Negative interest rates, in theory, mean parking money with banks costs the depositor instead of earning an interest on it. Thus, it's a way to nudge consumers and banks to take more risk by borrowing and lending money, and thereby, boost the economy. Negative interest rates are in vogue in the euro zone, Switzerland, Japan and some Nordic countries. In the post-Covid world, that is an option being weighed by many others as well. Two researchers this week said the US' V-shaped recovery from the Great Depression was fuelled by President Roosevelt's aggressive fiscal stimulus in the 1930s and a surge in govt spending during World War II. The equivalents now, they say, would be negative interest rates and aggressive government spending.
MARKET CUES: Where do we stand >>>  | Nifty futures on Singapore Exchange traded some 39 points down at 7 am (IST) in signs that Dalal Street might retreat after six-days of gains. |
| On Wednesday, while Nifty made higher highs and lows on the daily scale, it closed below the opening mark and formed a bearish candle on the daily scale. The 50-pack may now see a consolidative move before starting the next leg of rally, say analysts. |
| The global risk rally powered on in other Asian markets. Equities in South Korea, Hong Kong and Australia saw the bulk of the gains, while Japanese and Chinese stocks rose more modestly. |
| US equity futures traded flat this morning, after Nasdaq briefly surpassed its February closing record in overnight trade. Dow rallied 500 points to break past the 26,000 mark, while theS&P 500 gained one and a half per cent. |
| Oil prices fell on Thursday, reversing gains in the previous session, on concerns that supply will rise if major producers are unable to agree to extend the depth of output cuts. Brent crude futures fell 1 per cent, or 41 cents, to $39.38 a barrel. US WTI crude futures dropped 1.6 per cent, or 61 cents, to $36.68 a barrel. |
| The rupee surrendered all intra-day gains to provisionally settle 11 paise lower at 75.47 against the US dollar on Wednesday. |
| The euro held near multi-month highs against rival majors on Thursday on expectations that the ECB will expand its bond buying programme later in the day. The dollar index stood at 97.340, having fallen about 1% so far this week. The pound sterling changed hands near its highest levels in a month. |
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6-month grace on loan defaults... The Union Cabinet on Wednesday recommended promulgation of an ordinance to amend the Insolvency and Bankruptcy Code and provide relief for loan defaults after March 25, initially for six months. Default in repayment of loans by companies — other than financial services ones — up to September-end, which can be extended by another six months, will not be counted as default under the IBC.
Read More V-shaped demand recovery ... There's a V-shaped demand recovery in major consumer goods segments but that V may not last long. Across phones, consumer durables, apparels, shoes — in both online and offline stores — demand is close or equal to pre-lockdown levels. In certain products, the buying-spree is remarkable. iPhone SE clocked the highest sales for an iPhone model on Flipkart. Chinese brand Realme launched TV on Tuesday and sold 15,000 units online in 10 minutes. But industry executives are not sure the buying surge will last long as pent-up demand may get exhausted.
Read More Corp bond issues hit a high... The lockdown appears to have opened the floodgates for corporate bond issues in India. The first two months of FY21 have been the best in decades, with companies raising Rs 1.63 lakh crore — more than double the same period last year and nearly four times of April-May in FY19 — as rates plunged to a record low and banks went slow with loans. HDFC, L&T Group, PFC, the Tata Group and RIL led the giants that sold bonds worth Rs 1.63 lakh crore in April and May.
Read More Preferential share norms may be eased... Sebi is actively considering a relaxation in pricing rules to make it easier for all companies to raise capital by making preferential equity sale to financial and strategic investors in the wake of the Covid-19 disruption. The proposal is to make the preferential allotment regulation more realistic not just for stressed companies, but for any listed entity struggling in the present environment.
Read More Tatas to rejig business plans... The board of Tata Sons is scheduled to meet on June 5 to chart the next move for the $111-billion salt-to-software group whose businesses have been significantly impacted due to the pandemic. Among other things, the group will relook at its strategies covering a fund-raise, budget allocation to portfolio companies, debt leverage as well as revenue generation. It will also consider the compensation of its executive leadership, including chairman N Chandrasekaran, for fiscal 2021.
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Warning on arbitrage funds... Fund houses Edelweiss, Kotak and IDFC have warned investors of either near-term losses or poor returns in arbitrage schemes, with spreads turning negative and causing money-making opportunities to shrink. These schemes make money when stock futures trade above the cash market price. These funds buy shares and sell stock futures at the same time to benefit from price conversion. These funds manage assets worth about Rs 55,000 crore.
Read More Govt slams Moody's downgrade... The Indian government has slammed Moody's decision to downgrade India's rating, saying ratings agencies are following double standards and need to change their methodology to remain relevant. Over 30 countries had been downgraded since the onset of the crisis and that is because governments have unveiled stimulus packages, a govt official said, adding that they were making selective downgrades, comparing India with Japan, which has a debt-to-GDP ratio of 250, for whom the denominator is not growing as fast as India's.
Read More HC stays Templeton e-voting... In a relief to investors of Franklin Templeton Mutual Fund, the Gujarat High Court on Wednesday stayed the fund house's plan to conduct e-voting and hold a unit holders' meeting on winding up six debt funds. Justice Gita Gopi issued a notice to Sebi and Franklin Templeton's three companies in response to a petition filed by senior citizens.
Read More Meanwhile... 40 drugs under price control... India's drug pricing regulator on Tuesday capped the prices of 40 formulations, including statins and some other popular cardiovascular and diabetes drugs. The revised prices will have an impact on the manufacturers of these formulations, including Sun Pharma and Zydus Healthcare.
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