Indian stocks have kick-started the day with minor losses, in line with the sentiment in other Asian bourses, as the coronavirus pandemic has forced an economic shutdown.
The IMF has backed India’s decision to impose a nation-wide lockdown despite the massive economic cost of the decision. The IMF has projected growth in Asian economies to come to a halt for the first time in 60 years.
Join us as we follow the top business news through the day.
US blocks funding to Iran, China
Politics seems to be hindering efforts to effectively fight the coronavirus pandemic.
Reuters reports: “U.S. opposition to opening new avenues of funding for Iran and China is preventing the International Monetary Fund from deploying a powerful tool to help countries fight the economic impact of the coronavirus, according to two sources familiar with the matter.
A massive IMF liquidity injection through issuance of new Special Drawing Rights, something akin to a central bank ”printing” new money, has the backing of many finance ministers, prominent economists, and non-profit groups.
It could provide hundreds of billions of dollars in urgently needed foreign exchange reserves for all of the IMF’s 189 member countries, and finance officials are debating the issue during this week’s virtual IMF and World Bank Spring Meetings.
But sources said the United States, the IMF’s dominant shareholder, actively opposed the new fundraising.
The Trump administration does not want Iran and China to have access to billions of dollars in new resources with no conditions, two of the sources familiar with the IMF’s deliberations said, asking not to be identified given the sensitivity of the issue.”
Stocks end day with modest gains
The benchmark stock indices ended the day with gains of under 1% as they struggled to break above their most recent highs.
The Sensex gained over 200 points while the Nifty settled just below the 9,000 mark.
Rupee plummets 43 paise to settle at all-time low of 76.87 against US dollar
An update on the rupee, which has fallen further in value against the US dollar since this morning.
PTI reports: “The Indian rupee tanked 43 paise to settle at an all-time low of 76.87 (provisional) against the US dollar on Thursday, amid rising concerns over coronavirus-led economic slowdown.
Forex traders said the weakness in the rupee was largely due to strengthening of the US Dollar against a basket of currencies as investors fled to safe haven greenback amid weakening risk appetite in the markets.
At the interbank foreign exchange, the rupee opened weak at 76.75, and during the day lost further ground to settle at 76.87, registering a fall of 43 paise over its previous close.
During the session, the rupee moved between 76.68 and a low of 76.87 against the US dollar.
On Wednesday, the rupee had settled at 76.44 against the greenback.”
Covid-19 leaves private healthcare sector in financial distress, in need of stimulus, says study
The healthcare sector, which many would believe should benefit immensely from the ongoing pandemic, has surprisingly been hit hard due to severe lockdown restrictions.
PTI reports: “The private healthcare sector in the country is witnessing an unprecedented slowdown due to outbreak of Covid-19 in India and the resultant lockdown, according to a Ficci-EY study.
“The pandemic has caused an adverse impact on the private healthcare sector resulting in 70-80 per cent drop in footfall, test volumes and 50-70 per cent drop in revenue in last ten days of March that is expected to sustain in month of April with continued lock down,” the study said.
Possible ramp up will be gradual thereafter, taking at least three quarters for return to normalcy, according to the study titled ‘Covid-19 impact assessment for private healthcare sector and key financial measures recommendations for the sector’
According to Ficci Health Services Committee Chair Alok Roy, the financial distress accentuated by Covid-19 lockdown has forced several standalone and small nursing homes in tier II-III cities to pull down the shutters.
Many others are at high risk of closing down soon since their cash flows have dried up, due to steep decline in patient footfalls, and they are facing liquidity crisis for even sustaining their staff salaries, he added.”
Gold futures hit all-time high
The bull run in the yellow metal continues as economic uncertainty pushes more investors to seek safety.
IANS reports: “Futures contracts of gold continued to surge on the Multi-Commodity Exchange (MCX) on Thursday and hit a new high of Rs 47,000 per 10 gram.
Currently, the June contract of gold on MCX is at Rs 46,975 per 10 gram, higher by 0.57 per cent from its previous close.
Earlier in the day it touched an all-time high of Rs 47,030 per 10 gram.
The demand for gold has risen off late as other asset classes including the stock markets remain subdued amid the coronavirus crisis and the nationwide lockdown. Global gold prices have also been surging off late.
