Markets are closed today on account of Ambedkar Jayanti.
Inflation numbers released yesterday showed an easing down of retail inflation, but economists have warned about rising food prices spoiling the party pretty soon.
Meanwhile, industry leaders are hoping for the easing down of lockdown measures today to mitigate the massive economic pain caused over the last 3 weeks.
Join us as we follow the top business news through the day.
More US jobs lost in the past four weeks than were created since the financial crisis
RIL to hit NCD market with ₹10,000-crore issue on April 16
To cash in on cheap funds flooding the debt market through the targeted long-term repo operations route, Reliance Industries (RIL) will raise ₹9,000 crore through an NCD sale to refinance the existing high-cost rupee debt.
The most cash-rich company is also one of the most indebted corporates sitting on debt pile of over ₹1.54 lakh crore as of March 2020.
According to an exchange filing, RIL is launching a ₹9,000-crore non-convertible debenture (NCD) issue on April 16 and the proceeds from the debt sale will be used to repay existing rupee debt.
The issue has two components: a ₹4,500-crore fixed rate tranche and an equal tranche with floating rate and both the issues are offering a coupon of 7.20%-4.40% of repo with a spread of 2.80%.
SoftBank shares fall 3.5% after flagging first FY loss in 15 years
Softbank is facing its worst crisis in years as many of its tech bets have gone sour after being hit hard by the global lockdown.
Reuters reports: “SoftBank Group Corp shares fell 3.5% on Tuesday morning after estimating the Vision Fund will record a 1.8 trillion yen ($16.73 billion) loss in the year ended March due to the tumbling value of bets on unproven startups.
The disastrous performance by the fund on which CEO Masayoshi Son has staked his reputation will drag the entire group to its first annual loss in 15 years, SoftBank said.
The Vision Fund recorded a loss of around 800 billion yen in the nine months to December, indicating that losses widened in the final quarter of the financial year. SoftBank did not provide details on which tech bets have been marked down, a long-standing irritant for analysts and investors.”
Private lenders may lose deposits to PSBs due to Yes Bank bailout, says Moody’s
Here’s Moody’s on the likely unintended consequence of the Yes Bank bailout.
PTI reports: “The Yes Bank rescue has undermined confidence of depositors in private sector lenders and will lead to smaller entities losing deposits to state-run banks, a report said on Tuesday.
The research report from global ratings agency Moody’s Investors Service comes at a time when many private sector lenders have reported a contraction of deposits in the March quarter when the Yes Bank crisis happened. The RBI – which had to steer the over Rs 10,000 crore Yes Bank bailout – has repeatedly assuaged such concerns, saying money in all the banks is safe.
“The Yes Bank event undermines depositor confidence in private sector banks, whereas public trust in PSBs (public sector banks) will remain strong, underpinned by a perception of strong government protection for them,” the rating agency said.
“As a result, some private sector banks, particularly, small institutions could lose deposits to PSBs, which will weaken their funding profiles,” it added.”
Auto dealers send SOS to PM
The Federation of Automobile Dealers Associations (FADA) has written to Prime Minister Narendra Modi seeking urgent measures, including complete waiver of interest on bank loans during lockdown, to help dealers stay afloat in the “extremely bleak” situation due to which lakhs of jobs are at stake.
“COVID-19 has come as a shock to all of us as the Indian auto industry was preparing for recovery in sales growth after 15 months of downturn. A new normal growth rate is going to be set, post the COVID-19 which is projected to be far lower than the normal. The current situation can lead to an existential situation for many of our members and their employees,” FADA president Ashish Kale said in the letter dated April 12.
The industry body, which represents around 15,000 auto dealers, sought complete waiver of interest on all categories of loans from banks and NBFCs for the lockdown period and an extension of 4% interest subvention/subsidy for working capital/loan requirements to companies for a period of nine months post the lockdown.
IMF to provide debt relief to help 25 countries deal with pandemic
To ease the burden of the economic crisis linked to the coronavirus pandemic, the International Monetary Fund has provided 25 countries some relief from their debt obligations.
Reuters reports: “The International Monetary Fund said on Monday it would provide immediate debt relief to 25 member countries under its Catastrophe Containment and Relief Trust (CCRT) to allow them to focus more financial resources on fighting the coronavirus pandemic.
