Here’s a lowdown on top macro triggers that may move market on Wednesday. This report was compiled from agency feeds.
US Gets Tough on Iran, China
The United States will begin collecting 25% tariffs on another $16 billion in Chinese goods on Aug. 23, the U.S. Trade Representative’s office said on Tuesday as it published a final tariff list targeting 279 imported product lines. Meanwhile, President Donald Trump said on Tuesday, that companies doing business with Iran will be barred from the United States, as new U.S. sanctions took effect despite pleas from Washington’s allies. The impact of sanctions mainly stems from Washington’s ability to block European and Asian firms from trading there.
Oil Prices Going Up
Globally, oil prices held steady on Wednesday, supported by a report of rising US crude inventories as well as the introduction of sanctions against Iran. Front-month U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $69.21 per barrel at 0012 GMT, up 4 cents from their last settlement. Brent crude oil futures LCOc1 were at $74.63 per barrel, down two cents after a 90 cent gain in the previous session. In India, petrol prices crossed the Rs 77 a litre mark for the first time in two months as international rates firmed up. Petrol price in Delhi was hiked by 9 paisa a litre to Rs 77.06 while diesel rates went up by 6 paisa to Rs 68.50 per litre.
Govt May Stop Wilful Defaulters from Fleeing
India may stop wilful defaulters with loans exceeding Rs 50 crore from travelling overseas without prior approval as part of a crackdown on promoters looking to leave the country without meeting repayment obligations.
Job Growth Slips 1%: CARE
There has been a decline of 1% in employment growth at 6.6% mainly due to a larger number of companies witnessing lower or negative hiring growth, according to a report. The employment growth in 2016-17 was 7.7%, Care Ratings said in a report. Mainly companies with a turnover of Rs 50-100 crore, rs 100-250 crore and Rs 500-1,000 crore have witnessed negative employment growth.
Election Boost for Corporates?
Large consumer goods makers and auto companies have forecast growth of about 10% in the next six months in the lead-up to the upcoming general election in 2019 that will see substantially increased liquidity in the market.
Gold Steady, Dollar Index Softens
Gold prices were steady early on Wednesday, after rising in the previous session, as the U.S. dollar softened against China’s yuan and the euro. Spot gold XAU= was unchanged at $1,210.91 an ounce at 0043 GMT, after rising 0.4% in the previous session. The dollar index .DXY, which measures the greenback against a basket of six major currencies, was down 0.1% at 95.133.
China Reports CAD After 20 Years
Amid the trade war with the US, China has reported a current account deficit of $28.3 billion in the first half of this year, which is the first in 20 years for the world’s second largest economy. China also recorded its first quarterly current account deficit in nearly 17 years this year, ending its dream run of accumulating trade surplus as top exporter for years and the deficit carried on to the first half of this year.
Banks Lose Rs 70,000-cr to Frauds
Indian banks reported a total loss of about Rs 70,000 crore due to frauds during the last three fiscals up to March 2018, the Rajya Sabha was informed yesterday. The extent of loss in fraud cases reported by scheduled commercial banks (SCBs)for 2015-16, 2016-17 and 2017-18 was Rs 16,409 crore, Rs 16,652 crore and Rs 36,694 crore, respectively, Minister of State for Finance Shiv Pratap Shukla said in a written reply quoting RBI data.
POLICIES & MORE
- The Supreme Court has refused the Reserve Bank’s plea to stay proceedings in Allahabad high court against the Feb 12 circular on norms for stressed assets.
- The government yesterday withdrew the Financial Resolution and Deposit Insurance (FRDI) Bill from the Lok Sabha. The government tabled the FRDI Bill, 2017, in August in the Lok Sabha, which was referred to a joint parliamentary committee.
- The government has doubled import duty on as many as 328 textile products to 20% to provide a boost to manufacturing of these items in the country.
- The central government on Tuesday announced the appointment of Satish Kashinath Marathe and Swaminathan Gurumurthy as part-time non-official Directors on the central board of Reserve Bank of India (RBI).
Aviation Sector Heading Towards a Jio Moment’
“Right Now, From a Stock Market Sense, the Pain Point is Over.”
Rupee Up: The rupee made a spirited recovery from a two-week low to end higher by 20 paise at 68.68 against the US currency on Tuesday on fresh bouts of dollar selling by exporters and banks.
Long-term Bond Yields Up: Government bonds (G-Secs) dropped on selling pressure from banks and corporates. The 7.17% 10-year benchmark bond maturing in 2028 weakened to Rs 95.93 from Rs 96.05, while its yield edged up to 7.79% from 7.77%. The 6.68% G-Secs maturing in 2031 slid to Rs 89.60 from Rs 89.68, while its yield inched up to 7.97% from 7.96%.
Shorter-term Bond Yields Down: The 6.84% G-Secs maturing in 2022 fell to Rs 96.5250 from Rs 96.60, while its yield eased to 7.79% from 7.77%. The 7.59% G-Secs maturing in 2026, the 7.37% G-Secs maturing in 2023 and the 6.65% G-Secs maturing in 2020 were also quoted lower to Rs 97.65, Rs 98.07 and Rs 98.66 respectively.
Call Rates Up: The overnight call money rates ended higher to 6.45% from Monday’s closing level of 6.30%. It resumed higher at 6.45% and moved in a range of 6.50 and 6.20%.
Liquidity: The Reserve Bank of India, under the Liquidity Adjustment Facility, purchased securities worth Rs 4281 crore in 7-bids at the overnight repo operation at a fixed rate of 6.50% as on Tuesday, while it sold securities worth Rs 28,994 crore in 58-bids at the overnight reverse repo auction at a fixed rate of 6.25% as on Aug 06.
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