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myashpal · 5 years ago

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Counting the zeros of 2,00,00,00,00,00,000 in 2020.

The ‘fiscal stimulus’ package of nearly ₹20 lakh crore that was announced on May 12th, by our honourable Prime Minister, is not actually as relieving as it sounds. There will be nothing wrong if I say that the package is transcendent for the ‘Headline Management’ rather than crisis management and it was all about marginalising the screen time of migrant labour distress. It should be kept in mind that the Union budget for year 2020-21 was ₹30.4 lakh crores (to be very precise ₹30,42,230 crores), which is approx. 15% of the GDP of the country. Total GDP of India is ₹190.54 lakh crores (US$ 3.2 trillion)

Last year central government announced a package of ₹100 lakh crores for infrastructure development projects. Now the question arises that if the last years budget of the government was ₹30.4 lakh crore, then how can it announce a package of worth ₹100 lakh crores? Well, “la risposta si trova qui!” (the answer is here!)

In that package the total budget expenditure of the government (in simple term — engagement of govt. money) was only about ₹7,000-8,000 crores and the remaining amount was to be financed to infrastructure companies by banks as loans. The banks didn’t financed the infrastructure projects because they found that many of the infrastructure companies were already running in huge losses and were turning into NPA’s. As a result, that package halted there only.

Structure of the so-called 20 lakh crores package (as per announced by govt.) —

March 26th, 2020 - ₹1.92 lakh crores

May 06th, 2020 - ₹8.1 lakh crores (by RBI)

May 13th, 2020 - ₹5.94 lakh crores

May 14th, 2020 - ₹3.10 lakh crores

May 15th, 2020 - ₹1.5 lakh crores

May 16th, 2020 - ₹81,000 crores

May 17th, 2020 - ₹40,000 crores

The fact here to be remembered is that - ‘currently we need to restart our economy, not to stimulate it.’ Stimulation is provided when a running economy is going through a slowdown. Presently, we are at 0% growth where all the business enterprises were fully shut since more than 50 days. A slowdown could be stimulated, but not breakdown.

There are three kinds of packages —

Fiscal package - expenditures from the government's earnings for public in form of tax subsidies, direct transfers and injecting funds directly in the economy.

Financial package - government asks banks to provide finance to citizens for boosting economy by liberalising rules for loans or sometimes acting as a guarantor to banks.

Monetary package - RBI decides to infuse liquidity in the economy by reducing repo rate**, so banks can provide loans to public at lower interest rates.

A ‘financial package’ can’t be termed as ‘stimulus’ package because the process of granting a loan entirely depends upon the bank, it is a transaction between a bank and the applicant. Government here, can only be a facilitator among both. Whether bank will sanction/provide a loan or not, depends fully upon the credibility of that applicant.

On May 13th, finance minister Nirmala Sitharaman announced that ₹3.7 lakh crores from the total package of ₹20 lakh crores, would be provided to MSME (Micro, Small and Medium Enterprise) sector as debt finance (loans), guaranteed by the central government. She also added that a 12 month moratorium period will be provided to Small Enterprises.

It must be committed to the memory that — ‘moratorium’ will only be for the principal amount but the interest calculated by banks would be on a ‘compounding’ basis. Compounded calculations of interest for 12 months for a Small Enterprise is not an easy play, where interest rates would be decided by the banks. This package was entirely dependent on the sole discretion of banks, whether to provide loans or not and also upon the enterprise’s willingness to take up a loan. The entire focus of this package is only upon — loan, loan, cheap loan, MSME loan and loan. People are being pushed to a system which is entirely based upon the ‘debt/credit finance’.

Post 9 to 12 months scenario due to this package :

After the period of about one year, we might experience that a majority of depositors will be seen, whose deposits will get eroded in terms of interest. They will not even be getting as much returns as their cost of living or inflation would have been. SBI had reduced its interest rates on the fixed deposits thrice, in the last 4 months.

Indian banks who were already trapped in a web of bad debts will be groaning, because of distribution of these new loans. It is also possible that we may experience a completely new explosive form of debt crisis.

There is also a possibility of bank loan scams making a comeback in the Indian economy on an extensive scale because of political interference for compelling banks to provide loans to the dear ones or relatives of the politicians.

Till February 2020, Indian banks were already burdened with NPA’s of ₹9.9 lakh crores, and government was pressurising them for not sanctioning any more loans because of the growing numbers of NPA’s & frauds. Government was telling banks to clear their balance sheets by various means — bankruptcy code, writing off loans, putting provision funds for bad debts, creating bad banks etc. India’s major pre COVID economic highlights were only about ‘troubles of the banking sector’.

Just with the outbreak of COVID-19, the very first steps took by the RBI were — releasing liquidity of ₹4 lakh crores to banks to provide economic stimulus to various sectors as loans and, reducing the repo rate from 5.15% to 4.40% (cutting it by 75bps), it was the lowest in the history of the Reserve Bank of India. As a result, all the retail loans also hit the record low (in rates and demand), ever since 2009. Finance Minister admitted that banks are sanctioning loans but consumers are not willing to take them. Even one-third amount of the funds that RBI released for various sectors (Mutual Funds, NBFC’s, DISCOMs) were not used by the banks.

