Signs that China’s economy was recovering helped ease sentiment in Asian market amid a surge in Covid-19 cases globally. But geopolitical tensions, including the ongoing US-China tariff war and tension on the India-China border, are fuelling fears in the market.
Here’s breaking down the pre-market actions.
STATE OF THE MARKETS
SGX Nifty signals negative start
Nifty futures on the Singapore Exchange traded 73.5 points, or 0.71 per cent lower at 10,266.50, in signs that Dalal Street was headed for a negative start on Monday.
Tech View: Nifty forms indecisive candles
Nifty50 advanced on Friday but formed indecisive candles on daily and weekly charts. While the index formed a Doji pattern on the daily chart, opening and closing almost at the same levels, it made a Spinning Top candle on the weekly scale, suggesting that it continued to struggle at higher levels
Nifty PCR signals slump ahead
Nifty could face selling pressure this week, as option sellers sold higher number of calls relative to puts as of Friday, weekly options data show. This coupled with FIIs turning net short in index futures underscores the anticipated near-term pressure on the index. The open interest Put-Call ratio for Nifty options expiring on July 2 ended at 0.89 on Friday, down from 0.95 a day earlier. The selling of a relatively higher number of Calls than Puts signifies that Call writers either don’t expect the market to rise or expect it to correct and thereby retain the premium paid by Call buyers.
Asian shares off to a shaky start
Asian share markets got off to a shaky start on Monday as the relentless spread of the coronavirus finally made investors question their optimism on the global economy. MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.2 per cent. Japan’s Nikkei shed 1.5 per cent and South Korean stocks 1.4 per cent. E-Mini futures for the S&P500 lost 0.3 per cent.
US indices tanked on Friday
US stocks fell sharply on Friday as investors grew nervous of a spike in coronavirus cases across the country.The Dow Jones Industrial Average index shed 730.05 points, or 2.84 per cent, to 25,015.55. The S&P 500 was down 74.71 points, or 2.42 per cent, to 3,009.05. The Nasdaq Composite Index decreased 259.78 points, or 2.59 per cent, to 9,757.22
Oil prices fall for second day
Oil prices fell for a second straight session as coronavirus cases rose in the US and other places, leading countries to resume partial lockdowns that could hurt fuel demand. Brent crude dropped 66 cents, or 1.6 per cent, to $40.36 a barrel. Brent crude is set to end June with three consecutive monthly gains.
Q4 results today
Petronet LNG, MRF, Bharat Electronics, GMR Infra, Central Bank of India, Fortis Healthcare, SJVN, AstraZeneca Pharma and CESC are among companies which are scheduled to announce Q4 results today.
DIIs buy Rs 1,304 cr worth of stocks
Net-net, foreign portfolio investors (FPIs) were sellers of domestic stocks to the tune of Rs 753.18 crore, data available with NSE suggested. DIIs were net buyers to the tune of Rs 1,304.18 crore, data suggests.
Rupee: The rupee pared initial gains and settled on a flat note at 75.65 against the US dollar on Friday as concerns about rising coronavirus cases weighed on investor sentiment.
10-year bonds: India 10-year bond yield rose 0.37 per cent to 5.91 after trading in 5.88-5.92 range.
Call rates: The overnight call money rate weighted average stood at 3.57 per cent, according to RBI data. It moved in a range of 1.80-4.05 per cent.
DATA/EVENTS TO WATCH
- Q4 Earnings: Tata Steel I Andhra Cement I BEL I Bharat Forge I Hind Copper I MRF I Central Bank I CESC I GIC Housing
- Japan May Retail Sales (05.20 am)
- UK May Mortgage Approvals (02.00 pm)
- BoE May Consumer Credit (02.00 pm)
- Euro Area June Business Confidence (02.30 pm)
- US May Pending Home Sales (07.30 pm)
- Fed Daly Speech (08.30 pm)
RBI weighs extending 90-day limit on NPA… The RBI board on Friday discussed the need for extending the NPA recognition date beyond 90 days, citing widespread distress in the corporate sector. The issue was flagged by Sachin Chaturvedi, director general at policy thinktank RIS, with Teamlease chairman Manish Sabharwal and Tata Sons chairman N Chandrasekaran also joining in. The discussions, which were not part of the official agenda, came a day after Finance Minister Nirmala Sitharaman publicly stated that the government and the regulator were in talks to allow a one-time loan recast for businesses that were viable in the pre-Covid period, but are struggling under the weight of the pandemic.
