What a freaky Friday the 13th it has been today! But it ended well and that’s all that matters. Of course, there is the persistent feeling of unease as no one knows how long this positive rally will be sustained.
But what we learned today are two things – firstly, if the market is doing well, suddenly all fears vanish. The moment the Sensex turns green, its as though magically all negative emotions, all the panic and anxiety just vanished. So, if the market is good, irrespective of coronavirus or any other virus, life is good! Its only when you switch back to the non-business news channel that the cold hand of fear once again grips the heart.
The second learning was that when the market does get back to the sustained bounce back, there will be no stopping – it would be no exaggeration to say that we could see an upper circuit on the index! And all large cap stocks, the one’s which were beaten down to pulp between yesterday and today morning, bounced back with such vigor that it left us all gasping for breath.
Today, the markets put all the fears of the virus on the back burner and decided to look at the 3.30 pm Press Conference of the FM. Hopes were huge that major sops or stimuli would be announced. But it was tame and gave nothing which the market expected. Thankfully, the market had closed by then or else the green could have turned red once again.
The big breaking news was that ICICI Bank has stepped in and is investing Rs.1000 crore in Yes Bank. Thus SBI could do what Yes Bank itself could not do! The meet today was more about Yes Bank, with the Govt trying to soothe frayed nerves, sending the message across that it will step in when required.
On Yes Bank, the FM said:
- Reconstruction scheme for Yes Bank approved by RBI
- SBI to invest 49% equity
- 26% of SBI’s stake locked-in for 3 years and 75% of the investment made by other investors locked-in for 3 years.
- Once reconstruction scheme notified, moratorium to be lifted; new Board to be in place in 7 days with two members from SBI.
- Cabinet approves Remission of Duties or Taxes on Export Product (ROTDEP) scheme proposed in the Budget
- This scheme will phase out MIES
- Approved 780 km upgradation of National Highways with focus on environment by pushing solar equipments, recycling plastic
- Increased MSP for Copra by Rs 439 for milling quality and for ball category from Rs 9920 to Rs 10300
- For Central Govt employees, Dearness Allowance increased by 4% from 17% to 21%; effective 1st Jan 2020 – this means they will now get arrears for three months.
The market expected more news on the telecom sector – it was reported that in the Cabinet meeting, the Govt has likely approved a bailout plan for the stressed telecom industry, w.r.t their pending AGR dues. When asked about this at the Press Conference, the FM said that the DoT will answer that question. So as of now, we do not know about the bailout as reported.
Well, this is out of the way and now through the weekend, we all will once again tune in to national TV and once again fears will get stoked. The US market is likely to end today in positive as the Fed said that it will be pumping in liquidity over the next few months to mitigate the impact of the virus.
Hope the RBI Governor knows that he does not need to wait till April to announce a rat cut…