BQuick On March 9: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. Global Stocks Plunge With Crude In Free Fall
U.S. stocks plunged more than 5 percent, whipsawing back from losses that topped 7 percent and triggered a trading halt, as a full-blown oil price war rattled financial markets already on edge over the spreading coronavirus.
- The S&P 500 is now down about 18 percent from its Feb. 19 all-time high, threatening to end the record-long bull market that began 11 years ago to the day.
- NYSE circuit breakers halted trading for 15 minutes at 9:34 a.m. in New York, in a move designed to limit panic. The next circuit breaker will trip if losses reach 13 percent.
- Crude tumbled the most since the Gulf War in 1991, after an OPEC+ alliance that had contained global production disintegrated. WTI and Brent pared some of their losses but remained down more than 20 percent.
- The 10-year Treasury yield fell below 0.5 percent and the 30-year yield dropped under 0.9 percent, taking the whole U.S. yield curve below 1 percent for the first time in history.
Get your daily fix of global markets here.
2. Sensex Selloff Wipes Out Rs 7 Lakh Crore
The Indian markets tumbled the most in more than four years, wiping off Rs 7 lakh crore worth of investor wealth.
- Domestic equities extended declines, tracking the global selloff after the historic crash in the oil prices triggered by an all-out price war between Saudi Arabia and Russia.
- That breakdown of talks, aimed at cutting output after coronavirus hurt demand, is likely to have sweeping political and economic consequences.
- The S&P BSE Sensex tumbled as much as 6.57 percent and NSE Nifty 50 dropped as much as 6.32 percent.
- The two indices closed 5.17 percent (1,941.67 points) and 4.9 percent (538 points) lower, respectively.
- That’s the biggest slide since August 2015 for both the benchmarks.
- Investor wealth measured by BSE’s market capitalisation fell more than 4.9 percent to Rs 137 lakh crore.
- Reliance Industries Ltd. shares fell 12.3 percent to Rs 1,114.15 apiece, the steepest fall since January 2009. The company lost more than Rs 1 lakh crore in market capitalisation.
- The rupee fell as much as 0.5 percent with losses cushioned by the drop in crude prices and suspected dollar sales by state-run banks on behalf of the central bank. It closed 0.4% lower at 74.0850 to a dollar, not far from its record low of 74.4825 seen in 2018.
- The yield on the benchmark 10-year debt slid below 6 percent for the first time since 2009. It ended trading down 12 basis points to 6.07 percent.
See nine charts that show today’s tumble tale in the market.
3. Is This What The Bottom Looks Like? Is It Time To Buy?
Has the market reached its bottom? Is this a good time to buy? BloombergQuint spoke with market veterans.
- Atul Suri of Marathon Trends Advisory said that he would look for at least three days of stability before investing.
- A Balasubramanian of Aditya Birla Sun Life AMC said that investors should consider deploying lump-sum amounts.
- Vikas Khemani of Carnelian Capital said it is the time to be “nibbling at equities”.
Find out more about the sectors and stocks that these veterans warn against.
4. Yes Bank Could Be Out Of Moratorium This Week
The moratorium on Yes Bank Ltd. could be lifted as early as Saturday, according to Reserve Bank of India-appointed administrator Prashant Kumar.
- “All of us are working towards lifting of moratorium much before the last date that is April 3, and it could be as early as this Saturday,” Kumar told BloombergQuint in an interview.
- Kumar assured Yes Bank’s customers that their deposits are “absolutely safe”, and that they can withdraw up to Rs 50,000 this month, as per the RBI-imposed cap.
- He doesn’t foresee any issue on the liquidity front, with added “lines of comfort” from both RBI and the State Bank of India, if required.
Watch the full interview with Prashant Kumar where he also elaborates on how Yes Bank can raise capital.
5. Yes Bank Debt Holders Move High Court
Bondholders with exposure to Yes Bank’s additional tier-1 securities filed petitions in the Bombay High Court against the decision to write off their investments as part of the plan to rescue the struggling private lender, according to two people in the know.
- Nippon India Mutual Fund and Axis Trustee have moved the court to seek relief against the decision taken by the banking regulator, the people said on the condition of anonymity.
- The high court will hear the petitions on Wednesday.
