Stocks opened the day weak with the benchmark indices losing around 1% after recording some gains in the pre-open session.
The rupee too slipped against the dollar, reflecting the weak sentiment in the domestic equities market.
Meanwhile, new estimates keep coming in to shed further light on the economic impact of the lockdown imposed to stop the spread of the coronavirus pandemic.
The latest estimate coming from the Asian Development Bank pegs India's likely growth rate in FY21 to be 4%
Join us as we follow the top business news through the day.
Europe witnesses sharp drop in economic activity
India’s power demand falls over 25% to 125.81 GW on April 2
India’s peak power demand slipped over 25% to 125.81 GW on Thursday compared 168.32 GW on April 2 amid the lockdown to contain COVID-19 outbreak , showed power ministry data.
In actual terms, the demand fell around 43 GW on Thursday compared to the same day a year ago. However, the data showed that peak power demand met has stabilised around 120 GW after March 22.
The government has imposed 3-week lockdown to fight the pandemic from March 24.
The demand was down mainly due to lower requirements from industry and state power distribution companies (discoms) across the country due to the lockdown.
RBI reduces market hours owing to "unprecedented situation"
Manojit Saha reports from Mumbai:
The Reserve Bank of India has reduced the timing of market hours from April 7 to April 17 due to the unprecedented situation that has emerged due to the spread of Coronavirus.
The call money market, government securities market, currency market, and many others which typically open at 9 AM and close at 5 PM will mostly now be open between 10 AM and 2 PM.
"The unprecedented situation created by the COVID-19 outbreak has necessitated lockdowns, social distancing, restrictions on movement of people and non-essential activities, work from home arrangements and business continuity plans. The resultant dislocations have adversely impacted the functioning of financial markets. Staff and IT resources have been severely affected, posing operational and logistic risks. The thinning out of activity is impacting market liquidity and increasing volatility of financial prices," RBI said.
"In order to minimise these risks and to ensure that market participants maintain adequate checks and supervisory controls while optimising thin resources and ensuring safety of personnel, it has been decided to revise trading hours for various markets," the RBI said.
Stocks end day down 2%
It was yet another day of steep losses at the stock exchanges with the Nifty and the Sensex losing over 2% over the trading session.
The Sensex was down well over 600 points while the Nifty settled below 8,100 as stocks continued to struggle to make a decisive trend reversal amid persistent selling pressure.
Traders seek interest waiver on loans to see through crisis
Last week, the RBI offered a 3-month EMI moratorium on all term loans to prevent a rise in default rates.
Meanwhile, the trading community has sought a larger concession to weather the current economic crisis.
PTI reports: "The Confederation of All India Traders (CAIT) has written to Union Finance Minister Nirmala Sitharaman to seek a relief package for traders, including waiver on loan interest for lockdown period.
It stressed the need for a strong stimulus package for small businesses in the country in view of the packages announced for other sectors of the economy.
Noting that EMIs have been deferred for three months on certain loans, the traders body said in its letter: “Also the bank interest on CC (cash credit) /OD (overdraft account)/TL (term loan) or any kind of loan should be waived for the effected period of lockdown.”
The waiver would allow all Indians to survive with the reduced payouts and for businesses to survive the zero—revenue period, it pointed out."
Fed's dollar loans may offer only temporary respite for emerging markets
Edited excerpts from a Reuters report: "Starting April 6, the Fed will allow foreign central banks to exchange Treasury securities for overnight dollar loans, giving them access to cash and further easing strains in global funding markets.
The move will allow countries that lack standing swap lines with the Fed to get their hands on dollars if they need to support their currencies, without having to sell U.S. Treasuries -- often the most liquid part of their reserve holdings.
But developing economies' longer-term problems cannot be resolved by the Fed, whose aim is predominantly to prevent a fire-sale of Treasuries should currency selloffs turn extreme.
Much capital invested in developing countries is from overseas and doesn't stick around when disaster hits -- a record $83.3 billion fled last month from emerging stocks and bonds, the Institute of International Finance said this week.
A collapse in trade and commodity prices has shrunk dollar supply. This comes after years of a widening dollar funding gap -- the difference between non-U.S. banks' dollar assets and their liabilities -- which exceeded $1.4 trillion in 2019, according to the International Monetary Fund."
