Today's top business news: RBI to do whatever it takes to tackle the virus, China's GDP contracts for first time in 60 years, fuel sales slump over 50% in April, and more

Grim prognosis: The near-term growth outlook for India has deteriorated sharply due to 14the lockdown, says Mr. Das.

Grim prognosis: The near-term growth outlook for India has deteriorated sharply due to 14the lockdown, says Mr. Das.   | Photo Credit: PTI

Updates from the world of economy, markets, and finance

Stocks started the day with strong gains of well over 3%

The gains, however, got trimmed after the RBI Governor's address to the media this morning failed to boost investor sentiment.

Meanwhile, Q1 growth numbers coming from China point to a severe hit to the country's economy.

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

4:30 PM

US Federal Reserve's balance-sheet soars $2 trillion in a month

 

4:15 PM

Fuel sales slump 50% in April; petrol down 64%, diesel 61%, ATF 94%

The nation-wide lockdown has dealt a several blow to fuel demand in the country as people cut down on movement.

PTI reports: "India’s fuel consumption slumped by a record 50 per cent in April as all petroleum products except LPG saw massive demand erosion following a nationwide lockdown halted economic activity and travel.

According to provisional industry data for fuel consumption in the first half of April, petrol sales were down 64 per cent, while diesel slumped by 61 per cent.

Aviation turbine fuel (ATF) consumption collapsed by 94 per cent as most airlines have stopped flying.

The only fuel that showed growth was LPG as the government dole of free cooking gas cylinders to poor households fired up consumption by 21 per cent during April 1 to 15, the data showed.

Overall the decline in petroleum product sales was 50 per cent, it said."

3:30 PM

Stocks end day with strong gains

The benchmark stock indices closed the day with gains of well over 3% after recovering in the post-lunch session.

The Sensex gained almost 1,000 points while the Nifty closed just below the 9,300 mark.

3:15 PM

RBI hints at further cut in interest rate to counter corona risks

The fall in overall inflation due to the drop in consumer demand amid the nation-wide lockdown has given more room for the RBI to further reduce interest rates.

IANS reports: "The Reserve Bank of India has hinted at further cuts in interest rates to maintain adequate liquidity in the system and counter the intensification of risks to growth and financial stability brought on by COVID-19.

Announcing a raft of liquidity and regulatory easing of steps on Friday, RBI Governor Shaktikanta Das said that easing of inflationary pressure on the economy and the outlook that it is on a declining trajectory and could fall further “make policy space available to address the intensification of risks to growth and financial stability brought on by COVID-19.”

In a series of announcements, the RBI on Friday also cut reverse repo rate by 25 basis points to 3.75% , making it less attractive for commercial banks to park cash with the central bank. This is second cut in reverse repo rate in just about three weeks."

 

2:50 PM

India removes export curbs on formulations from Paracetamol

The Centre has permitted the export of formulations made from Paracetamol. The government has, however, decided to continue with the restriction on export of Paracetamol APIs that were placed, along with that on export of the formulations, on March 3.

On Friday, a Directorate General of Foreign Trade (DGFT) notification said the March 3 order is “further amended to the extent that the formulations made from Paracetamol, including FDC (fixed dose combinations), under any ITCHS code…, are made ‘Free’ for export with immediate effect. However, Paracetamol APIs will remain restricted for export.

A common fever medication globally, Paracetamol is the most sought after and widely used drug ever since the COVID-19 outbreak.

Read more
 

2:30 PM

Oil falls as Chinese economy outweighs Trump plan to ease lockdown

China's disappointing growth numbers have increased concerns about potential demand in the global oil market.

Reuters reports: "Oil prices fell on Friday, giving up early gains as China's worst economic contraction on record outweighed news of U.S. President Donald Trump's plans to get the American economy moving again.

Brent was down by 10 cents, or 0.4%, at $27.72 a barrel by 0815 GMT.

“The market knows that U.S. crude stocks will fill very rapidly ... as refinery runs continue to be cut tremendously,” said Bjornar Tonhaugen, head of oil markets at Rystad Energy.

The hobbling of China's economy, meanwhile, was highlighted by data showing that GDP shrank 6.8% year on year in the first three months of this year, the first such decline since quarterly records began in 1992.

That data was released after President Trump laid out a three-stage process for ending U.S. lockdowns.

“The enthusiasm about U.S. President Trump's intention to end the countrys lockdown seems to be dying down as traders realise that a full return of the economy will not come overnight,” Tonhaugen said."

 

2:00 PM

Discoms to suffer Rs 30K crore revenue loss, face Rs 50K crore liquidity crunch due to lockdown, estimates CII

Citing the financial pressures faced by power distribution companies amid the lockdown, CII has called for using the opportunity to push through structural reforms.

PTI reports: "Industry body CII on Friday said discoms are likely to suffer a net revenue loss of around Rs 30,000 crore and liquidity crunch of about Rs 50,000 crore due to the coronavirus-induced nationwide lockdown.

According to government data, the discoms owe Rs 92,602 crore to Gencos as of February, 2020.

