BQuick On April 7: Top 10 Stories In Under 10 Minutes  

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

1. Covid-19 Cases Near 4,800, Panel Recommends Partial Lifting Of Lockdown

India saw the number of Covid-19 infections rise to 4,789 as the country entered its third week of the 21-day lockdown.

• India added 508 new cases over the last 24 hours.
• The death toll rose to 124, while 353 people have either been cured or discharged, according to health ministry data.
• India has conducted over 1.07 lakh tests till date, according to the Indian Council of Medical Research.
• Of these, over 11,000 were conducted just on Monday, indicating a rise in the daily number of tests.
• Meanwhile, a panel of ministers, headed by Defence Minister Rajnath Singh, has advised Prime Minister Narendra Modi to partially lift the lockdown imposed after April 15, people with knowledge of the matter told Bloomberg News.
• Areas with large clusters of Covid-19 cases will remain closed, the people said, asking not to be identified as the discussions are private. The panel also recommended that cities can open markets on alternate days after the three week period ends. States can allow harvesting of crops across the country, they added.
• Vice President M Venkaiah Naidu on Tuesday said the final week of the ongoing lockdown is "critical" for evolving an exit strategy as data regarding the spread of coronavirus will have a bearing on the decision to be taken by the government.

Follow the coronavirus outbreak in India here.

Globally, there are now over 1.36 million cases while deaths have exceeded 76,000.

• Spain reported another spike in fatalities even as the outbreak showed early signs of slowing down elsewhere in Europe.
• U.K. Prime Minister Boris Johnson, who was moved to intensive care last night, remains stable.
• China said it didn’t have any new deaths for the first time since the pandemic emerged.

Catch updates about the pandemic from around the globe here.

2. Nifty’s Best Day Since 2009; U.S. Stocks Rise

Indian equity markets began the truncated week on a resounding note, staging their biggest one-day gain since May 2009.

• The S&P BSE Sensex rallied 8.9 percent to close above the 30,000-mark.
• All of the 30 constituents ended the day with gains while 14 of them gained over 10 percent each.
• The NSE Nifty 50 index too gained 8.7 percent to end at 8,792.
• Twenty one Nifty stocks ended with gains of 10 percent and above.

Follow the day’s trading action here.

The Indian rupee has outperformed most major emerging economy currencies over the period of time when global markets have sold off due to fears surrounding the spread of Covid-19.

• The Indian currency’s outperformance is despite large outflows from the local debt and equity markets.

Despite large outflows, the rupee has fared better than emerging market peers. Here’s why.

U.S. stocks gained for a second day, with the S&P 500 Index venturing briefly into bullish territory, amid continuing optimism the spread of the coronavirus may be slowing in several major economies.

• The S&P 500 rose as much as 3.5 percent before cutting gains to around 1 percent.
• If the benchmark climbs back to the highs, the index will meet the time-honored definition for the start of a bull market.
• The Stoxx Europe 600 Index also advanced after the rate of new infections slowed in France and in Italy, the original epicenter of the continent’s outbreak.
• The dollar retreated the most since late March. The pound strengthened despite concern for Prime Minister Boris Johnson, who was moved into intensive care as he battled the virus.
• Oil gained on signs the world’s biggest producers are moving toward a deal to call off their price war.

Get your daily fix of global markets here.

3. MSCI Rejig May Bring In $7 Billion For Indian Stocks

Indian stocks are expected to see an inflow of more than $7 billion on account of a likely increase in their weights on the MSCI Index.

• Morgan Stanley expects MSCI Inc.—the world’s biggest index compiler with about $12 trillion in assets benchmarked to its products—to rebalance India weights to reflect the change in sector-wise limits for investment in stocks by overseas investors over the next few months.
• As a result, “MSCI India’s weight in EM is expected to rise by 55 basis points and India’s foreign inclusion factor to rise from 0.39 to 0.42, which would imply passive inflows of $1.3 billion and active inflows of $5.7 billion”, Ridham Desai, equity strategist at the research firm, said in the report.

According to Morgan Stanley, the top five beneficiaries of these regime changes are...

4. We Are In Uncharted Territory: Abby Cohen

The global economy is in uncharted territory, says Abby Cohen, among the most noted voices on Wall Street.

• And while central banks around the world have moved aggressively over the last two to three weeks, fiscal responses have been widely variable and it’s not clear whether enough has been done in terms of the aggregate amount nor whether they’re properly targeted, notes the advisory director and senior investment strategist at Goldman Sachs.

