BQuick On May 11: Top 10 Stories In Under 10 Minutes

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

1. Another Spike In New Covid-19 Cases In India

The total number of confirmed coronavirus cases in India topped 67,000 with more than 2,200 dead, at a time when the country is mulling, yet again, on how to reopen the economy.

• India added 4,213 new Covid-19 cases over 24 hours, according to the Union Health Ministry’s 8:00 a.m. update on May 11.
• The total number of cases in India stands at 67,152. This includes 20,917 people who’ve recovered and 2,206 deaths.
• Five states in India - Maharashtra, Gujarat, Tamil Nadu, Delhi and Rajasthan - account for nearly 72 percent of India’s total cases.
• India had done more than 16.7 lakh Covid-19 tests until Monday morning. There were 64,651 tests done on Sunday, according to the ICMR’s data released on Monday.
• The ICMR also released guidance for the appropriate recording of deaths where it said that Covid-19 would be recorded as an "underlying cause of death" when leading to pneumonia, cardiac injury and clotting in the bloodstream, among others.
• Meanwhile, the government also tried to allay fears of data privacy surrounding its controversial Covid-19 tracing app Aarogya Setu. It reiterated that the app is safe and user data is deleted once they are out of danger.
• Prime Minister Narendra Modi is holding a meeting with state chief ministers today, to take account of the virus’ spread, state of local economies and the best way to ease the lockdown.

Track news and developments around the coronavirus outbreak in India here.

Globally, cases crossed 41 lakh leaving over 2.38 lakh people dead.

• Wuhan, where the epidemic began, reported its first new infections since the Chinese city ended its lockdown last month.
• South Korea reported a flare-up in cases tied to nightclubs in Seoul, and officials are trying to track more than 5,500 people.
• Russia reported a record number of new cases in one day as it emerged as a new hub of the outbreak in Europe, though the spread slowed elsewhere on the continent.

Follow the global outbreak of the virus here.

2. India Considers Reopening Skies For Commercial Flights

India is considering allowing some domestic flights to resume on May 18 or earlier as the government looks to reopen a key part of the economy and provide relief to airlines, which haven’t been able to fly since March because of a nationwide lockdown, people familiar with the matter told Bloomberg News.

• The Ministry of Civil Aviation is in talks with airlines, travel agents and the federal home ministry about the move, the people said, asking not to be identified because the deliberations aren’t public.
• A decision may come Monday, they said, after Prime Minister Narendra Modi’s meeting with state chief ministers this afternoon.

Airlines in India have slashed salaries and furloughed staff as they try to weather the pandemic.

Customers demanding cash refunds for flights axed because of the coronavirus are putting the squeeze on India’s travel agents, who are only receiving virtual money from airlines solely to be used for future bookings.

• Indian authorities have told airlines to repay passengers in cash for tickets booked during the nationwide lockdown, but there’s no such obligation when it comes to travel agents.
• That leaves them digging into their own pockets to appease disgruntled customers.
• The default option for most travel agents in other countries is to give credit notes and only provide a refund if asked.

The strain India’s travel agents are under is yet another sign of the damage that the coronavirus is inflicting.

Select Train Services Resume From Tuesday

Nearly two months after all regular passenger services were suspended by the Railways over the coronavirus crisis, 15 pairs of special trains will be operated on select routes starting Tuesday.

• Only asymptomatic passengers with confirmed e-tickets will be allowed in these trains and they will have to report at the station at least 90 minutes ahead of the scheduled departure.
• While wearing masks has been made mandatory, passengers will also have to download the Arogya Setu app on their phone.
• They will be compulsorily screened at the station and have been encouraged to carry their own blankets, water and food for the travel.

3. Almost A Third Of Private Bank Loan Books Under Moratorium

India’s private lenders have seen about a third of their loan books go under the three-month loan moratorium offered to term loan customers by the Reserve Bank of India. The moratorium announced on March 27 was applicable for payments due between March and May.

• With the exception of HDFC Bank Ltd. and IndusInd Bank Ltd., which reported their earnings early in the season, most private lenders have provided information about the number of borrowers and value of loans under moratorium.
• The managements at these banks said that most borrowers have used the moratorium as a way to conserve liquidity and many continue to have the ability to repay their dues.

Find out what each private bank in India has said about the loan moratorium.

4. Stocks Flat, Bonds Drop

Indian equity markets failed to sustain gains to begin the new trading week on a sombre note.

• The S&P BSE Sensex fell 800 points from the day's high of 32,301 to end at 31,561, down 0.2 percent.
• The NSE Nifty 50 index fell over 220 points from its peak of 9,439 to end little changed at 9,239.
• Thirty out of the 50 index constituents ended the day with gains.
• Among sectoral indices, the Nifty Bank was the underperformer, ending 2 percent lower.
• Nifty Auto was the top-performing sector, ending with gains of 4 percent.

Follow the day’s trading action here.

Benchmark sovereign bonds in India tumbled by the most in more than three years after Prime Minister Narendra Modi’s government increased borrowing by more than half to cover revenue lost due to the virus-induced slowdown.

• The yield on 10-year bonds climbed 20 basis points to close at 6.17 percent after surging by as much as 27 basis points, the most since February 2017.
• The surge in borrowings is renewing calls for the Reserve Bank of India to step up support for the debt market.

There’s also a risk that corporate borrowers will get crowded out or have to pay higher financing costs.