Bharat Biotech set to develop and test vaccine for COVID-19
Bharat Biotech is getting into development and testing of a vaccine against COVID-19 called CoroFlu as part of an international collaboration of virologists and vaccine makers.
CoroFlu is a one drop COVID-19 nasal vaccine built on a flu vaccine “backbone” that has been shown to be safe and well-tolerated in humans, in Phase I and Phase II clinical trials, the Hyderabad-headquartered vaccine maker said.
Announcing that ‘CoroFlu’ is under development, a statement from the company on Friday said the product is part of an international collaboration of virologists at the University of Wisconsin–Madison and vaccine companies FluGen along with Bharat Biotech.
Bank shares tank after Moody’s changes outlook on Indian banks to negative
After the decision by Moody's to downgrade its outlook for Indian banks amid the nation-wide economic lockdown, bank shares are witnessing heavy selling today.
PTI reports: "Bank shares on Friday dropped up to 15 per cent after Moody’s Investors Service changed the outlook for Indian banking system to negative from stable.
Shares of RBL Bank tumbled 14.99 per cent, Kotak Mahindra Bank tanked 7.77 per cent, IndusInd Bank fell 7.33 per cent, ICICI Bank 6.56 per cent, SBI 4.34 per cent.
Also, City Union Bank slumped 4.21 per cent, Axis Bank dipped 3.86 per cent and Federal Bank 3.26 per cent.
The BSE Bank index was quoting lower by 3.74 per cent at 20,098.85.
Moody’s Investors Service on Thursday changed the outlook for Indian banking system to negative from stable, as it expects deterioration in banks’ asset quality due to disruption in economic activity from the coronavirus outbreak."
Coronavirus | Companies cannot force leave without pay, say experts
Companies cannot force employees to take leave without pay amid the 21-day lockdown imposed by the government to control to the spread of COVID-19 , according to experts.
“In general, annual leave is a statutory entitlement to be availed at the employee’s discretion and as per terms of company policy. It cannot be forced upon the employees,” Vikram Shroff, head of HR Laws at Nishith Desai Associates, said.
These are, however, exceptional circumstances and the concept of ‘no work no pay’ may be tested. The government has clarified that employees shall be deemed to be on duty in case of a lockdown. The employer may treat it as leave without pay if an employee refuses to work from home, he said.
Morgan Stanley sees US Q2 growth shrinking 38%
The economic lockdown imposed to prevent the spread of the coronavirus pandemic is set to impose a huge cost on the wider economy.
MarketWatch reports on the impact: "Morgan Stanley has lowered its U.S. economic forecasts, as social distancing measures and closures of nonessential businesses have spread to an increasing number of states.
The bank lowered its first-quarter GDP forecast to -3.4% from -2.4% and its second-quarter GDP forecast to -38% from -30%.
"We expect the U.S. economic recovery will be more drawn out than previously anticipated, marked by a deeper drop into recession and slower climb out," the economists said. Its third-quarter GDP estimate of 20.7% growth implies that the level of real GDP in the third quarter will recover back only 35% of the lost output in the first half of the year.
On an annual average basis, Morgan Stanley expects real GDP contracting 5.5% in 2020, the steepest annual drop in growth since 1946."
Pollution levels rise as China eases lockdown
Production of masks, coveralls sees increase
With the spread of COVID-19 in the country, demand for protective gear such as masks and coveralls has shot up. These products, now made by a handful of manufacturers, are attracting investments because of increasing demand.
According to government sources, the current production of N95 masks in the country is about 75,000 to one lakh pieces a day and coverall suits 5,000.
The production of N95 and other types of similar versions of industrial masks was 10-15 lakh a month and it is now about 25 lakh a month (average). There are limitations in increasing production of these masks as the machinery needs to be imported.
Atta, pulses get expensive even as world food prices drop
Global food prices dropped in March driven mainly by the fall in the commercial use of vegetable oils and sugars amid the rapid spread of the coronavirus pandemic.
IANS reports: "World food prices declined sharply in March, as every sub-index saw prices fall as demand fell amid the ongoing coronavirus pandemic, according to a study released by the UN Food and Agriculture Organization (FAO).
