When the government asked employers to pay salaries during lockdown and not fire people, besides trying to protect jobs and incomes, the other motive was to make sure India's consumption power stays intact to fuel a rapid rebound when the health crisis gets over. Now, as states seek to cut expenditures, stop dearness allowances, trim salaries, slap extra taxes on fuel and liquor, they are working at cross purposes. These steps will work in the reverse way, when the country needs more spending power in consumers to ensure faster pickup in demand for goods and services so that businesses can turn around quickly.
MARKET CUES: Where we stand >>>  | Nifty futures on the Singapore Exchange traded 26 points higher at 7 am (IST) in signs that investor sentiment may look up on Dalal Street |
| Nifty50 on Wednesday snapped a two-day losing streak even as it formed an indecisive Spinning Top candle on the daily chart. The daily price action formed a Small Bullish candle carrying shadows on both sides, indicating indecisiveness among market participants. |
| Nifty has been making lower highs and lows since last three sessions and sustaining below trend line breakdown levels. Chandan Taparia of Motilal Oswal maintained a negative to rangebound stance on market and said he expects Nifty to fall towards 9,000 and then 8,800 levels in the coming days. |
| Elsewhere in Asia, stocks slipped as investors digested mixed corporate earnings and worsening economic data. Japanese shares retreated as traders in Tokyo returned from holidays, while South Korean, Chinese and Hong Kong equities saw modest losses. |
| Wall Street ended mostly lower in overnight trade. The Dow lost 0.91%, S&P500 0.7% while the Nasdaq added 0.51% as traders betted on tech and stay-at-home sectors. |
| Oil prices rose on Thursday after US inventories swelled less than expected. Brent crude gained 12 cents to $29.84 a barrel and WTI crude rose by 19 cents to $24.18, after declining more than 2% in the previous session. |
| The rupee depreciated 9 paise to close at 75.72 against the US dollar, following a strong American currency overseas and fears of a renewed trade war between the US and China |
| In currency trading, safe-havens rose on Wednesday. The yen hit a seven-week high against the dollar and a 3-1/2-peak versus the euro. The dollar rose for a third session against a basket of peers. |
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Shift from debt funds to corp FDs ... Fixed deposits of top-rated finance companies such as HDFC, Bajaj Finance and Mahindra Finance are in demand as investors shy away from debt mutual funds following the Franklin Templeton fiasco. Even after a cut in interest rates by 20-40 basis points starting May, investors are flocking to these deposits because of better returns and a perception of safety amid subdued outlook for equities. Mahindra Finance and Bajaj Finance now offer 7.8% and 7.6% returns on a five-year FD, while HDFC offers 7.1%.
Read More India Inc wants to restart economy… India Inc now wants India to fully get back to work, economy and jobs to be the central focus, and to stop alarmism about Covid-19, because policymakers must recognise that the country will have to live with and work around the spread of infection. Industrialists, CEOs and bankers ET spoke to said they were all of the view that meaningfully restarting the economy, helping low-income earners and putting confidence back in doing business should be top priorities now.
Read More Motown to dole out big offers… Automakers are planning to tempt customers back into showrooms with a range of offers, having posted zero sales in April, which followed one of the worst years in sales. The offers will include 100% on-road financing, instalment holidays and vehicle loan repayment assurance programmes, among others. The companies are trying to resume sales to people wary of costly purchases amid fears of salary cuts and job losses.
Read More Top lenders revive bad bank plan… State Bank of India, ICICI Bank and some other large lenders came together on Wednesday to resurrect the idea of a 'bad bank' as an economic slowdown intensified by Covid-19 threatens to saddle lenders with more sticky loans. The proposed 'bad bank' would function like a large asset reconstruction company for the banking system, holding a chunk of NPAs and giving lenders a chance to improve their balance sheets.
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Franklin blames Sebi for fiasco... Franklin Templeton's global chief has partly blamed a October 2019 Sebi rule for the fiasco that led to winding up of six of its debt schemes. The market regulator had mandated mutual funds to cap their exposure to unlisted NCDs at 10% of the schemes' corpus. In a conference call after its earnings, Franklin CEO Jennifer Johnson said the rule "orphaned" one-third of their funds as these unlisted NCDs could not be traded after the circular.
Read More Services PMI shows economy shrinks 15%... India's services sector collapsed in April after the lockdown imposed to combat the coronavirus outbreak brought activity to a complete halt, leading to a historic spike in layoffs and reinforcing fears of a deep recession. The IHS Markit India Services Business Activity Index plunged to 5.4 in April from 49.3 in March, an unprecedented contraction since the survey started over 14 years ago. Historical comparisons of this data with GDP data suggested that India's economy contracted at an annual rate of 15% in April.
Read More RBI may tweak liquidity policy... Banks parking record amount of funds with RBI amid sagging demand for credit and risk aversion may force the regulator to tinker with the liquidity policies to make its monetary policy actions effective. With Rs 8.53 lakh crore being parked at the reverse repo, banks are not only neutralising RBI's push for credit, but also imposing a cost on its balance sheet that could erode the dividend RBI could pay the government.
Read More SBI okays NBFC moratorium… The executive committee of the SBI board has finally approved extending the central bank moratorium to shadow lenders, which will have to individually apply to avail the benefit. those eligible for the benefit will have to show a cash shortage to prove that they will not use the relief to divert funds for other purposes.
Read More Meanwhile... Rana Kapoor, family charged... Pegging the fraud caused to Yes Bank at Rs 5,500 crore, the Enforcement Directorate submitted its first chargesheet in the case on Wednesday, charging co-founder Rana Kapoor, his wife Bindu and their three daughters — Rakhee Kapoor Tandon, Radha Kapoor and Roshini Kapoor — along with three firms linked to the Kapoors under certain sections of the Prevention of Money Laundering Act.
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