| News Announcement |
Impact Analysis |
- Sensex ends volatile week with 5000 points gain from the bottom
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- The bounce came after the markets touched lower circuit in early trades on Friday
- A mix of domestic institutional buying and some positive noises from the government helped the recovery
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- Dow Jones also recovers 10% to close 2000 points higher on Friday
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- This bounce was largely determined by short covering after heavy selling through the week
- Most of the global indices lost around 25-28% in a span of just one month including DJIA, CAC, DAX and the Nifty
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- Trump declares National Emergency as the Coronavirus spreads across the US
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- Trump has provided an emergency funding of $50 billion to fight the spread of the virus on a priority basis
- Trump has already shut the borders to visitors from EU and has also cancelled all visa interviews in India
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- Yes Bank gets a major Rs.3100 crore life line from Indian banks
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- ICICI Bank and HDFC Bank will infuse Rs.1000 crore each while Axis and Kotak will put in Rs.500 crore each
- That brings the total capital contribution to Rs.10,300 crore, including SBI, and the balance may come from PE investors
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- AT1 bond holders in Yes bank may get equity to the tune of Rs.1700 crore
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- This roughly translates into a markdown of 80% from the bond value of Rs.8500 crore as per the balance sheet
- AT1 bond holders had put off their legal recourse after RBI had promised to intervene and sort out the matter
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- DGCA asks airlines to waive all cancellation charges due to the virus
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- More than 30% of the tours and travel plans have been cancelled in the last few months
- While that is going to result in business loss, airline companies will lose further if the cancellation charges are also waived
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- Saudi Arabia starts flooding the world market with cheap oil
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- After increasing oil supply to 12 million bpd, Saudi Arabia has now dropped prices to as low as $25/bbl
- The impact was clear on Brent Crude as the price dipped as low as $30/bbl, more than 50% lower in 3 months
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- India registers growth in exports and imports for Feb 2020
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- In a contrast to previous trends, exports for Feb-20 were up by 2.9% while imports were up by 2.43%
- Interestingly for India, the trade push came from non-oil exports, which was up by 6.16% for the month of February
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- Rupee rebounds over the weekend as RBI intervenes to support
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- The rupee had weakened to Rs.74.50/$ levels before RBI intervention helped it to close around 73.81/$
- The RBI is estimated to have sold dollars to the tune of $1.50 billion to provide support to the local currency
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- FPIs sell Rs.41,522 crore of equities in the last one month
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- FPIs were sellers on all days, except one, resulting in the Indian indices falling by 28% from the peak in a month
- FPI selling in the last one month intensified due to the spread of the Coronavirus and the Yes Bank moratorium
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- US markets are expecting another big rate cut from the Fed next week
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- Fed had already cut rates by 50 bps to 1.25% in the first week of March to counter the slowdown caused by the pandemic
- However, the expectation now is that the US could push rates once again close to the zero mark; as it did in 2008
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- CBI and ED file fresh money laundering case against Rana Kapoor
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- The promoter of Yes Bank is believed to have given out loans of Rs.20,000 crore that eventually turned bad
- The CBI is also investigating the process adopted in the case of the purchase of the Rs.378 crore property in New Delhi
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- Air India bidding cut-off has been put off to April 30th from March 17th
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- The bidders had asked for more time to evaluate the data and submit their bids for Air India
- Also, the Coronavirus had substantially depressed the valuations of airline stocks
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- Chief Economic Advisor hints at rate cut by the Reserve Bank
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- In view of the crash in the markets and the slowdown in growth, the CEA has hinted at an early rate cut by RBI
- It was expected that RBI would cut rates after the US Fed did in early March, but the RBI has chosen to go slow
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- Retail CPI inflation comes in almost 100 basis points lower at 6.58% for Feb
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- The fall in CPI inflation was largely driven by a sharp 283 bps fall in the overall food inflation
- This sharp fall in inflation, it is hoped, will pave the way for an RBI rate cut this month
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- IIP growth bounces back to 2%, led by better manufacturing growth
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- This marks the third successive month of positive IIP growth after 3 months of de-growth between August and October
- Some green shoots of recovery are also visible in the sharp improvement in the PMI manufacturing and services
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- Larsen & Toubro raised Rs.1675 crore for its INVIT Fund
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- These bonds will carry a coupon of 9.04% and is largest such INVIT issue raised on the NSE EBP platform
- This INVIT fund raising is being done by L&T to take over the road assets of ailing Sadbhav Engineering of Ahmadabad
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- Franklin Templeton takes up to 3.5% cut on most of its debt funds
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- This pertain to the full write-offs it is taking on its exposure to bonds of the ADAG group and Essel Infrastructure
- The exposure to the AT1 bonds of Yes Bank are yet to be fully accounted for by the fund
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- Fitch warns of impact of Yes Bank issue on NBFCs
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- According to Fitch, it could have an impact on its last mile business and its funding from other private banks
- Also, the expectation is that the cost of funds for NBFCs may go up sharply, putting them under immense stress
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- Infosys dismisses three of its employees on tax refund related fraud
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- These employees are alleged to have demanded money from the assessees towards speeding up their refunds
- The employees were part of the CPC project of the tax department, which is currently being handled by Infosys
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- US Yield curve is now entirely under the 1% mark for all tenures
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- For the first time in its history, even the US 30-year treasuries are trading at yields lower than 1%
- Low yields combined with an inverted yield curve at places, is a pointer towards an impending economic slowdown
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