The loan EMI holiday is ending on August 31. While RBI paid heed to the lenders' pleas to not extend it, it also took care to ease the hit from a potential spike in bad loans by allowing lenders to restructure some industry as well as individual accounts. It means account classification will remain standard for banks and no sudden provision requirements will arise, while the genuinely distressed also get a longer rope to come back. While RBI avoided a rate cut, it took care to ensure adequate liquidity and bring down borrowing costs, which will help enhance financial stability of the system.
MARKET CUES: Where do we stand >>>  | Nifty futures on the Singapore Exchange traded 3 points lower at 7 am (IST) this morning, signaling a weak start ahead for Dalal Street. |
| On Thursday, Nifty50 rose for the third session in a row and reclaimed the 10,200 level but formed a 'Doji' candle on the daily chart, suggesting indecisiveness among traders. Thursday's was the third straight session when the index formed a higher high-low formation. |
| Asian stocks were mixed this morning as investors weighed hopes for an agreement on a stimulus package from Washington against ongoing US-China tensions. Shares fell in China and Hong Kong, fluctuated in Tokyo ahead of a holiday and rose in South Korea. |
| Overnight, Dow rose 0.68% and S&P500 0.64%. The Nasdaq rose 1%, marking the fourth straight day of record peaks and closing highs as the tech-heavy index ended the session above 11,000 for the first time. |
| The rupee pared initial gains and settled on a flat note at 74.94 against the US dollar on Thursday after the RBI kept interest rates unchanged. |
| The dollar nursed losses against major currencies, and was close to its weakest in more than two years against the euro, while the British pound was close to its strongest level since March against it. The greenback teetered near a five-year low against the safe-harbour Swiss franc and was not far from a four-month low against the yen |
| Crude prices weakened but were poised for the biggest weekly gain since early July. WTI for September delivery lost 3 cents to $41.92 a barrel, while Brent for October settlement fell 5 cents to $45.04. |
| Gold prices rose further to Rs 55,350 per 10 gm, while silver climbed to Rs 73,500 pr kg. On MCX, August gold futures jumped 1.36 per cent to Rs 55,845 while silver September futures closed at Rs 76,052 on Thursday. In global markets, the yellow metal continued to rally, with spot prices rising 0.32% to strike a fresh record of $2,072 per ounce |
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Smallcaps, midcaps bounce back… The bloodbath in mid and smallcap stocks that began in January 2018 appears to be over. Since May 1, 295 of the NSE500 stocks have outperformed the benchmark, led by surging retail investor interest, fall in lending rates and some better-than-expected Q1 numbers. The Nifty Smallcap 100 and Midcap 100 indices have rallied 28% and 18%, respectively, since May 1. Nifty, on the other hand, has gained only 13%. Since March 24 this year, Nifty has climbed 47.17%, Nifty Midcap 109% and the smallcap index 55.95%.
Read More NBFC liquidity in best shape… Non-banking financial companies' access to funds is probably in its best shape since the implosion of IL&FS even as the borrowing cost has also come down, RBI said. This is a significant shift from the view in the RBI's financial stability report released in July, which had flagged continued liquidity concerns for NBFCs. Governor Shaktikanta Das said the NBFC sector, which was in stress post IL&FS and throughout early part of 2019, has now access to funding at reasonable cost.
Read More Loan recast for individuals, industry… For the first time since the 2008 financial crisis, the Reserve Bank of India on Thursday announced an across-the-board loan restructuring scheme that will extend to individuals in addition to airlines, hotels and steel and cement companies hit by the pandemic. The step is being viewed as the central bank's effort to shoulder the burden of seeing the economy through the worst peacetime crisis in the last 100 years. The RBI is also expected to unveil more relief measures for the most stressed segments, especially in the services sector.
Read More Startups to get priority lending… RBI has assigned priority sector lending status to India's startup sector. This is expected to help thousands of small startups get better access to bank credit for working capital support. Under PSL guidelines, banks have to set aside a specific portion of bank lending to sectors deemed important by the central bank. The PSL status was till now reserved for sectors such as micro, small and medium enterprises, agriculture, education and housing.
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Now UBS downgrades RIL… Brokerage UBS has downgraded Reliance Industries to neutral from buy as it believes that the company's key segments — oil-to-chemicals, retail and digital — could face macro headwinds. However, it has raised the target price to ₹2,300 from ₹1,700 after rolling over valuations to FY22. This is the fourth downgrade by a large brokerage in recent weeks after CLSA, HSBC, and Edelweiss.
Read More Voda Idea in the red for 8th quarter… Vodafone Idea widened net loss sequentially to Rs 25,460 crore for June quarter, its eighth successive three-month period in the red. It was hurt by a one-time charge related to statutory dues and continued loss of subscribers – over 11 million, pushing it to third place behind Reliance Jio Infocomm and Bharti Airtel. The telco warned of the continued threat to its viability, which is dependent on the period the Supreme Court allows it to pay thousands of crores in AGR-related dues and being able to renegotiate repayment terms with lenders.
Read More Loan EMI holiday ends on Aug 31… RBI ended the loan repayment moratorium and unveiled a loan-restructuring programme as a first step toward nudging industry and banks to return to normalcy, while keeping interest rates unchanged, balancing the need to shore up the Covid-hit economy with inflation vigilance. The MPC unanimously backed the status quo on rates amid elevated price pressures, but acknowledged the need for action to aid economic growth.
Read More Meanwhile... Employment recovery halted in July…The recovery in employment rate slowed down in July at 1.7 percentage points compared to June when it stood at 6.7 percentage points, suggesting a slowdown in economic activity after initial recovery, the Centre for Monitoring Indian Economy said in its weekly report. While the unemployment rate recovered in July to the pre-Covid levels, the labour participation rate was yet to recover to pre-Covid levels, CMIE said.
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