BQuick On April 23: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. Covid-19 Cases In India Inch Towards 22,000
The total number of confirmed Covid-19 cases in India inched closer to 22,000 on Thursday evening with ten days remaining for the nationwide lockdown to end.
- India reported 1,229 new cases over the last 24 hours taking the total in the country to 21,700, according to the health ministry's update at 5 p.m.
- In the last 24 hours, 365 people recovered while 34 have died.
- The ICMR, however, has a different number. By 9 a.m. on Thursday, India had 21,797 confirmed cases, the apex medical research body had said earlier.
- While it took 76 days for India to report its first 10,000 cases, the next 11,000 have come in just eight more days.
Track the latest developments on the coronavirus situation in India here.
Globally, over 2.6 million cases have been confirmed and while deaths exceeded 183,000.
- Spain reported the greatest number of new coronavirus cases and fatalities in almost a week.
- Singapore had more than 1,000 new infections for a fourth straight day.
- The U.K. will survey 20,000 households to track the spread of the virus, five weeks after abandoning community testing.
Follow coronavirus updates from around the world.
2. IBC Relaxed, Buyback Norms Eased
To avoid a slew of fresh bankruptcy filings, the government has decided to suspend several provisions of the Insolvency and Bankruptcy Code, according to a senior government official.
- The cabinet, in a meeting held on Wednesday, approved the move for six months, or till the time the government may seem fit, the official said.
- The government will suspend sections 7, 9 and 10 of the IBC, the official said.
- Sections 7 and 9 allow financial and operational creditors respectively to initiate insolvency; and section 10 allows for voluntary insolvency filing.
- The changes will be notified soon, the official said.
Here's how the decision will help small and large companies in India.
To ease fundraising through securities markets, Securities and Exchange Board of India relaxed period of restriction to six months for raising further capital through buyback from the current one year amid the coronavirus pandemic.
- This relaxation will be applicable till Dec. 31, 2020, SEBI said in a circular.
- Currently, buyback regulation provides a restriction that the companies cannot raise further capital for a period of one year from the expiry of buyback period, except in discharge of their subsisting obligations.
- To enable relatively quicker access to capital, SEBI has decided to temporarily relax the period of restriction provided in the buyback norms.
Here are some of the other relaxations provided by SEBI.
3. Few Takers For RBI’s NBFC Funding Facility
The Reserve Bank of India’s attempt to provide funding relief to non-bank lenders failed to draw a strong response, as banks signalled their reluctance to lend to smaller non-bank finance companies.
- The central bank’s targeted long term repo operation, or TLTRO 2.0 as the RBI termed it, saw bids worth only half the amount on offer, showed results of the auction conducted on Thursday.
- A total of 14 banks put in bids worth Rs 12,580 crore under TLTRO 2.0.
- This was just about half of the Rs 25,000 crore that was on offer in the first round of TLTRO 2.0.
While the RBI eased some of the conditions, the auction failed to garner adequate interest.
The benchmark sovereign bond in India surged after the central bank said it would redeploy a debt operation akin to the Federal Reserve’s Operation Twist.
- The yield on the 10-year bond dropped 20 basis points, the most since March 27, to 6.02 percent, after the Reserve Bank of India said it would buy long-term debt while selling bills.
- The central bank will buy Rs 10,000 crore ($1.3 billion) of bonds maturing between 2026 and 2030 on April 27, and sell the same amount of bills.
The number is small, but it shows the RBI is heeding calls from investors.
Also read: India’s Yield Curve Is All Bent Out Of Shape
4. Stocks Rise In India, U.S.; Crude Rallies
Indian equity markets ended higher for the second day, led by gains in private banking stocks as well as information technology heavyweights.
- The S&P BSE Sensex ended at 31,863, up by 483 points or 1.54 percent.
- The NSE Nifty 50 index too ended above the 9,300 mark at 9,313, up by 1.4 percent.
- Kotak Mahindra Bank Ltd. emerged as the top index gainer, with gains of over 8 percent.
- I.T. majors like Infosys Ltd. and Tata Consultancy Services Ltd. also contributed to gains.
- Among sectoral indices, the Nifty Bank and the Nifty I.T. index gained 2.6 and 4 percent respectively.
Follow the day’s trading action here.
U.S. stocks rose for a second day as investors weighed the latest economic and earnings data to determine the coronavirus’s damage to global growth.
- The S&P 500 advanced after jobless claims surged by 4.4 million last week, slightly less than expected. Total job losses now exceed 26 million.
