BQuick On March 26: Top 10 Stories In Under 10 Minutes

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

1. India Unveils Rs 1.7-Lakh-Crore Coronavirus Relief Package

Indian officials today said that they are noticing a stabilisation in the rate of new infections across the country even as total cases of Covid-19 rose to 694.

• While there is a general decline in the number of new cases detected, this is not yet the time to be relaxed about the situation, Joint Health Secretary Luv Agarwal said in a press conference.
• Confirmed cases of Covid-19 have more than tripled to 649 over the past one week. This includes 42 discharged and 13 deaths.
• India is currently in the second day of the three-week long lockdown to curb the spread of the virus.
• Maharashtra and Delhi have allowed essential shops to operate 24x7 to stagger customer visits and maintain social distancing.
• Meanwhile, the central government has extended the ban on international flights till April 14. Cargo flights will be excluded.
• Globally, cases rose past 4.87 lakh with over 22,000 dead. More than 1.17 lakh have recovered.
• Spain reported a surge in cases with Europe now accounting for 7 out of 10 reported fatalities.

Follow the developments around the coronavirus outbreak and the lockdown in India here.

India announced a Rs 1.7-lakh-crore relief package to take care of poor, workers and those who need immediate help amid a lockdown to combat the coronavirus pandemic.

• The Pradhan Mantri Garib Kalyan Scheme, which will cover 80 crore poor people, will include cash transfers and food security, Finance Minister Nirmala Sitharaman said at a press meet in New Delhi.
• The scheme also focuses on giving payments to different sections of the society directly into their bank accounts.
• This will cover farmers, workers under the Mahatma Gandhi National Rural Employment Guarantee Scheme, widow pensioners, disabled, women with Jan Dhan accounts, women running self help groups, beneficiaries of the Employees’ Provident Fund Organisation and construction workers.
• The amendments to the EPFs & Miscellaneous Provisions Act will allow members to withdraw up to 75 percent of their balance in the fund or three months’ wages, whichever is lower, as an emergency measure to tide over any difficulties arising from the coronavirus pandemic.

Here are the 10 government measures announced to help the poor during the lockdown.

2. Economists Think Relief Package Isn’t Enough

While most economists that spoke to BloombergQuint welcomed the interventions announced by the finance minister today, they felt these measures are not adequate to address the plight that the marginalised are facing.

• The focus on vulnerable sections is welcome, but the amounts announced is very small relative to the scale of the problem, said Jayati Ghosh, a development economist and professor at the Jawaharlal Nehru University.
• There is a need for more steps to initiated, along with ensuring quick implementation of the measures announced, said Rahul Bajoria, chief India economist at Barclays.
• The package is not as big as it looks because much of it is just frontloading the expenditure which the government had already planned for, said M Govinda Rao, an economist and a member of the 14th Finance Commission of India.
• The government should have made cash transfers to NREGA workers instead of women Jan Dhan account holders as the latter are the poorest, Reetika Khera, associate professor at IIM-Ahmedabad said.

Watch the full discussion with the economists on what was lacking from the Finance Minister’s relief package.

3. Will RBI Cut Rates Now? Bond Traders Sure Think So

The interest-rate cut that the Reserve Bank of India has resisted may now be inevitable.

• Sovereign bonds rallied, though in low volumes, after the government unveiled a Rs 1.7 lakh crore ($22.6 billion) stimulus to alleviate the economic impact of the coronavirus pandemic.
• “There are expectations in the market that the RBI may announce some steps,” said Harish Agarwal, a bond trader at FirstRand Bank Ltd. in Mumbai. “No one wants to initiate a fresh short position.”
• The yield on the benchmark 10-year bond dropped eight basis points to 6.22 percent on Thursday.

Sitharaman sidestepped queries on how the government will fund the spending, and the impact on the fiscal deficit.

India’s central bank should directly start monetizing the government’s fiscal deficit in efforts to fight one of its worst economic crisis, said Ananth Narayan, the former South Asia head of financial markets at Standard Chartered Plc.

• “In a war, we have to borrow from our future,” said Narayan, now a professor at Mumbai-based SP Jain Institute of Management & Research.
• “In the short term, we will need to print and spend to fund our war against Covid-19, sustain critical services, give relief to daily wage earners, and give forbearance to banks and businesses. All this at a time when our tax revenues will plummet,” he said.

Narayan thinks there’s a very small window for the RBI to act.

4. Nifty’s Best Three-Day Rally In A Decade

Indian equity markets advanced for the third straight day, registering their best three-day rally since May 2009.

• The S&P BSE Sensex rallied 4.9 percent, or 1,260 points, to close at 29,946.
• The index has advanced 15.2 percent in the last three days.
• The NSE Nifty 50 index ended 3.89 percent higher at 8,641.
• Today's move takes Nifty's 3-day advance to 13.7 percent.
• All sectoral indices ended with gains with the Nifty Realty index being the top performer, rising 7 percent.

Follow the day’s trading action here.

Powell Says Fed Won’t ‘Run Out Of Ammunition’; U.S. Jobless Claims Surge To Record

U.S. stocks rose as investors speculated the $2 trillion rescue package poised to pass Congress will lessen the pandemic’s toll on the economy.

• The S&P 500 extended its advance to as high as 3 percent in early trading, headed for its first three-day rally since February. Treasuries held gains and the dollar fell for a third day.
• Jobless claims surged to a record 3.28 million Americans last week as businesses shut down to help prevent the spread of the virus. While the reading exceeded estimates, aid is on the way from the U.S. government to help offset the impact on workers and businesses.
• Federal Reserve Chairman Jay Powell also sought to assure traders that the central bank wouldn’t run out of crisis-fighting ammunition.
• European Central Bank announced it will scrap limits on bond purchases for its emergency programme, a landmark decision that gives it almost unlimited firepower to fight the economic fallout from the virus.
• The euro strengthened as a gauge of the dollar headed for a third day falling.
• West Texas Intermediate crude fell 4.8 percent to $23.32 a barrel.

