BQuick On May 13: Top 10 Stories In Under 10 Minutes

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

1. Finance Minister Unveils Measures For MSMEs, NBFCs, Discoms

Finance Minister Nirmala Sitharaman today announced a set of measures for providing relief to small businesses, non-banking financial firms and power distribution companies among others.

This was the first set of measures announced in the package pledged by Prime Minister Narendra Modi to help support the economy tide over the Covid-19 pandemic.

• Of the 16 measures the finance minister announced, six were targeted at micro, small and medium enterprises, or MSMEs.
• They range from providing more funding to small businesses through collateral-free loans, amending definition and timely payment of dues by government enterprises.

Read more details on the announcements for small businesses here.

• The government agreed to provide full and partial guarantees on investments in debt securities issued by non-bank lenders under two different schemes.
• This includes a Rs 30,000 crore special liquidity facility. Under this scheme, investments can be made in investment-grade debt securities of NBFCs, housing finance companies and microfinance institutions.

A second scheme has also been expanded to help smaller entities such as microfinance companies.

• Besides, to help power distributions companies clear off their pending dues, the government-run Power Finance Corporation Ltd. and REC Ltd. will extend loans up to Rs 90,000 crore. The loans will be linked to certain conditions.
• Real estate developers have also been allowed to invoke Force Majure clause and extend registration and completion dates by six months.
• Rates for tax deducted at source and tax collection at source have also been reduced.

Catch all updates and highlights from the Finance Minister’s press conference here.

2. Sensex Reclaims 32,000; Powell’s Grim Outlook Spooks U.S. Stocks

Indian equity markets snapped a two-day losing streak even after giving up almost half of their opening gains.

• The S&P BSE Sensex ended 2 percent higher at 32,008.
• The NSE Nifty 50 too gained 2 percent but failed to hold the 9,400 mark, ending at 9,383.
• Among sectoral indices, the Nifty PSU Bank ended as the top gainer, up 6.1 percent while the FMCG index joined the Nifty Pharma to be the two sectors that fell.

Follow the day’s trading action here.

Sovereign Indian bonds reversed losses amid speculation the central bank may be buying to help steady yields after the announcement of an economic package fanned concerns about a wider budget deficit.

• Yields on 10-year bonds slid as much as eight basis points to to 6.08 percent after surging by as much as 12 basis points earlier.
• Bonds sold off Monday after the administration raised its annual borrowing plan by more than half late Friday.

The expectation that the stimulus won’t add to ramped-up borrowing target has supported sentiments.

U.S. stocks fell as Federal Reserve Chairman Jerome Powell said the economic outlook is uncertain and the downside risks are significant.

• The S&P 500 dropped for a second day on Powell’s view that “the recovery may take some time to gather momentum, and the passage of time can turn liquidity problems into solvency problems.”
• Equities trimmed losses amid a rally in health-care and technology companies that lifted the Nasdaq 100.
• Treasuries and the dollar were little changed as the Fed chairman pushed back against negative interest rates.
• West Texas Intermediate crude fell 1.6 percent to $25.38 a barrel.

Get your daily fix of global markets here.

3. How Maruti Suzuki And Kotak Mahindra Bank Fared In Q4

Maruti Suzuki India Ltd.’s quarterly profit fell as sales tumbled after the coronavirus pandemic stalled operations, disrupting a nascent recovery from the worst auto slowdown in decades.

• Net profit declined 28 percent year-on-year to Rs 1,291.7 crore.
• Revenue fell 15 percent year-on-year to Rs 18,198.7 crore.
• That mostly came on the back of a 16 percent drop in sales during the quarter.

Besides, the company spent more on promotions during the quarter to boost sales, which hurt margin.

Kotak Mahindra Bank Ltd.’s quarterly profit fell as the private lender increased provisioning to mitigate impact of the Covid-19 pandemic.

• Net profit declined 10 percent year-on-year to Rs 1,266.6 crore
• Net interest income, or core income from operations, increased 17.25 percent to Rs 3,560 crore.
• Provisions jumped six-fold to Rs 1,047.5 crore.

Asset quality improved.

4. Uday Kotak Bats For Ball-By-Ball Credit Strategy

In uncertain times, the best that bankers can do is to replenish their balance sheets, buffer their provisions and ensure their organisation is prepared to face risks from many areas.

• That’s the strategy outlined by Uday Kotak, managing director and chief executive officer of Kotak Mahindra Bank Ltd., at a post-earnings call today.
• Kotak said that going in the new financial year, the bank will have to face risks and stress, similar to a ball-by-ball scenario in a cricket match, in the coming months as a result of the Covid-19 pandemic.

Kotak said that the outbreak of the Covid-19 pandemic has placed the world and India in completely uncharted territory.