In its report released on Friday, the CII has suggested host of measures like easy credit facility for discoms (from PFC and REC) to pay off its dues to Gencos, lower tariff especially for industrial and commercial consumers and deferral of indirect taxes like electricity duty, coal cess etc.

According to the report, power sector, one of the essential services under the lockdown till May 3, is battling the twin issues of demand and liquidity compression.

"Recent experience suggests that a financial restructuring package without insistence on structural reforms leads to temporary alleviation of the problem in the sector followed by eventual recurrence of the core problems of liquidity. We therefore propose that the post COVID-era is the right time to undertake an ambitious overhaul of the sector... ," said Chandrajit Banerjee, Director General, CII in the report."

1:15 PM

India says IMF liquidity boost may have costly side effects

Finance Minister Nirmala Sitharaman has opposed IMF's plans to offer foreign exchange support to countries amid the coronavirus pandemic.

Reuters reports on her concerns: "India's finance minister said on Thursday the country could not support a general allocation of new Special Drawing Rights by the International Monetary Fund because it might not be effective in easing coronavirus-driven financial pressures.

Finance Minister Nirmala Sitharaman said in a statement to the IMF's steering committee that she also was concerned that such a major liquidity injection could produce potentially costly side-effects if countries used the funds for “extraneous” purposes.

Sitharaman joined U.S. Treasury Secretary Steven Mnuchin in opposing a new SDR allocation, which would provide all 189 members with new foreign exchange reserves with no conditions.

“In the current context of illiquidity and flights to cash, the efficacy of an SDR allocation is not certain," she said, adding that most countries rely on national reserves as a first line of defense.

“Consequently, extraneous demands for these reserves, not related to domestic monetary and financial stability, would be costly, and hence cannot be supported,” she added."

 

12:45 PM

Indian shares pare gains, investors assess RBI interest-rate cut

The RBI presser this morning failed to impress traders, with the benchmark indices paring gains.

Reuters reports: "Indian stocks trimmed gains on Friday as investors digested a cut in key interest rate by the country's central bank aimed at easing financial stress stemming from the world's biggest nationwide lockdown.

The Reserve Bank of India cut its reverse repo rate by 25 basis points (bps) in a bid to push banks to deploy excess funds toward lending, just two weeks after it cut the rates by 90 bps.

Both the NSE Nifty 50 index and the benchmark S&P BSE Sensex, which were up over 3%, pared gains as RBI Governor Shaktikanta Das announced the measures.

The Nifty was last up 1.66% at 9,136.50 by 0620 GMT, while the Sensex was up 1.7% at 31,094.15."

 

12:30 PM

RBI sees inflation falling below 4% target by mid-FY21

Reserve Bank of India (RBI) Governor Shaktikanta Das on April 17 said the inflation is on a declining trajectory and could fall below the central bank’s 4% target by the second half of this fiscal amid challenges posed by Covid-19 pandemic.

He said the consumer price index based retail inflation has fallen by 170 bps from its January 2020 peak.

“In the period ahead, inflation could even recede further, barring of course any supply side disruptions and may even settle well below the target of 4% by the second half of 2020-21,” the RBI Governor said in an early morning video conference.

Read more

12:00 PM

Over 100 nations seek IMF help amid COVID 19 crisis

The coronavirus pandemic has forced many economically vulnerable nations to seek external help from the IMF to tide over the crisis.

IANS reports: "More than 100 countries have turned to the International Monetary Fund (IMF) for financial support to cope with the economic fallout from the COVID-19 coronavirus pandemic, the institution’s managing Director has said.

“We meet during exceptional times. And exceptional times call for exceptional action,” Kristalina Georgieva said following a virtual edition of the Fund’s annual spring meeting on Tursday.

“More than ever, we must work together to respond to this unprecedented crisis and prepare for recovery,” she said.

Of the 102 nations that have approached the IMF for help, 15 — including El Salvador, Ecuador, Madagascar, Rwanda and Togo — have already seen their applications approved, while Fund officials are expected to decide on dozens more applications by the end of April, reports Efe news.

The Fund’s latest economic forecast, released this week, showed a global contraction of 3 per cent in 2020, compared with a 0.1 per cent decline in 2009 as a result of the financial meltdown."

 

11:40 AM

Is China's GDP contraction far worse than reported?

 

11:15 AM

China's Q1 GDP shrinks for first time on record

The coronavirus pandemic has managed to bring the Chinese economy to its knees, dealing a heavy blow to its first quarter growth rate.

Reuters reports: "China's economy shrank for the first time in almost three decades of records in the first quarter, as the coronavirus paralysed production and spending, raising pressure on authorities to do more to stop mounting job losses.

Gross domestic product (GDP) fell 6.8% in January-March year-on-year, official data showed on Friday, slightly larger than the 6.5% decline forecast by analysts and reversing a 6% expansion in the fourth quarter of last year.

The contraction is also the first in the world's second-largest economy since at least 1992 when official quarterly GDP records started.

Providing a silver lining was a much smaller-than-expected decline in factory production in March, suggesting efforts to restart parts of the economy since February are working.