IMF Managing Director Kristalina Georgieva said the fund’s executive board approved on Monday the first batch of countries to receive grants to cover their debt service obligations to the fund for an initial six months.
She said the CCRT had about $500 million in resources on hand, including new pledges of $185 million from Britain, $100 million from Japan, and undisclosed amounts from China, the Netherlands and others. The fund is pushing to raise the amount available to $1.4 billion.
About $215 million of the total would be used for grants to the first 25 countries over the next six months, with extensions possible up to two years, an IMF spokeswoman said.
“This provides grants to our poorest and most vulnerable members to cover their IMF debt obligations for an initial phase over the next six months and will help them channel more of their scarce financial resources towards vital emergency medical and other relief efforts,” Georgieva said in a statement.”
China’s March crude oil imports rose 4.5% y/y on stockpiling
Chinese oil refiners are making use of cheap global crude oil prices to increase their reserve levels, so much so that the country’s oil imports have grown year-over-year despite falling demand.
Reuters reports: “China’s crude oil imports in March rose 4.5% from a year earlier, according to official customs data, as refiners stocked up on cheaper cargoes despite falling domestic fuel demand and cuts in refining rates caused by the COVID-19 disease outbreak.
China, the world’s top crude oil importer, took in 41.1 million tonnes of oil, according to the official data from the General Administration of Customs. That is equal to 9.68 million barrels per day (bpd).
The official March figure in bpd compared to an average of 10.47 million bpd for the first two months of the year. Imports in the first quarter rose 5% from a year earlier to 127.19 million tonnes, customs said, equal to 10.2 million bpd.”
Gold climbs to over 7-year high on coronavirus-led economic worries
After cooling off a bit last month, gold has begun to rally due to increasing economic uncertainty linked to the coronavirus pandemic.
Reuters reports: “Gold prices rose to a more than seven-year high on Tuesday as mounting fears of a steeper global economic downturn due to the novel coronavirus increased bullion’s safe-haven appeal.
Spot gold gained 0.1% to $1,715.25 per ounce by 0037 GMT, having touched its highest since Dec. 2012 at $1,722.20 earlier in the session.
U.S. gold futures rose 0.5% to $1,770.20 an ounce.”
‘About $250 billion lost so far, post economic shutdown’
Most businesses in non-essential products and services will have to resort to scaling down of operations in the range of 25-75% in the wake of the COVID-19 pandemic and the resultant lockdown.
Automobile, high-end consumer goods, consumer durables, fancy FMCG items, expensive clothing, gems and jewellery, leisure holidays, restaurants and star hospitality will be some of the sectors that will witness deep down compression, while essential services such as food companies, pharmaceuticals and healthcare providers will continue to do business as usual, industry experts and trade body representatives said.
The compression will lead to the loss of millions of jobs across segments in the country by the end of May, although data as of now is ‘the most fragile factor’. Businesses will embark on stringent austerity measures as reducing people and minimising the use of real estate will be critical in this regard.
Pradeep Bhargava, president, Mahratta Chamber of Commerce, Industries and Agriculture (MCCIA) said the COVID-19-driven uncertainty had resulted in erosion of income at all levels.
Economists expect retail inflation to spike in April due to lockdown
Even as retail inflation eased in March, economists have warned that the impact of the lockdown on food prices could cause April’s retail inflation to spike.
Core inflation, however, may drop due to the severe hit to consumer demand overall.
PTI reports: “Economists on Monday termed the ease in March CPI inflation to a four-month low of 5.1 per cent as a misplaced sense of improvement because the impact of lockdown on food prices will be felt in April.
Retail inflation as measured by consumer price index (CPI) slowed to a four-month low of 5.91 per cent in March as against 6.58 per cent in February 2020 and 2.86 per cent in March 2019.
The number does give a sense of improvement in inflation, which is misplaced given that the real impact of the lockdown will be felt sharply in April as prices of food items have increased quite sharply, Care Ratings chief economist Madan Sabnavis.
With the lockdown across the country and limited movement of goods due to absence of labour, trucks and activity in wholesale markets, there have been sharp declines in supplies of foodgrains, horticulture, sugar which have been reflected in higher prices in the market.
This can push food inflation towards the 10 per cent mark. We can expect CPI inflation in April to be above 6 per cent, Sabnavis said.”