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Markets hint to recovery in the coming week

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Sensex Nifty Equity

A week can be a very long time and last week was a classic example. It began with the markets falling very sharply and the BSESENSEX losing just about 4,000 points on Monday. Tuesday saw the markets trading in a comparatively narrow range of just about 800 points on BSESENSEX. Tuesday night was also the time when Prime Minister Narendra Modi announced a 21-day lockdown beginning 12 midnight of Tuesday the 24/25th March. Wednesday saw markets gain 2,000 points. Thursday saw the FM announcing measures to ensure that the poorest of poor had food and money to tide over the present crisis.

Markets gained 1,400 points on the BSESENSEX. Friday saw RBI announcing rate cuts and measures to benefit the banking system and customers. Markets after gaining initially closed with minor losses of 130 points on BSESENSEX.

The week closed with losses of 100.37 points on BSESENSEX or 0.34 per cent at 29.815.59 points. NIFTY closed with losses of 85.20 points or 0.97 per cent at 8,660.25 points. The broader indices saw BSE100, BSE200 and BSE500 lose 1.52 per cent, 1.92 per cent and 2.23 per cent respectively. BSEMIDCAP was down 5.42 per cent while BSESMALLCAP was down 6.09 per cent.

It would be interesting to observe that BSESENSEX made an intraday low of 25,880.83 points on Monday and 25,638.90 points on Tuesday before staging a sharp recovery for the week. Similarly, NIFTY made lows of 7,583.30 points on Monday and 7,511.10 points on Tuesday.

The intraweek highs made on Friday was 31,126.03 before the profit taking and correction post RBI policy. Similarly, NIFTY made a high of 9,038.90 points. In normal circumstances I would have stuck my neck out and said that this was a bottom that we have witnessed but after the setback 2 weeks ago would now say that the signs indicate that probably a bottom has now been established.

The Indian Rupee after a wild week, managed to recover 29 paisa or 0.39 per cent to close at Rs 74.89 to the US dollar. Dow Jones had a torrid week and managed to gain 2,462.80 points or 12.84 per cent at 21,636.78 points. During this period on has witnessed Dow ending the day with gains of 800-1000 points and futures opening with losses of over 600 points.

Such has been the volatility that it has changed the trading atmosphere and brought in unheard of uncertainty. March futures expired on expected lines and the series lost 2,991.85 points or 25.72 per cent to close at 8,641.45 points. While there was recovery during the week it just recovered the intraweek losses.

In recognition of the services of the healthcare sector, the government has announced a health insurance of Rs 50 lacs per person involved in the treatment of Covid-19 whether it be doctors, nurses or support staff. This would boost the morale of those people who are giving their best for the treatment of the pandemic.

RBI advanced its monetary policy review meeting to be held from March 31 – April 3 and instead held it from March 25- 27. On Friday it announced a cut in Repo rate by 75 basis points from 5.15 per cent to 4.40 per cent. CRR or cash reserve ratio was cut by 100 basis points 3 per cent.

Reverse repo rate was cut by 90 basis points to 4 per cent. In a very significant move, it announced that lending institutions can allow 3 months moratorium on EMI’s. Deferment on loans and interest repayments will not be classified as defaulters and will not impact credit history of borrowers.

The FM is expected to announce further measures which would affect positively the SME and MSME segments in the coming week. One announcement which is being looked for is the change in the financial year which would end on 31st March. With complete disruption having already happened it would be in the fitment of things that the same be shifted to end on 30th April at the bare minimum or ideally 30th June. This would ensure better compliance and convenience for all stake holders.

Covid-19 has gripped the entire world and at last count had already claimed 30,900 deaths and over 6.65 lac affected patients. We need to understand that the advanced countries in the US and Europe are having far better resources and infrastructure to tackle Covid-19 than we have in India. The complete lockdown is in our national interest and it would help in containing the spread of the virus significantly. Paying heed to the request of the Prime Minister and following the shut down would help you and therefore the nation.

Coming to the markets, we have seen complete mayhem so far in the last five weeks. The time to do some repair, some rebuilding and some shopping has probably come. Look at some damage control to the portfolio by topping up blue chips. The path to recovery will be slow, tedious and bumpy. With a reasonable amount of comfort, it could be said that barring a major setback on the Covid-19 front, things should limp back toward partial normalcy.

(Arun Kejriwal is the founder of Kejriwal Research and Investment Services. The views expressed are personal)

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Covid-19 corollaries on the dairy sector: CRISIL

Overall, demand for milk and dairy products would be lukewarm in the near term, so prices are unlikely to boil over, according to the report.

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New Delhi, May 26 : Supply chain disruptions in the early weeks of the nationwide lockdown, and bread-and-butter issues for hotels, restaurants and cafes, have materially reduced demand for dairy products.

This is despite supply of most dairy products continuing during the lockdown, since they are categorised as essentials.

The shuttering of hotels and dine-ins has also dried up off-take of skimmed milk powder and khoya.

According to report by CRISIL Research on the state of dairy industry and supply chains, products that can’t be made at home easily – such as cheese, flavoured milk and also khoya – haven’t found their way back to the dining table in the same quantities as before the lockdown.

