BQuick On April 20: Top 10 Stories In Under 10 Minutes

This is a roundup of the day’s top stories in brief.

1. India Sees Fresh Spike In New Covid-19 Cases

India reported a fresh spike in confirmed Covid-19 cases over the last 24 hours as the total infections in the country rose to 17,656 by Monday evening. Yet, it also reported over 500 new recoveries.

• The country added 1,540 new cases over the last 24 hours—it’s biggest single day addition, according to data from the health ministry as of 5:00 p.m.
• The country has also reported 2,842 cases who've recovered and 559 deaths.
• In the last 24 hours, there have been 541 recoveries and 40 deaths.
• A total of 4.01 lakh samples from about 3.83 lakh individuals had been tested by April 19, the ICMR said.
• The ICMR also said that global data suggests that 80 percent of the cases show no symptoms at all.

Follow developments around the novel coronavirus outbreak in India here.

Globally, cases topped 24 lakh while deaths exceeded 1.65 lakh.

• Daily infections in Singapore topped 1,000 while Hong Kong had no new cases for the first time since March.
• Cases rose the least this month in Germany and the government eased some curbs.
• Europe tries to ease lockdowns with an eye on new cases

Track the spread of the pandemic across the globe here.

2. ‘Black April’ Continues As WTI Crude Drops Below $11

Oil suffered its biggest one-day price plunge in the modern era, at one point crashing about 40 percent to below $11 a barrel as traders contended with an historic glut.

• Despite OPEC+’s unprecedented output deal agreed a week ago, the oil market remains massively oversupplied as the lockdowns to fight the spread of the coronavirus reduce global crude demand by about a third.
• Storage tanks across the globe are rapidly filling, including at the key U.S. hub in Oklahoma.
• The plunge was exaggerated as the May futures contract expires on Tuesday, leading to a fire-sale among traders who don’t have access to storage.
• The June contract fell 13 percent to $21.80 a barrel.

Brent crude, however, was resilient.

The crude selloff is not surprising considering the current supply glut as demand in April will show a decline of 30 percent, as per the International Energy Agency’s latest forecast.

• Executive Director Fatih Birol described it as “Black April” and, in an interview to BloombergQuint on April 17, said he expects “further downward pressure” on prices this month.
• At that time the WTI contract was already trading at around $18 per barrel.

Here’s the worst case scenario, according to Birol.

3. U.S. Stocks Retreat; Nifty Volatile

U.S. stocks fell from the highest level in six weeks as oil plunged in New York and investors braced for a raft of corporate earnings.

• The S&P 500 fell by about 1 percent as the drop in West Texas oil accelerated to $12 a barrel.
• Energy companies plunged, while Amazon.com lifted megacap tech shares.
• The euro, pound and yen all weakened.
• European bonds dropped as Treasuries advanced.

Get your daily fix of global markets here.

Indian equity markets ended a volatile session flat after fluctuating between gains and losses for the majority of the trading day.

• The S&P BSE Sensex ended 0.19 percent or 59.28 points higher at 31,648.
• The NSE Nifty 50 Index ended little changed at 9,261, down 5 points.
• Financials were on both sides of the spectrum in today's trading session. While the HDFC twins contributed to the upside, ICICI Bank Ltd. and Axis Bank Ltd. declined.
• Among sectoral indices, the metals index was the top laggard, closing 3.5 percent lower.

Follow the day’s trading action here.

4. Infosys Pauses Trend It Started In India

Infosys Ltd.’s quarterly profit declined as the Covid-19 pandemic stalled economic activities and disrupted global trade.

• Net profit fell 2.9 percent sequentially to Rs 4,335 crore.
• Revenue rose 0.8 percent to Rs 23,267 crore.
• Revenue in dollar terms fell 1.4 percent to $3,197 million.
• Margin narrowed 70 basis points to 21.2 percent.
• Infosys has also temporarily suspended giving a revenue and margin guidance in the wake of the uncertainty from the Covid-19 crisis.

See what the Infosys’ management had to say about the uncertainty and outlook for the company.

5. RBI Lends A Helping Hand To The Government

The Reserve Bank of India has stepped in with more short-term funding support for the central government to help it tide over the Covid-19 crisis. A 40-day lockdown to curb the spread of the coronavirus has led to a surge in expenses and a sudden stop in revenues.