Spot gold trade is shut in India amid the nationwide lockdown, but with the extension of the lockdown and further economic concerns and uncertainty in other asset classes, investors are likely to move more towards gold and futures of the yellow metal are likely to surge further, analysts said.”
China says has not seen large-scale exodus of foreign capital amid coronavirus outbreak
Even though the epicenter of the global coronavirus pandemic, China has apparently not seen any mass outflow of capital.
Reuters reports: “China has not seen large-scale exodus of foreign capital from the country amid the coronavirus outbreak, the commerce ministry said on Thursday, adding that many Japanese firms have expressed a willingness to boost investment in China.
Globalisation has been met with “undertow”, but the trend would not change, ministry spokesman Gao Feng told a press conference.
Foreign direct investment (FDI) into China fell 10.8% in January-March due to the impact from coronavirus pandemic, official data showed on Wednesday.”
Date for renewal of health, motor insurance policies extended up to May 15
The Finance Ministry on Thursday extended the renewal dates of health and motor insurance policies falling during the nationwide lockdown period till May 15 to ensure continuity.
This extension is for policies that are due for renewal between March 25 and May 3.
“With a view to mitigate hardship to policyholders whose health & motor (third party) insurance policies are due for renewal during COVID-19 lockdown, Govt. has issued notification allowing policyholders to make payments on or before 15.05.2020 towards renewal of their policies,” the finance ministry said in a tweet.
The finance ministry in two separate notifications said policy holders whose motor insurance third party insurance or health insurance policies that are due in the lockdown period from March 25 up to May 3 and who are unable to make payment of their renewal premium on time due to the lockdown are allowed to make such payments till May 15.
Asia to see zero per cent growth in 2020, says IMF
Growth forecasts for the year seem to be only getting worse as the economic impact of the global lockdown becomes increasingly obvious by the day.
PTI reports: “Asia is expected to witness zero per cent growth in 2020 due COVID-19 pandemic, its worst growth performance in almost 60 years, but still the world’s largest and most populous continent is likely to fare better than other regions in terms of activity, the International Monetary Fund (IMF) has said.
The IMF in a blog titled ‘COVID-19 Pandemic and the Asia-Pacific Region: Lowest Growth Since the 1960s’ further said the impact of the coronavirus on the region will be “severe and unprecedented“.
“Growth in Asia is expected to stall at zero per cent in 2020. This is the worst growth performance in almost 60 years, including during the Global Financial Crisis (4.7 per cent) and the Asian Financial Crisis (1.3 per cent),” it said.
It further noted that “Asia still looks to fare better than other regions in terms of activity”.
The global economy is expected to contract in 2020 by 3 per cent — the worst recession since the Great Depression, the IMF said adding Asia’s key trading partners are expected to contract sharply, including the United States by 6.0 per cent and Europe by 6.6 per cent.”
Emerging markets witness unprecedented capital outflow
IT stocks fall as Wipro flags coronavirus challenges
A few quick updates from Reuters on the troubles facing India’s IT sector after Wipro’s bleak outlook.
** Top Indian IT exporters slip after sector heavyweight Wipro flags uncertainties and challenges due to the coronavirus outbreak, suspends qtrly revenue guidance
** Infosys Ltd falls over 5.5%, Tata Consultancy Services slips 3.4%, Wipro slides 3.5% and Tech Mahindra drops 4.85%
** Sector’s main sub-index on NSE down as much as 3.9%, following Wipro’s comments
** Bengaluru-based Wipro was the first among the IT cos to report March-qtr earnings on Wed; Q4 profit missed est on higher spending
** CFO Jatin Dalal flags “challenging” qtrs ahead, says would require “tremendous response” on costs
** Wipro’s statements come a week after U.S. software services giant Cognizant withdrew its 2020 outlook on coronavirus uncertainty
** If there is so much uncertainty, one can’t clearly assess the impact and give a guidance – HDFC Securities analyst Amit Chandra
** Slowdown in IT spends will impact H1, which generally drives the growth for the full year – IDBI Capital
** Indian IT cos heavily rely on rev from the United States and Europe, two of the hardest hit regions because of the virus
** TCS to report results on Thursday, Infosys earnings scheduled for Monday
Rupee tanks 36 paise to all-time low of 76.80 against US dollar
As investors rush towards the US dollar, the rupee and other emerging market currencies are coming under increased pressure.
PTI reports: “The Indian rupee tanked 36 paise to an all-time low of 76.80 against the US dollar in opening trade on Thursday, tracking weak domestic equities and sharp rise in coronavirus cases in the country.
