The benchmark US stock market index, S&P500 closed at a record high as did the NASDAQ. The record performance of the US markets came on the back of solid macro data coming from the US. In addition, the news of an antidote to the Coronavirus also helped the markets to move up sharply. Over the last few days, global markets have been increasingly reconciling to the fact that the overall impact of the virus pandemic maybe limited, contrary to what the markets had originally anticipated. In the last 10 years, the US markets have been the clear outperformer in terms of stock market returns globally.
It was a month of solid green shoots for the Indian economy with the PMI Manufacturing coming in at a 8-year high and now the PMI Services coming in at a 7-year high of 55.3. Both the PMIs were above 55 indicating a strong traction in manufacturing and services as well as a build-up of momentum compared to the previous month. In manufacturing and services, the PMI got a boost due to a spurt in fresh orders and recruitment of personnel. At a time when India desperately needs a bounce in GDP to counter the twin effects of inflation and weak output, the PMI data surely comes in as a whiff of fresh air.
Bharti Airtel has strongly pitched for the survival of Vodafone Idea and urged the government and DOT to take all possible measures to ensure that Vodafone Idea is not pushed to the wall. Both Vodafone and Bharti have been demanding leniency in AGR payments in terms of the time allowed and also in terms of waiver of interest and penalty. Bharti Airtel has already raised $3 billion from the global markets and is in a position to honour its commitments under the AGR, as per the Supreme Court order. However, the financial position of Vodafone Idea is more vulnerable with promoters ruling out further fund infusion.
One of the big beneficiaries of the Union Budget 2020 could be the Indian dairy industry which got a specific focus from the budget after a very long time. In the budget, the government had announced that the capacity for production and processing of milk would be doubled over the next 5 years from 53 MT to 106 MT, which would make India among the top milk producing nations in the world. The dairy industry is enthused and believes that this expansion of capacity can not only attract Rs.60,000 crore of fresh investments but also create nearly 10 million jobs in the process.
Oil prices in the Brent market jumped by nearly 4% but it has been on a steep decline in the last 2 months. Brent Crude prices fell from nearly $70/bbl at the height of the Middle East tensions in December to the current level of $54/bbl. The sharp fall in just about 2 months has been largely driven by the Coronavirus scare in China. Currently, China is the real swing consumer of oil as it accounts for 13 barrels out of every 100 barrels consumed in the world on a daily basis. In addition, the US is also planning to increase its oil production to nearly 20 million bpd by the end of the year and that is also proving to be a major overhang on the sector. Normally, OPEC would intervene and smoothen prices with supply cuts, but a key partner of OPEC, Russia, does not appear too keen on supply cuts.
The real estate developers have urged the government to reconsider the decision on dividend taxes in the case of REITs and INVITs. It may be recollected that the Union Budget 2020 had shifted the incidence of dividend taxation from DDT to withholding tax. This also meant that REITs and INVITs, which were exempted from tax, would also come under the tax ambit. The real estate industry is of the view that such a move could kill the nascent REITs and INVIT industry. While these real estate intermediaries were permitted in 2014, they took off in the last 2 years with just a handful of listed entities in the market.
