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QBiz: Realty Braces for the Worst; Govt Mulls Easy Bank Norms

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1. Realty Braces for the Worst Amid Cash Flow Pressures

The three-week lockdown to contain the COVID-19 pandemic has deeply impacted India’s real estate sector, which was already reeling from a liquidity crunch and weak residential sales.

The impact on discretionary spending may disrupt the retail mall business for a long time, while a sharp drop in home sales will heighten liquidity and cash flow pressures for developers. Affordable housing, which has held up in the five-year-long slowdown, may also get hit by the ongoing crisis.

However, the commercial office business, which has been an outlier of sorts, may face limited impact though this may be determined by how the information technology (IT) sector, one of the largest occupiers of office space, performs in the near future.

(Source: Livemint)

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2. FPIs Pull out Record Rs 1.1 Lakh Cr in March Amidst COVID-19 Mayhem

Foreign portfolio investors (FPIs) have net withdrawn a record Rs 1.1 lakh crore from the Indian markets in March as the coronavirus pandemic dented investor sentiment worldwide.

According to latest depositories data, FPIs pulled out a net Rs 61,973 crore from equities and Rs 56,211 crore from the bond market in March, taking the cumulative net outflow to Rs 1,18,184 crore.

(Source: The Economic Times)

3. Govt Mulls Easy Bank Overdraft Norms

After announcing money transfer through Jan Dhan accounts of 20.4 crore poor women to blunt the COVID-19 impact, the government may impress upon state-run banks to help improve the cash flow of individuals, many of whom are yet not covered under any relief measure.

One of the proposals being toyed with is to raise the overdraft facility automatically for customers with good credit history for a temporary period, should they wish to avail of it, a source told Financial Express. “The proposal also includes raising the limit for Jan Dhan account holders (not just women) from the current Rs 10,000. A final decision will be taken soon,” he said.

(Source: Financial Express)

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4. Cipla’s Advair Generic Launch in US Is Subject to Price-Erosion Risk

The stock of Cipla Ltd attracted plenty of investor attention as it announced the completion of clinical trials of its generic version of the drug Advair. The drug launch is expected to open up another revenue stream for the company in the US. But investor gains depend heavily on price stability in the highly competitive American market.

While the drug generated more than $4 billion in revenue for GlaxoSmithKline Plc in 2017, prices have come crashing down since Mylan NV’s generic-version launch at a discount of about 70 per cent. Analysts now estimate the market size, including generics, at roughly $1 billion.

Besides, some competitors are already ahead in their filings with the US Food and Drug Administration. This means Cipla will be the third or fourth in the market as it is expected to file an application only in the first quarter of FY21.

(Source: Livemint)

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5. HDFC Bank Bucks Trend, Reports 7.41% Rise in Deposits in March-Quarter

HDFC Bank has bucked what was emerging as a trend of private sector lenders facing a fall in deposit base during the March quarter.

The largest private sector lender has reported a 7.41 per cent increase in aggregate deposits during the January-March period to Rs 11.46 lakh crore, which was 24 per cent higher as compared to 31 March last year.

HDFC Bank said its advances have risen by around 21 per cent to Rs 9.93 lakh crore as of 31 March and have grown by over 6 per cent for the March quarter as compared to December-end.

(Source: The Economic Times)

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6. Retailers, Online Grocers Restrict Purchases; Put Cap on Quantity to Prevent Hoarding

Retailers – large chains, e-grocers and kiranas – are restricting the quantity of products their consumers can purchase at one go amid low supplies and indications that hoarding of essentials is on the rise on fears that the lockdown may be extended or lifted with restrictions.

Spencer’s Retail, EasyDay, Nature’s Basket, Grofers, Reliance Retail, More and kiranas in most cities have imposed curbs on essential commodities such as sugar, atta, rice, pulses, oil, milk, biscuits, disinfectants, handwashes and breakfast cereals.

(Source: The Economic Times)

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7. Promoters Raise Stakes in Auto Firms as Equities Crash

Promoters of automobile and auto ancillary companies such as Hero MotoCorp Ltd, Bajaj Auto Ltd, and Tata Motors Ltd have stepped up open market purchases of equity shares and other financial instruments in the past few weeks.

This follows one of the steepest declines in the BSE auto index. The index has lost 42.76 per cent since 1 January.

On 31 March, members of the promoter group of Hero MotoCorp bought 276,000 shares in the open market for Rs 44 crore, increasing the promoter shareholding from 34.63% to 34.77 per cent.

Tata Sons Pvt. Ltd, the promoter of Tata group, invested Rs 118 crore to buy 26.72 million units of undisclosed financial instruments of Tata Motors differential voting rights (DVR) on the open market on 12-13 March. Tata Motors DVR offers holders fewer voting rights for the equity shares held but may provide more dividends. On 16 March, Tata Sons chairman N. Chandrasekaran bought 200,000 shares in TML-DVR.

(Source: Livemint)

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8. Undeterred by Lockdown, GST Staff Process Over 10,000 New Registrations

The lockdown has not deterred business entities from getting new GST registrations. Statistics released by the GST Network (GSTN), the IT backbone for the indirect tax system, show that over 10,000 entities registered themselves between 25 March and 3 April, the first 10 days of the lockdown.

According to the data, 20,273 registrations were processed during the period. These include 10,077 cases of new registration, 3,377 core amendments, 3,784 cancellations by application, 1,966 cancellations suo moto and 1,069 cases of revocation. Similarly, 7,876 cases of refund were also processed during the period. These numbers are for 21 States and Union Territories (UTs).

As on 31 March, the total number of registered assessees stood at 1.23 crore. January alone saw the registration of 1.85 lakh.

(Source: The Hindu BusinessLine)

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9. Container Carriers Skip JNPT, Mundra Port as Exports Dry up

Global container shipping lines such as Maersk Line, Mediterranean Shipping Company SA, CMA CGM SA, Hapag-Lloyd AG and COSCO Shipping Lines have started skipping India’s top container gateways: Jawaharlal Nehru Port Trust and Mundra port.

The shipping industry sees this as a clear indication that the problems in clearing import containers from the two ports and nearby container freight stations (CFS), and the lack of exports due to factory closures in the wake of the lockdown, have started to disrupt export-import (EXIM) trade and carrier schedules.

“Lines have started skipping JNPT and Mundra Port,” said the chief executive officer of a European container line. “Because there are no exports and imports, clearances are not happening,” he said.

(Source: The Hindu BusinessLine)

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