Teji Mandi: Three things investors should know on October 28th, 2020
Teji Mandi

Consumer confidence dips in the US as second Covid wave strikes the nation:

The United States of America is currently witnessing the second wave of Covid cases. In the US, the number of hospitalized COVID-19 patients is at a two-month high. It has again revived the fear of fresh curbs being reimposed.

Negative consequences of fresh covid cases are captured in the consumer sentiments which have dipped slightly in October. The Conference Board reported Tuesday that its consumer confidence index fell to a reading of 100.9 from 101.8 in September.

Consumer spending accounts for 70% of economic activity in the US. It is also a concern ahead of the all-important holiday season as negative consumer sentiments would have a direct impact on the GDP and thereby on the stock market.

Are the banks ready to revive credit growth?

Rajkiran Rai G, Chairman of Indian Bank's association has shared a positive outlook on the Indian banking system going ahead. He believes that all the black swan events are behind us and banks are now ready for growth.

On the asset quality and restructuring front, the current trend is indicating that things are not as bad as they were perceived to be. In his words,

the moratorium period is behind us, normal collections have started while banks have made hefty provisions which are providing great comfort.

Further, the government is going to bear the cost of interest on interest, which is a huge positive for the sector. Considering this, we can expect banks to shed their fears and start lending again. He expects the credit cycle to pick up from the fourth quarter onwards.

NSDL's flip-flop on Bharti Airtel:

It looked like an early Diwali for Bharti Airtel as National Securities Depository (NSDL) announced an increase in the company's foreign ownership limits to 100%. However, NSDL withdrew the notification within the hours and clarified that Bharti’s foreign investment limit, for the time being, will be monitored at 49% only.

NSDL's flip-flop caused heavy volatility in Bharti's stock. The decision on the foreign ownership limit was vital for Bharti Airtel as it would have opened the doors for MSCI to increase weightage in the company. MSCI is an acronym for Morgan Stanley Capital International.

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