Here’s breaking down the pre-market actions.
STATE OF THE MARKETS
SGX Nifty signals gap-up start
Nifty futures on the Singapore Exchange traded 48 points higher at 7 am (IST), signalling further gains on Dalal Street
Tech View: Nifty forms bullish candle
The bulls continued to build long positions, as Nifty on Tuesday tested the all-time high the index had recorded last month and in the process formed another big bullish candle. Analysts believe the 14,750 level will now be crucial in deciding which way the index moves.
Asian stocks look upbeat
Most Asian stocks rose on Wednesday, extending a global rally amid a slew of corporate earnings and a crumbling of the retail trading frenzy that fueled swings in heavily shorted shares. Shares outperformed in Australian and Japan, though dipped in China and Hong Kong.
US stocks logged further gains
Wall Street rallied overnight on renewed hopes for US President Joe Biden’ proposed $1.9 trillion Covid-19 aid bill. The Dow rose 475.57 points, or 1.57%, the S&P500 gained 52.45 points, or 1.39%, and the Nasdaq added 209.38 points, or 1.56%
Dollar weakens, yuan falls too
The dollar retreated. The yuan edged lower by 0.1% as the People’s Bank of China drained some funds from the financial system. The euro bought $1.2045. The yen was at 105.00 per dollar.
price hits highest in a year
Oil traded at its highest in over a year on tightening global supplies and signs of strength in physical markets. WTI crude climbed 0.2% to $54.86 a barrel.
Home First Finance set for debut
Home First Finance Company India is set to replicate the strong debut made by Indigo Paints today, when the shares of the company are listed on the bourses on Wednesday. The stock was commanding a grey market premium of Rs 130 helped by the post-Budget rally in the secondary market, said dealers.
Brookfield REIT IPO opens today
Global investment firm Brookfield’s Real Estate Investment Trust (REIT) public issue will hit the capital market on Wednesday to raise up to Rs 3,800 crore. Brookfield REIT will be the third listed trust in India if it is successfully subscribed.
Gold, silver lose sheen
Gold futures fell by 1.18 per cent to Rs 48,146 per 10 gm on Tuesday as participants offloaded their holdings on low spot demand. Silver futures declined by Rs 3,076 to Rs 70,590 a kg. In global markets, gold traded at $1,840.30 an ounce, while silver futures added 2.5% to $27.05 after slumping 10% on Tuesday.
MONEY MARKETS
Rupee: The domestic currency gained 6 paise to settle at 72.96 against the US dollar on Tuesday tracking weak American currency and heavy buying in domestic equities.
10-year bonds: India 10-year bond yield rose 1.87 per cent to 6.06 after trading in 5.88-6.07 range.
EVENTS/DATA TO WATCH
- Q3 earnings: Adani Enterprise I Adani Green I Apollo Tyre I Airtel I Hind Copper I Jubilant Foodworks
- India Markit Services PMI Jan (10:30 am)
- Japan Jibun Bank Services PMI Final Jan (06:00 am)
- China Caixin Services PMI Jan (07:15 am)
- ECB Non-Monetary Policy Meeting (01:30 pm)
- Euro Area Markit Composite PMI Final Jan (02:30 pm)
- US ADP Employment Change Jan (06:45 pm)
MACROS
Rating agencies wary of Budget… Global rating agencies on Tuesday flagged “higher-than-expected” fiscal deficit figures and a gradual pace of consolidation announced by finance minister Nirmala Sitharaman in her budget presentation even as they said increased capital expenditure will support an economic recovery. Gene Fang, associate managing director, sovereign risk, at Moody’s Investors Service said nominal GDP growth will remain critical for future deficit reduction. Both S&P and Fitch noted that the increased capital expenditure is expected to support economic recovery, which is likely to gather more pace as Covid-19 cases decline amid the rollout of the vaccination programme.
Govt gets going on LIC IPO… In preparation for the mega IPO, the government has proposed sweeping changes to several critical clauses of the LIC Act of 1956 that pertains to the capital structure, composition of the board, dividend payments to policyholders and the governing norms of the state-owned life insurance behemoth ahead of its much-anticipated public listing.
