The Regulator -RBI is in pessimistic mood on Economic recovery.
While Gold rates are coming down along with Silver, U S Dollar currency is gaining a bit, unemployment in USA is getting dropped, Oil prices are steady,Indian Govt is ready for more stimulus to revive the economy, Indian economy is not all that is desirable, according to RBI Governor. He said that Covid ’19 has caused a severe shock to consumption which will take a longer time than expected to turn back. The solution lies in Government enhancing its expenditure to boost up the demand consumption. But the Fiscal deficit is already nearly 10 % of GDP which is a cause of great concern.
While earlier the 2nd quarter was expected to provide a fillip to the economy, RBI now feels that the contraction is so huge that even the 2nd Q will not yield the desired results. Despite the liquidity surplus and soft interest rate regime, the demand for loans both for consumption and project\Capital goods investment has not been forthcoming which is the crux of the challenge.
In fact GOI has announced Rs 21 Lakh Crores stimulus to make up for Covid’19 impact, most of these are on credit side and has failed to create real demand for goods and services. RBI adds that private consumption which is 57 % of GDP will be non-discretionary spending.Transport sector, Logistics, Transport services, hospitality, recreation, malls, Real estates,Theaters etc continue to suffer for reasons unknown despite the lock-down is being slowly relaxed in many States.
In the Corporate sector activity, Tata Motors’s AGM held last day was totally tumultuous with many of the shareholders voicing their anger and anxiety in the erosion of their investment due to falling share value and also upset over the inability of TaMo, not able to give dividends continuously for four years. They also commented badly on the high remuneration being taken by the top management when the Company is doing badly. The Company proposes to sell off its non-core assets and bring down its debts.
SEBI has imposed a huge fine on NSE for making extra payments paid to its past MDs without prior authorization from them. NSE has to pay Rs 50 Lakhs fine to SEBI.
Banking frauds jump sky-high-over 2.5 times to Rs 1.86 L Cr by value in FY 20 and the Government and RBI are worried and propose to take measures to contain it.
These are some of the market news which will weigh heavily on the Bourses in the days to come. And as such the Investors are advised to be cautious while taking over night positions. They need to hedge their positions otherwise to limit their down turn losses.
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