Economists the world over are saying there is no doubt global economy is already in a recession, as the hit to economic activity from the coronavirus pandemic has become more widespread. Majority of them said in a Reuters poll that the longest global expansion on record will end this quarter. They projected the US and the euro area to see negative growth and Chinese growth to shrink to a paltry 1.5%.
STREET PULSE: Where we stand Nifty futures on the Singapore Exchange traded some 50 points down at 7am (IST), signalling some more selloff on Dalal Street. Elsewhere in Asia, shares sought a reprieve this morning after Wall Street eked out gains, bonds rallied and oil boasted its biggest bounce on record.
Read More  | MSCI's broadest index of Asia-Pacific shares outside Japan firmed up 0.6%, while Australia's beleaguered market rose 2.9% and South Korean shares bounced 2.6%. But Japan's Nikkei went the other way and dipped 1% |
| In overnight trade on Wall Street, gains in tech stocks had helped the Dow rise 0.95%, while the S&P500 gained 0.47% and the Nasdaq 2.3% |
| Oil prices remained volatile on Friday after a dramatic rebound from multi-year lows, but stayed below $30 a barrel on fears the deadly coronavirus will push the world into recession with an oversupply. US benchmark WTI was up 2.22 per cent to $25.78 a barrel in morning Asian trade. Brent eased 0.91 per cent to $28.21 in volatile trading. |
| The scramble to hold cash amid fears of a freeze in the global financial markets led to overseas investors dumping shares en masse, sending the rupee tumbling to a record low at 75.31 on Thursday. It recouped some losses partially after RBI intervened strongly in the last hour of the session to close at 74.99 versus 74.23 a day earlier. |
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IT FIRMS FREEZE PAY HIKES… India's IT services companies may freeze pay hikes and cut bonuses to tackle business slowdown sparked by shutdowns due to the Covid-19 outbreak, replicating moves made during the global financial crisis over a decade ago. "Bonus, variable pay or any increment is right now on hold," said CP Gurnani, managing director of Tech Mahindra.
Read More ARBITRAGE FUND SUSPENDS FLOWS… Tata Arbitrage Fund, one of the top performing scheme in the category, has suspended fresh flows from March 19. Arbitrage funds look to benefit from the price anomalies between shares and its futures contracts. But, in the wake of the sharp sell-off in the stock market, arbitrage opportunities have dwindled. In this strategy, these schemes buy a share and simultaneously sell its futures in the event of differences in value.
Read More OFFSHORE FUND REDEMPTION HITS BLUE CHIPS… Offshore funds investing in India have been forced to liquidate some of their top bluechip holdings in the past month on account of stoppage of fresh inflows and increased redemptions by clients. The 34% fall in the stock market in line with the meltdown in global markets on worries that the disruptions caused by Covid-19 would lead to a global recession has led to investors making fresh investments in these funds.
Read More BOND SALES DRY UP… Bond sales have collapsed as companies and investment bankers freeze activity due to the Covid-19 pandemic. Companies, so far this month, have raised only a quarter of funds through bonds compared with March last year. They raised Rs 35,946 crore this month via bonds; it was Rs 150,536 crore in the entire month of March 2019, shows data compiled by JM Financial. A fall in capital expenditure too contributed to this, as it reduced the need to raise money.
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ECONOMY BOOSTER IN THE WORKS… The government is working on a package to support the economy facing the brunt of the Covid-19 outbreak that would include measure to address potential non-performing loans issue as businesses are shuttered to contain the risks. The government is ready to relax the fiscal goals to provide more funds to support the stressed sectors and the economy. Prime minister's office, finance ministry and regulators have been in touch and all possible steps immediately needed are on the agenda.
Read More COVID TASK FORCE FORMED… Prime Minister Narendra Modi announced a Covid-19 taskforce that would draw up measures to combat the economic effects of the pandemic, told employers not to cut the pay of staff and called for a "Janata Curfew" on Sunday. He warned of the outbreak's "wideranging" economic impact, underscoring the need to be prepared. "There is a need to follow two important things to fight this pandemic — resolve and restraint," he said in a televised address on Thursday.
Read More Meanwhile... CURBS ON PUBLIC TRANSPORT … India suspended international flights and sought to curb public transport and gatherings of people as the number of Covid-19 cases climbed to 173 on Thursday from 151 the day before and the death toll rose by one to four. The ban no international flight services for a week starting Sunday was announced after a meeting of the group of ministers chaired by health minister Harsh Vardhan. Public transport — metros, railways, domestic flights, buses — will reduce frequency and consider alternate seating to ensure social-distancing norms.
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