Parts of India Inc are showing extreme behaviours. Some companies have suddenly gone on the front foot to disclose details of their operations, trying to become more transparent than they ever were. Industry watchers say some of them with very weak business models might be trying to use the COVID crisis to kitchen-sink some not-so-great stuff; while others, who have nothing to hide, maybe increasing disclosures to communicate how comfortably they are positioned vis-Ã -vis their competition. Investors have a task cut out there to separate the wheat from the chaff.
MARKET CUES: Where do we stand >>>
- Nifty futures on the Singapore Exchange-traded flat at 7 am (IST) in signs that Dalal Street is indecisive amid lack of directional cues
- On Thursday, Nifty50 reclaimed the 9,100 level but formed a bearish candle on the daily chart that resembled a 'Shooting Star' pattern. The index is facing strong resistance near 20- and 50-day moving averages, which does not bode well for the bulls
- The 9,150 level would be a crucial hurdle for Nifty now. If it manages to sustain above 9,150 level, then we may see a bounce towards the 9,300 – 9,350 zone. On the flipside, support is placed at 9,000 and then 8,888-8,800 levels
- Elsewhere in Asia, stocks slipped, with the bulk of losses coming in Hong Kong, as China announced plans to impose a national security law on the city, that may further deteriorate the tension between the US and China. Hang Seng opened 2% lower. Losses were more modest in Tokyo and Seoul, while shares edged up in Sydney.
- Wall Street shares to slip from the two-month highs overnight after President Trump said the US would react “very strongly” against Beijing's move to impose a new national security legislation on Hong Kong. S&P500 slipped 0.78%. Dow 0.41% and the Nasdaq 0.97%.
- Oil prices were on the rise on Friday, heading for a fourth straight week of gains, amid more evidence that fuel demand is recovering. Brent rose 14 cents, or 0.4%, to $36.20 a barrel while WTI crude gained 5 cents, or 0.2%, to $33.97
- The rupee appreciated 19 paise to close at 75.61 against the US dollar on Thursday, tracking positive trend in domestic markets
- The dollar held gains against major currencies on Friday amid fresh US-China tensions. The yuan nursed losses in offshore trade. The greenback traded at $1.0950 per euro in Asia, following a 0.3% increase in the previous session.
| LOOK WHO'S |  |
- Spare time draws Indians to equities... With spare time due to lockdown, the uncertainty of income and sharp fall in the stock prices, trading volume on Indian bourses have increased, reflecting rising activity by investors. The combined total volume on the two stock exchanges, BSE and NSE, shot up by 49 per cent in the last 30 days and 40% in last 90. A similar trend has been observed in turnover, which increased 44% year on year in last 90 days to Rs 38 lakh crore. In the three months to March 2020, turnover had increased by 26 per cent to Rs 34,00,000 crore.
- India heads for current account surplus... India’s current account could show a surplus of at least $19-20 billion this year for the first time since FY07, following a sharp drop in domestic demand for investment and consumption goods. The drop in crude and commodity prices and lower demand for them are also contributing to the decline. A current account deficit is seen as a weakness but experts see a bigger problem in a surplus as it stems from demand destruction.
- China central bank gets FPI licence... Sebi has extended People’s Bank of China’s foreign portfolio investor licence by three years, allaying concerns among other China and Hong Kong-based FPIs. The Chinese central bank had sent several representations to Sebi and the finance ministry seeking timely renewal of the licence that was expiring in the first week of May. According to industry estimates, the central bank holds assets to the tune of $3-3.5 billion in India, which includes equities and bonds.
- Bank deposits swell through lockdown… Latest RBI data shows bank deposits have risen by over Rs 2.8 lakh crore in three fortnights of the lockdown till May 8, while bank credit during the period dipped by Rs 1.2 lakh crore. This added Rs 4 lakh crore to liquidity in the banking system, resulting in a surge in bank investments. On March 27, bank deposits stood at Rs 135.7 lakh crore. A fortnight later on April 10, outstanding deposits surged to Rs 137.1 lakh crore.
AND WHO'S
Airfares capped for 3 months… The government has fixed minimum and maximum fares, effective till 11.59pm on August 24, for domestic flights that will resume from Monday. Airlines will need to sell 40% seats below the midpoint of the fare band on each flight. Based on flying time, there are seven categories: starting at flights below 40 minutes having a range of Rs 2,000-6,000 and going up to those with flying time of 3-3.5 hours with a range of Rs 6,500-18,600.
FII ownership hits six-year low... Overseas investors’ ownership of top Indian stocks hit a six-and-a-half-year low in March quarter as risk-off sentiment in global markets on account of the COVID-19-led slowdown sparked outflows from emerging markets. Holdings of foreign investors in the top 500 listed companies dropped to 20% as on March 31 — the lowest since December 2013. A Credit Suisse study showed promoter ownership in BSE500 stocks rose to a record high of 44 per cent at the end of March, while DII and retail ownership remained unchanged at 14 per cent.
Investors sue Franklin for refunds… Several Delhi-based investors have sent a legal notice to Franklin Templeton Asset Management Company (AMC) demanding refund of their entire investment at re-determined net asset value within a week, and to withdraw the winding-up notices of six investment schemes. Franklin Templeton shut six debt schemes with total assets under management of Rs 25,856 crore on April 23, owing to severe illiquidity and redemption pressures caused by the Covid-19 pandemic.
Birla MF stops fund flow to 2 debt funds… Aditya Birla Sun Life MF has stopped taking money in two of its debt schemes — Medium Term Plan and Credit Risk Fund. But the fund house said that regular redemptions and switch to other funds will continue as usual. It said the decision, which has been taken to safeguard the interests of existing investors, is effective May 22. Together, the two debt schemes currently manage about Rs 5,000 crore.
Meanwhile...
124 companies liquidated... Indian banks let 124 companies slip into liquidation despite resolution plans that – at least theoretically – promised higher recoveries, data with the Insolvency and Bankruptcy Board of India showed. At the end of March, insolvency processes for 914 companies were closed. About 57% of the total insolvency cases ended in liquidation orders, compared with 14% that ended in resolution plans.
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