BQuick On March 25: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s stories in brief.
1. Coronavirus Cases Cross 600 As India Enters 21-Day Lockdown
Positive cases of Covid-19 in India crossed the 600-mark as the country entered a 21-day lockdown to curb the spread of the coronavirus.
- Total cases stood at 606, including 10 deaths, according to Health Ministry data as of 6:45 p.m.
- India continues to be confident that there is no community transmission in the country yet.
- More private labs have been added for Covid-19 testing. There are 29 private labs with nearly 16,000 collection centres across India.
- Globally, cases topped 4.35 lakh with more than 19,000 deaths.
- Spain saw its deadliest day yet while Britain moved to shut parliament after Prince Charles tested positive. Iran and Singapore tightened curbs.
Follow updates from around the world here.
Hours after India’s Prime Minister Narendra Modi announced the 21-day lockdown to contain the spread of coronavirus, online retailers and grocers either shut operations or curtailed them, citing lack of clarity and inadequate safety of employees.
- Flipkart temporarily suspended operations as it awaits ground-level clarity.
- Amazon is also halting orders for non-essential products in India to prioritise customers’ ‘critical needs’, and focus on supplying essentials.
Most online retailers have raised the issue of safety of employees after reports of delivery staff being beaten up by police.
India’s efforts to arm itself with necessary medical equipment to fight its rising coronavirus infections are being hindered by the uncertainties of a three-week nationwide lockdown announced by Prime Minister Narendra Modi.
- Strict movement curbs being enforced by local state governments are hampering supplies of medical devices and those trying to meet the growing demands of surgical gloves, masks and personal protective equipment kit for health workers.
- Employees have been stopped by local police as they try and reach work while truck drivers carrying raw materials to these factories have also been halted at check points.
The gaps in the supply chain can potentially derail India’s efforts to tackle the outbreak.
2. Sensex Rallies Most In 11 Years, U.S. Stocks Volatile
Indian equity markets staged a strong rally in the second half of trade to post their best one-day gain since 2009.
- The S&P BSE Sensex ended with gains of 7 percent, the most in a single day since May 2009, to close at 28,535.
- Twenty seven out of the 30 stocks in the index ended with gains.
- The NSE Nifty 50 index too saw its best single-day jump since 2009, ending 6.62 percent higher at 8,317.
- 38 out of the 50 stocks on the index ended with gains.
- This is also the first time in seven weeks that the index has posted two successive days of gains.
- All sectoral indices ended the day with gains, led by the Nifty Bank, which witnessed its biggest one-day gain since September 2013.
Follow the day’s trading action here.
U.S. stocks struggled to post their first back-to-back gain since the coronavirus crisis began as investors awaited details on the unprecedented government spending packages aimed at countering the hit from the pandemic.
- The S&P 500 fluctuated in the morning session, following Tuesday’s 9.4 percent surge in anticipation of the deal between the White House and Congress. After overnight negotiations, the bill is slated for a vote Wednesday.
- A rally in Boeing Co. lifted the price-weighted Dow Jones Industrial Average as much as 3.5 percent at one point, but that gain has mostly faded.
- Despite hopes surrounding the stimulus agreement, James Bullard of the St. Louis Federal Reserve Bank told reporters that he expects jobless claims to surge and said the U.S. won’t resume normal life until people feel safe.
- West Texas Intermediate crude fell 2.2 percent to $23.49 a barrel.
Get your daily fix of global markets here.
3. India’s Economy To Shrink In Q1FY21?
India’s economy is poised to shrink next quarter and full-year expansion set to suffer markedly, as a three-week nationwide lockdown starting Wednesday brings activity to a standstill, according to economists including from ING Groep NV and Deutsche Bank AG.
- With two of the three-week shutdown falling in April, gross domestic product growth in the quarter to June could contract about 5 percent, Prakash Sakpal, an economist at ING in Singapore, wrote in a note.
- The economy, which expanded 4.7 percent in the quarter ended December, hasn’t seen a contraction in at least two decades. India’s economy had contracted 5.2 percent on an annual basis in 1980.
- Deutsche Bank’s Chief India Economist Kaushik Das expects real GDP growth to collapse in April-June to a negative print of 5 percent year-on-year or more, going by China’s experience.
Other assessments were less severe.
Options For The Government
Amid such stringent restrictions, how does a $3-trillion economy move along? What needs to be done to keep basic supply chains functioning for essential goods? How do you compensate daily wage earners? And where does the government find the resources for it?
- Rathin Roy, director of the National Institute of Public Finance and Policy, says there are two key issues that the administrative machinery needs to address.
- The first is managing the supply chain for essential commodities in a way that is consistent with the restrictions placed on movements.
- The second key immediate concern is the livelihoods of people.
Still, Roy thinks finding the resources for such measures will not be difficult.
Double Whammy For Daily Wagers
The world’s biggest lockdown to contain the coronavirus pandemic has stalled work under the rural jobs guarantee scheme, leaving daily wage workers with little to fall back on.
