RBI credit line for mutual funds?
The crash in the stock market, it seems, has got many investors pulling their money out of mutual funds. And, not surprisingly, mutual funds are having a hard time meeting these redemption demands.
Bloombergreports that the RBI is considering a credit line now to help mutual funds handle this pressing problem.
Japan plans massive stimulus to fight pandemic impact
A cash transfer scheme is part of the Japanese government's massive plan worth $503 billion to mitigate the impact of the coronavirus pandemic.
Reuters reports: "Japan's government is considering a fiscal stimulus package worth roughly 10% of annual economic output to combat the impact of the coronavirus outbreak, the Nikkei newspaper said on Wednesday.
The package, worth more than 56 trillion yen ($503 billion), will include cash payouts to households who have seen their income fall due to the epidemic, the paper said without citing sources.
That size of stimulus would put Japan in line with interventions from other major developed countries to fend off the shock from the health crisis that has closed shops and offices, locked down national populations and stretched supply chains close to breaking point.
Cash payouts may start as early as in May, with the government considering offering each eligible household up to 300,000 yen, the Nikkei said."
Coronavirus | Air India to incur ₹30-35 crore loss per day following suspension of operations
Flag carrier Air India is expected to incur losses to the tune of ₹30-35 crore per day following the suspension of operations in the wake of coronavirus pandemic, according to a source.
With stringent border controls across the countries to restrict movement of people, many countries have barred international flights in their territory amid COVID-19. India has also announced a temporary ban on flying.
“We will not be operating a single commercial flight along with other domestic carriers as per the government’s order, yet our daily losses will still be in the range of ₹30-35 crore.
Cash transfers and soft loans expected to mitigate corona crisis
In the next few days, the government is set to announce relief measures to help the economy withstand the effects of the 21-day lockdown. Here are some of the relief measures that are expected.
IANS reports: "Emkay Global Financial Services expects that the government would offer soft loans for Micro, Small and Medium Entreprises (MSMEs), cash transfers and restructuring of loans to provide to the sector which would be severely hit due to the lockdown.
In a report on Wednesday, Emkay said that for the “first time in living memory”, many industries or SMEs (small and medium enterprises) will be running on zero revenue for close to a month.
“We would expect measures like MSME soft loans, loan restructuring, cash transfers, etc. In addition, at the moment — given the quick decisions on shutting down public transport — it is unclear if we should be worried about the disease spreading from urban areas to the rural areas too,” Emkay said."
HUL demands steps for smooth transport of essential items
FMCG major Hindustan Unilever has urged central authorities to take necessary action to clear logistical bottlenecks in the supply chain.
This demand comes at a time when ground reports pour in saying that retail delivery agents trying to deliver essential goods during the lockdown are being harassed by the police.
PTI reports: "FMCG major Hindustan Unilever on Wednesday said clear instructions need to be provided to enforcement authorities across states for smooth transportation of essential items and functioning of supply chain amid the nationwide lockdown due to coronavirus outbreak.
The company said, in the last couple of days there has been a significant amount of difficulty in running the factories and transportation of goods.
“The government has rightly permitted food, vegetables, groceries and medicines to be excluded from the lockdown. However, clear instructions need to be provided to the enforcement authorities across states so that these essential items and the supply chain around it, is allowed to function,” a company spokesperson said."
Stock market update: Nifty, Sensex surge over 6%
The benchmark indices have surged this afternoon with both the Nifty and the Sensex up over 6%
The Sensex has gained over 1,900 points, while the Nifty has broken above the resistance level of 8,000 to trade at around the 8,300 mark.
It may, however, be too soon to call a change in trend as both indices are still some distance from breaking past their most recent high.
Ashish Rukhaiyar from Mumbai has more details:
A strong rally in the global markets along with expectations of an economic stimulus package by the government led to the equity markets staging a strong rally on Wednesday.
At 2:20pm, the 30-share Sensex was up 1,900 points or 7.12% to trade at 28,574 as banks and automobiles sector heavyweights that had lost heavy ground in the recent past saw strong buying support.