- A reading on private-sector manufacturing activity topped estimates, though showed deep contraction.
- Crude oil surged above $17 a barrel in New York.
- The dollar held three days of gains versus its major counterparts.
Get your daily fix of global markets here.
5. Unilever Highlights India Concerns
Unilever Plc. highlighted uncertainties in its key emerging markets, including India, as the consumer goods giant, withdrew its financial guidance for the year after the new coronavirus pandemic clobbered sales.
- The parent of Hindustan Unilever Ltd.—India’s largest fast-moving consumer goods company—reported flat sales for the quarter ended March, according to a statement, compared with analysts’ estimates of 2.1 percent growth.
- Unilever had earlier guided for less than 3 percent growth in the first six months of the calendar year 2020 and below 4 percent for the full year.
- While the Indian market had begun slowing before the lockdown at the end of March, the strict shutdown stopped production and shipping for a number of days, according to the statement.
India’s personal care businesses, especially skin and hair care were impacted because of the lockdown.
6. L&T Sees Spurt Of New Orders In April
India’s largest construction company bagged more orders in the first 22 days of the ongoing financial year than what it received in the entire quarter ended March, at a time the Covid-19 pandemic threatened global growth and crude oil prices plunged.
- Larsen & Toubro Ltd. announced 10 orders in the first three weeks of April, most of which are from Indian clients, according to exchange filings.
- That compares with seven in the January-March period.
- L&T, according to data collated from the filings, received orders worth anywhere between Rs 18,500 crore and Rs 37,000 crore during the period.
The construction company is expected to miss its order guidance for the financial year ended March.
7. IndiGo’s U-Turn On Pay Cuts
IndiGo, Asia’s biggest budget airline by market value, has reversed a decision to slash employee salaries after the Indian government urged companies to avoid such practices, people with direct knowledge of the matter told Bloomberg News.
- The airline, operated by InterGlobe Aviation Ltd., had proposed pay cuts of as much as 15 percent for most staff but will no longer go through with them, the people said, asking not to be identified as the decision isn’t public.
- Top management will, however, take as much as a 25 percent reduction in pay, the people said.
IndiGo’s move stands out at a time when airlines throughout the world are cutting operations.
8. Former RBI Governor Subbarao’s Warning
Opinion is unanimous that India should spend its way out of the current crisis, but it’s the question of ‘how’ that divides the room. Former central bank governor Duvvuri Subbarao is the latest to weigh in with an argument against fiscal excesses.
- Subbarao says acting on calls for the Reserve Bank of India to directly fund the government’s borrowing will dent the central bank’s credibility and boost the case for a rating downgrade.
- Instead, he suggests India should commit a pre-determined amount of additional borrowing and plan to reverse the action once the crisis blows over.
- “Global markets are much less forgiving of unconventional policies by emerging market central banks,” he wrote in an article in the Financial Times Thursday to support his case.
Subbarao seeks to differentiate between such actions by developed countries and emerging economies.
9. Construction Activity Restarts In Some Green Zones: Niranjan Hiranandani
About two to three percent of construction activity has resumed in green zones across the country, said Niranjan Hiranandani, president of industry body Assocham.
- “My reading is that hopefully by next week, it could go up to 5 or 6 percent of the work but a large amount of work and other men are in city and urban, semi-urban areas where we have a large number of red zones and that is becoming the challenge,” Hiranandani said in an interview to BloombergQuint.
- In the Mumbai metropolitan region only government construction activity on pre-monsoon road and drain work as well as on key projects such as metro rail and harbour bridge has restarted, Hiranandani, a developer himself, said.
- He warned that resumption of certain construction activity is critical in the city.
Besides, there are continuing concerns about the safety of migrant labour in urban construction sites.
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- Distress deepens in Indian villages, worsening economic pain.
- Labour woes in India’s rice-growing region may push farmers to cotton.
- Remittances to India likely to decline in 2020.
10. India Rolls Back Dearness Allowance Hike
India rolled back a hike in special allowances to central government employees and pensioners amid the crisis stemming from the new coronavirus pandemic, a move that may help it to save about Rs 21,000 crore.
- The 1.14-crore employees and pensioners will continue to get dearness allowance—offered to compensate for the rise in inflation and cost of living—and dearness relief at the current rate of 17 percent of basic pay or pension till June-end 2021, according to a government office memorandum.
- Earlier, it had announced a hike in allowances to 21 percent, effective January 2020.
The government reversed its decision as economic activity stalled.