U.S. Stocks Drop; Saudis Deepen Oil Output Cuts

Stocks fell as the latest moves to relax restrictions amid the coronavirus pandemic raised concern over future lockdowns that could further hamper the global economy.

• The S&P 500 Index dropped from a two-week high. United Airlines Holdings Inc. slumped after scrapping a $2.25 billion sale of junk bonds. AMC Entertainment Holdings Inc. surged after reports suggested Amazon.com Inc. was “thought to have held talks about a potential takeover.”
• The U.S. dollar halted two days of losses, climbing against most of its major peers.
• Benchmark 10-year Treasuries were little changed.
• Oil rose on Saudi Arabia’s plan to deepen output cuts in an effort to prop up the market.

Get your daily fix of global markets here.

5. Investing In The ‘Grandmother’ Of All Crises

The impact on the real economy as a result of the novel coronavirus outbreak and the nationwide lockdown would be 100 times, if not 1,000 times greater than the global financial crisis of 2008.

• That’s according to the investor couple Devina Mehra and Shankar Sharma, who are director and vice chairman at First Global, respectively. “We thought the GFC (global financial crisis) was the mother of all crises,” they told BloombergQuint in an interaction.
• “But this seems to be the grandmother of all crises.”
• Mehra and Sharma spoke on the outcomes that would be materially different for different countries, asset classes and investors.

Find out what the investor duo expect from the markets, government stimulus and the next bull run.

6. Why Investors Are Shunning State Government Firms

Bond investors continue to stay away from debt issued by state-government owned firms even as they rush for the safety of central government-owned enterprises.

• State government firms have weaker standalone financial profiles than central PSUs, investors say.
• Also unlike central PSUs which rarely default due to the implications for the sovereign, some state government firms have delayed payments leading to nervousness.
• Data from Bloomberg shows that the handful of state government firms, which are actively traded in the secondary markets, have seen yields jump.
• The spreads, or the additional interest rate charged over and above the benchmark government bonds of similar maturity, have also risen.

Investors have chosen to sell down these securities due to redemption pressure at mutual funds and financial impact of Covid-19.

7. India’s Oil Demand Is On The Mend

Fuel consumption in India is showing signs of rebounding after witnessing the worst monthly sales in more than 12 years.

• Demand in May will be as much as 25 percent higher than April as planting season begins, requiring tractors and water pumps to burn more diesel, and the easing of the world’s biggest lockdown brings more trucks back to the road, officials at two state-owned refineries told Bloomberg News.
• The world’s third-biggest oil importer saw demand crater after the government ordered its 1.3 billion people to stay home from March 25 to curb the spread of coronavirus.
• April consumption fell by half from the previous year to the lowest level since 2007, according to official data released Monday.

India’s rebound remains far behind that of its neighbour China, where traffic in top cities is busier than pre-virus levels.

8. Funding Risks Emerge For India Inc.

A new threat is growing for India’s local credit market, already reeling under the strains of the Covid-19 pandemic, world’s biggest lockdown and a prolonged shadow bank crisis.

• Corporate borrowers now also risk getting crowded out as the government steps up debt issuance looking to borrow Rs 12 lakh crore in the fiscal—54 percent more than budgeted.
• The country’s plan for additional borrowing risks crowding out corporate issuers and pushing financing costs higher, according to Ajay Manglunia, managing director and head at JM Financial Products Ltd.
• Yields on AAA graded company notes maturing in three years and 10 years each jumped as much as 20 basis points on Monday on government’s additional borrowing plan, according to traders.

A further increase in financing costs will put added pressure on already-struggling borrowers.

Related Coverage

• In charts: The record-breaking lows the Indian economy saw in April.
• India’s GDP growth likely to contract 5.2 percent in FY21, says Nomura.
• India’s extra borrowing likely to widen FY21 budget gap to 5.5 percent.
• Largest India broker may make working from home more permanent.
• India reopens economy but millions of workers stay home.

9. Will States Diluting Labour Laws Attract More Investment?

The low road to industrialisation has never led to development success, cautions Jayati Ghosh.

• The class war waged by employers in India has never been so blatant.
• It’s absurd to suggest that high labour costs are holding back private investment in India.
• Suppressing wage incomes and damaging workers’ protection reduces their ability to demand goods and services.

It will be tragic if, at this crucial juncture, India actively chooses a foolish route.

10. Nirav Modi's Extradition Trial Begins

Fugitive diamond merchant Nirav Modi, fighting extradition to India on charges over the nearly $2 billion fraud and money-laundering case, appeared via videolink before a U.K. court on the first day of his 5-day extradition trial on Monday, taking place in a part-remote setting due to the coronavirus lockdown.

• The 49-year-old jeweller, who has been lodged at Wandsworth Prison in south-west London since his arrest in March last year, joined the proceedings via the court’s common viewing platform at Westminster Magistrates’ Court in London dressed formally in a white shirt and black blazer.
• The Crown Prosecution Service, appearing on behalf of the Indian authorities, began by laying out the basis of the Indian government’s case. CPS barrister Helen Malcolm appeared via videolink to tell the court that Modi acquired eye-watering amounts of money fraudulently from Punjab National Bank.
• There is really nothing very complicated about this case. It covers three aspects - the fraud, then laundering of that fraud money and the rotation of goods around the Modi empire, she said.

The diamond merchant would not be giving evidence in the case, but his legal team plans to produce around six witnesses.