The overall index fell 4.3 per cent, the second consecutive contraction and the biggest one-month decline in nearly two years. Despite the fall in food prices in March, the overall index was still 2.7 per cent higher than the same point last year, Xinhua reported citing the study released on Thursday.
The biggest falls in the index came from prices for vegetable oil and sugars."
But domestic supply-chain troubles within India have meant that there is a sharp spike in the prices of essential items.
More from IANS : "The prices of flour (atta), pulses, ‘besan’ and edible oils have gone up due to disruption in the supply chain following the 21-day countrywide lockdown called to contain the coronavirus pandemic.
Wheat flour (atta) saw a rise of Rs 5 per kg, whereas ‘besan’ rose by Rs 10-12 a kg. Prices of edible oil too rose by Rs 5 per kg.
Retailers as well as wholesalers cite shortage of supplies from distributors. “The supply of ‘atta’ and ‘besan’ is low, and whatever is arriving is available at a higher prices”, said Sushil Kumar, a wholesaler from Delhi’s Shahdara."
ADB pegs India's FY21 growth to drop to 4%
Here's one more estimate of the likely drop in growth due to the current economic lockdown. This one comes from the Asian Development Bank.
PTI reports: "India’s economic growth is likely to slow down to 4 per cent this fiscal on the back of the current global health emergency, Asian Development Bank said in its outlook for financial year 2020-21 on Friday.
Growth in India will remain subdued after the country suffered a sharp slowdown last year, from 6.1 per cent in fiscal 2019 to 5 per cent, as a credit crunch that originated in the non-banking financial sector severely hampered bank lending , the Manila-based lender said.
Noting that COVID-19 has not yet spread extensively in India, ADB said measures to contain the virus and a weaker global environment will whip up headwinds, offsetting support from corporate and personal income tax cuts as well as financial sector reforms which are meant to revive credit flows.
In its Asian Development Outlook (ADO) 2020 the lender said: Gross domestic product (GDP) growth in India is forecast to slow further to 4 per cent in FY21 before strengthening to 6.2 per cent in the next fiscal."
TV viewership up 37% in first week of lockdown
Television viewership has seen a sharp increase of 37% from March 21 to 27 as compared to the pre-lockdown period from January 11 to 31.
The TV consumption data for the first week of the lockdown was released by BARC India-Nielsen on Thursday.
The sharp increase is on account of people staying at home during the lockdown and watching more news and movies, as per the findings.
This period witnessed the highest-ever TV viewing at 1.20 trillion minutes. And 622 million new viewers were found watching TV for 4 hours 40 minutes daily.
Rupee opens weaker by 48 paise
With sentiment in the domestic equities market being quite weak in the past few days, a similar mood is being witnessed in the currency market as well.
PTI reports: "The Indian rupee fell 48 paise to 76.08 against the US dollar in opening trade on Friday, as investors braced for a prolonged period of uncertainty as coronavirus cases witnessed a sharp rise across the world and in India.
Forex traders said weak opening in domestic equities dragged the local unit amid mounting fears of a coronavirus-led economic slowdown.
The rupee opened weak at 75.97 at the interbank forex market and then fell further to 76.08, down 48 paise over its last close.
The rupee had settled at 75.60 against the US dollar on Tuesday."
Movement of essential goods hit by disruptions
With the country witnessing largescale disruptions in transportation network and supply chain on account of the COVID-19 spurred lockdown, the logistics sector is likely to face more hardships as current reserves are depleting and manufacturing is yet to pick up.
“The situation does not seem to be improving. Demand for movement of essentials goods is increasing frantically, but supply is not even close to matching it,” said Abhishek Gupta, MD, Prakash Parcel Services Ltd.
“We are most likely entering a phase where supply will be disrupted very soon. Instructions from the Ministry of Home Affairs to allow trucks to operate has not percolated down yet in many places. Warehouses and factories, to unload trucks, have not been asked to open,” he said.
“The driver count per 100 trucks is now below 15 as compared to 58 before the virus outbreak. Not more than 10% of trucks are running and drivers are finding ways to return home,” he said.
Stocks open in the red
The benchmark stock indices have opened this morning in the red with losses of over 1%
Both the Nifty and the Sensex were up over 1% in the pre-open session.
The Sensex has lost over 300 points while the Nifty is trading below 8,200
Overnight, the Dow Jones Industrial Average gained over 2% after opening with losses.
