Why all eyes will be on the expiry of Brent oil futures this week

Analysts and investors have been wondering if the same will happen to Europe's Brent oil futures.

The expiry of the June contract for Brent oil futures in Europe on Thursday will possibly be the most watched event in oil markets for some time after the US benchmark plummeted below zero for the first time in history last week.

The coronavirus pandemic has killed oil demand as over four billion people are in lockdown and last week, ahead of its contract expiry, US West Texas Intermediate (WTI) futures crashed deep into negative territory making it a liability for anyone holding it.

Analysts and investors have been wondering if the same will happen to Europe's Brent oil futures, but most agree that while there are no technical obstacles for the contract going the same way, it is hard to see why it would.

ALSO READ: US oil fund had $726 million in unrealised losses before April: Report

Brent is considered to be the international marker by the oil industry as it is linked to seaborne crude so has fewer storage limitations than WTI, which is settled against a major landlocked storage site in Oklahoma.

Brent is run by the Intercontinental Exchange (ICE) in Europe and other crudes are unofficially pegged to it, so there is more vested interest in keeping it stable.

Nevertheless, last week, ICE said it was ready to switch mathematical models, from Black-76 to Bachelier, to settle contracts at negative prices if needed.

How will the Covid-19 pandemic impact Nifty companies' earnings in Q4FY20?

Margins in some sectors could improve due to soft raw material prices.

In Q4FY19 Nifty sales/EBITDA/PAT grew nearly 10 per cent/6 per cent/16 per cent year-on-year (YoY), respectively. Hence, the base as far as earnings before interest, taxes, depreciation, and amortisation (EBITDA) and profit after tax (PAT) is concerned, is high in Q4FY20. However in Q4FY19, profitability was driven largely by banks. Excluding banks, the PAT growth was slow at <2 per cent. The topline growth for Nifty companies in Q4FY19 was the slowest since Q3FY17.

COVID 19 would impact the performance of Nifty companies and overall corporate sector in Q4FY20 and Q1FY21. In Q4FY20, we could see a decline in both the topline and bottomline in Nifty companies on a YoY basis. Analysts will rework their FY21 estimates lower after Q4FY20 results and management commentary.

Will margins benefit from lower input costs?

Margins in some sectors could improve due to soft raw material prices. However, this advantage could be partly nullified by lower operating leverage, especially due to lockdown in the last 10-11 days of March.

Which sectors may be relatively better, which will be worst affected?

Telecom would report better performance due to tariff hike wef December and higher data usage in March, both of which could pull up the average revenue per users (ARPUs) of telecom companies. FMCG (essential categories) could do well, aided by lower input costs. Pharma companies could report better numbers but their Q1FY21 performance could get impacted due to lack of patient visits to doctors and delayed surgeries and also disruption in manufacturing. City Gas distribution companies could do well, especially those who are less dependent on CNG volumes.

India coronavirus dispatch: Why we must prepare for the long haul

From a proposal for future lockdowns, to mapping of coronavirus hotspots, and how the civil society can aid government response to Covid-19 - read these and more in today's India dispatch.

Here is a roundup of articles from news publications in India on how the country is dealing with the Covid-19 pandemic — from a proposal for future lockdowns, to mapping of coronavirus hotspots, and how the civil society could aid government response to Covid-19.

Expert Speak

How Covid-19 will hit India: Why is India at such a grave risk from the coronavirus? What are the different ways in which the rural and urban India are likely to be affected? And what has the disease laid bare about the long-term consequences of insufficient health systems? Read this interview with epidemiologist and economist Ramanan Laxminarayan, who directs the Center for Disease Dynamics, Economics, and Policy in Washington, DC.

Citizens Under Lockdown

Lockdown causing further shortage at blood banks: The situation at blood banks has worsened during the lockdown, with hospitals making do with fewer employees, and fewer donors coming forward due to restrictions on people’s movement and the fear of contracting Covid-19 at a hospital or clinic. Read more on how hospitals and patients are managing this crisis.

Exodus shows essential role migrants play in functioning of Indian cities: Most migrant workers live in cramped rented rooms or must sleep on the footpath, lack documents to access benefits such as rations in the city, do not have family members in the city, and have little savings to draw upon. Read this interview with Tariq Thachil, associate professor at Vanderbilt University, on India’s migrant labourer during a lockdown.

Long Reads

Covid-19 – Are we ready for the long haul? Policymakers must be prepared to provide relief to adversely affected individuals. Read this proposal, which details a comprehensive approach for a combination of in-kind transfers and cash support to be provided to all households with ration cards, during any lockdown that takes place over the next 24 months.

South Africa terminates all forms of cricket over coronavirus pandemic

CSA said in its statement that this includes domestic first class cricket, List A matches, semi-professional and provincial cricket and all junior and amateur 

cricket.

Cricket South Africa (CSA) declared on Monday that it has ended all types of cricket in the nation in the midst of the rising worry over the coronavirus pandemic. 

CSA said in its explanation this incorporates residential top of the line cricket, List A matches, semi-expert and commonplace cricket and all lesser and novice cricket.

"We at CSA take this profession by the President and the bureau truly and we will unquestionably utilize our influence to guarantee that we limit the effect of the infection in our spaces," CSA CEO Jacques Faul said in the announcement.

"Thusly and during this season of outright alert and reconnaissance, we might want to call upon every one of our individuals and partners to halt from partaking in any cricket related social occasions and other transversal occasions that will incorporate the gathering of huge quantities of individuals as well as up to 100 individuals," he included.

Prior, South Africa's voyage through India for a three-coordinate ODI arrangement was delayed. The group is as of now in Kolkata from where they will take a trip back home to South Africa by means of Dubai.