In this interview, Cohen discusses the speed and intensity of the crisis, those most impacted by it, the scope of a global recovery and her outlook on global financial markets.

5. Public Sector Borrowers Look To Return To Primary Debt Markets

Public sector enterprises have started to line up short-term borrowing plans as they seek to take advantage of targeted long term liquidity being offered by the Reserve Bank of India to banks.

• The central bank is offering Rs 1 lakh crore to banks provided they use this to invest in corporate bonds.
• Half of the funds raised by a lender via the targeted long term repo operation must go towards debt issuances in the primary market, the regulator has specified.
• With interest rates easing, some firms may return to the primary markets.
• According to two debt capital market bankers, several state-owned entities are lining up fresh bond issues.

While RBI’s targeted long term repo operations may bring back some activity to the primary debt markets, it may be slow.

6. India’s States Find It Costlier To Borrow

Indian states, strapped for funds as they seek to counter the fallout of Covid-19 outbreak, saw borrowings costs spike at the first bond auction of the current financial year.

• The fear that states and the centre will have to borrow more to fund expenditure related to the spread of Covid-19 has pushed up bond yields even after the RBI cut policy rates and flooded the system with liquidity.
• Over and above the central government bond yields, investors are now demanding a higher spread for subscribing to state government bonds.
• The spread represents the additional amount over the so-called risk free rate that investors demand to compensate for either increased supply of bonds or higher risk of default.

As a result of the higher interest rates, some states accepted only partial amounts compared to what was on offer.

7. IndusInd Bank Charts A Comeback Plan

Private sector lender IndusInd Bank Ltd. is reviewing its corporate lending strategy as it deals with an outflow in deposits, rising risk across the economy and a management transition.

• Under new Chief Executive Officer Sumant Kathpalia, the bank is reviewing its exposure to large corporates and may trim the size of that book if needed, said two people familiar with the matter, who spoke on condition of anonymity.
• The strategy, according to these two officials, is to look at exposures to large inter-connected companies and redirect direct lending to better-performing firms within the groups.
• The bank is also trying to negotiate better terms with these borrower groups to ensure adequate security backing these loans.

As a consequence of this review, the bank may see the size of its corporate loan book shrink.

8. Relief For Renewable Energy Producers

India rejected power distributors’ demand to not buy electricity from renewable energy producers citing ‘force majeure’, or unforeseen conditions preventing from honouring contracts, after the nation went into the world’s biggest lockdown to contain the spread of the coronavirus pandemic.

• “Renewable energy generating stations have been granted ‘must run’ status and this status of ‘must run’ remains unchanged during the period of lockdown,” the Ministry of New and Renewable Energy said in an April 1 memorandum.
• That means such projects will continue to generate power and distribution companies will buy according to the terms of the power purchase agreements.

Read to find out what the ministry said, why discoms sought relief and what memorandum means for the sector.

Related Coverage

• Goldman sees recession in India as consumption takes a severe hit.
• India partially lifts malaria drug export ban after Trump call.
• Three ways to assess Covid-19's impact on India's real estate.
• World’s biggest lockdown brings trucks to a standstill in India.
• Kerala high court averts ‘CATastrophe’ amid coronavirus lockdown.
• India’s daily wage worker worries: ‘If virus won’t kill me, hunger will’.

9. WhatsApp Plans Curbs To Limit Forwarded Messages

Facebook Inc.-owned WhatsApp will now allow users to send frequently forwarded messages to only one chat, as part of its efforts to curb misinformation on the coronavirus pandemic.

• This limit will be in place once a message has been previously forwarded five times or more.
• The latest move comes as countries, including India, are initiating measures to tackle the spread of rumours, fake news and misinformation on social media platforms.
• The messaging app is also testing a feature that would display a small magnifying glass next to any frequently forwarded messages.

Here's more on WhatsApp's efforts in India to curb fake news.

10. Challenges And Traps In Restarting The Economy After Covid-19

In such extraordinary times, the temptation to ignore rules and frameworks, and apply discretion runs high. This approach is neither effective nor sustainable, write Harsh Vardhan and Rajeswari Sengupta.

• The widening fiscal deficit may lead to a sovereign rating downgrade or a lowering of the macro outlook.
• Deficit monetisation will violate India's inflation-targeting framework and also hurt the credibility of the government.
• Postponement of NPA recognition helps to 'extend and pretend'. Soon the problem becomes too big to tackle.

The important policy frameworks that have been put in place must be adhered to.