Ingenuity trumped theory and convention when RBI on Thursday delivered more than a quarter point interest rate reduction without actually effecting it. The surprise weapon revealed by the central bank — to treat banks' additional lending to realty, car financing and small industry as part of the money banks are obliged to park with RBI to meet the cash reserve ratio — has been accepted by one and all as a masterstroke. There is little doubt that RBI's `whatever it takes' approach was the best it could do to stoke demand in the economy.
STREET PULSE: Where we stand Nifty futures on the Singapore Exchange traded flat at 7 am (IST), indicating indecisiveness on Dalal Street. A mid-week rally in Asian share markets halted on Friday and oil prices steadied as the growing death toll and economic damage from a new virus spreading from China curbed further gains.
HERE'S WHAT TO WATCH  | MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.5%. Japan's Nikkei and Korea's Kospi headed lower in morning trade, but were on track for their best week of the year after earlier rises. |
| US stocks advanced for a fourth consecutive day and struck new record highs. Dow rose 0.3 per cent to return to a record high, while S&P500 gained 0.3 per cent and the tech-heavy Nasdaq 0.7 per cent. |
| Oil prices fell hard as the coronavirus outbreak gained pace and have been slow to recover. WTI crude was firm at 51.37 per barrel, but is flat for the week and remains 13% below its January 21 level. Brent settled at $55.12. |
| The rupee rose by 7 paise to close at 71.18 against the US dollar after RBI left policy rates unchanged but maintained its accommodative stance to boost growth. |
| LOOK WHO'S |  |
The Big Dividend Deal… India's top 25 dividend-paying MNCs, including HUL, Maruti Suzuki, Nestle, and Colgate-Palmolive, are likely to save more than Rs 2,800 crore collectively after the government's move to abolish the levy on distributing dividends. The savings could either be used to increase dividend payouts for both local and overseas investors, or be transferred to the overseas bases benefiting foreign shareholders, experts said. Data compiled by ETIG from the previous year's annual reports of the 25 largest locally-listed MNC dividend payers showed that the companies had declared ?17,765 crore in aggregate dividends in FY19.
Read More RBI Delivers A Masterstroke… RBI on Thursday sought to ease access to loan funds for new retail buyers of homes and cars and for small-business owners, freeing up high-street lenders from the need to maintain mandatory cash pools against incremental advances to these categories of borrowers. The move to ease the CRR, or CRR-equivalent, on these borrowing segments will help free up more resources for lending — even in the absence of another round of policy rate reduction and cost of funds is likely to ease as well.
Read More Finally, Loans Get Cheaper… Indian banks are transferring the benefits of reductions in policy rates to borrowers faster than they earlier did, with monetary transmission turning positive for outstanding rupee loans for the first time since Mint Road had begun the current easing cycle in February 2019. What this means is that existing bank loans, drawn before or in the initial days of the easing cycle, have now started turning cheaper. The transmission had been slow for new loans even as the RBI reduced the benchmark policy rate by 135 basis points since February 2019. The effects were barely visible for existing loans.
Read More | WHO'S |  |
Depressed Motown… Maruti Suzuki, Hyundai Motor and M&M, the nation's top three passenger vehicle makers, expect the automobile market to grow in low single digits in fiscal 2021, after a slow start to the year. A favourable base to compare with after a steep fall in sales this year, low interest rates and new rules that give the taxpayer an option to choose lower I-T rates are among the key reasons driving their estimates. But they expect sales in the first two quarters to be flat or even fall marginally, owing to pricier BS-VI models.
Read More Hiring Amid Startup Layoffs… Startups such as Oyo, Ola, Quikr, Zomato and Paytm may be going through a spate of layoffs, but about half a dozen leading B-schools reported a spurt in hiring by ecommerce companies and startups during their recently concluded final placements. IIM, Kozhikode; MDI, Gurgaon and Bharatiya Vidya Bhavan's SPJIMR said the sector recorded the biggest on-year jump in the number of offers during final placements for the Class of 2020. Several ecommerce companies and startups have indeed decreased hiring this year, and some have even skipped placements.
Read More Meanwhile... Switch Away From Dividend Hit... Financial Planners are advising investors with taxable income to consider switching from dividend options in equity-oriented mutual funds to growth. The advice comes after the budget put the onus on investors to pay tax on dividend income, based on their tax slabs, starting April. Also, any dividend above Rs 5,000 in a financial year will attract tax deduction at source.
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