Forex traders said the weakness in the rupee was largely due to strengthening of the US Dollar against the basket of currencies as investors fled to safe haven Greenback amid weakening risk appetite in the markets.
The rupee opened weak at 76.75 at the interbank forex market and then fell further to hit an all-time low of 76.80, down 36 paise over its last close.
The rupee had settled at 76.44 against the US dollar on Wednesday.
The currency could also track local equity markets which started on a negative note as Asian stock markets are set to tumble amid increasing gloomy economic outlooks for Asia, Reliance Securities said in a report.”
Refineries cut output as coronavirus hits fuel demand
As global demand for oil takes a huge hit due to the pandemic, refiners have oped to cut their output.
Reuters reports: “Refineries have been curbing output in the last few weeks, as fuel demand has been crushed by global travel restrictions aimed at containing the spread of the coronavirus.
While most refiners are running, several have reduced the barrels of oil they process as gasoline and diesel use has fallen sharply as the coronavirus pandemic keeps much of the world at home, with little need to drive or fly.
The U.S. Energy Information Administration (EIA) said last week the global petroleum and liquid fuels consumption likely averaged 94.4 million barrels per day (bpd) in the first quarter of 2020, 5.6 million bpd lower than the same period in 2019.
EIA forecast 2020 world oil demand will drop by 5.2 million bpd from an average of 100.7 million bpd last year.”
Fed says US economy contracts sharply due to COVID 19 pandemic
Some insights on the economic impact of the coronavirus pandemic from the US Federal Reserve’s Biege Book.
Reuters reports: “Economic activity “contracted sharply and abruptly” across all regions in the US as a result of the COVID-19 pandemic, the Federal Reserve said on Wednesday.
“The hardest-hit industries — because of social distancing measures and mandated closures — were leisure and hospitality, and retail aside from essential goods,” the Fed said in its latest survey on economic conditions, known as the Beige Book, based on information collected from its 12 regional reserve banks before April 6, Xinhua reported.
“All Districts reported highly uncertain outlooks among business contacts, with most expecting conditions to worsen in the next several months,” the Fed said.
The survey showed that employment declined in all districts as the COVID-19 pandemic affected firms in many sectors.”
IMF backs India’s “very wise” lockdown decision despite economic cost
The International Monetary Fund has praised the Centre’s decision to impose a nation-wide lockdown to spreadof the coronavirus pandemic given the likely long-term costs of the disease.
IANS reports: “The International Monetary Fund (IMF) supports India’s “very wise” decision to impose a national lockdown to combat the coronavirus pandemic despite the resulting economic slowdown, according to Changyong Rhee, the organisation’s director of the Asia and Pacific Department.
He said at a news conference on Wednesday, “India entered the pandemic turmoil in the midst of a credit crunch induced slowdown and its recovery prospect becomes more uncertain.”
The IMF drastically revised India’s growth rate projection for the current fiscal year to 1.9 per cent from the 5.8 per cent made in January, which was lower than the 7 per cent made in October.
Rhee said that India’s strict action against the COVID-19 pandemic “can cause a drop in economic activity (and) growth rate will go down definitely, but I think that is a very wise and important decision to minimise the long-term cost of this disease spread.”
He said that the fiscal stimulus as well as the monetary policy easing adopted by the Indian government and the Reserve Bank are in the right direction, but whether they will be enough “depends on how this containment policy which is just adopted, how successful it will be”.”
IEA forecasts huge drop in oil demand in 2020
The International Energy Agency (IEA) on Wednesday forecast a 29 million barrel per day (bpd) dive in April oil demand to levels not seen in 25 years and warned no output cut by producers could fully offset the near-term falls facing the market.
Benchmark Brent crude futures fell following the IEA’s monthly report, by $1.88, or 6.4%, to $27.72 a barrel by 1816 hours IST.
The IEA forecast a 9.3 million bpd drop in demand for 2020 despite what it called a “solid start” by producers following a record deal to curb supply in response to the coronavirus pandemic.
Stocks open with losses
The benchmark stock indices opened the day with losses of close to 1% as they struggle to regain upward momentum.
Ths Sensex is trading down over 200 points while the Nifty is trading below the 8,900 mark.
Overnight, the Dow Jones Industrial Average was down nearly 2% losing around 450 points.