• To tide over this period of cashflow mismatch, the RBI has increased the limit for short-term credit under the ‘Ways and Means Advances’.
• For the April-September 2020 period, the WMA limit for the central government has been raised to Rs 2 lakh crore from an earlier revised Rs 1.2 lakh crore.
• The limit of Rs 2 lakh crore is the highest ever and a sharp jump compared to the Rs 75,000 crore limit in the same period last year.

This has been done to tide over the situation arising from the coronavirus outbreak.

6. Covid-19, Bayes’ Theorem, And A Big Buy Call On India

Most people are overestimating the risk posed to them (and to their livelihoods and to their portfolios) by Covid-19, argue Saurabh Mukherjea and Harsh Shah.

• This overestimation is being fuelled further by tendency of people to resort to “confirmation bias” where people will give undue weightage to information that confirms their initial view.
• Applying Bayes’ Theorem shows that the risk of us dying from road accidents or air pollution in an Indian city is at least four times higher than the risk of us dying from Covid-19.
• To extrapolate the current lockdown in India and forecast a doom-laden future would be imprudent.

A rational investor cannot help being massively bullish on high-quality Indian stocks.

7. China Says India’s FDI Barriers Violate WTO Principles

The Indian government’s decision to tighten foreign direct investment rules for investors coming from China and other neighbouring countries has drawn a sharp criticism from the Chinese Embassy.

• The additional barriers set by the Indian side for investors from specific countries violate the World Trade Organization’s principle of non-discrimination, and go against the general trend of liberalisation and facilitation of trade and investment, Chinese embassy spokesperson Ji Rong said in a statement.
• On Saturday, the government had revised the FDI policy to say that entities from countries which share a land border with India will now be permitted to invest only under approval route.
• This restriction will also apply if the beneficial owner of the investment is an entity situated in or a citizen of such countries. India shares a land border with China, Pakistan, Bangladesh, Nepal, Myanmar, Bhutan and Afghanistan.

Experts said this will impact all global transactions by Chinese investors which have an India leg.

8. Even Before Covid-19, Real Estate Had Little Relief From Rescue Fund

Even as the real estate industry in India hopes for bigger relief measures following a nationwide lockdown to contain the coronavirus pandemic, a rescue fund set up for the sector last year is yet to disburse money for select stressed projects.

• The government-led alternative investment fund, with a starting corpus of Rs 10,000 crore, is yet to release money to stressed projects though the amount sanctioned to such projects may range between Rs 700 crore and Rs 1,000 crore, a senior industry executive told BloombergQuint on the condition of anonymity as the information is not public yet.
• The fund, which was started seven months ago, may have given final approval to six distressed realty projects and there are as many as 31 projects that are at various stages of approvals, according to the firm managing the AIF’s corpus.
• But it is facing resistance from lenders who are unwilling to give a “no-objection certificate” to invest in the stressed projects unless they get a portion of the project cash flow.

Here’s why lenders are unwilling to give NOC for certain projects.

Related Coverage

• Cement makers resume operations amid lockdown but...
• No amount of liquidity can create risk appetite, says HSBC’s Hitendra Dave.
• States are crowding out cash-strapped companies in accessing credit.
• Wuhan virus lab denies any link to first coronavirus outbreak.

9. Edelweiss Moves High Court To Prevent Downgrade

Edelweiss Financial Services filed a writ petition in the Bombay High Court seeking to restrain ICRA Ltd. from downgrading its instruments, according to three people in the know.

• The rating agency is looking to downgrade the financial services provider by a notch to A-plus, the people told BloombergQuint on the condition of anonymity.
• As of June 2019, ICRA had an AA-minus rating—high degree of safety regarding timely servicing of financial obligations and carry a very low credit risk—on Edelweiss.
• To arrive at the rating, ICRA had considered the financials of the consolidated entity that includes more than 65 subsidiaries and associates.

A rating downgrade may have a significant impact at this time on access to capital for the Edelweiss group.

10. Setback For Vijay Mallya

Embattled liquor tycoon Vijay Mallya on Monday lost his U.K. High Court appeal against his extradition order to India in relation to charges of fraud and money-laundering amounting to an alleged Rs 9,000 crore.

• The 64-year-old former Kingfisher Airlines boss had appealed to the U.K. High Court against his extradition to India at a hearing in February this year.
• Lord Justice Stephen Irwin and Justice Elisabeth Laing, the two-member bench at the Royal Courts of Justice in London presiding over the appeal, dismissed the appeal in a judgment handed down remotely due to the current coronavirus lockdown.

Mallya is wanted in India on alleged fraud and money laundering charges.