On May 4th, 2020, banks returned ₹8.54 lakh crores to the RBI via ‘reverse repo’ window. So, the RBI slashed reverse repo rate window because of this. On this event, FM Nirmala Sitharaman told that banks are not distributing loans and are keeping funds with the RBI. The banks were provisioning funds for future balancing for NPA’s and moratoriums, amid this, the RBI announced that it will not provide any dividends for the current year. Banks were calculating the losses that they had to bear in the coming year due to bad loans & NPA’s.

Suddenly, out of the way, May 12th, 2020 on 20:20hrs, a relief package of ₹20 lakh crores descended, and was announced with idea of “AatmaNirbhar Bharat” (Self-reliant India) by the PM Narendra Modi and was quoted as — “20 lakh crore in 2020”.

The basic default rate in India is close to 15%. So, if we calculate the maximum risk on the government for MSME sector package of ₹3.70 lakh crores, it will be around ₹15,000 - ₹20,000 crores. That also on a condition — ‘if’ these loans will get disbursed and get default, then only these would be repaid from the government treasury. The intent of government was not clear on emphasis to provide new loans to the bad MSME’s which are already in default and running in losses.

The contradiction and ridiculousness —

Just before a month from now (in April 2020), the government was directing banks to pause recoveries/provide moratoriums for a period of 3 months to the people and industries because they hadn’t performed any business operations as everything was completely closed due to the nationwide lockdown. And now (May 2020), the government is telling for those same industries, to take up a new loan to restart their business operations. It is quite obvious in nature that any enterprise will primarily focus to repay the existing/ongoing loans rather than taking up a new one.

The total amount of loans distributed in the Indian Banking System (IBS) is nearly ₹93.8 lakh crores, in this, ₹56 lakh crores is distributed to large industries, ₹11.8 lakh crores to agriculture industry and ₹26 lakh crores are personal/other retail loans including loans to small industries. The small industries for whom the package of ₹3.7 lakh crores was announced, are the industries that are already in debts of ₹10 lakh crores.

Till February 2020, these small industries were requesting the governments for restructuring of their loans and stop recoveries as they were going through a very bad phase due to the slowdown, since 2 years. Now the question is, Why the enterprises who were unable to repay their existing loans and demanding for restructuring of their loans in normal days, would take a new loan in a juncture when there is total ‘uncertainty’ for demands and supplies? Many industrial reports had caveated that a large number of defaults in retail loans will take place in the coming 6-9 months because of the unemployment occurred and occurring during & after the lockdown. The major problem of the Indian economy before the COVID-19 was only the debt-crisis — the debts in company’s accounts, debts in bank’s accounts, debts in state and central government’s accounts, and when the people were already struggling hard to get rid of the debt cycle; they suddenly are being sent back to a system where they should be going to take up another new debt, due to COVID-19 crisis. At last, I would conclude myself with the famous lines of the scholar ‘Nassim Nicholas Taleb’, — “The solution for a debt-crisis in any economy, cannot be a new debt”.

- M. YASHPAL

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moneycafe · 4 years ago

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SBI Research cuts India’s GDP estimates for FY22, sees peak of Covid 2.0 in May

NEW DELHI: Economists at India’s largest bank have cut the FY22 GDP growth projection for the economy by 60 basis points, and said India could have done better to tackle the second wave of the Covid-19 pandemic. The downgrading of growth projections was triggered largely due to restrictions being imposed by different states. “India managed the first wave of pandemic well. However, the country is…

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newsmatters · 4 years ago

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SBI Research cuts India’s GDP estimates for FY22, sees peak of Covid 2.0 in May

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amitbwadhwani · 4 years ago

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Realty Sector Yet To Reflect Impact Of Government's Measures: Report

The real estate sector continued to reel under pressure in 2019 due to a prolonged liquidity crisis in non-banking finance company (NBFC) segment

New Delhi:

The real estate sector continued to reel under pressure in 2019 due to a prolonged liquidity crisis in the non-banking finance company (NBFC) segment. The government came up with a slew of stimulus measures during the year to infuse liquidity and boost demand, but these have not made any noticeable impact as sales declined in the second half of the year.

According to a report by Anarock Property Consultants, a total of 2.61 lakh units were sold during the year, a year-on-year growth of 5 per cent. Out of the overall sales across seven major cities in the country during the year, around 1.47 lakh flats were sold in the January-June period, and the remaining 1.14 lakh have been sold so far in the second half.

Despite the steps announced by the government, mostly in the second half of the year, sales during July-December declined by 22 per cent compared to the first half.

"The unrelenting liquidity crisis, lower-than-expected buyer sentiments and faltering GDP growth eventually put brakes on the overall housing growth in the second half of 2019," said Anuj Puri, Chairman of Anarock Property Consultants.

Among other liquidity infusing measures, in a much-awaited relief for distressed home buyers awaiting possession of their flats, the Finance Ministry last month committed up to ₹ 10,000 crore for completing housing projects stuck for years.

Thereafter, the Union cabinet cleared a proposal to set up a 'Special Window' in the form of an Alternative Investment Fund (AIF) to provide priority debt financing for the completion of stalled housing projects that are in the affordable and middle-income housing sector.

The corpus size of the AIF would be scaled up to ₹ 25,000 crore after SBI and LIC pumps in funds. It would grow further in the coming days with the addition of sovereign wealth funds and pension funds, the government said. The fund, however, is a work in progress right now.

"The year 2019 turned out to be a rather challenging one. Despite various measures announced by the government as well as the RBI, the going was tough for the industry. The sluggish economic growth during the first two quarters of the current fiscal added to the misery of the sector," Manoj Gaur, MD Gaurs Group and Chairman of CREDAI Affordable Housing Committee.

