The Signal: The Week: Highlights

No Lockdown for fund raising:

Fund raising by Indian companies through sale of shares in the primary and secondary market proved to be positive in the first quarter of FY2020-2021. Indian companies have raised INR. 1.15 lakh crore in first three months of the year compared to 1.53 lakh crore in entire FY20 and 1.33 lakh crore in FY10.

FPIs have been one of the key drivers of this trend especially in the primary market. FPI purchases accounted for 43.5% of total equity inflows which clearly indicates Indian companies are still able to attract foreign capital amid the Covid-19 crisis.

World’s fifth-largest reserves buffer gives India some comfort:

India is currently at the fifth position in terms of foreign exchange reserves at more than $500 billion, making its bright spot in an otherwise dismal economy. The reserves were bolstered by a surplus current account deficit, strong return of inflows in the Indian stock markets and foreign direct investments. 

Strong forex reserves buffer is a cushion on market volatility, gives rating agencies and foreign investors and companies an added comfort that the government can meet its debt obligations despite deteriorating economic health.

PMI, GST mop-up point to a pickup in economic activity:

Manufacturing activity in India appeared to stabilize from historic lows and indirect tax collections perked up in June, indicating a mild recovery from the collapse in demand of due to Covid-19 crisis.

The latest round of data points indicate bottoming out and that India is on a path to recovery. 

World Bank approves $750 million fund to support Covid-hit MSMEs:

World Bank on Wednesday announced MSME Emergency Response Programme to support increased floe of liquidity in MSMEs severely impacted by the Covid-19.

This is the 2nd week where continuous relief have been announced to MSME sector. This program will address the liquidity needs of some of 1.5 million MSMEs to help them withstand the impact of current shock in protect millions of jobs.