Equalisation levy to hit more firms… The Centre’s clarification on the scope of the equalisation levy on digital transactions, provided in the Union Budget on Monday, will bring more foreign entities selling goods and services to either businesses or consumers through online platforms under the ambit of the tax, legal and industry experts told ET. Previously, the 2% levy was being paid by global internet services companies such as Google, Netflix and Adobe.
Tax on VPF interest on principle of equity… The decision to remove the tax exemption on provident fund contributions of Rs 2.5 lakh and above in the budget was based on the principle of equity, said revenue secretary Ajay Bhushan Pandey. “Any tax exemption is taxpayers’ money— assured return being given is again coming out from the taxpayers’ money,” he told ET in an interview. “The question is those who are depositing higher, should they be given the tax concession at the cost of another taxpayer?” In the budget announced on Monday, the government said interest earned on Employees’ Provident Fund contributions of Rs 2.5 lakh and above a year will be taxed at the prevailing income tax rates.
GoM to fix bare minimum presence of PSEs… The bare minimum presence of public sector enterprises (PSEs) in strategic sectors – announced by finance minister Nirmala Sitharaman in the budget – will be decided by a group of ministers after consulting ministries in each identified sector, Department of Investment and Public Asset Management (DIPAM) secretary Tuhin Kanta Pandey told ET on Tuesday. The identification of PSEs will result in a potential pipeline of companies to be disinvested and require Cabinet approval.
Biden undoes Trump H-1B order… US President Joe Biden has revoked the ‘Buy American Hire American’ (BAHA) executive order of predecessor Donald Trump, which had resulted in high denials of H-1B and L-1visas. The move is expected to translate into fewer visa rejections and requests for evidence (RFE) in the upcoming visa lottery in April for the financial year 2022 which begins on October 1. H-1B visa denial rates increased to 24% (in financial year 2018) and 21% (in FY19), compared to 10% in FY16 and 13% in FY17, after the BAHA order took effect in April 2017.
VPF sweetest despite B-sting… The budget’s new tax on interest from Provident Fund contributions above Rs 2.5 lakh a year has taken some sheen off this tax-free haven, but the Voluntary Provident Fund (VPF) is still among the best fixed income options. Only the Public Provident Fund (PPF) offers higher interest than the VPF. But PPF has an investment limit of Rs 1.5 lakh in a year. If you want to invest more, the VPF is your best bet. In the 30% tax bracket, it would still give 5.85% returns, which is higher than what other fixed income options offer.
REITS, InvITs to get debt too… Real estate investment trusts (REITs) and infrastructure investment trusts (InvITs) are set to attract more investments after the government announced on Monday that regulations will be amended to allow them to raise debt fund from FPIs. Global institutional investors and sponsors of REITs and InvITs have been seeking the government’s push to enable REIT and InvITs’ debt raising from insurance companies and FPIs.
Lower dividend for govt from RBI… The government is expecting a much lower dividend payment from the Reserve Bank of India next fiscal year, validating the market belief that the central bank’s income is likely to dwindle due to the cost for absorbing surplus liquidity. The government has budgeted Rs 53,511 crore in FY22 as dividend receipt from the RBI, public sector banks and financial institutions, 40% less than the initial budget estimate of Rs 89,649 crore for FY21, and about 14% less than the revised estimate of Rs 61,826 crore.
Tax levy on M&As goes up… Many companies will have to fork out higher tax on past M&A deals while some may renegotiate valuations of ongoing and future transactions with the budget ending Corporate India’s ageold practice on ‘goodwill’ accounting. In a balance-sheet, goodwill is typically captured as the extra amount a company pays —either as stock or cash — over the net worth of the entity that is acquired. After the acquisition or merger, the goodwill is treated as an ‘intangible asset’ and the depreciation claimed on it lets the acquiring company or resulting or surviving entity lower its taxable income.
