BQuick On April 1: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. GST Collections Fall Below Rs 1-Lakh-Crore Mark
The government’s goods and services tax collections fell below the Rs 1-lakh-crore mark after four months.
- GST collections for February, collected in March, was Rs 97,597 crore against Rs 1,05,366 crore in January, according to a statement by the Ministry of Finance.
- That’s a decline of 7.37 percent over January and 8.42 percent over the year-ago period.
- This came even as India restricted input tax credit—what businesses get for paying taxes on inputs—to the extent of 10 percent of eligible credit if all invoices are uploaded by the taxpayers’ suppliers from January.
Still, total GST collections for the financial year ended March were higher than the revised target.
2. Covid-19: India Cases Cross 1,600; Global Death Toll Tops 43,000
India reported its largest increase in Covid-19 infections today taking the total count to 1,637. This includes 132 people who have been cured or discharged and 38 who have succumbed to the respiratory illness.
- India reported 240 new cases since the previous update by the Health Ministry at 8:30 p.m. on Tuesday night.
- India reported 146 new cases yesterday and 224 new cases on Monday.
- Tamil Nadu saw the most case additions—110 in a day—with all of them having attended the Tablighi Jamaat meet in Delhi earlier in March.
- Meanwhile, the Indian embassy in Beijing has been tasked to coordinate with Chinese authorities for the procurement of medical equipment and possible assistance in dealing with the pandemic.
Follow latest news updates and developments on how the coronavirus situation is evolving in India here.
Globally, cases rose over 8.74 lakh leaving over 43,000 people dead.
- Spain reported another spike in fatalities while Italy and Germany moved to extend lockdown measures.
- U.S. President Donald Trump warned of a painful two weeks after projections showed as many as 2.4 lakh Americans could die.
Track the global spread of the coronavirus here.
3. Sensex Slumps 4%, U.S. Markets Drop
Indian equity markets fell for the second time in the last three sessions, erasing the gains made on Tuesday.
- The S&P BSE Sensex ended 4.1 percent lower at 28,265. The index had gained 3.6 percent on Tuesday.
- The NSE Nifty 50 ended 4 percent lower at 8,253.80.
- All sectoral indices ended lower, led by the Nifty I.T. index, which fell 5.5 percent.
Follow the day’s trading action here.
U.S. stocks started the second quarter with deep losses as investors braced for a longer economic shutdown that’s likely to devastate corporate profits and dividends.
- The S&P 500 fell for the third time in four days, with sentiment souring after President Donald Trump warned of a “painful” period of the pandemic.
- A report on private payrolls showed fewer job losses than anticipated, but it only measured through March 12.
- Gold fell 0.4 percent to $1,588 an ounce.
- West Texas Intermediate crude dipped 0.2 percent to $20.44 a barrel.
Get your daily fix of global markets here.
4. A Year To Forget (Till Now) For India’s Top Corporates
None of India’s top corporates has created wealth this year as equities tracked the worst global selloff in more than a decade after the novel coronavirus outbreak.
- S&P BSE Sensex and the NSE Nifty 50 have tumbled about 29 percent each from Jan. 31 till March 31, with 90 percent of the stocks in the benchmark recording losses.
- So deep is the rout that, according to BloombergQuint’s calculations, the nation’s 18 largest conglomerates wiped off Rs 19.6 lakh crore in investor wealth during the period.
- The Wadia Goup has seen the least decline in its market cap in the first three months of calendar year 2020.
Find out how other large conglomerates like HDFC Group, Tata Group, Mukesh Ambani Group and Bajaj Group contributed to this erosion.
5. Automakers See Sharp Dip In March Sales
India’s automakers saw sales in March decline sharply as the sector was hit by a triple whammy of higher insurance costs, economic slowdown and a nationwide lockdown that has stalled operations at factories and dealerships.
- Largest carmaker Maruti Suzuki India Ltd.’s sales declined 47 percent to 83,792 units.
- Hinduja Group’s flagship Ashok Leyland Ltd. posted a 90 percent decline, selling just 2,179 units.