Deepak Kapoor, Director, Gulshan Homz said that although multiple policy measures were announced, "something was left wanting and it is this gap that has be plugged in the new year."

He hoped that 2020 would be more fruitful in terms of funding for real estate and finance options for the buyers.

Further, in a major boost for the flow of liquidity, the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) has reduced its repo rates in over five consecutive bi-monthly meets this year, making a cumulative reduction of 135 basis points (bps).

However, the transmission of the RBI's rate cuts to retail loans has only been 44 bps, according to the apex bank.

In its previous MPC meeting earlier this month, the central bank kept its repo rate, or short term lending rate for commercial banks, unchanged at 5.15 per cent and said that it would like to wait for the impact of the previous successive rate cuts.

Amit Wadhwani, MD of Mumbai-based realty consultancy SECCPL said: "The year 2019 saw the relentless challenge for the real estate sector with severe liquidity crisis leading to a number of bankruptcies, regular reforms and amends by government."

The year was also marked by home buyers' victories in major legal tussles with the builders. In a landmark judgement in the Amrapali case, the Supreme Court in July directed the public sector enterprise NBCC (India) to take over the stalled Amrapali projects and complete them. However, work on the projects is yet to gain momentum and the Supreme Court earlier in the month directed SBICAP Ventures Ltd to decide on financing the uncompleted projects of the defunct Amrapali Group.

Besides, the resolution process for Jaypee Infratech, where over 20,000 home buyers are yet to get their flats after a delay of around a decade, has also neared completion. Earlier this month, NBCC's resolution plan got the majority votes from the firm's Committee of Creditors (CoC) and is set to acquire Jaypee Infratech and its stalled projects.

Next, the NBCC plan has to receive the approval of Allahabad bench of National Company Law Tribunal (NCLT).

Dhruv Agarwala, Group CEO of Elara Technologies, said that along with the ₹ 25,000 crore fund to salvage stalled projects, the progress made in resolutions for Jaypee and Amrapali group will go a long way in reviving sentiment in the market during 2020 and coming years.

Although residential real estate remained subdued and tepid, commercial realty witnessed a positive run during the year.

According to a JLL report, India's office market has set a new benchmark and recorded a historic high, both in net absorption and new completions. While 4.65 million square feet of space got absorbed, nearly 52 million square feet of Grade-A office space was completed in 2019.

Along with the conventional commercial and office spaces segment, co-working, co-living spaces and student housing also gained in demand during the year.

Speaking on student housing, Anindya Dutta, MD and Co-founder Stanza Living said, "The industry is beginning to garner investor attention. Also, rental yield improvement and professional asset management have created growing interest from landlords, property owners, educational institutes and developers for partnership."

"We believe the student housing industry is still nascent and has the potential to grow at least '4x' over the next decade," he added.

On the outlook for 2020, market players are optimistic that the demand scenario would improve across segments and government's measures would result in positive impact on the long-subdued sector.

"We hope the coming year is the last year of the storm that has engulfed residential realty," said Samir Jasuja, Founder and MD at PropEquity.

This article was originally published in English www.ndtv.com

All rights reserved. Any act of copying, reproducing, or distributing this newsletter whether wholly or in part, for any purpose without the permission of Amit B Wadhwani is strictly prohibited and shall be deemed to be copyright infringement

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mimsoft-blog · 6 years ago

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Amazing Entrepreneur | Syed Azhar Rizvi

Azhar Rizvi is a multifaceted seasoned professional who is an entrepreneur evangelist, business advisor, career mentor, social missionary, and an author & Amazing Entrepreneur. He has devoted his life to helping people and organizations innovate smartly and achieve high growth targets. After working for years in the industry, Azhar Rizvi holds a goldmine of knowledge to offer expert-level advice as a business management consultant and a career advisor. The expert career mentor has been involved in developing individuals since he started off his career. Until now, he has mentored close to 15,000 students, researchers, and faculty from 65 Universities and 450+ companies from various industries. Like many great motivational speakers, Azhar Rizvi has also been serving as the North Star to assist people in finding the right track of their lives; he has restructured many careers and helped people find their undiscovered talents

An Entrepreneurship Evangelist

In 2007, Azhar embarked on a journey to promote entrepreneurship in Pakistan. He helped the MIT Alumni of Pakistan set up the MIT Enterprise Forum Chapter in Pakistan. Together the team designed a 6-month extensive Business Acceleration program and launched the Business Challenge Cup open to all comers. Since its launch, the initiative has put on the map more than 450 enterprises. These enterprises collectively employ 4000+people and have estimated revenues of USD 500M.

In 2010, he joined hands with IBA Karachi and NUST Islamabad to launch a similar 5-months intensive program. The programs, branded IBA- Invent Annual Business Plan Competition and NUST Discover -Annual, Prime Minister Entrepreneurial Challenge Program, have led to separate student-competitions. These two platforms have become an ecosystem enabler. They have also allowed Azhar to help 10,000+ student teams, faculty, start-ups, and mid-size organizations in developing their business plans, growth strategies and launching successful ventures.

Azhar has also served Higher Education Commission of Pakistan HEC as a consultant to establish Offices of Research Innovation and Commercialization (ORICs) and Business Incubation Centers (BICs) and assisted in developing their operational framework, policies, and manuals. He has also trained their program directors and managers, all PhDs in various disciplines from technology, agriculture sector, and pure sciences, in developing a research program in areas of local needs and national importance and on building an entrepreneurial ecosystem in their respective cities.

