1. Virus Cuts Into India’s Growth
A fledgling recovery in Asia’s third-largest economy is set to lose steam as travel curbs and closure of malls, theatres and educational institutes, among other steps aimed at containing the COVID-19 outbreak in India, have led to a significant drop in economic activity.
The pandemic has hit the economy at a time when growth has slowed to the lowest in a decade, investments are shrinking and a consumption recovery is sputtering. This has prompted economists to pare India’s growth projection for 2020-21 closer to 5 percent from about 6 percent earlier. Moody’s Investors Service said COVID-19 will likely depress global growth in 2020 below 2.5 percent, the recessionary threshold for the world economy.
(Source: Livemint)
2. SEBI Considers Short Selling Ban, Trading Curbs to Reduce Market Volatility
The Securities and Exchange Board of India (SEBI) is working on a plan to arrest the deep market sell-off and reduce volatility, which has spiked to record levels owing to the damage caused by the coronavirus pandemic.
A ban on short selling, mandatory delivery-based trading, and invoking the so-called additional surveillance mechanism (ASM) for highly volatile stocks are among the proposals being considered, said people in the know. If the market continues to fall, SEBI would announce at least some of these measures to reduce excessive speculation.
(Source: Business Standard)
3. Yes Bank AT1 Bonds Worth Rs 8,415 Crore Written Down to Zero
Private lender YES Bank’s additional tier 1 (AT1) bonds worth Rs 8,415 crore have been written down to zero, the company informed stock exchanges.
“The perpetual subordinated Basel-III compliant additional tier 1 bonds issued by the bank for Rs 3,000 crore on 23 December 2016 and perpetual subordinated Basel-III compliant additional tier 1 bonds worth Rs 5,415 crore on 18 October 2017 have been fully written down and stand extinguished with immediate effect,” YES Bank said in the regulatory filing on Saturday, 14 March.
The lender said that as per rules, if authorities decide to reconstitute or amalgamate a bank with any other, then such a bank is deemed non-viable, and conversion or write-down of AT1 instruments is then activated.
(Source: The Economic Times)
4. Rescue Plan in Place, Yes Bank Gears up to Face New Challenges
State Bank of India (SBI), six private sector banks, and a mortgage lender will invest a combined Rs 10,000 crore to rescue Yes Bank Ltd, allowing the troubled lender to shore up its capital buffers after they dropped below the regulatory requirement.
While the funds infusion by some of India’s biggest financial institutions does signal a show of confidence, the real challenge will be to ensure that Yes Bank’s depositors don’t abandon it.
“The ability of Yes Bank to retain its deposit franchise will be key to its revival. So, the next one week will be crucial to see if the bank is able to stabilize its depositor base. That will decide whether the bank is able to focus on its near-term revival plans,” said Karthik Srinivasan, group head of financial sector ratings at Icra Ratings.
(Source: Livemint)
5. ED Summons Anil Ambani in Probe Against Rana Kapoor
The Enforcement Directorate (ED) has summoned Reliance Group Chairman Anil Ambani in connection with the ongoing money-laundering probe against YES Bank co-founder and former chief executive officer Rana Kapoor. The Group is among the largest borrowers from the bank, with an exposure of around Rs 14,000 crore.
Confirming the development, an ED official said the agency was examining all the big borrowers of the bank, and the stressed loans sanctioned during Kapoor’s tenure. Ambani has been asked to join the probe on Monday, 16 March.
(Source: Business Standard)
6. Nifty 50 Likely to Remain Volatile, Avoid Chasing Technical Pullback
On a day of wild extremes, NSE Nifty witnessed insane volatility on either side before ending with a big gain on Friday, 13 March. The stock market made an immensely weak start following an overnight rout in the US markets. After opening gap-down, the headline hit the lower circuit of 10 percent and trading was stopped for 45 minutes.
However, after the session resumed, the index made over 1,700-point recovery and finally settled with a net gain of 365.05 points or 3.81 per cent at 9,955.20. Dalal Street witnessed its biggest one-day decline in absolute terms on Thursday. However, the following day, it saw the largest recovery from the lows in its history.
In the process, the volatility index or India VIX surged 25.05 per cent to 51.47 despite coming off its highs. The technical pullback that was witnessed on Friday came on the back of sharp short covering, which is evident from the F&O data.
(Source: The Economic Times)
7. Cheaper Oil May Not Help Industry
When the going gets tough, tough measures get going. With major cities and trading centres across the globe putting restrictions on travel, and some in lockdown mode, economic activity is expected to slow down at a fast clip.
This worry is paramount in the minds of investors, as the impact of a prolonged slowdown will be far greater than the benefit for India from lower crude oil prices. The country imports more than 80 percent of its oil requirements.
The price of Brent crude had already dropped from USD 66 a barrel on 31 December to USD 45 a barrel on 6 March owing to concerns on demand. But with the Organization of the Petroleum Exporting Countries and allies failing to reach a consensus on supply cuts, a price war triggered a further drop to about USD 34 per barrel.
(Source: Livemint)
8. Yes Bank Posts Rs 18,500 Crore Loss in Q3; Declares Share Allotment Under Reconstruction Scheme
Crisis-hit private-sector lender Yes Bank, Saturday, 14 March, posted its quarterly results for the quarter ended 31 December. The lender reported a loss of Rs 18,564 crore, as compared to a net profit of Rs 1,000 crore reported by the bank in the same quarter last year.
Yes Bank has posted a net loss of Rs 600 crore in the previous quarter. Bad loans on the books of Yes Bank stood at Rs 40,709 crore, shooting up significantly from Rs 5,158 crore in the same quarter last year. The cash-starved lender lost more than Rs 40,000 crore worth of deposits quarter-on-quarter.
In a separate filing to the stock exchanges, Yes Bank also announced the issuance and allotment of equity shares, totaling to 395 crore equity shares worth Rs 3,950 crore to private institutional investors and 605 crore shares to State Bank of India for Rs 6,050 crore.
(Source: Financial Express)
9. US Fed Slashes Rates in Emergency Coronavirus Move
With panic buying on Main Street and fear-driven sell-offs on Wall Street, the US Federal Reserve cut interest rates to near-zero on Sunday, 15 March, in another emergency move to help shore up the US economy amid the rapidly escalating global coronavirus pandemic.
The Fed already cut interest rates by half a percentage point on March 3 at an emergency meeting, the first emergency cut since the financial crisis in 2008. The central bank said it was cutting rates to a target range of 0% to 0.25%.
US President Donald Trump called the move "terrific" and "very good news."
Americans are waking up to a new reality as coronavirus spreads, with store shelves stripped bare of toilet paper, schools closed and large gatherings banned.
(Source: Business Standard)
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