The stimulus lesson from 2008-13 was not on the size, but the mistiming of the exit from it. Sustained high fiscal deficits resulted in high inflation and widened current account deficit. The current situation links the fiscal stimulus with the rate of economic growth. A low increase in fiscal deficit will result in a mild rise in the debt-to-GDP ratio at the cost of a tepid rise in economic momentum. A large fiscal deficit increase now, in contrast, can result in a larger, immediate rise in debt-GDP ratio, but yield a faster rate of economic growth. That's the tradeoff needed in order to boost demand, which can produce immediate, tangible results.
MARKET CUES: Where do we stand >>>  | Nifty futures on the Singapore Exchange traded some 62 points lower at 7 am (IST) in signs that Dalal Street might see a weak start ahead of the expiry of weekly options |
| On Wednesday, Nifty formed a bullish candle on the daily chart. Daily strength indicator RSI and the momentum indicator Stochastic both have turned bullish along with a positive crossover. Analysts said this supports the view that the upside momentum may continue |
| Options data indicated Nifty's immediate trading range between 8,800 and 9,300 levels. India VIX fell 9.23 per cent to 35.81 level. A decline in volatility has supported some recovery. |
| Equity benchmarks in other Asian markets edged up. Hang Seng rose 0.5%, Shanghai Composite 0.2%, South Korea's Kospi index advanced 0.6% and Australia's S&P/ASX 200 Index added 0.3%. |
| US stocks rallied overnight on upbeat quarterly results from retailers Target and Lowe's that had investors focus on US businesses reopening. The Dow advanced 369.04 points, or 1.5%, to finish at 24,575, while S&P500 climbed 48.67 points, or 1.7%, and the Nasdaq 190.67 points, or 2.1%, closing to 9,375 |
| Oil prices edged higher on Thursday after data showed US crude inventories fell again, easing concern about a supply glut. Brent futures for July delivery traded 17 cents, or 0.5%, higher at $35.92 a barrel while WTI crude futures gained 4 cents to $33.53 |
| The rupee depreciated by 14 paise to 75.80 against the US dollar on Wednesday as headwinds due to US-China trade tiff and worries over the second wave of coronavirus infection weighed on investor sentiment. |
| The dollar nursed broad losses on Thursday and riskier currencies held gains. The euro last sat just below that peak at $1.0975 and the dollar inched higher on the Japanese yen in Asian trade . |
| The dollar ticked higher for the first time this week. The Bloomberg Dollar Spot Index rose 0.3%, even as the yen fell 0.1% to 107.65 against the greenback. The offshore yuan traded at 7.1053 to the dollar and the euro at $1.0967, down 0.1%. |
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Flights set to resume from Monday... Domestic flights will finally start taking to the skies from Monday (May 25) in a gradual manner, two months after being stopped as part of the national lockdown imposed to check the spread of the novel coronavirus. Bookings will start from Thursday. However, international flights will stay grounded for now. Airports will aim for contactless entry of flyers. The ministry is also looking at fare-capping by putting upper and lower limits that airlines can charge for different routes.
Read More Now KKR eyes Jio platform stake... KKR and Co is in active discussions to invest in Reliance Industries' Jio Platforms, seeking to join peers and technology-focused investors like Silver Lake, Vista Partners and General Atlantic and back the telecom technology-commerce triple play that Mukesh Ambani is aiming for. KKR has been carrying out diligence for a while now and is expected to be nearing a deal that might see it deploying between $750 million and $1 billion, similar to previous rounds.
Read More NBFC scheme finalised... The government has finalised a special liquidity scheme for NBFCs and widened the scope of its existing guarantee to public sector banks that finance them. Under the Rs 30,000-crore special liquidity scheme, a large PSU bank will float a special purpose vehicle, or SPV, which will issue bonds guaranteed by the government, to be purchased by RBI. The SPV will use the funds so raised to manage a stressed asset fund to purchase bonds issued by NBFCs that will mature within three months.
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Banks want IBC cases fast-tracked… Leading banks have reached out to the Ministry of Corporate Affairs to fast-track 40 high-value insolvency cases that have been resolved and are awaiting approval from the bankruptcy courts. With prospects of almost zero recovery over the next few months, banks are worried that buyers may call off deals or reduce valuations significantly if the final approvals are delayed due to stalled economic activity.
Read More Sebi okays listing of MF schemes... Markets regulator Sebi has allowed listing of units of mutual fund schemes that are being closed down. The decision is seen as a move by the regulator to help the over three lakh unit holders of Franklin Templeton MF's six schemes by giving them the option to exit earlier than the full closure. However, such exits are likely to be at a huge discount to their actual value, industry players said.
Read More India Inc told to disclose Covid hit.... Sebi has asked listed companies to disclose the expected impact of the lockdown on account of Covid-19 on their revenues and profits, in line with international practices. The move is aimed at helping investors assess the extent of damage caused by the disruption on the business. Rules mandate companies to disclose material events which have a bearing on their performance or operations in case of such disruptions.
Read More Ola lets go one-fourth of work force.... Ride-hailing service Ola has asked over a quarter of its workforce in India to leave the company in a bid to combat the economic disruption wrought by Covid-19. Ola has seen revenue drop by 95% in the past two months, founder and CEO Bhavish Aggarwal wrote in an email to employees on Wednesday, resulting in the decision to lay off employees in order to reduce costs amidst the pandemic.
Read More Meanwhile... US begins move to bar Chinese IPOs… The US Senate overwhelmingly approved a legislation on Wednesday that could lead to Chinese companies such as Alibaba Group Holding and Baidu being barred from listing on US stock exchanges amid increasingly tense relations between the world's two largest economies.
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