We are now into Day 11 of the nationwide lockdown. While the lockdown overall in India has been quite diligently followed and many cities and towns are almost totally shutdown. The main countries to monitor have been Italy and Spain to see when the curve flattens and starts to turn down.

  1. In India the average daily cases have moved up to 400 plus over the last three days mainly driven by a religions congregation in New Delhi. Out of the 500 odd cases yesterday more than 300 were attributed to this event. The expectation is that the next three days will see more cases come out from this segment
  2. The figures from Italy and Spain have remained high but seem to be peaking off. The good part, atleast in Spain has been that the difference between new cases and those getting cured has been coming down which is positive. Most people are focussed on the gross figure of infections. Its actually important to monitor the net figure too i.e. adjusted for recoveries
  3. In the Indian Context the stock markets continued to fall in the absence of any relief measure for individuals and businesses by the government. US job losses have already reached the 1 Crore i.e. 10 million level. In India we don’t have authentic data and without a wage and interest cost support package we will see huge job losses over the next few weeks become a reality
  4. It is time for the government to get real on the economic issues. I have suggested 3 simple steps without getting into many complications. These will avoid bankruptcies, ensure business continuity and help businesses come back fast after the crisis.
  5. Wage Support- Given that the government has ordered all businesses, factories, shops etc to shut down there is a need of wage support to avoid job losses and also help businesses tide over the crisis. The government should pay 75% of the wages of all registered businesses in the country. Those dealing only in cash will lose out but the vast majority will benefit.
  6. Debt/Interest cost support- The total outstanding credit of the Indian Banking sector is around Rs 100 Lakh Crores. Assuming a 9% interest cost the total income from interest income for the banking sector would be Rs 75000 Cr per month. The Government should pay 60% of the entire interest cost for EVERY BORROWER for two months.
  7. Rent Support- Many businesses and shops run on rented premises and as such two months of no business would be a huge fixed cost. The government should pay 75% of the rental of all such businesses for two months
  8. My suggestions are simple and easy to implement. However I am sure that the Finance Ministry Bureaucrats will actually come out with some complicated system which will be tough to implement and benefits will not be seen immediately. All the above measures will help businesses survive, prevent job losses and also importantly prevent NPA build up in the banking sector which could become a big drag over the medium term.
  9. As a poor country with no effective social security we cannot shut down the country in a manner what countries with large Sovereign Wealth Funds can. It will be interesting to see the governments game plan to open up sectors of the economy. Many companies are indicating that once contract workers go back they won’t be back for atleast two months, thus compromising the recovery post lockdown
  10. Although the No of cases of Covid19 have moved up in India we do not have an explosive upmove due to the huge lockdown and I see all people wearing some sort of a mask when they go out this should be effective to prevent widespread infestation. The next few days are obviously crucial
  11. Global Volatility continues to decline with the CBOE VIX down to 47 levels yesterday despite a fall in the US Markets yesterday and over the last few days. This actually is an indicator that the market participants are coming to grip with the worst of the crisis. It is an indicator of declining uncertainty ( atleast perceived decline). This should reduce market volatility going forward.
  12. Positive data points have come out of an antiviral drug trial in Japan by Fujifilm. This could be the breakthough people were waiting for but still would take a few weeks. https://www.dailymail.co.uk/health/article-8173879/Fujifilm-begins-final-stage-human-trials-antiviral-flu-drug-coronavirus.html
  13. Global crude oil prices shot up from the bottoms by nearly 50% over the last two days driven by news of truce between Oil Producers Saudi Arabia and Russia. Very low prices are not good for anyone and as such if prices stabilize around the $ 40 levels it will be good for both producers and consumers

Overall I believe that we still have uncertainties especially if the Government does not act on the Fiscal Stimulus front. A good package should help make the Nifty bottom of around 7500 hold and the markets will consolidate and then move up. However a no package scenario could drag us down to more near 7000-7200 levels. However that should be the worse case. We are now into a three day weekend by the end of it we will have more clarity on global and local developments.


  1. I think it is time that government rewards honest small businesses who have been paying taxes genuinely.
    If govt atleast pays rent of such small shops and businesses who have been paying taxes regularly, it will set a good precedence and people will understand what good can happen if they pay their taxes honestly.

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