CCI NG 3.7 Product: ETMumbaiBS PubDate: 19-05-2020 Zone: MumbaiCity Edition: 1 Page: ETMCPG7 User: sandesh.pingale Time: 05-18-2020 23:42 Color: CMYK

SMART INVESTING Countering Covid: SBI Suggests Omnibus Pact for Fast Loan Rejig MarketsWWW.ETMARKETS.COM ET Beating Volatility MUMBAI, TUESDAY, 19 MAY 2020 STIMULUS PACKAGE, EASING OF LOCKDOWN likely to bring demand, especially from rural and semi-urban areas ON BOND STREET F&O PLAY HFCs Raise Nifty Likely `` 5,475 crore to Face Selling NBFCs See Opportunities Opening Up, on Improving Pressure, FIIs Sentiment Add Shorts Prepare to Give Fresh Loans in June Our Bureau Nifty 50 help grassroots borrowers tide over sanctioning new loans from June as Mumbai: Housing finance com- 9500 Saikat Das & Atmadip Ray BRIGHTENING UP the immediate crisis. Edelweiss, one-fourth of its customers are back panies (HFCs) dominated pri- 9293.50 “We will resume our new loan Mahindra Finance, in action. It will reopen 20% of its mary bond sales on Monday as 9300 Mumbai | Kolkata: Top non-ban- sanctions beginning June,” said IIFL Finance and branches in smaller towns by this the government’s stimulus king finance companies are set to re- Umesh Revankar, chief executive of- Shriram Transport month end. package helped lift the mood of 9100 sume sanctioning fresh loans in Ju- ficer at Shriram Transport Finance. Fin have started Credit and refinance facilities debt investors. ne with sentiment boosted by the go- “We see opportunities opening up in disbursing loans from Small Industries Development Tata Housing Finance, HDFC 8900 vernment stimulus and easing of rural and semi-urban areas that are (Sidbi) and National and ICICI Home Finance led the the lockdown, even as they tread not hard hit by Covid-19. Truck mo- NBFCs expect Bank for Agriculture and Rural De- primary market bond sale, rai- 8823.25 cautiously, aware that repayment vements are going to rise, aided by double-digit loan velopment (Nabard) have been ope- sing `` 5,475 crore collectively. 8700 May 4, 2020 May 18, 2020 capacities may have weakened with the government’s stimulus package growth in Sept rational, bridging the liquidity gap The spread or differential betwe- job losses and income declines. and easing of the lockdown.” quarter or that was creating a mismatch betwe- en top-rated corporate bonds and The , Mahindra The economy had come to a early Dec en demand and supply till April, cap- government papers — a barome- Finance, IIFL Finance and Shriram standstill following a nationwide quarter tains of the sector said. ter of calmness — narrowed to 80- [email protected] Transport Finance have started dis- lockdown that started on March 25. “We all have to build confidence 90 basis points immediately after bursing loans with their clients de- Shriram funds purchases of se- first and turn sentiment to positive,” the government had announced Mumbai: With Indian markets manding to draw down the limits cond-hand vehicles and expects ove- VINCENT VAN GOGH said Ramesh Iyer, managing direc- the relief package, compared getting into a “sell on rise” mode, sanctioned in March. Companies rall loan expansion at below 5%, alt- tor at M&M Financial. “Govern- with 90-100 bps a analysts are advising their cli- expect double-digit loan growth in hough the pace is expected to pick up ught Shriram’s business activities Edelweiss group. “Our clients are ment stimulus helped in that direc- few days earlier. ents to initiate a bear put spread the September quarter or early in with double-digit credit growth in to a halt. gradually coming back to work, tion. We are also reinvesting pro- Cos are also The gauge was on month-end Nifty options in the the December quarter. the September quarter. Closure of “We aim to attain 8-10% credit which results in resumption of loan duct designs and services.” increasingly little changed event of a bounce in the index. Microfinance firms have also star- regional transport offices during growth by the September quarter,” demand.” tapping the Monday. If the market bounces to or abo- ted disbursing emergency loans to first two phases of the lockdown bro- said Rashesh Shah, chairman at Edelweiss Finance plans to start Continued on  Smart Investing commercial HDFC bonds ve 9,000 from Monday’s close of paper with two-year 8,823, they advise buying a 9000 market, maturity fet- put and simultaneously selling SHARES SURGE UP TO 5% reflecting ched 7% as it rai- an 8,500 put to reduce the debit. BROKERAGES SAY VERY FEW INCENTIVES in package for urban issues, corporates demand for sed `` 5,000 crore. All options expire on May 28. to mitigate near-term problems; also cite lack of schemes to boost demand working “Non-banking The strategy is safer than buy- Defence Stocks Shine capital finance compani- ing a naked put as the client could es are slowly co- lose the entire premium if the