The rally in stocks is showing no signs of abating. Despite civil unrest in the US, Wall Street climbed overnight amid opening up of economic activities in the world’s largest economy. This is having a rubboff effect on Asian markets today and will likely boost domestic equities too.
Here’s breaking down the pre-market actions.
STATE OF THE MARKET
SGX Nifty signals positive start
Nifty futures on the Singapore Exchange traded 42 points, or 0.42 per cent higher at 10,080.50 in signs that Dalal Street was headed for a positive start on Wednesday.
Tech view: Nifty eyes 10,000
Nifty climbed for the fifth straight session on Tuesday and formed a bullish candle on the daily chart. The 50-pack has been forming higher highs and lows for some time, suggesting that supports have shifted higher. The index needs to take out the 10,000 level soon, else profit booking may set in, analysts said.
Asian shares gain up to 1.3%
Asian stocks gained on hopes of more government stimulus bolstered riskier assets and overshadowed a host of other worries from the coronavirus to Hong Kong and growing US civil unrest. Hong Kong’s Hang Seng Index jumped 1.28 per cent, or 307.62 points, to 24,303.56. China’s benchmark Shanghai Composite index gained 0.31 percent, or 8.99 points, to 2,930.39. Japan’s Nikkei 225 index was up 1.38 per cent or 308.50 points at 22,634.11 in early trade.
Oil prices hit 3-month highs
Oil rose on Wednesday to a near three-month high amid optimism that major producers will extend production cuts as the world recovers from the coronavirus pandemic. Brent crude was up 22 cents, or 0.6%, at $39.79, by 0003 GMT, the highest since March 6, having gained 3.3% on Tuesday.
US indices settled higher
US stocks ended higher, as Wall Street weighed the possibility of normalising economic activities amid civil unrest. The Dow Jones Industrial Average index rose 267.63 points, or 1.05 per cent, to 25,742.65. The S&P500 index was up 25.09 points, or 0.82 per cent, to 3,080.82. The Nasdaq Composite Index increased 56.33 points, or 0.59 per cent, to 9,608.37.
Q4 earnings today
BPCL, Aurobindo Pharma, MAS Financial Services, Orient Hotels, DCM Shriram, Cholamandalam Investment, Dishman Carbogen Amcis and Vesuvius India are among companies which will announce their March quarter results on Wednesday.
RIL’s rights issue closes today
The Mukesh Ambani-led company’s Rs 53,124 crore rights issue will close today. The issue has received total bids received of 54.9 crore shares so far, overshooting the 42.26 crore shares on offer by 29.8 per cent.
FIIs buy Rs 7,498 cr worth of stocks
Net-net, foreign portfolio investors (FPIs) were buyers of domestic stocks to the tune of Rs 7,498.29 crore, data available with NSE suggested. DIIs were net buyers to the tune of Rs 441.05 crore, data suggests. Data showed billionaire banker Uday Kotak on Tuesday sold 2.83 per cent of the promoter group’s holding in private sector lender Kotak Mahindra Bank for Rs 6,944 crore.
MONEY MARKETS
Rupee: The rupee on Tuesday rebounded by 18 paise to close at 75.36 against the US dollar after Prime Minister Narendra Modi asserted that the country will get back its economic growth.
10-year bonds: India 10-year bond yield fell 0.73 per cent to 5.99 after trading in 5.99-6.08 range.
Call rates: The overnight call money rate weighted average stood at 3.60 per cent, according to RBI data. It moved in a range of 1.80-4.15 per cent.
The DAY PLANNER
- Q4 Earnings: Aurobindo Pharma | BPCL | Chola Finance | MAS Financial
- RBA Interest Rate Decision (10.00 am)
- Markit Services PMI India (10.30 am)
- UK May Nationwide Housing Prices YoY (11.30 am)
- UK April Mortgage Lending (02.00 pm)
- BoE Consumer Credit April (02.00 pm)
MACROS
Maximum City braces for Cyclone… Mumbai is bracing for its first cyclone in at least a century as Cyclone Nisarga with wind speed of up to 120 km per hour is expected to hit the city and neighbouring districts on Wednesday, which is likely to flood low-lying areas in the region. It will be the second severe storm to hit India’s coastline in two weeks. Mumbai is likely to be drenched in 200 mm of rain, which is nearly one-fifth of total rainfall the metropolis gets in June.
