India's Q4 GDP may hit 2-year low !!

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Is the government stimulus for the MSMEs helping control COVID damage? One survey showed nearly two-thirds of them are resorting to layoffs amid a slump in demand, while 30% said they were planning to cut jobs by half and 26% by a quarter. As many as 86% of those surveyed said they wanted direct cash support from the government as their most immediate challenge has been to pay salaries, clear vendor bills and meet other fixed expenses. Around 77% of the small businesses said they are in need of emergency fund. 

MARKET CUES: Where do we stand.

• Nifty futures on the Singapore Exchange-traded some 85 points lower at 7 am (IST) in signs that Dalal Street may snap the two-day winning streak. Investors are nervous globally ahead of a planned Trump announcement of policy moves that could ignite a diplomatic row between Washington and Beijing.
• On Thursday, Nifty50 closed around the day's high point a tad below its immediate resistance at 9,500. Analysts said momentum indicator Stochastic is in bullish mode, which supports the upside momentum. The index sustained above its 20-day and 50-day SMAs, adding to the optimism.
• Momentum oscillator RSI is placed positively on the daily chart in signs that Nifty may continue the up-move for some time. Nifty has a key resistance placed at 9,730 and 9,900 levels, while support inched higher to 9,300 and 9,150 levels. Options data suggested a wider trading range between 9,000 and 10,000 levels.
• Elsewhere in Asia, stocks dropped before President Donald Trump’s anticipated address later Friday that could further stoke US-China tensions. The Hang Seng opened about 1.5% lower, while Japanese shares dipped more modestly along with those in Seoul and Shanghai.
• US stocks closed lower overnight, erasing solid gains from earlier in the day President Trump said he would be giving a news conference on Friday regarding China. Dow fell 147.63 points, or 0.6%, showing first losses in three days. The S&P500 slid 0.2% and the Nasdaq 0.5%.
• Oil prices edged lower after US inventory data showed lacklustre fuel demand in the world’s largest oil consumer. Brent crude slipped 36 cents, or 1%, to $34.93 a barrel while WTI futures fell 51 cents, or 1.5%, to $33.20.
• The rupee on Thursday declined by 5 paise to settle at 75.76 against the US currency as escalating tension between the US and China boosted the demand for the dollar.
• The dollar was hemmed into a narrow trading range on Friday and was on course for a weekly loss against major currencies. The yuan pulled away from a record low in offshore trade. The Australian dollar was close to its highest in more than two months. 

LOOK WHO'S

1. Google eyes 5% stake in Voda Idea… Google is reported to be exploring a move to pick up a minority stake in Vodafone Idea, the beleaguered telecom operator that is owned by Britain’s Vodafone and domestic business house Aditya Birla Group. Alphabet is looking to buy about 5% stake in Vodafone Idea, the Financial Times reported on Thursday. When contacted, the Indian subsidiary of Google and Vodafone Idea refused to confirm the development. 
2. SIPs play saviour for Dalal Street… As foreign funds took out over $6.6 billion from the Indian market during January-March, domestic funds — which saw Rs 8,500 crore coming in through the systematic investment plans (SIPs) route every month — cushioned that selling to a large extent. With net buying of over $10 billion, the domestic funds countered the FPI outflow, but the indices closed about 29% lower.
3. Six Covid vaccines in the works… India has identified at least six local vaccine candidates with 30 groups trying to develop a vaccine for Covid-19. Besides, around 10 drugs are being repurposed for use in the treatment of the disease and are under different stages of trials, the government said while also highlighting that it was working on guidelines to prioritise distribution of the vaccine once it is available. Four categories of vaccines were being looked at currently and some companies are at the late pre-clinical stage.
4. Corporate FDs offer alternative to bank FDs… Falling bank deposit rates should not make you lose heart. Fixed deposits of top-rated companies could be an attractive investment option, especially for those desiring safety and reasonable returns. With the RBI announcing the closure of government bonds that paid 7.75% interest and the country’s largest lender SBI slashing deposit rates, financial planners are advising investors to consider fixed deposits of companies such as HDFC, Bajaj Finance, ICICI Home Finance and Mahindra Finance. 

AND WHO'S 

• Q4 GDP growth slowest in 2 years?… GDP data scheduled to be released later today is expected to show India’s economy grew at its slowest pace in at least two years in March quarter as the coronavirus pandemic weakened already declining consumer demand and private investment. The median forecast from a Reuters poll of economists put annual economic growth at 2.1% in March quarter, lower than 4.7% in the December quarter. Forecasts ranged between +4.5% and -1.5%. 
• S&P sees 5% contraction in Indian economy… S&P Global Ratings said on Thursday that the Indian economy will contract by 5% in the ongoing fiscal year, citing the extended two-month nationwide lockdown and a likely protracted recovery as reasons for its latest downgrade. S&P, however, expects a strong recovery to 8.5% growth in the next financial year. In April, S&P had forecast 1.8% growth for the fiscal year ending March 31, 2021.
• Auto woes set to spill over… The domestic automobile industry is headed for another year of double-digit sales decline this financial year, given the extended lockdown to contain the Covid-19 pandemic, Crisil Research said. Overall sales volume would plunge to multi-year lows, with sales of both passenger and commercial vehicles reaching fiscal 2010 levels, it said. For the full fiscal, sales of passenger vehicles are expected to decline 24-26 per cent. 
• US economy shrinks rapidly… The US economy shrank at an even faster pace than initially estimated in the first three months of this year with economists continuing to expect a far worse outcome in the April-June quarter. The Commerce Department reported Thursday that the GDP fell at an annual rate of 5% in the first quarter, a bigger decline than the 4.8 per cent drop first estimated a month ago. It was the biggest quarterly decline since an 8.4 per cent fall in the fourth quarter of 2008 during the depths of the Global Financial Crisis.

Meanwhile...

China clears controversial HK law… Chinese lawmakers approved a proposal for sweeping new national security legislation in Hong Kong, defying a threat by US President Donald Trump to respond strongly to a measure that democracy advocates say will curb essential freedom in the city. The move to bypass the semi-autonomous city’s local Legislative Council risks spawning yet more protests in the city and could potentially prompt companies to flee. 

The DAY PLANNER

1. Q4 Earnings: VMart | Voltas | Equitas | Jubilant Lifesciences | KEC | LemonTree | SCI
2. Japan April Unemployment Rate (05.00 am)
3. UK Nationwide Housing Prices May (11.30 am)
4. India April Infra Output (05.00 pm)
5. RBI Forex Reserves (05.00 pm)
6. India Fiscal Deficit April (05.00 pm)
7. India Q4 GDP Growth Rate (05.30 pm)
8. Fed Chair Powell Speech (08.30 pm)

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