Midnight News – Jun 30th 2020

unnamed Midnight News – Jun 30th 2020

In a swift decision, the Indian government banned a total of 59 Chinese apps with immediate effect. These include some of the extremely popular apps like Tik Tok, We Chat, Baidu, UC Browser etc. Some of these apps like Tik Tok, which is a video uploading app, are extremely popular in India. These apps have been banned on the grounds of national security and the two largest platform providers on mobile, Apple and Google, have been issued instructions to block access to these apps on their platforms. These apps providers are allegedly indulging in activities prejudicial to India’s national sovereignty.

Tata Steel reported a net loss of Rs.1236 crore for the Mar-20 quarter as compared to a net profit of Rs.2353 crore in the Mar-19 quarter. Total sales revenues also fell by 20% to Rs.33,770 crore in the quarter. The big hit on the Tata Steel performance came from the slowdown in the auto and consumer sector as well as a virtual shut down in the construction activity. The lockdown from the last week of March only had a partial impact in the Mar-20 quarter although the impact is likely to be more acute in the June quarter. Tata Steel has debt of Rs.104,000 crore and is focusing on conserving cash.

RBI will initiate another round of Operation Twist on July 02 to bring more stability to the bond markets. The Operation Twist has been followed by the RBI prior to the lockdown but it has restarted the process after a gap. Under Operation Twist, the government buys and sells bonds worth Rs.10,000 crore by tweaking contra positions at the long end and the short end of the yield curve. This helps to smoothen the spread between the long term yields and the short end yields. The RBI normally uses this as a liquidity management measure and also to avoid the yield curve from flattening or inverting.

Prime Minister, Narendra Modi, is scheduled to address the nation at 4 PM on 30 June. Unlock 2.0 kicks off from June 30 even as states like Maharashtra have extended the lockdown till the end of July considering the rising number of cases. India has been seeing more than 20,000 fresh afflictions daily with states like Maharashtra leading the way. International travel and metro rail services will continue to remain shut even as domestic rail and air travel will continue to be limited. Non-essential movement around the city and large congregation of people continue to remain banned in most places.

Tax experts have opined that the tax benefits on home loans may get impacted due to the EMI moratorium. As per the income Tax rules there are two benefits in a home loan. There is Section 24 tax exemption up to Rs.2 lakh per annum on the interest paid on the loan and there is an additional exemption on the principal component under Section 80C of the Income Tax Act. The rules stipulate that interest exemption will be available to the borrower irrespective of whether the amount is paid or not. However, the principal portion will be available for tax exemption under Section 80C only if the amount is actually paid. This puts the borrower in a tight spot. The EMI moratorium will now mean that while Section 24 benefits will be available, the Section 80C benefits may have to be foregone.

According to a report in the Business Standard, the fourth quarter has been bad for most Indian companies despite just 8 days of lockdown applicable. If you leave out financials and the IT players, the combined net loss was Rs.2700 crore for the fourth quarter. The combined PBT was down by nearly 81% if the financials were also included in the calculation. The sharp fall in global commodity prices led to most commodity companies declaring losses for the quarter. The last time Indian companies had such a troubled quarter was when energy prices had crashed during 2014-15 on the shale syndrome.

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