What will be cost to the Indian economy due to the coronavirus outbreak? A Ficci survey shows 53 per cent of Indian businesses have reported a marked impact on operations at the early stages, while 80 per cent reported a drop in cash flow. About 60 per cent indicated a hit on supply chains; 30 per cent have put in place Work-from-Home policies and 42 per cent feel it could take up to 3 months for normalcy to return. UNCTAD estimates the impact on India's external trade to be about $348 million, while ADB calculates the losses in personal consumption at between $387 million and $29.9 billion. Meanwhile, OECD has revised down India's growth forecast by 110 basis points to 5.1% for 2020-21.
STREET PULSE: Where we stand Nifty futures on the Singapore Exchange traded some 350 points higher at 7am (IST), signalling a possible rebound on Dalal Street. Elsewhere in Asia, shares rallied as the US Fed's sweeping pledge to spend whatever it took to stabilise the financial system eased debt market pressures.
Read More  | Japan's Nikkei gained 4.9 per cent. MSCI's broadest index of Asia-Pacific shares outside Japan added 1.2 per cent, though that followed a drop of almost 6 per cent on Monday. South Korea and Australia markets also recouped a little of their recent losses. |
| Wall Street's slide deepened overnight as unprecedented moves by the US Federal Reserve to shore up credit across the economy proved insufficient to sooth investors' fears. Dow tumbled 3.04 per cent to 18,591, while S&P500 lost 2.93 per cent to 2,237 and the Nasdaq 0.27 per cent to 6,860. However, e-Mini futures for the S&P500 jumped 1.9 per cent this morning. |
| Oil prices rallied at the open in Asia Tuesday on Federal Reserve measures to boost the coronavirus-hit US economy, offsetting concerns about a failure to approve a rescue package. WTI crude rose 4.3 per cent at $24 a barrel while Brent gained 3.8 per cent to $28 |
| The rupee on Monday cracked 109 paise to hit its fresh lifetime low of 76.29 against the greenback following heavy selling in the domestic equity market amid a rise in the coronavirus cases in the country. |
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LOCKDOWN INTENSIFIES… India will intensify the Covid-19 lockdown by stopping all domestic flights from midnight on Tuesday and said those out and about without good reason could face arrest and jail time. The infection count rose to 468 on Monday from 396 the day before while the death toll rose to nine. Maharashtra and Punjab stepped up the shutdown already prevailing in the states by imposing a full curfew, as did Puducherry. The Centre asked all states to take strict legal action against violators after Prime Minister Narendra Modi tweeted his displeasure amid TV pictures of people milling about in crowded markets and elsewhere.
Read More RUPEE FALL TRIGGERS RUN FOR COVER… The rupee fell from a cliff on Monday, tipped over the edge by savage selling in Indian equities and other financial assets, sending harried importers to buy expensive foreign-currency covers for unhedged liabilities due for payments. Hedging costs surged almost two percentage points over the weekend after Mumbai stocks made their worst retreat, plumbing the rupee to the level of 77 to a dollar. The one-month forwards premium is now at 8.67%. Three- and six-month contracts quoted 85-38 basis points higher compared to last week.
Read More PURI CALLS FOR RELIEF… HDFC Bank chief executive Aditya Puri said the Indian economy is in an intensive care unit, requiring both RBI and the government to come up with emergency measures to prevent the economy from slipping into a coma. The longest-serving bank chief in the country said his bank was in fine fettle and that speculation of a surge in bad loans from its unsecured loans portfolio was unrealistic as its exposure was only to the staff of top-rated companies which could navigate the current storm.
Read More MOTOWN BRACES FOR BIG HIT… The automotive industry is expecting a loss of about 750,000 units in production and $2 billion in revenue in March alone because of the lockdowns to combat the Covid-19 outbreak. Despite the tough business environment, several automakers said they would not lay off any permanent or temporary workers. The government has also told India Inc to not cut jobs or salaries.
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UTILITIES STEADY IN MARKET MAYHEM… Through the 2008 financial crisis, when blue-chip investment banks were collapsing overnight, utility companies stood out amid the mangled debris. It's no different through the ongoing encore a decade later. Both Indian and global utilities firms outperformed their benchmark indices by at least 10% during the 2008 crisis, and are doing so now. Valuations of Indian utilities are currently 50% below those during the Global Financial Crisis. Investors should look at companies with an assured return on equity — about 15% — and that would provide adequate earnings visibility and command a premium over current valuations, said analysts.
Read More FM SOFTENS BLOW ON NRIs… Finance Minister Nirmala Sitharaman softened the contentious Budget proposal to tax non-resident Indians, putting in place a threshold of Rs 15 lakh for the levy of tax on incomes emanating from India, while leaving out global incomes from the tax ambit. Through amendments to the finance bill, she provided a carveout for REITs and InvITs in respect of changes in the taxation of dividends announced in the Budget. Non-resident ecommerce firms will face a 2% equalisation levy or the so-called Google Tax. Sitharaman also raised special additional excise duty on petrol and diesel.
Read More RBI BOOSTS LIQUIDITY... RBI has intensified liquidity enhancement measures to unclog the credit markets that are beginning to see a squeeze with short-term rates climbing as investors hoard cash amid uncertainty about the impact and duration of the coronavirus outbreak. The measures are being hurried through after rates in the inter-bank call money market hardened amid some banks declining to trade with weaker ones and yields on commercial paper and corporate bonds climbed. The overnight call rate surged as high as 5.50% Monday, up from 4.96% on March. 2. The benchmark repo rate is at 5.15%. The central bank will inject Rs 1 lakh crore in variable repo trades.
Read More VIRUS FIGHT COST UNDER CSR... Funds spent on measures to tackle the Covid-19 pandemic will be counted towards the corporate social responsibility (CSR) activity of companies, the ministry of corporate affairs (MCA) said in a circular on Monday "Keeping in view of the spread of novel coronavirus (Covid-19) in India, its declaration as a pandemic by the World Health Organisation (WHO), and, decision of the government of India to treat this as a notified disaster, it is hereby clarified that spending of CSR funds for Covid-19 is eligible CSR activity," the notification said.
Read More Meanwhile... NO JOB CUTS, PLEASE!… The government asked public and private establishment employers not to cut salaries or lay off employees during the coronavirus pandemic. In the backdrop of such a challenging situation, all employers of public or private establishments may be advised not to terminate their employees, especially casual or contractual workers, or reduce their wages, the labour ministry said.
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