An Entrepreneur

In 1999, Azhar set up the first venture which grew from 2 to 42 persons in a short span of 18 months. The venture failed during the 2001 dotcom crash. Using lessons learned, he set up another company,which by 2002 had become the biggest Pakistan’s BPO in the tech sector of the country. The 1,500+ person company served 200 cities to large banking networks in 800 cities, town, and villages, and also provided specialized applications development and deployment services for major organizations like HBL, UBL, Emirates Bank, and Several other leading Organizations etc.

A Strategy Consultant

Azhar started his career as a Sales Executive marketing IT services from leading firms NCR, AT&T and Unisys. He rose to Director Sales & Products within a short span of 10 years. During these years, he built relationships leading to a portfolio with major multimillion dollar accounts like PTCL, GHQ, Habib Bank, UBL, ABL, Federal Ministry of Finance, ABN Amro, Standard Chartered Bank, MSD, and BASF among others.

Azhar has brought that same zeal, excel, and ability to identify opportunities to other companies, too. He has helped more than 450+ firms redefine business strategy to scale up operations, from a few hundred thousand to multi-million dollars’ global operations.

A Missionary

Azhar has recently embarked on the mission to promote entrepreneurship in the agriculture sector, especially in rural areas. Azhar firmly believes that this sector, with properly trained human resources coupled with appropriate funding, can double the GDP in a few years. As a first step, he, in February 2018, joined hands with Sindh Board of Investment (SBI) and its subsidiary SEDF to launch an Agri-Entrepreneurship program at Sindh Agriculture University (SAU), Tandojam. The intense four-month program has so far trained 250 youth, and as a result, 5 teams have been shortlisted for full-time incubation for 12 months at the SAU’s newly established incubation center.

A Historian

Azhar has authored the book, “Entrepreneuring Pakistan- 27 stories of struggle, failure, and success”. The book celebrates the triumphs and highlights the challenges of 27 mentee organizations, who have achieved success. These companies in the technology, social, research and education sectors have broken the barriers and achieved exponential 10X+ growth per annum.

He is currently working on his next book focused on the struggle and successes of women entrepreneurs of Pakistan.

A Philanthropist:

Azhar also pays an active part in philanthropic and social circles. He is very active in Rotary Pakistan for the past 22 years. As part of Rotary, he has implemented several key initiatives in the healthcare which included the end-to-end automation of largest 2500-beds hospital with latest open source software, cutting-edge hardware, and HIPA HL7 Compliant,Civil Hospital Karachi in 2009.

He also led the tech team which established 14 Telemedicine Centers during 2005 massive earthquake in KPK and Azad Kashmir in collaboration with Pakistan Army, P@SHA, Intel Pakistan, InMar Sat, MOIT Pakistan and Rawalpindi Hospital.

The 2nd project during another critical juncture was to bring organizations specializing in software for disaster relief management. Sahana Foundation is one such organization which was brought in to interact with PITB of Punjab Government and Sindh Government Disaster Relief Management during the floods of 2010.

Education for disadvantaged and special kids is an area of special interest to Azhar. He was instrumental in setting up five cutting-edge technology setup using DAISY Labs at PAFF Institute, Al-Mukhtoom Centers for vision-impaired people, Islamabad, Aziz Jan Trust Center for the disabled at Lahore, Al Faisal Center for the blind, Faisalabad and Ida Rieu Center at Karachi. All of the centers are now producing digital taking books which enable the kids to interact with these books with the help of computers and special daisy leaders. The project was launched from Rotary Pakistan and P@SHA platforms. Nippon Foundation was the main donor and NAB, Delhi, India was the lead technical partners for this project.

A project which Azhar says that has given him great satisfaction was developing and implementing an Inmate Management System at the Karachi Central Jail in 2007. The project was developed on the request of Legal Aid Office (LAO), an NGO headed by Honorable Former Chief Justice of Pakistan CJP (R) Nasir Aslam Zahid. Prior to the IMS system, there were close to 1500 women and kids at the facility of 150 only. A major reason was an obsolete manual system which was hampering record management and the follow up of their cases. Once the system was implemented in 2 months record time, Honorable Justice Zahid and his team of 40 strong female advocates managed to get over 1340 inmates justice and send back to their home in a short span of one year.

Watch Azhar Rizvi Interview:

Kanwal Masroor, Chairman, TECH taking interview of Mr. Azhar Rizvi, Co-Founder MITEF Pakistan

#entrepreneur #Business Consultant #career coach #Mentor #motivational speaker #strategy consultant

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techminsolutions · 4 years ago

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SBI cuts FY22 GDP growth estimate to 7.9%; recovery to be 'W-shaped'

SBI cuts FY22 GDP growth estimate to 7.9%; recovery to be ‘W-shaped’

State Bank of India (SBI) economists on Tuesday sharply slashed their FY22 GDP growth estimates to 7.9 per cent — the lowest among all analysts — from the earlier projection of 10.4 per cent. The economists at the state-run lender seemed to attribute the impact of the second wave of Covid-19 infections as a key factor for the revision in the growth estimate, and pitched for faster…

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vsplusonline · 5 years ago

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RBI cuts repo rate again, down to 4%

New Post has been published on https://apzweb.com/rbi-cuts-repo-rate-again-down-to-4/

RBI cuts repo rate again, down to 4%

The Reserve Bank of India (RBI) further reduced the key interest rate or the repo rate by 40 bps on Friday, after a yet another out-of-turn Monetary Policy Committee (MPC) meeting as the COVID-19 pandemic induced lockdown continues, albeit with calibrated relaxations.

