Markets

SGX Nifty up 5 points; here’s what changed for market while you were sleeping

While there is optimism over US-China trade talks, concerns over the global economic outlook have kept Asian stocks rangebound in early trade on Wednesday, raising doubts over whether the domestic indices can log further gains.

Here’s breaking down the pre-market actions.

STATE OF THE MARKET
SGX Nifty signals flat start
Nifty futures on the Singapore Exchange traded 3.5 points, or 3 per cent higher at 11,483.50, in signs that Dalal Street was headed for a flat start on Wednesday.

Tech View: Nifty forms bearish candle
Nifty50 could not capitalise on a positive opening on Tuesday, but saw buying interest intraday on every dip. The NSE barometer eventually ended up forming a small bearish candle on the daily chart. Analysts said the index continued to form higher high and higher low as support shifted higher. As long as the index trades above the 11,350 level, analysts expect the bias to remain positive.

Asian stocks off to cautious start
Asian stocks were off to a cautious start on Wednesday following a mixed Wall Street lead as the US market cheered signs of progress in US-Sino trade negotiations but remained cautious about the broader economic outlook. Japan’s Nikkei 225 index was down 0.18 percent or 40.82 points at 23,255.95 in early trade. Hong Kong’s Hang Sang Index added 0.13 per cent, or 34.19 points, to 25,520.41. The benchmark Shanghai Composite index dipped 0.05 per cent, or 1.77 points, to 3,371.81.

US stocks settled mixed
Wall Street’s major averages finished mixed as investors digested a slew of economic data.On Tuesday, the Dow Jones Industrial Average fell 60.02 points, or 0.21 per cent, to 28,248.44. The S&P 500 rose 12.34 points, or 0.36 per cent, to 3,443.62. The Nasdaq Composite Index was up 86.75 points, or 0.76 per cent, to 11,466.47.

Q1 results today
Indraprastha Gas, Gillette India, Gujarat Mineral Development Corporation, Dolat Investments, NACL Industries and Sharda Motor Industries are among companies which will disclose their June quarter results on Wednesday.

FIIs buy Rs 1,481 crore worth of stocks
Net-net, foreign portfolio investors (FPIs) were buyers of domestic stocks to the tune of Rs 1481.20 crore, data available with NSE suggested. DIIs were net sellers to the tune of Rs 172.97 crore, data suggests.

MONEY MARKETS
Rupee: The rupee pared its early gains to settle almost flat at 74.33 against the US dollar on Tuesday, tracking muted domestic equities.

10-year bonds: India 10-year bond yield fell 1.03 per cent to 6.15 after trading in 6.12-6.17 range.

Call rates: The overnight call money rate weighted average stood at 3.43 per cent, according to RBI data. It moved in a range of 1.80-4.10 per cent.

DATA/EVENTS TO WATCH

  • Earnings: Gillette I IGL
  • Japan leading economic index (10.30 am)
  • US durable goods orders July (06.00 pm)
  • ECB Schnabel speech (6.30 pm)
  • EIA crude oil imports change (08.00 pm)
  • BoE Haldane speech (09.30 pm)

MACROS
FM hints at new growth stimulus… The government on Tuesday hinted at fresh measures, including GST review on two-wheelers, and a possible second stimulus once coronavirus cases decline. Expenditure secretary T V Somanathan said another economic package might be considered in future. At a meeting with industry captains, FM Nirmala Sitharaman on Tuesday recognised the need for additional measures for stressed sectors such as hospitality, tourism, aviation, real estate and construction.

RBI prescribes several reforms to push growth… RBI has prescribed several reforms to get the economy back on the rails after the rollback of various stimulus measures taken to counter the lockdown-induced economic damage. These include a concrete plan to rein in fiscal deficit instead of kicking the can down the road, targeted tax sops to create employment, and sale of assets to improve liquidity. Behavioural changes would make recovery bumpy, RBI said in its annual report.

RBI’s Op Twist to remove kinks in yield curve… RBI on Tuesday said it would buy longer duration bonds worth Rs 20,000 crore and sell an equivalent amount of debt maturing in the next two-three months, helping debt-market yields to soften temporarily through its latest announcement on ‘Operation Twist’. The central bank will conduct two auctions on August 27 and September 3 to help remove kinks in the broader yield curves.

RBI says recovery will be a long haul… The Reserve Bank of India on Tuesday said Covid-19 had caused a severe shock to consumption, which will take a long time to recover, and it is government spending that will support the economy. “An assessment of aggregate demand during the year so far suggests that the shock to consumption is severe,” it said in its annual report. “It will take quite some time to mend and regain the pre-Covid-19 momentum.”

Tech biggies in a tax mess… It’s a taxman versus internet majors standoff — companies such as Google, Facebook, Netflix, LinkedIn haven’t paid the April-June quarter’s 2% equalisation levy that fell due on July 7. The new levy was announced in the 2020-21 budget. Companies claim this is due to lack of clarification on issues such as whether the tax will be payable on gross or net revenue. Tax department officials say “there’s no confusion”, and that tax will be calculated on “total money spent by Indians on these platforms”

MFs deploy cash in full force… After playing safe by holding cash during the early months of the coronavirus pandemic, mutual funds have once again started deploying cash. According to an analysis of mutual fund fact sheets by Motilal Oswal Financial Services, average cash holding at the top 20 funds dropped to 4.3% of the portfolio holdings in July, the lowest since January 2020.

Institutional investors no more rubber stamp…. Institutional investors are no longer rubber-stamping reappointment of directors of listed companies, they are actively voting against them over matters of performance. In the past month, at least 20 companies have seen them vote en bloc against such appointments, according to an analysis by ET.

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