After Thursday’s rally, domestic stocks could come under pressure on Friday on likely profit taking following a resumption of weak trend in US markets in overnight trade. Here’s breaking down the pre-market actions:
STATE OF THE MARKETS
SGX Nifty signals negative start
Nifty futures on the Singapore Exchange traded 32.50 points, or 0.28 per cent lower at 11,428, in signs that Dalal Street was headed for a negative start on Friday.
Tech View: Nifty may see profit taking
Nifty50 on Thursday took out its immediate resistance at 11,300 level at the very start, paving the way for a strong rally towards the 11,450 level. That said, Thursday’s bounce was led partly by an unusual sharp 7 per cent surge in the shares of Reliance Industries. A profit booking move cannot be ruled out, even though technical charts suggest a bullish bias ahead, analysts said.
Asian shares fall in early trade
Japan’s Nikkei 225 index fell 0.19 per cent, or 45.10 points, to 23,190.37. Hong Kong’s Hang Sang added 0.16 per cent, or 39.09 points, to 24,352.63. China’s Shanghai Composite slipped 0.28 per cent, or 9.04 points, to 3,225.78.
Oil prices add to recent losses
Oil prices extended declines on Friday, under pressure from a surprise rise in U.S. stockpiles and ongoing weak demand from the coronavirus pandemic. Brent crude was down 8 cents, or 0.2 per cent, at $39.98 a barrel, after falling nearly 2 per cent on Thursday, while US crude was off by 2 cents at $37.28 a barrel, having fallen 2 per cent in the previous session. Both major benchmarks were headed for a second week of declines.
US stocks decline amid tech selloff
US stocks gave up earlier gains to finish sharply lower on Thursday as tech shares lost momentum again after a noticeable rebound in the prior session.The Dow Jones Industrial Average index fell 405.89 points, or 1.45 per cent, to end at 27,534.58. The S&P500 slid 59.77 points, or 1.76 per cent, to 3,339.19. The Nasdaq Composite index dipped 221.97 points, or 1.99 per cent, to 10,919.59
Q1 results today
Bharat Heavy Electricals, Adani Green Energy, BGR Energy Systems and Eros International Media are among companies that are scheduled to announce their June quarter earnings on Friday.
Route Mobile IPO subscribed 4x, closes today
Route Mobile’s IPO was subscribed 4.15 times on the second day of bidding on Thursday. The Rs 600-crore public offer of Route Mobile, a cloud communications service provider, received bids for 5,05,09,920 shares as against the total issue size of 1,21,73,912 shares, according to data available with the NSE. The category for qualified institutional buyers (QIBs) was subscribed 1.25 times, that for non-institutional investors was subscribed 2.04 times, while retail individual investors’ portion was subscribed 6.71 times.
FIIs buy Rs 838 cr worth of stocks
Net-net, foreign portfolio investors (FPIs) were buyers of domestic stocks to the tune of Rs 838.37 crore, data available with NSE suggested. DIIs were net sellers to the tune of Rs 317.30 crore, data suggests.
MONEY MARKETS
Rupee: The rupee on Thursday advanced by 9 paise to end at 73.46 to the US dollar as robust foreign fund inflows and easing of crude oil prices lifted forex market sentiment.
10-year bonds: India 10-year bond yield rose 1.07 per cent to 6.05 after trading in 5.98-6.05 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 1.80-4.05 per cent.
DATA/EVENTS TO WATCH
- Japan PPI YoY AUG (05.30 am)
- UK Balance of Trade JUL (11:30 am)
- UK Industrial Production YoY JUL (11.30 am)
- UK GDP 3-Month Avg JUL (11.30 am)
- India Banks’ Loan/Deposit Growth YoY AUG/28 (05.00pm)
- RBI Foreign Exchange Reserves SEP/04 (05.00 pm)
- India Industrial Production YoY JUL (05.30 pm)
- India Manufacturing Production YoY JUL (05.30 pm)
- ECB Lane Speech (05.30 pm)
- US Inflation Rate YoY AUG (06.00 pm)
MACROS
China told to restire status quo ante… India on Thursday asked China to restore the status quo ante of April 2020 on the Line of Actual Control (LAC) in Ladakh during a marathon meeting external affairs minister S Jaishankar had with his Chinese counterpart Wang Yi in Moscow. The meeting which began around 7 pm Indian time lasted till almost midnight and full details are yet to emerge.