After Hike in FDI Limit ming back to primary bond sales Nifty expired or traded above 9,000. While the strategy reduces Mumbai: Shares of select Indian de- with number of queries rising,” Why Even 20 Lakh Cr Was the debit, it also caps the profit. `` said Ajay Manglunia, managing fence sector-linked companies surged on Derivatives experts like Rajesh Monday after the government raised director at JM Financial. “Market Palviya of Axis Securities and foreign direct investment (FDI) limit to appetite is gradually going up for Chandan Taparia of Motilal Os- 74% from 49% under the automatic NBFC papers although we have wal suggest a bear put spread in Not Enough to Cheer Up D-St route. Shares of Hindustan Aeronautics ended up not yet spotted any significant the event of a bounce. 4.2% at `` 545.30 after touching a high of `` 576 during contraction in yield spread.” The negative sentiment was un- vestors after the recent 30% market ral- the day. Shares of Taneja Aerospace ended up 5% at Market awaits more clarifica- [email protected] derscored by foreign institutio- ly, the brokerage said. There are almost `` 20.30. Astra Microwave Products ended up 5% at tion on NBFC package, he said. nal investors (FIIs) raising their no measures (like tax cuts) to create a `` 66.95. Walchandnagar Industries gained 4.15% to Tata Housing mopped up `` 200 outstanding short index futures Mumbai: Brokerages are disappoin- meaningful rise in personal disposable close at `` 36.40. “The government raised the FDI limit crore, paying 9.1% to raise the positions Monday along with sel- ted that the economic package announ- income and provide a more immediate which is a positive news. It won’t happen immediate- three-year money. ling shares worth a provisional ced by the government in five tranches and much-needed boost to demand, sa- ly but it is a positive step,” said AK Prabhakar, head Housing Finance ra- `` 2,513 crore. They were cumulati- in order to mitigate the fallout of the id CLSA. of research at IDBI Cap. is Prab- ised `` 1,030 crore, offering 9.1% vely net short index futures — coronavirus pandemic lacks sector- hakar’s preferred pick in the defence space from a with three-year maturity. The HSBC Nifty and Bank Nifty — by 45,470 specific measures and no measures to three-year perspective. – Our Bureau bond sale came up for bidding boost consumption or promote infrast- HSBC said the overall package focused last Friday. contracts on Monday. ructure. Brokerages said there is little more on medium-term supply-side me- of urban-focused incentives or for cor- asures, and funding via future public- porates. Industries such as hotels and sector liabilities. As such, the central aviation still have to bear the operatio- government’s fiscal cost is likely to be nal costs amid the lack of government sumption, promote manufacturing contained at 1% of GDP, said HSBC. intervention, said brokerages. ET ta- and even the broader reforms lacked The brokerage has estimated general kes a look at what brokerages did not the spark; while urban and corporates government fiscal deficit at 10% of liking about the package: were ignored, said Bernstein. GDP and expects growth to contract 3% in 2020 over the previous year. BERNSTEIN CLSA In a report titled “Dear Finance Mini- A large part of this package is made up NOMURA ster - Is the aim to revive GDP, or to re- of monetary measures by the RBI, gua- Nomura said the government has ai- ach the 20,000,000,000,000 number?”, rantees by the government and fun- med for maximum bang for minimum Bernstein said the package started on ding by other means with the actual im- buck, with most of the relief being eit- important aspects but the need to an- pact on the FY21fiscal deficit limited to her regulatory in nature or reflecting nounce measures that add up to this only 0.8% of GDP, said CLSA. While in its contingent liabilities rather than top-down number made the entire these measures show long-term promi- explicit budgetary support. package aimless. The package lacked se, a lack of schemes to boost demand substantive decisions to support con- may be seen as a disappointment by in- Continued on  Smart Investing

