Last time Warren Buffett was hoarding record cash, it was during the dot com bubble of 2000. He is doing that again now. That is not the only similarity former Goldman Sachs analyst Will Meade sees in the current market setup. In 2000, US stocks dropped 40%, then bounced 42% off the bottom only to again crash 43% to make a new low four months later. Drawing parallels, Meade predicts a 40% drop in the US market over the rest of 2020, 'exactly like' the dot com bubble burst.
MARKET CUES: Where we stand >>>  | Nifty futures on the Singapore Exchange traded 11 points lower at 7 am (IST) in signs that investor sentiment will remain weak on Dalal Street |
| On Tuesday, Nifty50 failed to capitalise on early gains and ended up forming a bearish candle on the daily chart. The follow-up selling after forming an Island Reversal pattern in the previous session confirmed weakness in the market, analysts said. They see potential for the Nifty50 to test the 8,800-8,900 region in the near future. |
| Nifty sustaining below the rising trend line breakdown level on the daily chart has bearish implications. Momentum oscillator RSI also turned southward and saw a negative crossover, which doesn't bode well for the bulls. |
| Elsewhere in Asia, markets traded mixed, with investors weighing optimism that more economies are moving toward easing lockdowns. Equities in Shanghai retreated as markets reopened after a holiday. Shares also dipped in Sydney and Taiwan, while those in Seoul and Singapore advanced. |
| Futures on the S&P500 ticked lower. US stocks ended higher on Tuesday, but well off their best levels. S&P500 rose 0.9%, Dow climbed 0.6%, and the Nasdaq 1.1% |
| Oil prices slipped back Wednesday after two days of gains, although Brent crude remained above $30 a barrel, as renewed US-China tensions offset optimism about the easing of coronavirus lockdowns. Brent fell 1.1 per cent to $30.63 a barrel in early Asian trade. |
| The rupee surged 10 paise to close at 75.63 against the US dollar on Tuesday, amid higher domestic equity markets and gains in some Asian currencies. |
| The dollar rose for a third session against most major currencies on Tuesday, in line with US stocks. The greenback gained 0.7% versus the Swiss franc, another safe-haven currency, but slipped 0.3% against the yen. The euro, meanwhile, fell 0.5%. |
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Govt plans ITC, Axis stake sales... The government is seeking to raise around to Rs 22,000 crore by selling its entire stake in FMCG–hospitality–cigarette major ITC and Axis Bank, one of the leading private sector lenders. "Given the current timeline, the government is hoping to complete the transaction by the end of this week or early next week," a person familiar with the development told ET. The transaction will be done through a bulk deal on the bourses.
Read More Seeking safety in govt bonds... Government bonds, which were not even on the radar of individual investors, are in demand these days. Given the increasing risk aversion, investors are now buying the seven-year 7.75% non-tradable bonds. "It makes sense for retail and HNI investors," said Deepak Jasani, head of retail research at HDFC Securities. "This is the only instrument where the rate has not yet been cut in line with the trend. Before it happens, we are seeing a surge in investor interest. The post-tax returns would be less, but investors are currently prioritising safety."
Read More Discounts, cashbacks set to return… Discounts, cashbacks, bank and digital wallet offers are reappearing from FMCG and grocery chains, both online and at brick and mortar stores. Consumers may also see large apparel retailers, other big brands and ecommerce majors rolling out huge discounts across categories as soon as markets and malls reopen. As supplies get normalised and the spike in demand dips, players such as Amazon, Grofers, BigBasket and Spencer's Retail are planning to roll out incentives.
Read More Another Jio deal in the offing?... Reliance Jio Infocomm's parent Jio Platforms could potentially offload another 8% stake to strategic financial investors on the heels of recent deals with US PE firm Silver Lake and social media giant Facebook, analysts said. Another mega stake sale could reduce its dependence on an IPO for future cash infusions and give it a first-mover advantage over rivals Bharti Airtel and Vodafone Idea in aggressively buying 5G airwaves in the next sale, analysts said.
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CEA says no free lunch... Chief economic adviser KV Subramanian said India's GDP will contract in the first quarter, but is likely to grow 2% for the full financial year. He said a stimulus package is expected 'soon' but cautioned against demands for government support similar to that provided by other nations as the cost would be too high. "One of the first things that anybody learns in economics is that there is no free lunch," he told ET in an interview. "If you are going to monetise (the deficit), that will have some impact on macro fundamentals. We cannot pretend to do policy as if there are no costs."
Read More Bank stocks downgraded... Bank of America Securities has downgraded SBI, IndusInd Bank, Bank of Baroda and ICICI Bank as it believes the banking sector is on the verge of a new and unique non-performing asset cycle panning across corporate and retail segments. The brokerage has cut earnings estimates on banks by up to 90% and target prices by around 60%. HDFC Bank remains the only buy for BofA Securities in the sector. Its EPS estimates are on an average 15-20% below consensus estimates.
Read More Corporate borrowings dry up... Borrowings by 1.7 million companies tracked by the ministry of corporate affairs have nearly dried up since the government imposed a nationwide lockdown on March 25 to rein in the Covid-19 outbreak. Charge filings, which indicate new loans or additional collateral towards past loans, fell 57.4% to 277 in March and April combined from 650 in January and February, according to data compiled by Propstack, a financial data intelligence provider.
Read More Meanwhile... Jobless rate shoots up... India's jobless rate shot up to an all-time high of 27.1% in the week ended May 3 and the situation could get worse in the coming weeks, says independent think tank CMEI. The unemployment rate in April was 23.5%. "This is the highest unemployment rate so far. It seems to have risen because of a surge in labour participation rate from 35.4% in the week ended April 26 to 36.2% in the week ended May 3," CMIE said.
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