STATE OF THE MARKETS
SGX Nifty signals a flat start
Nifty futures on Singapore Exchange traded 6.5 points, or 0.04 per cent, higher at 15,757, signaling that Dalal Street was headed for a muted start on Wednesday.
Tech View: Nifty50 on Tuesday formed a small bearish candle on the daily chart, which looked like a ‘Hanging Man’, suggesting exhaustion in the ongoing positive momentum.
India VIX: The fear gauge eased 2 per cent to 15.22 level on Tuesday over its close at 15.57 on Monday.
Asian markets muted in early trade
Asian stock markets opened lower on Wednesday after subdued US trade, as investors sought fresh market-moving events. MSCI’s broadest index of Asia-Pacific shares outside Japan was down by 0.22 per cent.
- Japan’s Nikkei shed 0.19%
- Korea’s Kospi declined 0.25%
- Australia’s ASX 200 inched 0.06% up
- China’s Shanghai Composite slipped 0.06%
- Hong Kong’s Hang Seng gained 0.07%
US shares settled mixed
Wall Street stocks struggled to eke out closing gains on Tuesday as a lack of clear market catalysts kept institutional investors on the sidelines, while retail traders fueled the ongoing meme stocks rally.
- Dow Jones slipped 0.09% to 34,599.82
- S&P500 index inched up 0.02% to 4,228.26
- Nasdaq Composite added 0.31% to 13,924.91
Dollar teeters as inflation test looms
The dollar clung to a small bounce on Wednesday as traders looked to upcoming US inflation data and a European Central Bank (ECB) meeting to gauge the global recovery and policymakers’ thinking.
- Dollar Index inched to 90.107
- Euro slipped to $1.2174
- Pound steady at $1.4155
- Yen declined to 109.42 per dollar
- Yuan at 6.3967 against the greenback
Q4 earnings today
GAIL (India), Bata India, TeamLease Services, Star Cement, SH Kelkar & Company, Indian Metals & Ferro Alloys, Dhanvarsha Finvest, Bajaj Healthcare, Indraprastha Medical Corporation, Sadhana Nitro Chem and Munjal Auto Industries are among companies that will announce their March quarter results today.
FPIs buy shares worth Rs 1,423 cr
Net-net, foreign portfolio investors (FPIs) turned buyers of domestic stocks to the tune of Rs 1,422.71 crore, data available with NSE suggested. DIIs were net sellers to the tune of Rs 1,626.98 crore, data suggests.
MONEY MARKETS
Rupee: The rupee depreciated by 9 paise to close at 72.89 against the US currency on Tuesday, tracking a strong dollar overseas and subdued sentiment in the domestic equities.
10-year bond: India 10-year bond yield declined 0.27 per cent to 6.01 after trading in the 6.00 – 6.04 range.
Call rates: The overnight call money rate weighted average stood at 3.13 per cent, according to RBI data. It moved in a range of 1.90-3.40 per cent.
DATA/EVENTS TO WATCH
- Q4 Earnings: Amtek Auto | Bata India | GAIL | Teamlease
- China Inflation Rate YoY May (07:00 am)
- China PPI YoY May (07:00 am)
- Australia HIA New Home Sales MoM May (10:30 am)
- US MBA Mortgage Applications 04/June (04:30 pm)
- US Wholesale Inventories MoM April (07:30 pm)
MACROS
World Bank cuts GDP estimate
The World Bank on Tuesday slashed India’s GDP growth estimate for the current fiscal year to 8.3% from its previous projection of 10.1%, citing the impact of the second wave of Covid. The multilateral agency is the latest in the long list of economists, investment banks and other agencies that have cut the country’s growth estimates due to the impact of the localised lockdowns imposed to prevent the spread of the second surge of the pandemic.
Life insurers seeing de-growth
India’s life insurance sector reported a 5.5% de-growth in first-year premiums in May as the deadly second wave of the coronavirus pandemic caused these companies to go slow on new business, especially in the term cover segment. The de-growth was largely on the back of slow business by LIC in the month, even as some private-sector insurers such as HDFC Life, Max Life and India First reported strong growth, albeit a lower base.
Proxy advisory firm red-flags PNB Housing deal
A report by SES, an institutional investor advisory firm, has alleged that the whole process of preferential allotment in PNB Housing Finance to global PE major Carlyle was ultra vires of law and is against the minority shareholders of the mortgage finance company. It also alleged that the process adopted to give management control to the PE major would lead to a Rs 2,000-crore loss to PNB, one of the largest government-run banks. PNB HF, however, said the process was done after proper due diligence and will benefit all shareholders.
NCLT clears Vedanta bid for Videocon
NCLT has approved billionaire Anil Agarwal’s Rs 3,000 crore offer for the debt-ridden Videocon Group. The offer by Twin Star Technologies, a company owned by Agarwal, is against the more than Rs 46,000 crore debt of the Videocon Group. The transaction, when completed, will be Agarwal’s third asset purchase under the Indian bankruptcy code after Electrosteel Steels and Ferro Alloys Corporation.
Covid 2.0 impacting loan repayments
The second wave of Covid-19 is having a significant impact on loan repayments, particularly in rural areas, as borrowers continue to face stretched liquidity and lenders see collection disruptions, India Ratings and Research (Ind-Ra) has said. Lenders have seen a drop in April 2021 collections, pay-outs for which were due in May, in rated securitisation transactions across asset classes at 73%, down from 84% in March, the credit rating agency said on Tuesday.
Short-term yields drop sharply
Short-term yields have dropped by up to a tenth of a percentage point in June after RBI successfully brought down forward premiums via currency derivative deals. Banks are increasing bets on these securities in anticipation that a rate increase, if any, will be a reality only in FY23. Softening yields will likely help North Block, which is seeking to borrow an additional Rs 1.58 lakh crore in FY22 to bridge the shortfall in GST collections.
HNIs seeking to shift abroad
Several HNI and promoters have started the process of moving out their businesses and families to the UAE, Singapore and the United Kingdom even as the second Covid wave shows signs of subsiding in India. In the last few months, many businessmen have created intermediary companies based in these countries so that the operations could be handled from these locations.
Large borrower firms pare debts
Large borrowers across several industries have responded to the Covid crisis by repaying loans and reducing their debt. While some companies pulled back from investments in the absence of demand, others have shifted from loans to the capital market. Companies in oil, steel, fertilisers and cement sectors are among those who have reduced their borrowing significantly during the year. According to a research report by SBI, the top 15 sectors, from more than 1,000 listed entities, reported a debt reduction of Rs 1.7 lakh crore during FY21. In percentage terms fertilisers, cement products, consumer durables and capital goods sectors have reduced their dependence on bank loans by more than a fifth during the year.