Crisil sees deeper contraction in FY21… Ratings agency Crisil forecast a deeper contraction of 9% in this financial year, against 5% projected in May, and called for reforms to get the economy on a faster recovery path as well as fiscal support to vulnerable households and small businesses hit hard by the Covid-19 pandemic. Another rating agency, Icra, kept its forecast of 9.5% contraction in 2020-21 unchanged, while maintaining that the economy was “undoubtedly recovering” from the lows of first quarter.
Top banks report suspicious transactions… Banks including State Bank of India, Bank of Baroda, ICICI Bank and HDFC Bank have started red-flagging transactions that defy traditional company patterns after witnessing a substantial spike in suspicious bank, cash and overseas transfers since the start of the Covid-19 pandemic. Especially under the scanner are companies where banks have noticed a sudden spurt in trading or increased dealing in unrelated goods and services or there’s a sudden outflow of money to other countries, people familiar with the development said.
Mehrishi panel to study interest waiver… The government has set up an expert committee headed by former comptroller and auditor general Rajiv Mehrishi to assess the impact of waiving interest and interest on interest on loans during the moratorium offered to Covid-hit borrowers that ended August 31. The panel, which was announced late on Thursday, has been asked to submit its report within a week. This followed the Supreme Court giving the government until September 28, when the next hearing will take place on petitions related to the moratorium, to clarify its view on waiving interest during the six-month period.
Moratorium extension won’t hurt bank profit… A virtual extension of the interest payments standstill on loans is unlikely to immediately hit the profits at banks as the affected lenders might still continue to accrue some interest on these advances. But bankers want the apex court to take a considered final view that would address the concerns of depositors as well. A complete waiver of interest will hit banks’ profits the hardest as they will not only have to reverse the interest due on these loans, but also provide for losses arising out of them.
Big retail expansion on the cards… India’s biggest retailers have started to accelerate new store openings for the fiscal year after losing four months to lockdowns, some in greater numbers than before, as part of a strategy to exploit low rental costs and weakening competition. Reliance Retail, Tata-owned Croma, Aditya Birla Fashion & Retail, DMart and RP-Sanjiv Goenka Group’s Spencer’s Retail and Nature’s Basket chains will together open more than 650 stores during this fiscal with some signs of recovery being visible, executives said.
Good start to festive season for Motown… The festive season of FY21 has got off to a good start with the 15 days of Ganesh Chaturthi and Onam recording strong double-digit growth of 15-20% over previous season. Carmakers have sold close to 50,000 units in the states of Maharashtra and Kerala during the key festivities in August, which usually attracts higher numbers of bookings and deliveries. This is for the first time in 3 years that carmakers have notched double-digit growth in sales during the key festive season.
PSUs losing clout in overall m-cap…The insipid stock returns and unabated disinvestments are waning the Union government’s clout in Indian equities. The proportion of the PSUs in India’s total market capitalisation fell to a decade low of 4.6% in June 2020, according to an analysis by the ET Intelligence Group. There are 76 companies on the stock exchanges where the government holding is more than 50%. Their total market cap is Rs 12.5 lakh crore. Of this, 42% is spread among the top five PSUs by market cap including SBI, ONGC, Power Grid Corporation, NTPC, and BPCL.
Sebi probes tricky issues at Franklin… Sebi is examining a raft of tricky issues that have cropped up in a forensic audit carried out after Franklin Templeton (FT) shut down six mutual fund schemes on April 23. These pertain to redemptions in the six schemes in the months before FT announced their winding up, accommodation of long-term securities in short-term funds, delayed reaction to downgrades of papers, and the role of the trustees and board members of the asset management company in addressing risks, among other things.
