higher sustained growth path again.
“We expect that the contours of the package to be announced by Finance Minister Nirmala Sitharaman will address the needs of the poor and needy, MSMEs and also the industry and common man on the whole. The stress on land, labour and liquidity is what is required to make India self-reliant,” she added."
Stocks record strong gains
Ashish Rukhaiyar reports from Mumbai:
Equity benchmarks registered strong gains in the morning session on Wednesday, a day after prime minister Narendra Modi announced a ₹20 lakh crore stimulus package for the country to counter the impact of the coronovirus pandemic.
At 10:25, the benchmark Sensex was trading at 32,044.73, up 673.61 points or 2.15%. Earlier in the day, it gained 1,474 points to touch a high of 32,845. Meanwhile, the broader Nifty was at up 190 points or 2.06% at 9,386.30.
Stocks like HDFC Bank, ICICI Bank, HDFC, L&T, Kotak Mahindra Bank, Axis Bank and Infosys contributed the maximum to the Sensex's gains in the morning session. Incidentally, ICICI Bank, L&T and Ultratech Cement were up 5% each.
The overall breadth of the market was also strong with more than 1,300 gainers as against 446 stocks that declined.
Coronavirus lockdown | Industrial output shrank 16.7% in March 2020
India’s factory output plummeted to record lows in March, with the Index of Industrial Production contracting 16.7%, reflecting the drastic impact of the countrywide lockdown that began on March 25. This comes after a positive growth of 4.5% recorded in February .
Manufacturing sector output slumped 20% in March, while electricity generation shrank almost 7%, according to data released on Tuesday by the Ministry of Statistics and Programme Implementation. The mining sector remained flat, without any growth or contraction in output.
“I have been looking at IIP data from April 1982 onward, and this is the biggest ever contraction since then. It is no surprise, as all industrial activity was halted for one week, apart from State-level lockdowns which began earlier,” said D.K. Pant, chief economist of India Ratings and Research, part of the Fitch group.
Sensex zooms over 1,400 points on PM Modi’s Rs 20 lakh crore economic booster
The long wait for a fiscal stimulus is over, and investors seem to be enthused about it.
PTI reports: "Equity benchmark Sensex rallied over 1,400 points in opening session on Wednesday as Prime Minister Narendra Modi’s Rs 20 lakh crore stimulus package to revive the coronavirus-hit economy boosted domestic investor sentiment.
After touching a high of 32,845.48, the 30-share index pared some early gains to trade 818.68 points or 2.61 per cent higher at 32,189.80.
Similarly, NSE Nifty soared 213.50 points, or 2.32 per cent, to 9,410.05.
ICICI Bank was the top gainer in the Sensex pack, surging around 7 per cent, followed by L&T, Axis Bank, Bajaj Finance, Hero MotoCorp, M&M, UltraTech Cement and Maruti.
On the other hand, Nestle India, Bharti Airtel, Sun Pharma and Reliance Industries were trading in the red.
In the previous session, the BSE barometer settled 190.10 points or 0.60 per cent lower at 31,371.12, and broader Nifty declined 42.65 points, or 0.46 per cent, to 9,196.55.
Foreign portfolio investors offloaded equities worth Rs 1,662.03 crore in the capital market on Tuesday, provisional exchange data showed.
According to analysts, domestic investors cheered the government’s massive stimulus package to revive the pandemic-stricken economy.
The Prime Minister on Tuesday announced massive new financial incentives on top of the previously announced packages for a combined stimulus of Rs 20 lakh crore.
He said the package will be around 10 per cent of the GDP and “will play an important role in the ‘Atmanirbhar Bharat Abhiyan’ (self-reliant India campaign)."