However, analysts say Beijing faces an uphill battle to revive growth as the global spread of virus devastates demand from major trading partners, while domestic consumption also remains under pressure."

 

11:00 AM

Rupee rises 29 paise to 76.58 against US dollar in early trade

After settling at an all-time low yesterday, the rupee gained against the US dollar in early morning trading.

PTI reports: "The Indian rupee appreciated by 29 paise to 76.58 against the US dollar in early trade on Friday tracking positive opening in domestic equities, as investors awaited cues from the Reserve Bank of India to tide through the coronavirus crisis.

At the interbank foreign exchange the rupee opened at 76.59, and then touched a high of 76.58 against the US dollar, registering a rise of 29 paise over its previous close.

On Thursday, rupee had settled at an all-time low of 76.87 against the US dollar.

Forex traders said, the domestic unit opened on a higher note as investors awaited cues from the media briefing by RBI Governor Shaktikanta Das."

10:30 AM

RBI cuts reverse repo rate from 4% to 3.75%, Repo rate remains unchanged

More highlights from the RBI Governor's address to the media:

* Rs 50,000 crore special finance facility to be provided to financial institutions such as Nabard, Sidbi, NHB

* RBI cuts reverse repo rate from 4% to 3.75%

* Repo rate remains unchanged

* Economic activity came to standstill during lockdown

* 90-day NPA norm not to apply on moratorium granted on existing loans by banks

* Banks not to make any further dividend payout in view of financial difficulties arising from Covid-19

* Loans given by NBFCs to real estate companies to get similar benefit as given by scheduled commercial banks

* CPI inflation declined in March; inflation is on a declining trajectory

* RBI will monitor evolving situation continuously, use all its tool to deal with pandemic fallout

10:05 AM

RBI Governor Shaktikanta Das addresses media

Highlights from the RBI Governor's address to the media:

* RBI monitoring situation developing out of Covid-19 outbreak

* The mission is to do whatever it takes to prevent the epidemiological curve from steepening further

* IMF projection of 1.9% GDP growth for India is highest in G20

* IMF expects Indian economy to post sharp turnaround in 2021-22

* Impact of Covid-19 not captured in IIP data for February

* Contraction in exports in March at 34.6% much more severe than global financial crisis of 2008-09

* LTRO-2.0 to involve Rs 50,000 crore to begin with

10:00 AM

India’s stock surge only a bear market rally, say global majors

Global financial majors believe the recent surge in the Indian stock market is only a ‘bear market rally’ as concerns continue on the rising number of COVID-19 cases leading to a significant contraction in economic activity, thereby causing a huge dent in corporate earnings.

Goldman Sachs, in its latest report, has lowered India’s rating to ‘market weight’ with a Nifty target of 9,600 by June 2021.

“We view the current rally as a bear market rally, which are common in history,” Goldman Sachs stated in a report released on Thursday.

Read more
 

9:45 AM

RBI Governor to address media at 10 am

Shaktikanta Das will be addressing the media this morning.

Investors and other stake-holders will be looking forward to more measures to fight the economic impact of the nation-wide lockdown.

PTI reports: "Reserve Bank Governor Shaktikanta Das will address the media at 10 am on Friday amidst the steep fall in the rupee and the continuing volatility in other segments of the financial markets.

The rupee fell 0.55 per cent to a new record low of 76.86 against the US dollar on Thursday, while the equity indices have been on a see-saw in the wake of the coronaviirus outbreak losing over 30 per cent since January.

“Watchout for the RBI Governor @DasShaktikanta address live at 10.00 am today (April 17, 2020),” RBI said in a tweet.

This will the second time that the governor will be addressing the media since the nationwide lockdown was imposed from March 25."

 

9:40 AM

SBI report sees FY21 real GDP growth at 1.1%

State Bank of India (SBI) has estimated the real GDP growth for the current financial year at 1.1%. “With the lockdown now being extended till May 3 and simultaneously, the government providing some relaxations from April 20, we estimate the overall loss for FY21 at about ₹12.1 lakh crore or 6% of the nominal GVA (gross value added), taking the nominal GVA growth for entire year to be around 4.2%,” the SBI report, authored by Soumya Kanti Ghosh, group chief economic adviser, SBI, said.

“Nominal GDP for FY21 could be lower/closer to 4.2%, as there is a strong possibility of subsidies outstripping tax collections. However, taking nominal GDP growth at 4.2%, the real GDP growth for FY21 would be around 1.1%,” the report said. The earlier forecast for GDP growth for FY21 was 2.6%.

The report said a 4% slippage in nominal GDP is equivalent to ₹8 lakh crore of fiscal support.

Read more
 

9:30 AM

Stocks off to a strong start

The benchmark stock indices have begun the day on a strong note with gains of well over 3%

The Sensex is up over 1,000 points while the Nifty is trading close to the 9,200 mark.

Overnight, the Dow Jones Industrial Average closed flat for the day.

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Printable version | Jul 8, 2020 5:15:33 AM | https://www.thehindu.com/business/businesslive-17-april-2020/article31362018.ece

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