The moment Covid-19 struck, bank stocks took the biggest hit, as investors rushed to dump them fearing a spike in bad loans. The moratorium on loan EMIs, suspension of bankruptcy rules, the government's credit guarantee scheme for MSMEs and increased pressure to lend only added to the worries. RBI has got the lenders to make solid provisions towards Covid-19. Yet, when leading banks queued up to raise Tier-I capital in large amounts even when they have parked surplus liquidity with RBI, it raised worries that another round of NPA cycle may be coming back.
MARKET CUES: Where do we stand >>>  | Nifty futures on Singapore Exchange traded 45 points lower at 7 am (IST) signalling a negative start ahead for Dalal Street |
| Nifty50 formed a small bearish candle on the daily chart on Tuesday after forming indecisive Doji candles for two consecutive sessions. Analysts said the index is losing strength and the bias has turned negative. |
| Asian stocks started the new quarter in a muted fashion, as investors assessed mixed data on the global economy. Shares edged lower in Japan on low volumes, but stocks ticked higher in Shanghai and Sydney. South Korea saw a bigger advance. Hong Kong is closed for a holiday. |
| The S&P 500 rallied on Tuesday to finish higher and secure its biggest quarterly percentage gain in more than two decades as improving economic data bolstered investor beliefs that a stimulus-backed rebound for the US economy was on the horizon. Dow rose 217 points, or 0.85%, the S&P500 47.05 points, or 1.54%, and the Nasdaq 184.61 points, or 1.87% |
| The rupee on Tuesday settled 7 paise higher at 75.51 against the US dollar tracking gains in the domestic equity market. |
| The US dollar held on to gains against the yen on Wednesday, while the euro was hemmed into a narrow range by traders. Sterling held on firmly to the previous session's gains, and Swiss franc perked up against the greenback. |
| Oil prices rose after an industry report showed crude inventories in the US fell much more than expected. Brent crude rose 33 cents, or 0.8%, to $41.60 a barrel while WTI crude gained 42 cents, or 1.1%, to $39.69 a barrel\ |
| Domestic gold prices rose to Rs 48,559 from Rs 48,534 per 10 gm while silver made marginal gains from Rs 48,556 to settle at Rs 48,600 per kg. In international markets, gold surged to its highest in nearly 8 years on Tuesday amid mounting fears of a resurgence of new coronavirus cases. Spot gold jumped 0.5% to $1,779.44 an ounce. |
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MNCs dole out dividends with both hands… The big dividend rush by MNCs is on. Taking advantage of the absence of dividend distribution tax (DDT), many multinational companies have been doling out large dividends over the past two months. Pharma major Pfizer paid a special dividend of Rs 320 per share, or 3,200%, last month compared to Rs 22.50 last year. Sanofi India paid Rs 106 and a one-time special dividend of Rs 243 recently. Sanofi's total dividend this year was Rs 349 per share against last year's Rs 66.
Read More Current account surplus after 13 years… Data released by RBI shows the country recorded a current account surplus of $600 million (0.1% of GDP) for the January-March 2020 quarter against a $4.5 billion deficit a year ago. The last time the current account was in surplus was over a decade ago in March 2007. The surplus was generated because of the trade deficit shrinking to $35 billion and a sharp rise in net invisible receipts at $35.6 billion compared with the year-ago period.
Read More Bonanza for SBI, other Yes Bank investors… SBI and other lenders that had purchased 10 billion equity shares of YES Bank at Rs 10 per share under the reconstruction scheme approved by RBI will not have to pay tax on the price differential between what was paid by them and the fair market value. In a notification issued on Tuesday, the Central Board of Direct Taxes has provided for an exemption from deemed tax to the equity share purchase transaction.
Read More Premji Invest, SBI eye Future Generali… Wipro's billionaire founder Azim Premji's investment firm Premji Invest and SBI General Insurance are exploring a joint bid to acquire Future Generali. Future Group is keen to sell its stake in the insurance venture and Italy's Generali Group is said to be considering an exit from India. Premji Invest has a 16% stake in SBI General Insurance, which was acquired last year when Insurance Australia Group (IAG) offloaded a 26% holding in the insurer. Warburg incus picked up the remaining stake.
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Voda Idea reports major Q4 loss… Vodafone Idea posted Rs 11,643.5 crore loss for March quarter, its seventh successive three-month period in the red, hurt by loss of subscribers, high finance costs and a one-time charge related mainly to its statutory dues. The telco warned of continued threat to its viability unless the Supreme Court allows it to pay the thousands of crores in adjusted gross revenue to the government in instalments, besides being able to renegotiate repayment terms with its lenders.
Read More Core sector shrinks in May… India's infrastructure sector contracted at a slower pace in May compared with April, data released on Tuesday showed, helped by the relaxation in lockdown restrictions and good growth in fertiliser production ahead of the sowing season. The index of eight core industries dropped 23.4% in May from a year earlier; in April, the fall was 37%. Output contracted 30% in the first two months of the current financial year.
Read More Banks set aside Rs 13K cr towards Covid hit… Indian banks have set aside Rs 13,653.2 crore for provisions towards moratorium and deferments related to Covid-19 in March quarter. This raised the total loan loss provision for Q4 by 22.7% to Rs 73,712 crore, which was 15.8% lower than the year-ago period. Covid provisioning was 18.5% of total loan loss provisioning for the quarter and in the absence of it, the loan loss for Q4 would have been Rs 60,058.8 crore.
Read More Diesel cars going out of choice… Diesel is increasingly going out of the choice list of the passenger vehicle buyer in India, as the fuel's price differential with petrol is disappearing. As much as 58% of new passenger vehicle sales in FY12 were dieselpowered cars, utility vehicles and vans. The share has come down to 28% in the fiscal year ended in March 2020, and just 17% in the final quarter. This trend is expected to accelerate.
Read More Meanwhile... Sharp drop in personal loans… Bank loans to individuals under the personal segment shrunk by Rs 74,790 crore in April and May driven by a sharp drop in credit card outstanding and a decline in loans against fixed deposits. Bank advances to the services sector and industry also recorded a sharp drop. A decline in bank credit to businesses in the first quarter is not unusual as companies repay some of the high borrowings they undertake at the end of the previous financial year. The overall drop in non-food credit in April-May at Rs 1.82 lakh crore is identical to the drop seen in the previous year.
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