Midnight News – Jul 13th 2020

unnamed Midnight News – Jul 13th 2020

According to a survey conducted by FICCI, India’s GDP is likely to contract by (-4.50%) in fiscal 2021. In the FICCI survey conducted in Jan-20, the GDP growth for FY21 had been pegged at +5.5%. The downgrade is largely on the back of the lockdown following the pandemic and the consequent impact on economic activity across India. Even RBI governor, Shaktikanta Das, has admitted that even if the demand manages to bounce back, the supply chains and the transport logistics will continue to be constraints for production. FICCI Survey has projected a worst case contraction of (-6.4%) in FY21.

Biocon has secured regulatory nod to use the drug, Itolizumab, on COVID-19 patients. The drug is currently used to cure psoriasis, a skin related disease. The DCGI has given this approval based on randomized trials wherein patients who were administered Itolizumab had responded positively to the drug. The drug is expected to reduce mortality in COVID-19 patients. The urgency to find a reliable cure has been growing as India is adding nearly 27,000 cases on a daily basis. In terms of number of casualties, India is already ranked third in the global list after the United States and Brazil.

Foreign Portfolio Investors or FPIs pulled out Rs.2867 crore from the Indian markets in the first two trading weeks of the month of July 2020. This does sound a tad disappointing after FPIs infused Rs.24,053 crore in the month of June into Indian markets. FPIs pulled out Rs.2210 crore from equities and Rs.657 crore from debt during the month of July so far. Ironically, June was the first month that FPIs were net buyers in equity and debt combined, after being net sellers between January and May this year. In terms of valuations, New Zealand, Malaysia and India remain the most expensive markets.

During the week ending on 10 July, six out of the ten most valuable companies on the NSE managed to add Rs.103,625 crore in terms of market capitalization. Reliance Industries accounted for more than 50% of these gains. However, the index overall was just up by 1.6% during the week. During the week, Reliance Industries, TCS, HDFC Bank, Hindustan Unilever, Infosys and HDFC ended the week with gains. On the other hand, Bharti Airtel, Kotak Bank, ITC and ICICI Bank ended the week with losses. RIL retains the spot of most valuable company followed by TCS, HDFC Bank, Hindustan Unilever and Infosys.

Financially stressed NBFCs and Housing Finance Companies are seeking nearly Rs.10,000 crore from the government to bail them out of the current crisis. The scheme was launched on July 01 with an outer limit of Rs.30,000 crore and applications for nearly a third of the amount have already been received. The first application has already been approved and the others are under review at this point of time, according to SBI, which is administering this scheme. Even under the Export Credit Guarantee Scheme for MSMEs, the banks have already sanctioned Rs.120,000 crore out of the stipulated Rs.300,000 crore. While the larger and more stable NBFCs have easier access to funds, it is the smaller and stressed NBFCs that are really worried about the possibility of a spike in bad loans once EMI moratorium is lifted.

There are some very important and significant data points coming up in the next week. Firstly, IT majors like Infosys and Wipro are expected to announce results this week. The retail inflation number will be out on Monday while the WPI inflation will be announced on Tuesday. The trade data covering the merchandise and service exports are also expected to be announced during the week. Above all, the progress on the Coronavirus cases and the recovery / affliction ratio will also be key data points for the week. In addition, there is the Rossari Biotech IPO and Yes Bank FPO, summing up a busy week.

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