New RBI debt paper promises good deal… Savers in lower tax brackets are set to benefit from a new set of sovereign debt papers being offered from next month, with the central bank selling the floating-rate securities linked to NSCs for the first time to individuals and Hindu undivided families (HUFs). These papers are being offered after RBI last month discontinued the offer of 7.75 per cent government bonds. People with up to Rs 10 lakh annual income can earn 6.08-7.15% after tax deductions, while the same will be in the 5.36-6.08% range for those earning Rs 10-15 lakh a year. Above that income, it will be 4.79 per cent.
LIC invests big in equity, debt… LIC of India, the country’s biggest money manager, has invested about Rs 64,000 crore in debt and equities until mid-June, only marginally lower than the first quarter of FY20, helping insulate the bond and stock markets from the Covid-induced disruptions reverberating through the real economy. While three-fourths of these investments are into long-term central and state government bonds, the rest is in the equity markets, a senior official with direct knowledge of the matter told ET.
Mobius backs India’s import curbs… Veteran emerging markets investor Mark Mobius has said India cannot be criticised for import restrictions to promote the domestic industry as other emerging markets had done the same. According to Mobius, the government should just focus on improving ease of doing business for domestic as well as foreign investors.
Road Ministry may offer relaxations to developers… The road transport and highways ministry has begun consultations on offering major relaxations to road developers, grappling with stressed finances, while also seeking to attract more private investment by settling claims that have been long overdue. After sitting on paying termination payment for months, partly through incorrect interpretation of a Supreme Court order, NHAI is being asked to expedite termination payment for cancelled contracts so that banks, largely public sector players, are able to recover their dues, which are on the verge of turning into bad debt.
Bharat ahead of India in consumption… Consumption growth in rural India is outpacing the rate of expansion in cities and has already reached 85% of pre-Covid average sales underpinned by higher farm income, minimal retail disruption during the lockdown and migrant workers returning home. In comparison, urban market sales were relatively lower at 70% in May, according to Nielsen’s latest data. In the next nine months, the overall FMCG segment is expected to grow at around 5% but rural market will expand at double the rate of urban
Worst June Quarter for Motown… Indian automakers could report the worst demand decline in almost three decades in the three months to June, with wholesale dispatches and retail sales of passenger vehicles for the quarter contracting drastically. The industry could see 25-45% overall decline in Q1, with heavy commercial vehicles expected to see a 50% degrowth, touching the sales levels of 2008. Industry estimates show PV wholesale figures may shrink to 1.5 lakh units from 8.73 lakh. Retail sales could fall to 2.5 lakh units from last year’s 7.94 lakh.
Startup deals down 31%… Dealmaking for startups in the first six months of 2020 dipped 31% to 272 transactions, while the total capital invested fell by 11% to $4.1 billion compared to the year-ago period, according to data from Venture Intelligence. Venture capital investors feel that given the double whammy of Covid-19 and blocking of investments from China, things will get worse in the next two quarters, as there is usually a lag between when deals are closed and their announcements.
Mall, restaurant footfalls very low… Malls and restaurants are seeing extremely low footfalls since reopening earlier this month. Restaurants are particularly struggling, given early closure timings and the ban on serving alcohol. While most retailers have opened their stores in malls, shopping complexes have at best seen 15-20% of footfalls compared to pre-Covid times and mall owners do not expect the situation to improve before the festive season. DLF’s malls in NCR have footfalls of just 6,000 per day, compared to 30,000 in normal times, its executive director Pushpa Bector, said.
India intensifies checks on Chinese goods… India is looking to increase the scrutiny of imports from Chinese companies or entities located in ASEAN countries, said people with knowledge of the matter. New Delhi has information about China setting up new entities or acquiring defunct companies in countries such as Vietnam and using these shell enterprises to re-label and export goods to India, exploiting India’s FTA with ASEAN.