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Key Indian equity indices open lower on Wednesday

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Key Indian equity indices opened a tad lower and were trading flat on Wednesday, even as their Asian peers continued to see sharper declines, mainly on account of some weak economic data from China and the developments in the global commodity markets, notably the continuing decline in crude oil prices.

Against the previous close at 25,310.33 points, the sensitive index (Sensex) of the Bombay Stock Exchange (BSE) opened at 25,299.34 points. Within minutes into trading, the key index was ruling at 25,285.81 points, with a loss of 24.52 points, or 0.10 percent.

At the National Stock Exchange (NSE), the broader 50-share Nifty was ruling at 7,695.50 points with marginal loss of 6.20 points, or 0.08 percent, over the previous close at 7,701.70 points.

The fall in the global crude oil prices, especially since Friday, amid a global glut — and with the Organisation of the Petroleum Exporting Countries (OPEC) failing to relent to production cuts — the investor sentiments were dampened further.

At Friday’s meeting of the Organisation of the Petroleum Exporting Countries (OPEC), there was no agreement on production cuts. This apart, weak data on external trade from China also disappointed traders.

On Tuesday, both the key Indian indices dipped successively to finally end the day in the red.

The 30-share Sensex fell by down 219.78 points, or 0.86 percent from the previous day’s close at 25,530.11 points, while the Nifty closed lower by 63.70 points or 0.82 percent at 7,701.70 points.

Japan’s Nikkei, Australia’s S&P/ASX 200, Hong Kong’s Hang Seng, China’s Shanghai Composite and South Korean Kopsi were all down in early trades on Wednesday.

“Following most global markets, US markets opened weak and ended in the negative zone citing weak global commodity prices and poor exports data from China,” Angel Broking said in a pre-open analysis, speaking about the developments in the global markets the day before.

“The European markets closed in negative territory on Tuesday on weak oil prices and unimpressive data out of China where the exports declined for fifth straight month,” the brokerage said.

“Indian shares extended their losses on Tuesday, tracing weakness in global markets and poor exports data from China hinting towards weak global demand,” it added.

Wefornews Bureau

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Banks branches remain open, ATMs filled up: FM

The CMDs were also asked to provide authorisation to bank staff and coordinate with the district administration for smooth travel of bank staff.

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Nirmala Sitharaman

New Delhi, March 30 : Banks are ensuring that their branches remain open and ATMs (automated teller machines) functional with adequate cash amid the nationwide lockdown, according to the Union Finance Minister, here on Monday.

Taking to Twitter, Finance Minister Nirmala Sitharaman also said banking correspondents were active.

“All banks are ensuring that their branches are kept open, ATMs filled up & working. Banking correspondents are active. Social distancing is respected & sanitisers are provided where necessary. Just in case, any assistance/clarification is required contact [email protected],” she tweeted.

On Saturday, the Finance Minister spoke to the chiefs and representatives of public and private sector banks and asked them to ensure uninterrupted banking operations and flow of liquidity.

She asked them to make sure there was adequate liquidity at the branches, ATMs and banking correspondent level. The CMDs were also asked to provide authorisation to bank staff and coordinate with the district administration for smooth travel of bank staff.

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FY21 GDP growth revised downwards to 3.6%: India Ratings

A stop on the construction activities will accelerate the problems of the real estate sector which is still struggling to access funding in the middle of a meltdown in the NBFC and banking sectors.

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Auto sector slowdown

New Delhi, March 30 : India Ratings and Research has revised its FY21 gross domestic product (GDP) growth for India down to 3.6% from 5.5%.

The key reasons for this downgrade are the spread of COVID-19 and the resultant nation-wide lockdown imposed till 14 April 2020, crippling most economic and commercial activities.

The revision is based on the assumption of lockdown continuing till end-April 2020 (full or partial) and gradual restoration of economic activities May 2020 onwards.

In view of the lockdown, India Ratings and Research has even revised the FY20 GDP forecast downward to 4.7% (9MFY20: 5.1%) from The National Statistical Office’s advance estimate of 5.0%.

The rating agency expects the GDP growth to come in at 3.6% in 4QFY20 and 2.3% in 1QFY21. Average growth is forecast to decelerate to 2.8% in 1HFY21 (1HFY20: 5.3%) and recover to 4.3% in 2HFY21 (2HFY20: 4.2%), due to a) the base effect and b) a gradual recovery and restoration of supply chain, it said.