Index heavyweight Reliance industries was up 20% or ₹188.60 to trade at ₹1,131.70.
Stocks like Kotak Mahindra Bank, Axis Bank, Maruti Suzuki India, HDFC Bank, HDFC and ICICI Bank were anong the top gainers.
The broader Nifty was up 522 points at 8,323. A little over 1,100 stocks were up on BSE, as against 962 declines.
Supply of essential items hit by delivery bans
Despite assurances from the government that the delivery of essential goods will not be disturbed by the 2--day nation-wide lockdown, the situation on the ground is turning out to be a little different.
Forum Gandhi reports: "Retailers and online grocery players are facing issues in supply chain and deliveries as some local enforcement authorities are prohibiting delivery boys and van drivers.
Van drivers and delivery boys were being stopped at toll booths. A few of them were also beaten up by the police.
“We cannot deliver although there is a clear guideline from the ministry of consumer affairs, still there is a problem and it isn’t getting executed well at the ground level. Few of our guys went out, and they were stopped, and some were even beaten up. It’s a grave situation, and customers are crying for the food to be delivered we are gearing up. We are also taking precautions so that the products are delivered safe and we are not being allowed to deliver. We have such a high intensity of orders,” said Hari Menon, CEO, BigBasket."
Coronavirus | GoAir says all employees will have pay cut in March
During the last few weeks, GoAir has already taken some cost cutting measures — it has laid off its expat pilots, asked its employees to go on leave without pay on a rotational basis, and announced that its top leadership would be taking a pay cut of up to 50%.
Mr. Dube told employees in an official communication: “Under the current conditions we find ourselves in we are left with no choice but to extend salary cuts for all of us for the month of March. We will ensure that the lowest pay grades suffer the least.”
Some Indian ports declare force majeure, could delay oil discharges
As the nation-wide lockdown gets underway, we may see businesses make use of the force majeure clause to escape liability for delays and other forms of breach of contract.
Reuters reports on the development: "Some ports in India including those owned by Adani Ports & SEZ Ltd have declared force majeure after Asia's third-biggest economy announced a 21-day lockdown to prevent the spread of the coronavirus, documents seen by Reuters showed.
The federal shipping ministry has issued a letter allowing ports to use the COVID-19 pandemic as valid grounds to declare force majeure clause, according to a separate shipping ministry order also seen by Reuters.
The force majeure declaration could delay discharge of crude oil tankers, an Indian refining source told Reuters.
“Though FM is declared, some operations are continuing. Ports will not be responsible for any delay and any other thing as per the notification of Adani,” said the source."
Stock market update: Stocks clock decent gains
The benchmark stock indices managed to rake in significant gains during the morning session, up over 2%.
The Sensex is up over 600 points at the moment while the Nifty is trading close to the 8,000 mark, a significant resistance level.
Analysts expect the fiscal stimulus plans announced in the US, and expected to be announced in India soon, to soothe markets in the coming days.
Aggressive lockdown may shave off growth to 2.5%, says Barclays
The next few days will see the release of various estimates regarding the economic cost of the nation-wide lockdown announced by the government last night. Here comes the first one from Barclays.
IANS reports: "Government’s stringent and aggressive move of a full three-week lockdown across the entire country to contain spread of novel coronavirus will much sharper impact on country’s GDP in the April -June quarter than what was previously anticipated, Barclays said in a research report finalised after Prime Minister Narendra Modi’s speech to the nation on Tuesday evening.
In view of the changed circumstances, the bank has shaved down its calendar year (CY) 2020 GDP forecast for India from earlier 4.5 per cent to 2.5 per cent now and FY20—21 forecast to 3.5 per cent from 5.2 per cent earlier.
But Barclays has also projected a recovery and rebound in CY 2021 with GDP growing by 8.2 per cent and 8.0 per cent in FY21—22."
US officials approve $2 trillion stimulus plan
After intense negotiations, a $2 trillion stimulus plan to deal with the economic effects of the coronavirus pandemic has been approved by the White House and Senate.