5. NBFC Loan Disbursements Likely Fell 70-80% In April

Caught between a lack of demand and a squeeze on funding, loan disbursements from non-bank lenders fell 70-80 percent in April, estimate industry representatives and analysts.

• Disbursements across most loan products like automobiles, personal loans and even gold loans fell sharply due to restrictions on normal operations, even though the government was clarified that non-bank lenders are exempt from the nationwide lockdown.
• Still, most lenders had skeletal operations running and demand was absent. The limited disbursements that took place were in the form of existing working capital lines to small businesses and some corporate and real estate loan outgo, the executives who BloombergQuint spoke to said.

Here’s the real reason for the slowdown.

6. Covid-19: India Nears 75,000 Cases; Dharavi Crosses 1,000-Mark

Total number of confirmed coronavirus cases in India crossed 74,000 with over 2,400 dead, at a time when Prime Minister Narendra Modi has warned citizens that they will have to learn to live with the virus.

• India added 3,525 new Covid-19 cases over 24 hours, according to the Union Health Ministry’s 8:00 a.m. update on May 13.
• The total number of cases in India stands at 74,281.
• This includes 24,386 people who’ve recovered and 2,415 deaths.
• Authorities have now reported more than 3,000 fresh cases everyday for a week.
• However, there was also a spike in recoveries today, hovering close to the 2,000 mark.
• Meanwhile, cases in Asia's largest slum Dharavi crossed the 1,000-mark after authorities reported 66 new infections. The area has had 40 deaths so far.
• Maharashtra has also requested the Centre for 20 companies of Central Armed Police Forces to provide some relief to the state police.

Track news and developments around the Covid-19 pandemic in India here.

Globally, cases crossed 42 lakh with deaths exceeding 2.91 lakh.

• China has once again started sealing off cities in a province that borders North Korea amid a growing cluster of cases.
• Hong Kong’s 23-day streak without a case of local transmission ended.
• Russia reported more than 10,000 cases again, although the growth rate slowed.
• Germany plans to reopen borders, a critical step in re-establishing the free flow of people as the pandemic threatens European integration.

Follow the global spread of the virus here.

7. Gilead’s Covid-19 Drug Deal: No Gain For Generics?

Gilead Sciences Inc. signed non-exclusive licensing pacts with five generic drugmakers in India and Pakistan to make and supply remdesivir, a potential treatment for Covid-19, in 127 countries.

• Gilead will transfer technology to make remdesivir and licensees will set their own prices.
• The licences are royalty-free until the World Health Organization declares the end of the Public Health Emergency of International Concern from Covid-19 or until a pharmaceutical product, other than remdesivir, or a vaccine is approved to treat or prevent the virus, whichever is earlier, Gilead said.
• While analysts see this as a positive for the generic makers, they don’t expect any financial benefits.

Here’s why.

8. Reliance Jio’s Broadband Stumble

The number of wired broadband users of Reliance Jio Infocomm Ltd. dropped for the first time since the billionaire Mukesh Ambani’s telecom unit marched into the segment five months back.

• The carrier’s home broadband users fell by 20,000 over the previous month to 8.4 lakh in January, according to the latest data released by the Telecom Regulatory Authority of India.
• In comparison, Bharti Airtel Ltd. reported steady growth for the third straight month.

In the mobile space, Reliance Jio, however, continued to add most paying subscribers among peers.

9. India’s Food Inflation Spikes In April

Retail food prices soared in April due to supply-side disruptions created by a nationwide lockdown which began on March 24.

• While essential commodities were exempt from the restrictions, collection, storage and transportation were impacted leading to less-than-normal supplies of farm commodities. Seasonal pressures also drove up prices.
• Data released by the Ministry of Statistics and Programme Implementation on Tuesday showed that food and beverage inflation rose to 8.6 percent in April 2020, compared to 7.8 percent in March.

This data showed that food prices rose at an accelerated pace for the first time since December 2019.

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10. Labour Law Dilution = Social Chaos?

The decision by various states like Uttar Pradesh, Madhya Pradesh, Gujarat and Maharashtra to amend certain labour law provisions has elicited two diametrically opposing views.

• On the one hand are those who argue that businesses today largely employ temporary workers. And so, the dilution of labour laws that mostly apply to permanent workers won’t make much of a difference. And that the existence of these laws only served the cause of labour inspectors.
• On the other hand, activists have strongly condemned this assertion saying that presence of stringent laws has proved to be a powerful tool in the hands of workers to negotiate for better wages, work conditions etc. And attributing lack of business activity to stringent labour laws is an over-simplification of the problem.

The usefulness of labour laws aside, both sides agree to one thing—that the manner in which the changes are being introduced will lead to social chaos.