BQuick On March 20: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s stories in brief.
1. Coronavirus: Mumbai, Delhi To Go Under Partial Lockdown After Biggest Single-Day Spike Of Cases In India
The total reported number of Covid-19 cases in India rose to 223 on Friday—an increase of 54 cases in just one day.
- This was the largest single-day spike in novel coronavirus cases reported in India.
- “The cases of Covid-19 have progressively increased in the last few days,” Luv Agarwal, joint secretary in the health ministry, said in his daily press briefing. “We will need to adapt social distancing measures in some form or the other.”
- More than 6,700 people are also being monitored, he said.
- One in every four positive cases has been from Maharashtra, prompting the state government to announce partial lockdowns in cities with international airports.
- From midnight, all non-essential shops and workplaces will be shut in Mumbai, Pune, Pimpri Chinchwad and Nagpur till March 31.
- Stock markets, clearing corporations, depositories and stock brokers will be exempted from this.
- Even in Delhi, all non-essential shops in malls, except grocery, pharmacy and vegetable shops will be shut down.
Catch all updates around the coronavirus outbreak in India here.
Globally, there was another surge in the number of new infections and deaths with the World Health Organisation saying that the virus is now spreading at a faster pace.
- It took three months for the first 100,000 cases, but only 12 days for the next 100,000.
- Cases topped 2.41 lakh leaving over 10,000 dead.
- Infections rose to almost 20,000 in both Spain and Iran.
- Iran has had 1,433 fatalities, while in Spain the number is 1,002.
- Italy's reported death toll has now surpassed China's.
Follow the global spread of the virus here.
2. U.S. Stocks Mixed, Sensex Posts Best Day Since 2009
U.S. stocks fluctuated in a flood of trading caused by expiring options and futures contracts.
- The S&P 500 reversed early losses as the Federal Reserve announced a coordinated action with global central banks to beef up dollar liquidity swap line arrangements.
- Markets gained in Asia and Europe, cutting the weekly drop for stocks worldwide to just under 10 percent.
- The 10-year Treasury yield headed for its lowest closing level since Monday.
- The dollar weakened against its major peers after vaulting more than 8 percent in the previous eight sessions.
- West Texas Intermediate crude fell 5.6 percent to $23.82 a barrel.
Get your daily fix of global markets here.
Indian equity markets staged a strong rebound on Friday, snapping a four-day losing streak to post their biggest one-day gain since 2009. However, the surge was not enough to prevent the indices from posting their worst weekly drop since October 2008.
- The S&P BSE Sensex ended with gains of 5.75 percent, or 1,627.73 points, the biggest single-day gain since May 18, 2009. 28 out of the 30 constituents ended with gains.
- For the week, the index posted losses of 12.2 percent, the worst weekly performance since October 2008.
- The NSE Nifty 50 index ended at 8,745, higher by 5.83 percent, or 482 points; that’s the most the index has gained in a single day since May 18, 2009. 46 out of the 50 stocks ended with gains.
- For the week, the index was down 12.1 percent, the worst since October 2008.
- All sectoral indices ended with gains.
Follow the day’s trading action here.
India’s Forex Reserves Plunge Most In 8 Years
India’s foreign exchange reserves fell sharply as the central bank stepped in to defend the rupee.
- The reserves fell by $5.35 billion to $481.9 billion in the week ended March 13, according to data published by the Reserve Bank of India.
- Foreign portfolio investors have pulled out a record $10 billion from Indian shares and bonds so far this month.
- Nevertheless, falling oil prices and slowing imports due to subdued domestic consumption are likely to offer some buffer to reserves.
India’s forex reserves are strong enough to cover nearly 10 months of imports.
3. SEBI Announces Steps To Reduce Volatility
With market volatility in 2020 already being higher than the last eight years, the Securities and Exchange Board of India has announced a series of measures to calm investors and reduce the wild swings.
- SEBI has revised the market-wide position limits for certain F&O stocks.
- The regulator has increased margin for stocks meeting certain criteria and also margin for certain non-F&O stocks in the cash market.
- Position limits in the equity index derivatives have been introduced.
These measures will come into effect from March 23.
4. RBI Moves To Calm Frayed Nerves... Again
The Reserve Bank of India will step up purchases of government bonds to keep interest rates in the debt markets in check.
- The central bank will buy bonds worth Rs 30,000 crore via its open market operations this month, it said in a release on Friday.
- The central bank already bought Rs 10,000 crore in bonds this week.
- The bond purchases will happen in two tranches of Rs 15,000 crore each.
- The first of these operations will be conducted on March 24.