BIGGEST PULL FROM FERTILISER PLANTS Market Trends Natural Gas Demand STOCK INDICES % CHANGE Nifty 50 8823.25 3.43 Sensex 30028.98 3.44 Starts to Rebound MSCI India 647.84 3.33 GAIL executive, who did not wish to be [email protected] identified. The biggest jump in demand MSCI EM 2096.68 0.22 has come from fertiliser plants, which had MSCI BRIC 570.74 0.07 New Delhi: Natural gas demand has risen slowed at the beginning of the lockdown MSCI World 8639.61 0.69 by a third from its recent lows as factory ac- but are now operating at full capacity or tivity expanded and more gas-driven vehi- more to quickly deliver supplies to far- Nikkei 20133.73 0.48 cles came on the roads following the easing mers for the current sowing season. Hang Seng 23934.77 0.58 of lockdown curbs, according to an executi- GAIL has also restarted a petrochemical ve at GAIL, the country’s largest marketer unit that was shut during the lockdown, Strait Times 2539.28 0.62 and transporter of gas. contributing to increased gas demand. Values in US $, Gross At 7 pm IST Natural gas sales by GAIL have risen to The city gas distribution business, which 74 million metric standard cubic metres a mainly caters to smaller factories, homes, OIL ($) day (mmscmd) from 56 mmscmd in the shops and compressed natural gas (CNG) DUBAI CRUDE last week of March, when the nationwide 33.86 lockdown imposed severe restrictions on 1.38 mobility and shut down most industries. Absolute Change Sales are, however, still much lower than the 86 mmscmd GAIL supplied before the ....74mmscmd GOLD RATE lockdown began on March 25. NATURAL GAS SALES BY GAIL, UP FROM Prices per Troy Ounce ($) Besides its own gas, GAIL transmits abo- 56 MMSCMD IN LAST WEEK OF MARCH US India ut 24 mmscmd of gas marketed by other OPEN 1757.5 1952.50 companies through its pipeline network. vehicles, has been the worst hit and the big- This volume had dropped to about 8 gest contributor to gas demand slump du- LAST* 1770.1 1961.15 mmscmd at the beginning of lockdown but ring the lockdown. “It has also started pick- *At 10.30pm, After adjusting for import duty, Indian has now risen to about 12 mmscmd, signal- ing up. With more private vehicles coming spot gold lower by $ 14.04 to US Comex gold price ling refiners and other gas players are also on the roads, the demand for CNG will go on Monday. The premium on local gold is due to witnessing a consumption recovery. up,” the executive said. tight supply following import curbs. Increasing demand also signals increased Further strengthening of gas demand wo- FOREX RATE (`-$ Exchange Rate) production by ONGC, which had to shut so- uld depend largely on how fast factories re- me wells as demand weakened during the turn to normal production levels. Factory OPEN LAST* lockdown, as well as more import. activity will be challenged by the paucity 75.86 75.91 “With further easing of the lockdown, of labour and demand in the economy, the the demand would continue to rise,” said a executive said. Market on Twitter@ETMarkets Many borrowers who had opted for moratorium are now paying portion of dues Lenders Report Pick-up in Repayments which make more than 80% of our loan bo- 19% customers have started repaying and [email protected] ok, are increasingly looking to repay as eco- that proportion will continue to rise by the nomic activity is picking up. At this rate we end of the month,” said Hardayal Prasad, Mumbai: Lenders are seeing a slow but could be surprised to see repayments by the CEO at SBI Card. sure recovery in loan repayments as end of May,” said Sanjay Agarwal, CEO, AU “Our spend had fallen by about 60% from customers are increasingly choosing Small Finance Bank. peak in April, but in May we have recovered not to exercise the Reserve Bank of In- These small entrepreneurs include ow- by about 35%, which means spends are aro- dia-provided option of moratorium on ners of light commercial ve- und 70% and going up. We had offered the payments to avoid paying higher com- hicles and kirana shops who moratorium to all credit card customers pounded interests. have been hit by the lockdown but once they took the moratorium they co- Small entrepreneurs who had earlier but are now coming back to uld not spend more. Many customers have opted for a moratorium on repayments business due to the gradual decided that it is better to resume repay- are now paying a portion of their dues as opening. ments and use their cards rather than take the cash flow begins to improve with busi- While these payments are small and re- the moratorium,” said Vishwavir Ahuja, nesses opening up slowly, said bankers. flect only a small segment of the borro- CEO at RBL Bank. At the start of May, aro- Even salaried credit card borrowers are wers, bankers said the trend is now clearly und 13% of RBL Bank’s customers had cho- opting to pay instalments as they seek to visible, especially with small borrowers as sen to take the moratorium on credit cards. use their cards more often, which is not even credit card customers are getting se- That number is now down to 11% as custo- possible if they opt for a moratorium. cond thoughts on using the moratorium. mers are opting to repay, Ahuja said. “Our repayments have improved to 40% “We are seeing repayments gradually rise SBI Card, too, has seen spending on its cre- so far in May from 20% in April. Small compared to April. In April the repayment dit cards increase to 60% of normal from entrepreneurs with loans up to `` 25 lakh, was just 25% and now so far in May another 35% in April.