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Retail Inflation Rate in India March 2020 Eases to a Four-Month Low of 5.9% YoY

Professor of Financial Economics and Part-time Value Investor, Transfin.
Apr 15, 2020 2:25 AM 6 min read
Editorial

PM announces extension to lockdown till May 3rd. UK likely to extend lockdown as deaths rise over 11,000. Retail inflation in India eases to a four-month low in March. Barclays cuts GDP forecast for India to zero for 2020. Zomato looking to acquire Grofers. 

 

 

LOCKDOWNS

PM announces extension to lockdown till May 3rd. UK likely to extend lockdown as deaths rise over 11,000.  

The First Wealth is Health?

Prime Minister Narendra Modi today announced an extension to the 21-day nationwide lockdown till May 3rd in an attempt to flatten the curve and break the chain of spread of the coronavirus outbreak in the country as the number of active cases crossed 8998.

 

In his address, the PM said that extra scrutiny/monitoring will take place till April 20th in every district to disallow new hotspots. Following this, areas that show remarkable improvement in terms of not allowing new hotspots to be created will see some relaxation in lockdown rules after April 20th. 

 

A detailed list of guidelines will be released tomorrow. [BS]

 

Walk the Tightrope

The UK is likely to extend its lockdown measures into early or perhaps even late May as number of deaths cross more than 11,000.

 

As per a report by The Times, Britain will remain in lockdown for another three weeks. Foreign Secretary Dominic Raab, who is deputising for Prime Minister Boris Johnson as he recovers from his own bout of COVID-19 will announce on Thursday that the lockdown will stay in place until at least May 7th.

 

Meanwhile, It’s been reported that Finance Minister Rishi Sunak and Home Secretary Priti Patel are pushing for restrictions to be lifted sooner rather than later, given the respective pressures their departments face.

 

Rishi Sunak has said that the GDP could shrink by up to 30% this quarter because of the coronavirus lockdown.

 

The news comes just as other European coronavirus hotspots start to lift some restrictions on businesses. [CNBC]

 

INDIA

Retail inflation in India eases to a four-month low in March. 

India’s retail inflation dropped to a four-month low of 5.91% YoY in March 2020 vs 6.58% in the previous month on the back of lower food prices. 

 

Food inflation declined to 8.76% in March from 10.81% in February because of falling onion prices, showed data by the National Statistical Office (NSO). [Reuters]

 

Barclays cuts GDP forecast for India to zero for 2020. 

Fade to Zilch

Investment Bank Barclays has cut GDP forecast for India to zero for 2020 from its earlier projection of 2.5%, holding that the economic fallout will be worse than it had earlier estimated.

 

Barclays said that combined with the disruption in several service sectors, it now estimates the economic loss at close to $234.4bn or 8.1% of GDP. This is much higher than the $120bn estimated earlier. 

 

It sees major economic losses for large industrial states such as Maharashtra, Delhi, Tamil Nadu and Punjab. [Livemint]

 

Only those belonging to the “economically weaker sections” can be tested for free in private labs, says SC.

The SC has modified its April 8th order which asked private labs to conduct free COVID-19 tests and said the benefit will be available only to “economically weaker sections” who are covered under a government scheme such as the Ayushman Bharat.

 

The SC clarified that it never intended to make testing free for those who can afford to pay.

 

It had on April 8th directed that private labs, which were allowed to charge ₹4,500 for COVID-19 tests, would not charge for the tests observing that they need to be philanthropic in the hour of national crisis. [BS]

 

COMPANIES

 

Zomato looking to acquire Grofers. 

Two Together

India’s consumer internet sector is brimming with chatter – a major consolidation may be incoming. Zomato is reportedly in talks with Grofers to acquire the online grocery retailing startup in an all-stock deal.

 

Grofers, which has seen increased demand of late on the back of the nationwide lockdown, is expected to be valued at $750m. Zomato, which is currently valued at $3.2bn, recently struck a partnership with Grofers to sell groceries on its food delivery and restaurant discovery platform.

 

The deal, if it goes through, would be Zomato’s second big buyout (it acquired UberEats earlier this year). Moreover, SoftBank is apparently looking to invest c. $100-200m in the merged entity. [ET Tech]

 

SoftBank forecasts record loss.

Speaking of SoftBank

The Japanese conglomerate estimated a record $13m full-year loss, the result of a spluttering $100bn Vision Fund and attention to a planned asset sell-down. SoftBank shares fell as much as 4% on the news. [Reuters]

 

Maruti expects car boom post-lockdown.

The Sun Shines Brighter After a Storm

RC Bhargava, Chairman at Maruti Suzuki India Ltd., says there is possibility of a car boom after the nationwide lockdown is lifted. He argues that as social distancing becomes a common practice, buyers could “become apprehensive of sharing space with another passenger”, thus increasing demand for vehicles.

 

While it remains to be seen if this hypothesis will come true, if a pandemic ends up reversing the long-drawn auto slowdown, it will go down in business history books as a cruel irony. [Livemint]

 

MONEY

 

Many debt mutual fund schemes turn cash negative in March. 

Debt by Default

Due to the coronavirus, many debt mutual funds turned cash-negative in March. Driven by a lack of liquidity, these mutual funds borrowed heavily to meet redemptions. As a result, many schemes have reported net liabilities of 3-17% of scheme assets. [BS]

 

Steps to take to navigate the COVID-19 financial crisis.

Extra Crunch

Mutual fund investing can seem complicated - but it's actually quite simple (and lucrative). Here are 10 things you should know if you're interested in investing in mutual funds. [TRANSFIN.]

 

Keep Your Hands on the Cash

COVID-19 is a global health crisis – this is well-established. But it is also a money crisis. Besides threatening millions of jobs and professions, the pandemic has shut down economies and industries the world over. This has in turn trickled down to individual workers, who are facing difficulties everywhere from what they can buy at a local store (considering it’s open and well-stocked) to sweating over whether the next pay check will be delayed.

 

Keeping that in mind, here are nine practical steps to prepare for and navigate the financial crisis. [ET Wealth]

 

ALL THAT GLITTERS

Government to launch new series of the Sovereign Gold Bond (SGB) Scheme. Gold prices rise to a more than seven-year high.

The Government of India In consultation with the RBI will launch new series of the Sovereign Gold Bond (SGB) Scheme, which will open for subscription from April 20. The Sovereign Gold Bonds will be issued in six tranches from April 20th to September 4th. 

 

The Bonds, to be issued by the RBI on behalf of the Government of India, will be sold through Scheduled Commercial banks (except Small Finance Banks and Payment Banks), Stock Holding Corporation of India Limited (SHCIL), designated post offices, and recognised stock exchanges such as BSE and NSE.

 

Bonds will be tradable on stock exchanges within a fortnight of the issuance on a date as notified by the RBI. [Business Today]

 

Here's all you need to know about the Sovereign Gold Bond Scheme: A New Way to Invest in Gold. [TRANSFIN.]

 

Gold prices rose to a more than seven-year high on Tuesday on rising fears of a steeper economic downturn and amid massive liquidity measures by global central banks. 

 

Spot gold gained 0.6% to $1,724.72 per ounce by 0804 GMT, having touched its highest since Nov. 2012 at $1,726.85 earlier in the session. U.S. Gold futures rose 0.6% to $1,772.20. [Reuters]

FIN.

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