Here’s breaking down the pre-market actions:
STATE OF THE MARKETS
SGX Nifty signals positive start
Nifty futures on the Singapore Exchange traded 61.50 points, or 0.41 per cent, higher at 15,056 in signs that Dalal Street was headed for a positive start on Monday.
Tech View: Nifty forms Bearish Engulfing pattern
Nifty50 declined for the fourth session in a row on Friday and slipped below the all crucial 15,000 mark. The 50-pack index formed a bearish candle on the daily scale and ‘Bearish Engulfing’ pattern, a trend-reversing formation, on the weekly scale. Adding to the concerns was the momentum indicator MACD, which is sending out a sell signal. All this, and the recent lower high-low formations, have made analysts believe the index could drift towards the 14,400-14,700 range in the coming days.
Asian markets edge higher
Asian share markets inched higher on Monday as expectations for faster economic growth and inflation globally batter bonds and boost commodities, though rising real yields also make equity valuations look more stretched in comparison. MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.1 per cent, after easing from a record top late last week as the jump in US bond yields unsettled investors. Japan’s Nikkei recouped 1 per cent and South Korea 0.4 per cent, while E-Mini futures for the S&P 500 were a fraction firmer.
Oil prices rise in early trade
Oil prices rose on Monday as the slow return of US crude output that was cut by frigid conditions raised concerns about supply just as demand is coming back from the depths of the coronavirus pandemic. Brent crude was up 76 cents, or 1.2 per cent, at $61.67 a barrel, after gaining nearly 1 per cent last week. US oil rose 74 cents, or 1.3 per cent, to $59.98 a barrel, having fallen 0.4 per cent last week.
US stocks settled flat on Friday
Stocks on Wall Street closed near break-even on Friday as investors sold technology shares. The Dow Jones Industrial Average edged up 0.98 points, or 0 per cent, to 31,494.32 and the Nasdaq Composite added 9.11 points, or 0.07 per cent, to 13,874.46. The S&P500 index dropped 7.26 points, or 0.19 per cent, to 3,906.71.
DIIs sell Rs 1,175 crore worth stocks
Net-net, foreign portfolio investors (FPIs) were buyers of domestic stocks to the tune of Rs 118.75 crore, data available with NSE suggested. DIIs were net sellers to the tune of Rs 1,174.98 crore, data suggests.
MONEY MARKETS
Rupee: Domestic currency and bond markets were closed on Friday on account of Chhatrapati Shivaji Maharaj Jayanti. On Thursday, the rupee pared its initial losses to settle higher by 9 paise at 72.65 against the US dollar following consistent forex inflows and losses in the American currency in the global markets.
10-year bonds: India 10-year bond yield rose 1.69 per cent to 6.13 after trading in 6.02-6.13 range.
Call rates: The overnight call money rate weighted average stood at 3.22 per cent, according to RBI data. It moved in a range of 1.9-3.50 per cent.
DATA/EVENTS TO WATCH
- US Chicago Fed National Activity Index Jan (07:00 pm)
- ECB President Lagarde Speech (08:00 pm)
- US CB Leading Index MoM Jan (08:30 pm)
- US Dallas Fed Manufacturing Index Feb (09:00 pm)
MACROS
RBI in a bind as yields rebound… RBI purchases worth Rs 50,000 crore in a week to stem the slide in bond prices appear to be a wasted effort as yields surged back past 6% in an environment where the inflation outlook is getting muddy and the central bank’s communication garbled. Intervention in the market after the monetary policy review earlier this month that led to a spike in yields is now giving way to pessimism that RBI’s communication and actions are not enough for investors to feel comfortable in the light of record-high government borrowings in a normal year. Yields on benchmark bonds surged to 6.14% last Thursday after falling to a low of 5.94% post the interventions nearly two weeks ago.
SpiceJet owner eyes Air India… A grouping of SpiceJet promoter Ajay Singh and two other investors is said to have shown interest in acquiring Air India, and is among the “multiple” overtures the government said it has received for the carrier. Singh is interested in buying 100% in Air India in his personal capacity, with support from investors, at least one of which is a foreign fund. “Singh is unlikely to be the largest shareholder in the airline if it goes to him and his co-investors,” ET reported quoting sources.