The central bank also extended the loan repayment moratorium for another three months till August 31.

The six-member MPC announcement has reduced the repo rate to 4% with five members of the panel voting for the steep cut while one member, Chetan Ghate, voted for a 25 bps cut.

The MPC also decided to continue with the accommodative stance ‘as long as it is necessary to revive growth and mitigate the impact of COVID-19 on the economy’, while ensuring that inflation remains within the target, RBI said.

Demand collapse

RBI Governor Shaktikanta Das termed the risk to growth outlook “gravest”.

“Domestic economic activity has been impacted severely by the two-month lockdown. The top six industrialised States that account for about 60% of industrial output are largely in red or orange zones,” Mr. Das said.

“High frequency indicators point to a collapse in demand beginning in March 2020 across both urban and rural segments,” he added.

The central bank refrained from giving a projection for GDP growth for the current financial year and stopped at saying that growth expected in the “negative territory” with some pick-up in growth impulses from the second half of 2020-21 onwards. “It is in the growth outlook that the MPC judged the risks to be gravest,” Mr Das said.

Inflation target has also been held back by the central bank.

“The MPC is of the view that headline inflation may remain firm in the first half of 2020-21, but should ease in the second half, aided also by favourable base effects,” Mr Das said.

“By Q3 and Q4 of FY20-21, it is expected to fall below target. Thus, the MPC’s forward guidance on inflation is directional rather than in terms of levels. Going forward, as and when more data are available, it should be possible to estimate the path of inflation with greater certainty,” he added.

Since February last year, the RBI has reduced the policy repo rate by a cumulative 250 bps, from 6.5% to 4%.

And there could be further scope for a rate cut if the inflation trajectory evolves as expected RBI said.

The central bank also extended the loan repayment moratorium for another three months, till August 31. All other conditions for the facility remain unchanged — a loan will not be classified by the lender as non-performing and there will not be any impact on individual credit scores. In addition, interest payment deferment for working capital loans has also been extended by another six months.

RBI has also decided to increase the group exposure limit of banks from 25% to 30% of its capital base. The regulator said the decision was taken to facilitate flow of resources to the companies as many of them were unable to raise funds from capital markets and are predominantly dependent on funding from banks.

A liquidity facility for Exim Bank of India was also opened as it has been decided to extend a ₹15,000 crore line of credit for a period of 90 days to enable it to avail a U.S. dollar swap facility to meet its foreign exchange requirements.

Also to alleviate difficulties being faced by exporters in their production and realisation cycles, it has been decided to increase the maximum permissible period of pre-shipment and post-shipment export credit sanctioned by banks from the existing one year to 15 months, for disbursements made up to July 31, 2020.

“Uncertainty associated with pandemic, normalisation of economic activity and relaxation made in social distance makes it imperative that policy response is calibrated and swift,” SBI chairman Rajnish Kumar said.

“In this context, extension of moratorium till August 31, enlargement of the Large Exposure Framework and option to convert accumulated interest for moratorium period into term loan are welcome measures. On the export side, increase in export credit period to 15 months from 1 year and buttressing EXIM Bank through ₹15,000-cr line of credit is also timely,” he added.

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ainvestops · 5 years ago

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Sensex outlook: Ahead of Market: 12 things that will decide stock action on Monday

NEW DELHI: Equity market was left less than impressed after the Reserve Bank of India Governor Shaktikanta Das refrained from making projections for growth and inflation in his media address, where he announced a slew of measures to support the economy, including a whopping 75 basis points cut in repo rate.

Das said the projected annual GDP growth was at risk due to the uncertainty created by the outbreak of the deadly virus.

BSE Sensex on Friday ended at 29,815.59, down 131.18 points against the previous close of 29,946.77. While, 50-share Nifty settled 18.80 points higher at 8,660.25.

Earlier in the day, positive global cues and hopes of an economic package by RBI had led to the domestic benchmarks surging before slipping from day’s high after the central bank’s announcement.

While experts are happy with the steps taken, they, however, feel that the market will be dictated by the evolving situation on the Covid-19 crisis and its implications on the economy and corporate earnings.

“Indices ended almost flat following RBI measures to lessen the burden on borrowers and to increase liquidity in the system. The market was up in the last two sessions on expectations of these announcements from the government and RBI. Now since the expected events are out of the way, focus will be back on the spread of the virus and its damage on the already reeling economy,” says Vinod Nair, head of research at Geojit Financial Services.

Here’s what indicators are suggesting for the stock market action on Monday: Wall St tumbles as US virus cases pass 100,000 Wall Street stocks tumbled on Friday, ending a massive three-day surge after doubts about the fate of the US economy resurfaced and the number of coronavirus cases in the country climbed, Reuters reported. The Dow Jones Industrial Average slumped 4.06 per cent to end at 21,636.78 points, while the S&P 500 lost 3.37 per cent to 2,541.47. The Nasdaq Composite dropped 3.79 per cent to 7,502.38.