PTI reports with details: "The unprecedented economic rescue package would give direct payments to most Americans, expand unemployment benefits and provide a $367 billion program for small businesses to keep making payroll while workers are forced to stay home.
One of the last issues to close concerned $500 billion for guaranteed, subsidized loans to larger industries, including a fight over how generous to be with the airlines. Hospitals would get significant help as well."
G-20 nations urged to offer 'war-time' stimulus worth trillions
Despite high levels of public debt across the world, the call for a massive fiscal stimulus has only grown louder amid the rising economic pain caused by pandemic-related lockdowns. The latest call comes from the UN Secretary-General.
PTI reports: "UN Secretary-General Antonio Guterres urged leaders of the world’s 20 major industrialized nations on Tuesday to adopt a wartime plan including a stimulus package in the trillions of dollars for businesses, workers and households in developing countries trying to tackle the coronavirus pandemic.
He said in a letter to the Group of 20 leaders that they account for 85 percent of the world’s gross domestic product and have a direct interest and critical role to play in helping developing countries cope with the crisis."
COVID-19 lockdown | Flipkart suspends operations
Walmart-owned Flipkart on Wednesday said it was suspending its operations temporarily as India entered into a 21-day lockdown to contain the spread of COVID-19 pandemic .
“Consequent to the order issued on March 24 by the Ministry of Home Affairs announcing a 21-day lockdown across India to contain the spread of the novel coronavirus causing Covid-19, we are temporarily suspending our services,” Flipkart said in a blogpost.
The blog further said “we will be back to serve you as soon as possible.”
"Unlimited QE" weakens the dollar
The US Federal Reserve's decision on Monday to flush the economy with freshly printed dollars, while encouraging for stocks, has had an adverse effect on the value of the dollar.
IANS reports: "The US dollar declined in late trading on Tuesday after the Federal Reserve offered unlimited quantitative easing (QE) policy and other measures.
The dollar index, which measures the greenback against six major peers, decreased 0.42 per cent at 102.0339 in late trading.
“The Fed’s decisive action is showing an effect,” as it increased its interventions package and got out “the heavy artillery,” Thu Lan Nguyen, analyst at Commerzbank Research, said in a note on Tuesday.
The US central bank announced on Monday a plan to purchase US treasuries and agency mortgage—backed securities with no limit to help markets function more efficiently amid coronavirus uncertainty."
Distilleries step in to meet jump in demand for hand sanitizers
The increased demand for hand sanitizers, amid the ongoing coronavirus pandemic, has got distilleries that usually make alcoholic drinks responding quickly to a new market opportunity.
Within days, distilleries have completely transformed themselves into facilities manufacturing essential hand sanitizers.
Banks likely to allow delays in loan repayments
As the nation-wide shutdown gets underway, regulators are taking steps to ease some of the pain likely to be experienced by bank customers.
PTI reports: "The Reserve Bank is likely to allow banks to give relaxation to customers in paying their EMIs as the forced lockdown across sectors due to coronavirus pandemic has impacted earnings severely, crippling repaying capacity of many businesses and individuals, sources said.
Many industry representatives have already demanded the government to allow late repayment of loans as businesses are badly hit due to no activity as the spread of coronavirus has led to a forced lockdown across the nation as well as globally.
While individuals who are self-employed, have small businesses, have to pay towards rents for shops, small vendors etc have taken loans for various purposes such as home, car, business or any other personal requirements are more concerned about their immediate loan liabilities.
A bank customer who runs a business and has to pay up towards loan will have to pay up from savings as there has been no business recently."
Sensex, Nifty get off to a slow start
The benchmark indices started the morning without much action with both the Sensex and the Nifty showing little gains.
The Sensex was up around 200 points while the Nifty was trading at around 7,850.
Overnight, the Dow Jones surged over 11% to record its best day since 1933 as investors got excited about the prospects of a massive government stimulus to revive the US economy.