IPO candidates can’t hold cryptos… Holding cryptocurrency may become a hindrance for promoters looking to raise money through an initial public offering (IPO). Sebi wants promoters of such companies to sell off any cryptocurrency they have before raising funds, said several people with direct knowledge of the matter. In the past few weeks, Sebi has communicated this to merchant bankers, securities lawyers and even company executives involved with the IPO process
Maharashtra bans social gatherings… The Maharashtra government on Sunday warned that a strict lockdown would be imposed if people did not follow Covid-appropriate norms for the next eight days. He announced a complete ban for a few days on all political, social and religious gatherings, processions, morchas and public protests to check the spread of the disease. In a 30-minute talk on social media, the Chief Minister told people that it was in their hands to prevent another lockdown.
ED seeks details of Amazon deal… The ED has sent a letter to Future Coupons seeking details about the contours of its deal with Amazon. The query is part of a probe started by the agency after a Delhi High Court observation in December said Amazon’s agreements with Future Group companies, if combined, could violate forex rules. According to documents dating back to 2010, three years before Amazon’s India debut, the US giant circulated an investment proposal to select potential local partners for a retailing venture, offering a minimum return on investments at a pre-determined rate of return.
8 toy clusters okayed… The government has approved eight toy manufacturing clusters at a cost of Rs 2,300 crore to boost India’s traditional toys industry. These clusters will manufacture toys made of wood, lac, palm leaves, bamboo and fabric. The Department for Promotion of Industry and Internal Trade (DPIIT) and the Ministry of Micro, Small and Medium Enterprises (MSME) are looking to develop toy clusters under existing schemes such as the Scheme of Fund for Regeneration of Traditional Industries (Sfurti).
Govt plans NPA hiveoff, staff transfer before bank sales… The government could hive off the non-performing loans of the two public sector banks that are to be selected for privatisation and transfer some of their employees to other state-run lenders in a bid to make them attractive for buyers. The government is likely to consider only banks that were not part of the recent consolidation, which would exclude Punjab National Bank, Bank of Baroda, Canara Bank and SBI from the privatisation process
Fuel price fails to dent car buying… Car bookings and retails remain strong on the back of positive factors like strong economy, pent-up demand and general positive sentiments about the pandemic being in some kind of control suggesting soaring fuels prices are yet to affect consumer sentiment in the automotive sector. While passenger vehicles do not see much dampening in demand in the short term, it is two-wheeler sales that is being hurt as the price conscious buyer is staying away, industry watchers said.
All-clear for overseas listings… Indian technology companies eyeing a US listing got a fillip after the Ministry of Corporate Affairs on Friday clarified that such firms would not be considered as listed companies in India. Until now, if a company raised capital through equity or debt from public investors, it would be categorised as a listed company and is subject to stringent disclosure and compliance norms. Sebi is the watchdog for such listed companies.
Fully provided for bad loans will go to bad bank… Banks will transfer sticky loans to the proposed ‘bad bank’ that have been fully provided for in their books. This will be done after lenders with at least 75% exposure agree on a deal — the norm that will distinguish the new institution from existing asset reconstruction companies (ARCs) in the country. About a dozen lenders, including some of the large state-owned entities, such as REC and PFC, would be approached for equity participation in the bad bank — being positioned as a national ARC.
Govt starts clearing China FDIs… The government has begun clearing foreign direct investment proposals from China on a “case-by-case” basis, ending the freeze on such clearances that lasted around nine months. Over the last few weeks, approvals have started, although it is so far limited to “smaller cases”, sources told TOI. The sources made it clear that large proposals would be take up later after a careful analysis of the situation.
States begin to cut fuel taxes… The Centre may be facing “dharm sankat (dilemma)” over record fuel prices but four states have taken the lead with tax cuts to offer consumers relief and show the Centre that spiralling pump prices have less to to do with rising crude, but is more because of high levies. On Sunday, West Bengal became the latest to join the band, reducing VAT by Re 1 on petrol and diesel. Rajasthan was the first to move on January 29, reducing VAT from 38% to 36%. Assam followed suit on February 12 by withdrawing additional tax of Rs 5 imposed last year. Meghalaya has given the biggest relief of Rs 7.40 on petrol and Rs 7.10 on diesel.
Cairn hopeful on solution to tax dispute … Cairn Energy on Sunday said that it was hopeful of finding an acceptable solution to the vexed $1.2-billion tax dispute with the government but will take all necessary steps to protect the interests of its shareholders. “We have had cordial and constructive discussions in Delhi over the last few days with officials from the finance ministry. Notwithstanding and without prejudice to our rights under the international arbitration award, we have discussed a number of proposals with the aim of finding a swift resolution,” it said.