Get your daily fix of global markets here.

5. Normal Days Are Far, Very Far Away

Get used to social distancing, says one of India’s leading epidemiologists Dr. Jayaprakash Muliyil.

• “No large gatherings, you may not have big crowds, big weddings, big parties for probably another three more months,” the former principal of Christian Medical College, Vellore and one of India’s leading epidemiologists said in an interview to BloombergQuint.
• The 21-day lockdown announced by Prime Minister Narendra Modi on March 24, was the only thing India could try, given the nature of the disease, India’s economic status and heath resources, Dr. Muliyil said.
• Two weeks would have been too short a time, 21 days is the minimum possible time, according to him.

Still, lockdown will help reduce avoidable deaths, he added.

6. Raghuram Rajan’s Take On India’s Lockdown

India’s three-week-long lockdown, the world’s biggest, to combat the Covid-19 pandemic need not necessarily contain the spread of infection, according to Raghuram Rajan.

• “This is a very serious concern because not only does the lockdown keep people from going to work, it keeps them at home which is not necessarily that pristine isolated place, but can also be a slum where people live together,” the former Reserve Bank of India governor told Bloomberg in an interview.

• India’s weak infrastructure could also make transferring money, food, and supplies to the poor, whose livelihoods have been battered by the lockdown, difficult, Rajan said.

Rajan called upon rich countries to get resources to some of the under-developed parts of the world.

7. Yes Bank Eyes Rs 5,000 Crore Fundraise

Yes Bank Ltd. approved a plan to raise an additional Rs 5,000 crore less than a month after the beleaguered private lender received Rs 10,000 crore from a consortium led by State Bank of India in rescue plan prepared by the banking regulator.

• The private bank’s newly constituted board led by non-executive Chairman Sunil Mehta won’t be required to seek shareholder approval for this fundraising separately if conducted through a rights issue, the lender said in an exchange filing.
• The bank’s board and shareholders had on Jan. 10 and Feb. 7, respectively, approved a plan to raise Rs 10,000 crore in one or more tranches through a qualified institutional placement, public issue, global and American depository receipts, foreign currency convertible bonds or any other permissible mode.
  

The Rs 10,000 crore invested by the consortium was used mostly to meet regulatory capital limits.

8. L&T May Miss Full-Year Guidance

India’s largest construction and engineering company faces the risk of missing its full-year order inflow target as crude oil prices plunged and the coronavirus pandemic stalled economic activity.

• After the third quarter, Larsen & Toubro Ltd. — considered a barometer for private investments—maintained guidance for order inflow at 10-12 percent and revenue at 12-15 percent for the financial year ending March 2020.
• The company requires orders worth Rs 66,000-70,000 crore in the fourth quarter to meet the order inflow guidance.
• Of which, it has only bagged a third, or Rs 27,500 crore, according to data available on exchanges.

And now the Covid-19 pandemic poses a challenge to L&T’s ability in meeting guidance.

9. Virus Impact: Bourses Cut Down Commodity Trading Hours

The Bombay Stock Exchange and the National Stock Exchange have cut trading hours for commodities derivative segment in the wake of coronavirus pandemic.

• Commodities derivative trading will begin at 9:00 a.m. and close at 5:00 p.m. from March to April 14, as against till midnight now, BSE and NSE said.
• Multi Commodity Exchange Ltd. and Indian Commodity Exchange Ltd. also announced the reduced trading hours in separate statements.
• India’s commodity markets trade between 10:00 a.m. to 11:50 p.m., while equity markets close at 3:30 pm.

The move could provide relief to all members amid the India lockdown.

Steel Prices Set To Fall In April

Steel prices, which have risen steadily since October 2019 and remained steady so far this month, are expected to decline in April as the coronavirus outbreak has stalled global trade. China raising tax rebate on steel exports may add to the downward pressure on prices.

• Prices of domestic hot-rolled coil steel in March fell marginally over the previous month to Rs 38,700 per tonne, according to data provided by Edelweiss Securities and BloombergQuint’s calculations.
• “Demand pick-up has belied expectations so far,” Amit Dixit, assistant vice president of research at Edelweiss Securities, told BloombergQuint. “Domestic companies which deploy large workforce at their mills or plants would also have severe repercussions of the Covid-19.”

That could result in Indian companies failing to meet their production targets.

Related Coverage

• Rural demand can still be saved, says Mahindra Finance’s Ramesh Iyer
• ‘Lockdown blues’ spur Citi to cut India stock index target
• India renewables projects set for slowdown on Covid-19 lockdown

10. Bombay High Court’s Tax Ruling A Setback For Firms

The tax department has the power to impose a time limit for use of accumulated credits from the erstwhile indirect tax regime, the Bombay High Court has held.

• Since high courts of Haryana, Calcutta, Delhi, Karnataka, Madras and Himachal Pradesh have dismissed such restrictions on taxpayers, the matter will now need to be settled by the Supreme Court, experts told BloombergQuint.
• The Bombay High Court judgment comes as a setback for companies that, for some reason or the other, were not able to upload details through form Tran-1 and transition the credit balance to the GST regime, Rajat Bose, partner at Shardul Amarchand Mangaldas, said.[

Taxpayers are likely to lose out on rightly accrued input tax credit. Read what experts say.