Some of the initial and visible impact of the spread of COVID-19 on the Indian economy has been the disruption in the production of select manufacturing sectors due to the breakdown of supply chain, near collapse of the tourism, hospitality and aviation sectors and a rise in the work load of the healthcare sector. Also micro, small and medium enterprises, irrespective of the sector they operate in, have begun to witness cash flow disruptions. This is not to say that other sectors were not impacted or are not likely to be impacted. However, some the services sectors such as financial services, IT and IT enabled services have greater flexibility in their operations and they quickly readjusted and/or are readjusting their operations by allowing employees to work from home.

Yet, the panic has gripped the Indian capital markets like elsewhere in the world. A changed outlook of investors has led to a huge outflow of capital and the rupee has come under intense pressure, India Ratings said. Also, significant wealth erosion would impact the consumption levels.

With the rabi crop maturing, disruption in harvesting and inability of agricultural markets to timely procure them could be a blow to the farmers’ income and rural demand.

A stop on the construction activities will accelerate the problems of the real estate sector which is still struggling to access funding in the middle of a meltdown in the NBFC and banking sectors.

After agriculture, construction is the largest employment generator in the Indian economy. Closure of non-essential commercial establishment and multiplexes will have a ripple effect on many sectors. Demand for consumer durables, entertainment, sports, wholesale trade, transport, tourism, hospitality etc. will decline, it said in its report.

Its is now expected, the agency said that several manufacturing activities will de-risk their operations by locating themselves outside China. Also, the disruption in supply chain especially in sectors such as automobiles, pharmaceuticals, electronics and chemical products could be an incentive for the Indian manufacturing sector to become part of the supply chain.

India Ratings and Research believes this will require significant government and policy support and will play out only in the medium- to long-term. One of the near-term advantages of the spread of COVID-19 for the Indian economy would be lower global commodity prices especially crude oil. However, to what extent this could benefit the Indian economy would depend on the pace of restoration of normalcy and the ability and nimbleness of the Indian businesses to take advantage of this opportunity. However, converting this advantage to an opportunity would not easy, because the Indian economy is reeling under low consumption and low investment growth, coupled with rupture in the financial system, the report said.

India Ratings and Research expects the government to announce more measures in the coming days/weeks to mitigate the pains and concerns of the other segments/sectors of the society/economy, since the role of the government is crucial in terms of containing the spread of COVID-19 and simultaneously mitigating the adverse impact of the lockdown on the economy.

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Global smartphone sales declines 14% in February: Report

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New Delhi, March 30 : Amid the COVID-19 pandemic, market demand is fragile but global smartphone sales in February declined only 14 per cent compared to last year, thus showing some resilience, a new report has said.

From the supply-side, global smartphone shipments (sell-in) fell a slightly more, down 18 per cent compared to last year but again a lower than expected drop, according to Counterpoint Research.

As coronavirus spreads like wildfire around the globe, its impact on the technology industry is unprecedented.

The global smartphone market is largely a replacement market, meaning that smartphones are a discretionary purchase.

“While people may delay purchasing due to the coronavirus pandemic, especially in the early part of the crisis when the disruption and uncertainty are both high, they will still replace their smartphone at some point. This means that sales will not be entirely lost – just delayed,” Peter Richardson, VP and Research Director, Counterpoint Research, said in a statement.

Sell-in shipments, which represents the supply of smartphones, were relatively weaker, but February is a traditional low period for production, especially if it coincides with the Chinese New Year as was the case this year.

However China, the initial epicenter of the epidemic, did show a huge 38 per cent decline. But it is showing signs of a rebound already.

Overall, global smartphone sales in February showed weakness in many markets as consumers became cautious.

But with the growth of online channels, we saw sales shifting from offline to online. Offline sales in China fell more than 50 per cent during February.

But this fall was partially offset with stronger online sales, so the overall drop at 38 per cent, was not so severe.

“While China and South Korea are gradually recovering, the worst is far from over for many other parts of the world,” said Jene Park, Senior Analyst at Counterpoint.

In terms of the competitive landscape, the demand for Samsung smartphones remained stable due to the minimum exposure to the Chinese supply chain and China market demand, thus, capturing 22 per cent global smartphone market share in terms of sales volumes.

Apple felt some impact from the supply-side during the month both in China in early February and outside of China in the latter half of the month, which affected its sales performance.

However, Huawei which has maximum exposure to China from both supply and demand perspectives, actually performed well above expectations, selling more than 12 million smartphones during February, seeing just a 1 per cent drop in global market share.

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