| Weekly Capsule (Apr 13 – Apr 17) and Impact Analysis |
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| News Announcement |
Impact Analysis |
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| RBI announces Rs.50,000 crore TLTRO 2.0 for liquidity to NBFCs |
This will be a liquidity facility which will be purely for NBFCs with 50% reservation for small and medium NBFCs |
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TLTRO 2.0 will entail buying bonds of NBFCs by the banks as the current system focuses only on PSU and top rated bonds |
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| NPA classification to commence only after EMI moratorium gets over |
This was a clarification that was long overdue and this shall apply to banks and also to NBFCs giving loans |
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This refers to the 3-month EMI moratorium that the RBI had already announced to give relief in midst of COVID-19 |
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| Realty loans can be extended by one year in genuine business cases |
This extension of the loan tenure can be now done in genuine cases without need for asset classification as non-standard |
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This will be a major boon for mid-sized realty companies that rely on the NBFC route for raising funds for operations |
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| RBI further cuts the reverse repo rates by 25 basis points to 3.75% |
The idea was to expand the gap between repo and reverse repo rate to make parking with RBI unattractive |
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The idea of the RBI here is to incentivize the banks to lend more to borrowers than keeping idle money |
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| Former finance secretary Garg warns of Rs.10 trillion budget shortfall in FY21 |
FY21 is likely to see a sharp contraction in GST and income tax revenues and spike in post Covid-19 expenditure |
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One option in front of the government is to monetize the deficit which is tantamount to printing notes |
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| SBI to extend special lines of credit for NBFCs to tide over liquidity crisis |
NBFCs have Rs.250,000 crore of CPs and NCDs that are due before the end of May 2020 |
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In the absence of a dedicated support line of credit from the banks, most NBFCs would end up defaulting |
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| US jobless claims added another 5.2 million during the latest week |
This takes the total unique jobless claims to 22 million in the last four weeks since the eruption of the COVID slowdown |
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This take unemployment to an all-time high and wipes out all the jobs created since the Great Depression of the 1930s |
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| GDP growth in fiscal year 2021 could taper to 1.1%; SBI Research |
SBI Research expects a virtual washout in the first two quarters of the fiscal with a bounce after that |
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This should still be a positive for the markets as all other world economies are expected to contract during this period |
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| Analysts expect India to move towards current account surplus by FY21 |
This is largely to be led by a sharp fall in the trade deficit and a rise in services surplus almost wiping out net deficit |
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Despite weak revenues, analysts are expecting a sharp spike in the inward remittances from NRIs during the year |
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| Overall trade (exports + imports) for March 2020 contracts to $53 billion |
This is the lowest monthly level of trade reported in the last 10 years and is driven by a sharp fall in world trade |
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However, the FIEO has warned that without a proper rescue package we could see spike in job losses and NPAs |
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| Government processes 3.3 lakh claims for EPF withdrawal worth Rs.940 crore |
This was in a short span of just 15 days after people were allowed to withdraw from EPF to tide over COVID-19 |
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It shows the liquidity crunch in the market and is not a good trend as this is supposed to be social security money |
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| Early estimates of the monsoon have come in at 100% of LPA |
The good news for Kharif appears to be that this time around there are limited chances of an El Nino effect |
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However, the real picture of the monsoon will only be clear once the first South West estimates come in June |
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| WPI inflation dips to just 1% for the month of March 2020 |
Like in the case of CPI inflation, Wholesale inflation also saw a sharp tapering in the food inflation component |
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However, WPI accords a much higher weightage to manufactured goods and that has remained flat |
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| Donald Trump stops funding to WHO for its alleged anti-US policy |
Trump has alleged that WHO delayed the announcement of the COVID-19 pandemic despite being informed by China |
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Trump has also insinuated that the WHO had deliberately done so to favour China over other countries |
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| FTSE Russell has hinted at raising India weightage in indices in June |
FTSE will hike India weightage by 1.56% which will lead to $2 billion of fresh inflows from ETFs and passive funds |
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This comes after MSCI had also hinted at increasing India’s weightage in the EM index post FPI limit relaxation |
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| SEBI calls for a close watch on Chinese FPI investments into India |
While it is just about $1.1 billion officially, India has been sceptical about China increasing its stake in Indian companies |
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SEBI has been investigating if the actual Chinese exposure is higher via sub accounts and proxy investments |
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| Lockdown could cost Indian economy $300 billion as per early estimates |
With the lockdown extended by 21 days, the cost comes to $200 billion at Rs.35,000 crore of lost business per day |
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In addition, economists estimate that there could be another cost of $100 billion due to the lag effect of the lockdown |
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| India allows paracetamol exports but puts curbs on API exports |
Paracetamol exports were in line with the commitment to ensure that COVID-19 drugs are made available globally |
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However, APIs are inputs and they are essentially to secure the supply chain for the pharma industry in India |
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| SIP closure ratio spiked to 70% in the month of March 2020 |
This shows that for every 3 fresh SIP registrations, there have been 2 requests for closure of SIPs in mutual funds |
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This is the highest SIP closure ratio seen in 2020 and could be a hint of SIP flows tapering in the future |
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| Face-off between tour operators and airlines likely over lockdown tickets |
While tour operators have demanded full refund of fares from the airlines, the airlines are only willing to reschedule |
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Considering grounded flights and zero business, it would be impractical to expect airlines to refund the full money |
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| TCS and Wipro hold back annual increment plans |
In the midst of weak revenue and profit growth, IT majors have desisted from any job cuts for the year |
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However, across all levels, the salaries have been frozen even as fresh offers made have been honoured |