Demand for ice creams, which usually peaks in summer (accounting for 40 per cent of annual sales) has just melted away. Rural areas, which are feeling the income pinch more, seem to be staying off butter and ghee, the report by global analytics firm has said.

To be sure, since the third week of April, supply chains have turned smoother, so demand for staples such as milk, curd, paneer and yogurt are expected to see a quick rebound, leading to on-year expansion in sales, CRISIL said.

The pandemic, however, may sour the business for unorganised dairies because of pervasive contamination fears.

Conversely, as consumers shift, revenues of organised dairies and packaged products should fatten.

Overall, demand for milk and dairy products would be lukewarm in the near term, so prices are unlikely to boil over, according to the report.

Large brands such as Amul and Mother Dairy had already hiked retail milk prices by 4-5 per cent last fiscal. They may not serve an encore.

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445 people died from Australia bushfires smoke: Experts

Melbourne, Sydney and Canberra all had periods where they had the worst air quality in the world as a result of the smoke.

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Arogya Setu App

Canberra, May 26 : Smoke from Australia’s devastating 2019-20 bushfires killed at least 445 people, health experts revealed on Tuesday.

Fay Johnston, a public health expert from the Menzies Institute for Medical Research at the University of Tasmania, told the bushfire royal commission on Tuesday that her team estimated that 445 people died as a result of the smoke that blanketed much of the nation’s east coast, reports Xinhua news agency.

It takes the total death toll from the 2019-2020 bushfire season, which has been dubbed the “Black Summer”, to nearly 480 after 34 people lost their lives directly.

According to modelling produced by Johnston and her colleagues, 80 per cent of Australians were affected by the smoke at some point, including 3,340 people who were hospitalized with heart and lung problems.

“We were able to work out a yearly cost of bushfire smoke for each summer season and… our estimates for the last season were A$2 billion in health costs,” Johnston said.

“There’s fluctuation year to year, of course, but that was a major departure from anything we had seen in the previous 20 years.”

Melbourne, Sydney and Canberra all had periods where they had the worst air quality in the world as a result of the smoke.

Commissioners also heard on Tuesday that the increasing frequency of significant bushfire events in Australia meant that survivors no longer feel safe during the recovery phase.

“Disasters are no longer perceived as rare events, they are often seen as climate change, and they’re part of our new reality,” Lisa Gibbs, a child welfare expert from the University of Melbourne, said.

“We don’t know how that is going to affect recovery because the seeds of hope are a really important part of people’s ability to deal with what has happened and to get back on track.”

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Rising urbanization likely cause of heavy rainfall in South: Research

Their findings were reported in the ‘Quarterly Journal of Royal Meteorological Society’ on May 18, 2020.

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IMD heavy rains predict

Hyderabad, May 26 : A team of researchers at the University of Hyderabad (UoH) have discovered a link between heavy rainfall in several parts of south India and a growing urbanisation in the region.

A team led by Prof. Karumuri Ashok from the Centre for Earth, Ocean and Atmospheric Sciences of the University of Hyderabad, examined whether a common factor, the changing ‘land use land cover’ (LULC) in these states, has any implications for the heavy rainfall events.

Over the past few years, many heavy rainfall events have been reported in cities of south India. Prominent among them are the extreme rainfall that created havoc in Chennai and nearby areas of Tamil Nadu in December 2015, the heavy rainfall over Hyderabad and adjoining regions in Telangana in September 2016, and the extreme rainfall event in Kerala in August 2018.

Notably, these three states differ in their geographical locations, and also the season in which they receive rainfall. Kerala, located on the southwest Indian coast off the Arabian Sea receives heavy rainfall during the summer monsoon from June-September.

Tamil Nadu, off the Bay of Bengal, receives rainfall mainly during the northeast monsoon (October-December). The land-locked state Telangana receives the bulk of its annual rainfall during the summer monsoon season.

A UoH statement stated that their study showed the precipitation during heavy rainfall events in these states has significantly increased from 2000 to 2017. Using the LULC data from ISRO, and by conducting 2 km resolution simulation experiments of twelve heavy rainfall events over the states, the researchers found distinct LULC changes in these three states, which led to higher surface temperatures and a deeper and moist boundary layer. These in turn caused a relatively higher convective available potential energy and, consequently, heavier rainfall.

The study also suggests that increasing urbanization in Telangana and Tamil Nadu is likely to enhance the rainfall during the heavy rainfall events by 20%-25%. Prof. Ashok feels that improving the density of observational rainfall and other weather parameters may help in forecasting extreme rainfalls at city level.

Their findings were reported in the ‘Quarterly Journal of Royal Meteorological Society’ on May 18, 2020.

Prof. K. Ashok and his Ph.D. student Mr. A. Boyaj who is the first author, are both from the Centre for Earth, Ocean and Atmospheric Sciences of the University of Hyderabad. The work was done in collaboration with Prof. Ibrahim Hoteit and Dr Hari Prasad Dasari of King Abdullah University of Science and Technology (KAUST), Saudi Arabia.

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