European shares fall after 3-day rally European shares closed in the red after EU lawmakers failed to agree on a coronavirus rescue package and British Prime Minister Boris Johnson announced he had been infected. The pan-European STOXX 600 index started the day about 2 per cent lower, then closed down 3.3 per cent after the announcement about Johnson’s test. London bluechip stocks had extended losses after the news, closing 5.3 per cent down.

Did RBI rate cut not go down well on D-Street?

Tech View: Nifty50 has resistance at 8,900-9,000 Nifty formed a small bearish candle on the daily chart. Analysts said the index needs to breach the 8,900-9,000 range in the near term, before instilling confidence among market participants. The index managed to break a double bottom pattern on the intraday chart, but was unable to close above the same. This signalled that the structure is still negative and the index needs to close above the 8,900 level for a change in momentum, said Rohit Singre of LKP Securities.

F&O: Nifty’s overall structure still negative Nifty started April derivatives series on a positive note as there was a decent gapup opening in the market on the back of favourable cues from global bourses. Nifty moved above the 9,000 mark in early trade, but failed to sustain at higher levels and corrected sharply by more than 500 points from the intraday high. The overall chart structure is still negative, but a pullback move of the ongoing corrective phase cannot be ruled out after the sharp decline of last six weeks.

Podcast: Time to invest in passive funds?

Stocks showing bullish bias Momentum indicator Moving Average Convergence Divergence (MACD) on Friday showed bullish trade setup on the counters including Tata Motors, NCC, NHPC, Canara Bank, MothersonSumiSystems, NMDC, Wipro, Cipla, NBCC (India), LIC Housing, TCS, Biocon, IFCI, PC Jeweller, HFCL, MMTC, Indian Overseas Bank, Central Bank, ITI, Sterlite Technologies, Berger Paints, Colgate, PVR and PTC India. The MACD is known for signalling trend reversals in traded securities or indices. It is the difference between the 26-day and 12-day exponential moving averages. A nine-day exponential moving average, called the signal line, is plotted on top of the MACD to reflect ‘buy’ or ‘sell’ opportunities. When the MACD crosses above the signal line, it gives a bullish signal, indicating that the price of the security may see an upward movement and vice versa.

Most active stocks in value terms Axis Bank (Rs 2691.49 crore), HDFC Bank (Rs 2549.23 crore), ICICI Bank (Rs 2494.96 crore), SBI (Rs 2317.42 crore), RIL (Rs 2037.71 crore), Bajaj Finance (Rs 1961.93 crore), IndusInd Bank (Rs 1953.15 crore), HDFC (Rs 1609.64 crore), Kotak Bank (Rs 1439.51 crore) and Infosys (Rs 881.98 crore) were among the most active stocks on Dalal Street on Friday in value terms. Higher activity on a counter in value terms can help identify the counters with highest trading turnovers in the day.

Most active stocks in volume terms YES Bank (Shares traded: 11.86 crore), SBI (Shares traded: 11.47 crore), Vodafone Idea (Shares traded: 10.58 crore), Ashok Leyland (Shares traded: 8.00 crore), ICICI Bank (Shares traded: 7.28 crore), Axis Bank (Shares traded: 7.10 crore), Tata Motors (Shares traded: 5.88 crore), IDFC First Bank Ltd. (Shares traded: 4.74 crore), IndusInd Bank (Shares traded: 4.39 crore) and Federal Bank (Shares traded: 4.23 crore) were among the most traded stocks in the session.

Stocks showing buyers’ interest Ruchi Soya Industries, Geekay Wires and Bafna Pharmaceuticals witnessed strong buying interest from market participants as they scaled their fresh 52-week highs on Friday signalling bullish sentiment.

Stocks witnessing selling pressure Cummins India, TVS Motor, Oberoi Realty, Future Retail and CreditAccess Grameen witnessed strong selling pressure in Friday’s session and hit their 52-week lows, signalling bearish sentiment on these counters.

Sentiment meter As many as 241 stocks on the BSE 500 index settled the day in green, while 258 settled the day in red.

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boldlykeenblizzard · 5 years ago

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Coronavirus impact on stock market

In just weeks, the Coronavirus pandemic has shaved off nearly a third of the global market cap. The Indian equity market bounced back valiantly on Friday, but the Sensex still closed 20% below the peak achieved two months ago. Investors can get some cold comfort that other markets have fallen more. The spread of the virus has triggered panic across the world and shaken the confidence of investors.

Making things worse is the crude oil war between Saudi Arabia and Russia, which has injected volatility into other assets. “Earlier, only the equity and debt markets were impacted by the Covid-19 scare; now the commodities and currency market are in turmoil due to the crude oil war. After a crash of this magnitude, market confidence usually does not come back soon. So, it is better to wait for calm before taking big investment decisions,” says Anil Sarin, CIO – Equities, Centrum Broking. Before considering what investors should do now, let us understand the reasons behind this turmoil.

As of 12 March, only 29% of the active cases were in China and the remaining 71% were in other parts of the world. Active cases mean the infected people who are still being treated and not yet recovered. While the situation is improving in China, Covid-19 is leading to lockdowns in countries like Italy, South Korea and Iran. Due to spiralling numbers, the US and many countries in Europe are staring at a grim situation. German Chancellor Angela Merkel estimates that “up to 70% of the country’s population could contract the Coronavirus”.

Impact of this on global economic growth is going to be huge. The Organisation for Economic Co-operation and Development (OECD) has halved the global gross domestic product (GDP) growth projection for 2020 due to Coronavirus. The disease will obviously impact the Indian economy as well. “The current restrictions will impact most economic activities like travelling, consumption, etc. Manufacturing will be impacted due to supply chain disruptions and this in turn will delay capacity additions and capex spending,” says Brinda Jagirdar, Economist, SBI.