Bond markets responded positively to the central bank’s decision and yields slipped 13 basis points.
5. A Time Of ‘Unquantifiable Uncertainty’
The rapid spread of the novel coronavirus locally is an “unquantifiable uncertainty” for the global and local economy, said Sajjid Chinoy, chief India economist at JPMorgan.
- Cautioning that disruptions in the credit markets and labour markets could quickly emerge due to containment measures put in place by the governments, Chinoy said these must be tackled quickly to avoid second round impacts.
- “We’re seeing the confluence of two really potent forces,” Chinoy told BloombergQuint in an interview.
Find out what the two potent forces are in this full interview with Sajjid Chinoy.
6. Rescuing India Inc. From The Virus
Industry leaders fear it could be a long hard summer for businesses, big and small, formal, informal across India.
- “We’re not seeing the light at the end of the tunnel,” says Harsh Mariwala as he describes the initial impact of the coronavirus-led disruptions on businesses, already hurting due to a slowing economy.
- “I think the impact is on various fronts,” he says, speaking of the industry at large in an interview with BloombergQuint.
- At JSW Steel Ltd., one of the country’s largest steel producers, Sajjan Jindal says the immediate impact on business has been marginal, but we “don’t know what will be the effect going forward”.
Many governments around the world have stepped in with measures for businesses. The Indian industry is hoping for the same.
7. Escorts To Sell 10% Stake To Japan’s Kubota
Escorts Ltd. has agreed to sell 10 percent stake to Kubota Corporation as the Indian tractor maker looks to boost its market share and its Japanese partner aims to create a manufacturing hub for global exports.
- Escorts will issue and allot more than 1.22 equity shares through a preferential issue to Kubota at Rs 850 apiece for Rs 1,042 crore, according to its exchange filing.
- That’s a 48.21 percent premium over Thursday’s share price.
- Escorts will reduce an equal number of shares held by Escorts Benefit and Welfare Trust to keep the total equity capital of the company unchanged.
- Escorts will simultaneously acquire 40 percent stake in Kubota Agricultural Machinery India Pvt. Ltd, the local marketing and sales unit of the Japanese corporation.
The collaboration will see them working in new markets on new product lines.
8. What The Rout Did To Nifty 50 Valuations
The Nifty 50 index has tumbled by more than a fourth in March, tracking the global selloff as the trade disruption by Covid-19 pandemic caused panic selling worldwide.
- It’s already the most volatile year for Indian equities since 2011, taking the benchmarks below the levels last seen after demonetisation.
- That plunge has brought valuations of nearly three-fourths of Nifty 50 stocks below their 10-year average.
- Of the 41 non-financial stocks, 32 are cheaper than their long-term historical average.
- Broadcaster Zee Entertainment Enterprises Ltd. and tower firm Bharti Infratel Ltd. trade at the biggest discount.
See the full list of stocks which are now cheaper than ever.
9. Man Who Foresaw India’s House Of Debt Has A New Warning
Ashish Gupta is surprised that not a single Indian billionaire sued him in the last decade.
- His 2012 “House of Debt” report for Credit Suisse Group AG gave investors an early warning about the dangerous levels of delinquent borrowing by many of India’s top business groups.
- That helped push policymakers to review banks’ loan books and revise the nation’s official bad-loan ratio from about 3 percent to 9.3 percent, one of the highest in the world.
- The coronavirus pandemic now roiling global markets adds urgency to his warnings.
- Gupta, Credit Suisse’s chief of India equity research, says the crisis engulfing India’s shadow bank sector could be even more destabilizing for the $2 trillion economy because the risks are held in entities that, unlike state banks, rely on market funding and provide scant disclosure.
Here’s Gupta’s approach to analysing Indian businesses, his outlook for the financial industry, and the risks he’s focused on today.
Also read: Yes Bank Rescue: Yes And No
10. Kamal Nath Resigns As Madhya Pradesh Chief Minister
Indian Prime Minister Narendra Modi’s Bharatiya Janata Party is set to form a government in the central state of Madhya Pradesh after several lawmakers of the ruling Congress party switched loyalties causing its 15-month-old state government to collapse.
- The chief minister of the state, Kamal Nath offered his resignation on Friday ahead of a confidence vote in the state assembly.
- In a televised press conference, Nath accused the BJP of conspiring against his government.
- The resignation follows weeks of the political crisis that began brewing when senior Congress leader Jyotiraditya Scindia left the party to join the BJP.
Wresting power in Madhya Pradesh gives the BJP a much-needed boost after a series of losses in recent state polls.