- Work under the Mahatma Gandhi National Rural Employment Guarantee Scheme—which guarantees 100 days of work to daily wage earners in rural areas—has come to a standstill due to the lockdown in India, a government official told Bloomberg Quint.
- Some ongoing work that involves priority and comes under essential service like for hospitals is still going, the official said on the condition of anonymity.
Here’s how the scheme’s halt will magnify the effects of unemployment.
4. Chidambaram Calls For Rs 5-6 Lakh Crore Plan
The shortest-term economic consequence of the 21-day nationwide lockdown will be on the livelihood of India’s poorest, said Congress leader and former Finance Minister P Chidambaram.
- “Poorest Indians need cash in their hands,” he said, and Prime Minister Narendra Modi’s government should not delay the announcement of a relief plan any later than tomorrow, he told BloombergQuint in an interview.
- Chidambaram, who has been in favour of a complete lockdown to curb the spread of the novel coronavirus in India, has recommended a 10-point plan to offer relief to those worst hit by the economic shutdown—daily wagers, workers in the informal sector and rural economy - as well as measures for businesses.
The government is thinking too much or not thinking enough. It’s being tardy and hesitant. This is no time for timidity, we should be able to announce a Rs 5-6 lakh crore package without taking so much time.P Chidambaram, Former Finance Minister
Find out why Chidambaram thinks the Rs 5-6 lakh crore package is “eminently doable”.
5. What Axis Bank Chief Thinks Lenders Need Amid Lockdown
Axis Bank Ltd. said the banking industry was waiting for the government and the Reserve Bank of India to come up with a “structured, seamless framework” to deal with the stress arising from a nationwide lockdown amid the coronavirus pandemic.
- The obvious thing to do is to allow some kind of forbearance, restructuring or leeway in repayments of term loans and to extend the working capital cycle, Amitabh Chaudhry, managing director at the private lender, told BloombergQuint in an interview.
- “Bonds are another instrument where concerted action is required,” he said.
How bad will the asset quality hit be for lenders? Watch Chaudhry's take here.
6. New Credit Line For Mutual Funds?
India’s central bank is weighing opening a new credit facility for banks aimed at boosting their lending to mutual funds, which have been hit by a flood of redemptions, people with knowledge of the matter told Bloomberg News.
- The Reserve Bank of India and the finance ministry are in favor of a proposal from the industry regulator to open a cash window that fund houses can tap via their banks, the people said, asking not to be identified as the discussions are private.
- Other measures to ease a growing cash crunch are being discussed and a final decision is expected soon, one of the people said.
Policymakers are concerned that stress among mutual funds will translate into higher borrowing costs for companies.
7. Before The Virus, India Inc. Was Raining Dividends
It may come as little solace now to shareholders confronted with steep falls in share prices due to the coronavirus pandemic, but not so many days ago fiscal 2019-20 looked set to deliver a dividend double dhamaka.
- So far this year, 24 entities constituent companies of the benchmark NSE Nifty 50 Index have announced interim dividends.
- Last year, just 15 paid interim dividends in the January-March period.
- Earnings growth, at a dismal 6 percent as of the third-quarter, gets no credit for that.
8. Biyani Family Breached Terms Of Loans
The founding family of a retail giant in India breached loan terms, people with knowledge of the matter told Bloomberg News.
- At issue are the loans taken by the founding Biyani family of the Future Group, which comprises listed companies including Amazon partner Future Retail Ltd.
- The loans were backed by shares in the family’s listed units, but are in breach of terms including collateral cover requirements, the people said, asking not to be identified as the details are private.
- The coronavirus outbreak triggered record declines in risk assets putting pressure on tycoons who’ve used share-backed debt to expand businesses.
The Biyani family is now in talks with their creditors to fix the problem.
9. Shareholder Stewardship Efforts: A Mixed Bag
A well-designed stewardship regime could help address some of the concerns emanating from the structure of the stakeholder approach in Indian corporate law, writes Umakanth Varottil.
- India adopted the path of fragmentation with three codes, one for each investor type.
- Individual regulators appear to have acted on their own, displaying a lack of coordination.
In India, the concept of stewardship must also be extended to promoters.
10. Bill Gates Says Isolation Won’t Be Easy For India
As India goes into a 21-day complete lockdown amid the Covid-19 pandemic, Microsoft co-founder said it was way more difficult for a country like this to do social distancing and shutdowns alone would not help in containing the virus.
- “[Narendra] Modi in India said he wants India to do (social distancing) it. I hope it works, but it is way more difficult as you move down the income ladder than it is for a country like the United States,” Bill Gates said during a TED Connects online broadcast programme.
- Gates, in an hour-long online chat with the head of TED Chris Anderson, also said that countries like India won’t be able to reduce its inner household spread nearly to the degree at which rich countries, that shut down as well, have done.
Read more on why Gates is worried about “massive number of deaths” in poorer countries.