To compound the global economic uncertainty, an ill-timed global crude oil war has begun. The demand by Organisation of Petroleum Exporting Countries (OPEC) to further restrict production from April was rejected by Russia, resulting in the scrapping of existing restrictions. Increasing production at a time when demand is low due to the Covid-19 pandemic is bad for the crude oil market.

Crude oil prices have crashed For oil importing countries like India, this fall may be a blessing in disguise.

“Though there will be counter cyclical rallies during times of central bankers’ actions like rate cuts, the outlook is clearly bearish and in worst case, Brent oil can go down to $25 level,” says Praveen Singh, AVP, Fundamental Research – Commodities & Currencies, Sharekhan Comtrade. However, the crude oil war is a blessing in disguise for oil importing economies like India. “The negative impact of the pandemic on Indian economy will get cushioned by the fall in crude oil prices because it will help to bring down our current account deficit, fiscal deficit and inflation, etc.,” says Jagirdar.

The domestic consumption slowdown, triggered by the failure of large financial institutions such as IL&FS and DHFL, is still lingering. Now we have another situation in the form of the Yes Bank crisis. Though only time will tell how the Yes Bank fiasco will shape up, the revival package for the bank is a good short-term step. “The Yes Bank crisis seems to be heading for a solution due to government and RBI actions. If that happens, at least one immediate worry will be out of the way,” says Sarin.

While other commodities are down, gold has gone up because of the demand for a safe haven in uncertainty. The hope of rate cuts by global central bankers (the US Fed has already cut rates by 50 basis points) is also keeping gold demand intact. “Our initial target for gold was $1,700. However, it can go up to $1,800 if Covid-19 is not contained soon and central bankers are forced to come out with more rate cuts,” says Singh. The impact gold rally will be more for Indian investors because of the fall in rupee now.

Gold becomes attractive in uncertainty Global gold prices are rising but the fall in the rupee will push it up further in India.

Gold exposure brings down portfolio volatility and experts recommend 5-10% allocation to gold in an individual’s portfolio. Investors underweight on gold should add more now. The best way to invest in gold is through gold ETFs or gold bonds, not in physical gold. But don’t go overboard. “Gold has already rallied and most of the fear premium is already priced in. Since global gold ETFs are very liquid, there may be profit booking if the price continues to move up,” says Lakshmi Iyer, Head of Fixed Income and Product, Kotak Mutual Fund.

Stick to short-term debt funds

Another safe haven asset, government securities, are also rallying. The 10-year US treasury yield is now at 0.75%. The 10-year government bond yield in India is also close to a 10-year low. Since the US Fed has already cut the rates by 50 basis points, the debt market is hoping for a smilar rate cut by RBI to fight the weakness in the domestic economy.

10-year govt bond yield is at 10-year low Since further yield reduction is limited, it is better to be with short term papers.

Bond yields and prices are inversely correlated and long-duration funds have rallied on these hopes. However, experts say the long-duration rally is over and future returns may not be as good. “The rate cut hopes are already priced in, so the 10-year yield may range between 6% and 6.25% and not offer much further upside from long duration funds. However, Short to medium segment, ie 1-5 year papers, looks attractive now,” says Iyer. Dwijendra Srivastava, CIO (debt), Sundaram Mutual Fund concurs with this view. “The duration risk increases with low yield and since the yield is not expected to go down significantly from 6%, there is no reason to take that risk. Better to stay with 2-3 year buckets,” he says.

Long duration funds rally may be over Bond yields are at 10-year low and may not fall further. Short-term funds are better now.

Equity markets in bear hug

With more than 20% cut in benchmark indices, the Indian equity market has entered the bear market territory. Experts say investors should be cautious and not jump in right now. “Despite the cut, our broader market is still not in cheap valuations zone. However, risk is low here due to lesser leverage in India compared to other markets,” says Sarin.

Sensex PE is below its 10-year average With the market back in the fair valuation zone, long-term investors can get in slowly.

But the fact that the Indian market is out of the overvaluation zone should provide comfort to long-term investors. The broader market valuation has gone below its 10-year average while the 10-year real return from the Sensex is in the negative. In other words, this turmoil is an opportunity for long-term investors. “If you are a longterm investor with a 5-7 year view, this is a fantastic time to start investing. However, the market could fall another 8-10% in between,” says Jimeet Modi, CEO, Samco Securities. Jaspreet Singh Arora, CIO, Equentis Wealth Advisory Servies concurs with this view. “New investors should park around 50% of their equity allocation in the next two weeks and the balance slowly in a staggered manner,” he says.

10-year Sensex CAGR is below inflation Sensex rarely gives negative real CAGR. It has given decent returns after incidents like this.

Sensex at 2-year low, mid-caps are lower Due to the deep correction, long-term investors can consider invetsing in mid-caps now.

5-year SIP returns of Sensex almost zero Five-year SIP returns of Sensex falling to zero is rare. Future returns have been good.

Experts are also advising investors to stick to large-caps. “Since large-caps have corrected more than 20% now, you have margin of safety there. Further fall in quality large-caps will be limited. However, that can’t be said about mid- and small-caps,” says Arora. “It is not the time to get aggressive or adventurous. Instead of searching for small-caps, investors should restrict to quality large-caps that have corrected recently. Among mid-caps, restrict to companies that have low debt and the ones that generate free cash flows,” says Modi.