- About 16 Indian banks have Rs 93,669 crore worth AT1 bonds outstanding, according to a report released by rating agency ICRA Ltd. on Monday.
- And the write-off of such instruments issued by Yes Bank has triggered a debate about the seniority of the AT-1 bondholders over equity investors.
Some fund managers say the decision to write off debt securities without writing off equity goes against the credit hierarchy accepted in the market.
Also read: How to Turn a Banking Rescue Into a Crisis
6. RIL’s Problems Go Beyond Crude Rout
India’s largest company by market capitalisation lost close to a third of its value from its record high in December as the coronavirus outbreak, possible delay in deleveraging and unfriendly tax proposals weighed on its mainstay energy and telecom businesses.
- Shares of billionaire Mukesh Ambani-controlled Reliance Industries Ltd. also marked their worst start to the year since 2008.
- The oil-to-telecom conglomerate’s stock has declined more than 26.4 percent year-to-date—the worst drop in 12 years.
- While the recent market turmoil because of coronavirus outbreak and crude plunge contributed, the stock had fallen about 16 percent prior to that.
Find out what’s worrying investors about Mukesh Ambani’s flagship.
7. Oil’s Biggest Fall In 29 Years, And Yet No Respite For Your Petrol Bill
Indian consumers are yet to benefit from a plunge in crude oil prices as a depreciating rupee partly eroded the gains and oil retailers earn a higher mark-up on every litre of fuel sold.
- Benchmark Brent crude tumbled as much as 31.5 percent, its worst single-day drop since 1991, after Russia balked at Saudi Arabia-led OPEC’s demand for deeper output cuts to cope with falling demand amid coronavirus outbreak, triggering an all-out price war.
- Still, while crude oil prices have halved in value since the start of the year, retail fuel prices of petrol and diesel declined only 6-7 percent, according to data compiled from the website of India’s largest oil marketer—Indian Oil Corporation Ltd.
- That’s because the Indian rupee depreciated nearly 3.6 percent against the U.S. dollar this year—in part wiping off gains that could have translated into cheaper auto fuels.
Oil retailers still have a bigger room to cut prices.
Also read: A Year Of Hope Turns Into Despair For ONGC
8. Coronavirus: New Cases Emerge In India, Almost Half Of The World’s Countries Report Infection
The total number of coronavirus cases in India has risen to 43 with new cases discovered in Kerala, Delhi, Uttar Pradesh and Jammu since Sunday. Another 68-year-old man with coronavirus-like symptoms has been admitted in a hospital in Nashik, Maharashtra.
- Meanwhile, cases almost doubled in Spain and Italy struggled to lock down its financial hub amid a surge in infections.
- French President Emmanuel Macron called for ‘urgent’ European cooperation and plans to unveil “initiatives” later on Monday.
- About half of the world’s countries have now reported infections.
- Cases have surpassed 109,000 worldwide while deaths exceeded 3,800.
Follow the coronavirus outbreak and the developments around it here.
9. Coronavirus Brings Renewed Reminder For Prioritising Public Health
For how long can borders be monitored and vigil maintained, visas suspended or businesses stopped, asks former Union Health Secretary K Sujatha Rao.
- While face masks give one a psychological sense of security, its utility is limited to those having symptoms of the infection.
- Missing cases in contact-tracing can have the possibilities of the infection slyly spreading into the community.
- It is essential to reset priorities by focusing on building public health infrastructure centered around the community
In India, we have been lucky so far. This is what we need to do next.
10. The Indian Economist’s Guide To Living In The Present
The Indian economy has seen many twists and turns in the last few years. Believe it or not, Indian economic data has seen even more.
- Between the old GDP series, the new GDP series, the back data for the new series and the many revisions for each individual reading, economists have been left searching for underlying trends amidst increasingly confusing data.
- “For analysts, the revisions make it difficult to gauge economic activity in India and sometimes forecasting feels like shooting at a moving target,” said Hugo Erken, head of international economics at Rabobank.
- This is true not just for private-sector economists but also for central bank economists who are innovating with their leading indicator and nowcasting models to track the state of the economy.
- But as the old adage goes, no two economists agree on what the best way to do this is.
BloombergQuint spoke to senior economists to judge what they believe has proved to be among the best indicators of underlying economic conditions.