IT sector revises growth downward to 3-8% for the next FY on back of virus outbreak. More than 20L employees are expected to work from home in the coming days. India’s current account deficit narrows to $1.4bn in December quarter. Russian efforts to interfere in the US presidential election getting more sophisticated and harder to detect, reveal Facebook and Twitter.
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Some $14trn has been wiped from world stocks this month. To put that into perspective, that’s equivalent to the nominal GDP of China, the world’s second-largest economy.
Who Let the Bears Out?
Stock markets around the world suffered staggering losses, in many cases recording their worst falls since the 2008 economic crisis; some recorded their worst weeks on record.
India, Japan, South Korea, Australia, Hong Kong, China, Europe, USA – the coronavirus economic fallout spared no one. Along with equities, oil prices tanked and bond yields have also plummeted.
The Fall of the Bulls
The longest-ever bull market for US stocks has ended. The Dow’s decline from its most recent peak crossed 20% on Wednesday, the threshold that defines a bear market. This officially ended US stocks’ 11-year bull market run, which began following the Great Recession and was the longest in history.
Meanwhile in India
Indian markets have been swinging wildly. On Friday, Indian stocks erased most of their losses incurred during a volatile session after a 10% crash in the main indices triggered a trading halt earlier in the day. This “circuit breaker” – the first time it has happened since 2009 – was followed by a dramatic swing. Sensex ended the day up 4.04% while Nifty was up 3.81%.
The volatility index surged 44% to its highest in over a decade.
Are the Bears Back?
The bugles have been sounded alerting the beginning of a bear market – which, after more than a decade-long bull run, was long-feared nonetheless.
There is a silver lining, though. Bear markets usually don't tend to last as long bull markets. The typical bear market lasts just shy of a year and wipes out about 34% of the stock market's value. And despite the global panic about the coronavirus, analysts expect the pandemic to be largely contained in the coming weeks and the global economy to rebound later this year.
Mark Your Money Safe
The World Health Organisation (WHO) yesterday declared COVID-19 a global pandemic.
Indian, as well as the global, stock markets have witnessed a blood bath in the last couple of trading sessions on fears of the virus further dampening economic growth. The US Federal Reserve and Bank of England have cut interest rates to offset the inevitable consequences of the outbreak.
The massive fall in the stock markets has perhaps had the small investor thinking if it were better to invest in Fixed Deposit and small savings schemes offered by Post Office including Public Provident Fund (PPF), NSC, KVP etc. - all of which offer 7-8% interest with guaranteed returns. Read what the experts have to say about this here. [Financial Express]
The IT services sector's growth has been revised downward to 3-8% for the next financial year following the COVID-19 outbreak, according to Kotak Institutional Equities.
The Information Technology Business Process Management industry in India usually reports a strong quarterly performance in the April-June quarter and any slowdown in growth in the quarter could prove to be a dampener for the whole year, analysts said. New customer acquisitions and initiation of large deals will be delayed due to the outbreak, Kotak said.
Large and mid-cap tech services firms may see growth fall by 2-4%, it said. Kotak has also predicted a 3-10% reduction in fair values of IT stocks across companies. [ET Tech]
The coronavirus scare has forced some of the biggest firms in India to adopt a work from home model. These include ecommerce majors Flipkart, Snapdeal, transport aggregators Uber and Ola, food delivery company Swiggy, payments provider Paytm as well as IT services companies Wipro and Tech Mahindra.
Social media giants Facebook and Twitter have revealed that Russian efforts to interfere in the upcoming US presidential election are getting more sophisticated and harder to detect.
The companies said that they have removed dozens of fake accounts and pages from their services.
Facebook reported that the network of accounts it removed posted about topics such as black history, celebrity gossip and fashion, and were operated by people in Ghana and Nigeria on behalf of individuals in Russia.
Twitter, meanwhile, said the accounts it removed tried to sow discord by emphasising social issues such as race and civil rights without favoring any particular candidate or ideology. [AP News]
Charity Begins at Home
Elon Musk’s SpaceX is seeking to qualify for federal subsidies worth $16bn to provide broadband service to rural areas.
The move comes despite objections from competitors who say its satellite-based technology is unproven.
As per records, SpaceX has convinced the Federal Communications Commission (FCC) to propose a policy change that would improve its chances of winning federal funds to expand internet service in far-flung parts of the US. The FCC, which has earmarked $16bn to improve internet service in rural areas over the next 10 years is yet to decide whether the company will be awarded funding. [The Motley Fool]
India’s current account deficit (CAD) narrowed sharply to $1.4bn or 0.2% of gross domestic product (GDP) in the December quarter on the back of lower trade deficit and a rise in net services receipts. [Livemint]
After the Supreme Court last year ordered telecom operators to pay the dues related to Adjusted Gross Revenue (AGR), and following the submission and rejection of multiple pleas, telecom giants Bharti Airtel, Vodafone Idea and Tata Teleservices have deposited money based on their respective calculations.
However, the amount paid by the three operators is much lower than the initial estimate made by the Department of Telecom (DoT).
While Airtel has paid only 34.5% of the DoT’s provisional dues, Vodafone Idea and Tata Teleservices have given 40.6% and 16% respectively.
So why is there a divergence in the estimates made by the DoT and the self-assessment done by the operators?
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