Investors with a higher risk appetite can start nibbling at mid-caps, where the cut has been more pronounced. Others can consider getting into this segment through mutual funds. “Investors who want to get into the mid-cap space now should do it through mutual funds. Stagger your investments over the next 12-18 months,” says Amit Jain, CEO & Co-Founder, Ashika Wealth Advisors.

The market is going through a period of flux and investors need to shift between sectors to make most of it. They need to rebalance from overvalued sectors to undervalued ones and from sectors with bleak prospects to those looking bright. The pharma sector looks attractive now. “Despite the recent outperformance, pharma valuation is still reasonable. Defensive sectors will do well in the coming 1-2 years and pharma is the best candidate,” says Jain.

Just like pharma will benefit from the Covid-19 spread, there are several other sectors that will directly benefit from the fall in crude oil. “Sectors like paints, speciality chemicals, hair oil, cement, pvc pipes, etc will benefit due to fall in crude prices and therefore, are worth betting on now,” says Arora. Though aviation is expected to benefit from crude oil crash, same will be nullified following the fall in traffic due to the pandemic.

The entire consumption pack is expected to do badly in the coming months. It is also very overvalued. “Despite the recent cut, FMCG stocks (other than ITC) are still overvalued now,” says Jain. Banking and financial services is another sector investors can reduce exposure to now. Though Yes Bank may be saved for the time being, the crisis it created will linger for longer as PSU banks have to bail out weak entities. Private banks are also facing the music due to the Yes Bank incident, with depositors shifting money from small private sector banks to PSU banks. Also, the good private banks are quoting at very high valuations. “We have marginally lowered our BFSI weight because of the increased risk there. Attractive valuation in other sectors is another reason for this reduction,” says Arora.

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moneycafe · 4 years ago

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SBI cuts FY22 GDP growth estimate to 7.9%; recovery to be 'W-shaped'

SBI cuts FY22 GDP growth estimate to 7.9%; recovery to be ‘W-shaped’

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vsplusonline · 5 years ago

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Sensex tumbles over 500 pts in early trade; Nifty slips below 9,200

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Sensex tumbles over 500 pts in early trade; Nifty slips below 9,200

Equity benchmark Sensex tumbled over 500 points in early trade on Friday dragged by losses in banking and IT stocks amid weak cues from global markets.

After hitting a low of 31,278.27, the 30-share index was trading 534.23 points or 1.68 per cent down at 31,328.85.

Similarly, the NSE Nifty declined 129.35 points, or 1.39 per cent, to 9,184.55.

Bajaj Finance was the top laggard in the Sensex pack, shedding up to 5 per cent, followed by ICICI Bank, IndusInd Bank, Axis Bank, HDFC twins, SBI, Infosys and TCS.

On the other hand, Hero MotoCorp, Sun Pharma, L&T, ONGC and HCL Tech were among the gainers.

In the previous session, the BSE barometer surged 483.53 points or 1.54 per cent to close at 31,863.08, and the broader Nifty advanced 126.60 points, or 1.38 per cent, to settle at 9,313.90.

Foreign portfolio investors were net sellers in the capital market on Thursday, as they offloaded equity shares worth Rs 114.58 crore, according to provisional exchange data.

Domestic market opened on a negative note as global stocks slumped amid projections of severe coronavirus-led blow to the global economy, traders said.

Fitch Ratings has slashed India’s economic growth projection to 0.8 per cent in the current 2020-21 fiscal, saying an unparalleled global recession was underway due to the COVID-19 crisis.

The agency has further made large cuts to global GDP forecasts. Global economic growth is now expected to fall by 3.9 per cent in 2020, a recession of unprecedented depth in the post-war period.

This would be twice as severe as the 2009 recession, it noted.

Bourses in Shanghai, Hong Kong, Tokyo and Seoul were trading with losses in early deals.

On Wall Street, key indices closed in the red in overnight session.

Global oil benchmark Brent crude futures advanced 5.91 per cent to USD 22.59 per barrel.

Further, reports on Thursday said a potential antiviral drug flopped in a clinical trial, citing documents published accidentally by the World Health Organisation.

In India, the death toll due to the COVID-19 pandemic rose to 718, while the number of cases in the country climbed to 23,077.

Global tally of the infections has crossed 27 lakh, with over 1.90 lakh deaths.

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ainvestops · 5 years ago

Text

Coronavirus impact on stock market

Crude oil prices have crashed For oil importing countries like India, this fall may be a blessing in disguise.

Gold becomes attractive in uncertainty Global gold prices are rising but the fall in the rupee will push it up further in India.

Stick to short-term debt funds

10-year govt bond yield is at 10-year low Since further yield reduction is limited, it is better to be with short term papers.

Long duration funds rally may be over Bond yields are at 10-year low and may not fall further. Short-term funds are better now.

Equity markets in bear hug

Sensex PE is below its 10-year average With the market back in the fair valuation zone, long-term investors can get in slowly.

10-year Sensex CAGR is below inflation Sensex rarely gives negative real CAGR. It has given decent returns after incidents like this.

Sensex at 2-year low, mid-caps are lower Due to the deep correction, long-term investors can consider invetsing in mid-caps now.

5-year SIP returns of Sensex almost zero Five-year SIP returns of Sensex falling to zero is rare. Future returns have been good.

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