- Tata Motors Ltd.’s sales plunged 84 percent to 11,012 units.
Track the latest March auto sales updates here.
6. HUL Is The New Owner Of Horlicks, Boost
Hindustan Unilever Ltd. has completed the takeover of GlaxoSmithKline Consumer Healthcare Ltd., bringing India’s largest selling malted milk drink Horlicks into the portfolio of the nation’s biggest consumer goods maker.
- The board of directors of HUL approved acquiring the Horlicks brand for India from GlaxoSmithKline Plc for Rs 3,045 crore, exercising the option available in the original agreement between Unilever Plc and GSK, it said in a statement.
- That means Unilever will no longer pay a royalty of 1.8 percent to 4.5 percent to GSK as agreed in December 2018 when the two companies announced the merger.
This will enable HUL to utilise cash on its balance sheet and create value for shareholders.
7. RBI Offers More Relief To Deal With Covid-19 Crisis
After an emergency rate cut, easier asset quality norms and loan moratorium to fight disruptions caused by the coronavirus outbreak, the Reserve Bank of India has now announced relief measures for exporters and allowed states to borrow more to manage finances.
- For exports made up to or on July 31, RBI extended the deadline for realisation and repatriation period of export proceeds to 15 months from nine months at present.
- RBI constituted an advisory committee to review ways and means limits—limit for short-term credit that governments can borrow from the central bank—for states and union territories.
- RBI also said that counter-cyclical buffer for banks will not be applicable for a period of one year.
Find out how these measures will help exporters and states.
8. NBFCs Tread With Caution
India’s non-bank lenders and housing finance companies are offering loan moratoriums selectively to customers, fearing that a halt in a large chunk of repayments could lead to liquidity stress.
- While the RBI allowed banks and non-banks to offer this moratorium, the choice is tougher for the latter as they borrow from banks and the market for on-lending.
- Most NBFCs and HFCs that BloombergQuint spoke to said they will do a case-by-case assessment of moratorium requests.
- NBFCs, who are far more reliant on market funding for lending, could also face genuine difficulties in offering loan moratoriums.
Besides the risks of asset-liability mismatches, NBFCs also fear a rise in asset quality risks.
- Coal India mulls output cuts as inventories mount on virus fight
- Sectors where rating agencies see elevated credit risk due to Covid-19
- Empty treasury desks may hurt Modi's plan to sell record bonds
- Coronavirus crisis may hit commercial real estate more than expected, says Anarock’s Anuj Puri
- Wipro, Azim Premji foundation commit Rs 1,125 crore to tackle Covid-19
9. Former RBI Governor Sees A Return To Old Days Of Monetising Deficit
It was in 1997 that India moved away from a regime where the central bank would buy government securities to provide for its expenditure. Known in technical parlance as the automatic monetisation of the deficit, the practice was seen as one that encouraged government profligacy and led to high inflation in the economy.
- Starting April 1997-98, the RBI put a stop to that practice. The central bank governor who oversaw this defining transition in Indian monetary policy was C Rangarajan.
- Now, 23 years later, India may be forced to move back into that era, at least temporarily, as the economy deals with the fallout of a rapidly spreading Covid-19.
Monetisation of the deficit is inevitable. Such a large increase in expenditure cannot be managed without monetisation of government debt.C Rangarajan, Former Governor, RBI
Watch the full interview where Rangarajan says RBI shouldn't throw all caution to the wind.
10. Margin Calls In Times Of Covid-19
The Bombay High Court order injuncting IDBI Trusteeship Services from selling the shares of Future Retail will have far-reaching implications for all financial market transactions which are secured by securities or margins, write Harsh Vardhan and Bhargavi Zaveri.
- Unless the order is appealed against, the relief operates until May, by which time the bondholders would arguably by irreparably damaged.
- This cannot be compared to the recent RBI moratorium. That seeks to allow the debtor to tide over temporary cash-flow issues, and not solvency issues.
- The current lockdown circumstances raise similar questions on all transactions where securities are offered as collateral for credit.
The second-order effects of such relief are too grave to ignore.