DIIs call the shots on D-Street… DII holding in Indian equities rose to a record high of 14.8% in March quarter 2020 amid sustained exodus of DII money. DIIs’s AUM stood at Rs 20.4 lakh crore in April, down 10% since the beginning of 2020, against FIIs’ Rs 24.4 lakh crore down 21.3%. Year to date, DIIs have invested close to Rs 72,000 crore while FIIs have pulled out Rs 39,000 crore. The ratio of FPI-DII ownership dropped to 1.2 this April from the peak of 3.8 in April 2015.
LIC losing clout in market… LIC’s ownership in listed Indian companies hit an all-time low of 3.88% as on March 31. The value of its investments had declined by over Rs 1.7 lakh crore during the quarter due to the selloff following the Covid-19 outbreak. The value of the LIC’s holdings in listed stocks dropped from Rs 6.04 lakh crore as on December 31 to Rs 4.24 lakh crore as on March 31. On a free-float basis, LIC’s ownership in Indian companies declined to a record low of 7.85 per cent.
PSU bank privatisation mulled… The government has taken baby-steps toward privatising one or more PSU banks to make them stronger, likely undoing a legacy that started with the nationalisation of banks in 1969, said three people familiar with the plans. A group of top government functionaries has begun discussions on the proposal that originated from state-backed think tank Niti Aayog that’s aimed at halting future bailouts by the taxpayer. Possible candidates could include Punjab & Sind Bank, Bank of Maharashtra and Indian Overseas Bank, which are not part of the ongoing consolidation plan.
Banks may recast Rs 3 lakh cr loans… Domestic lenders have asked RBI to allow them to restructure loans worth about Rs 3 lakh crore given to hospitality, aviation and commercial property companies without downgrading these assets on their books. These sectors are among the worst-hit by the Covid-19 pandemic and subsequent lockdown. At the end of April, banks had an exposure of Rs 2.3 lakh crore to commercial realty, Rs 45,862 crore to hospitality businesses, and over Rs 30,000 crore to aviation firms.
Call for bad banks grows louder… Financial services sector entities batted for a one-time restructuring of all loans and setting up of a bad bank to help revive the economy and shore up weak balance sheets that they said would be seen a year from now due to the impact of Covid-19. Speaking at the 125th annual session of the CII on Tuesday via videoconference, entities representing NBFCs, health insurers and private equity firms also backed the idea of a single financial regulator, besides enabling healthcare insurance for all.
Rs 1.25 lakh cr investments in queue… The government is considering investment proposals worth $16-17 billion (around Rs 1.25 lakh crore) to boost domestic production of air conditioners and its components, furniture and leather footwear, while looking at options, including duty hikes, to reduce import dependence and push exports. For ACs, the government has been advised to increase customs duty on components to discourage imports from China. For furniture, three-four clusters involving investment of over Rs 75,000 crore have been discussed.
Listed firms not revealing Covid impact… Many listed firms are holding back from disclosing the extent of financial damage that the lockdown has inflicted on them, notwithstanding the recent push from the capital market regulator to divulge the exact impact. Most firms, in their exchange filings, said they were unable to quantify the losses on account of the shutdown of plants and operations; though lawyers feel the reluctance could stem from fear of adverse impact on the share price in advance.
Moody’s cuts rating for SBI, HDFC Bank… Global rating agency Moody’s has downgraded ratings for State Bank of India and HDFC Bank’s long-term local and foreign currency deposit from “Baa2” to “Baa3”. This is part of rating action on 11 banks, after Moody’s downgraded India’s sovereign rating from “Baa2” to “Baa3” with a negative outlook. It also downgraded seven Indian infrastructure issuers, including NTPC, NHAI, GAIL and Adani Green Energy Restricted Group, by one notch. Issuer ratings of IRFC and HUDCO have also been lowered.
India set to re-enter UNSC… India is set to re-enter the UN Security Council for the eight time, as it is the sole contender for the Asia Pacific seat, after the General Assembly holds polls for electing the five non-permanent members on June 17. UNGA will have new voting arrangements due to the Covid-19 restrictions. India’s candidature for 2021-22 for the lone seat from Asia Pacific had been unanimously endorsed by 55 members of the group last June.
Trump invites Modi to G-7 summit… US President Donald Trump on Tuesday invited PM Narendra Modi to G-7 Summit as part of his efforts to expand the grouping to G-11 where China, however, does not figure. Both discussed a host of issues including India-China border row. The two leaders also exchanged views on other topical issues, such as the COVID-19 situation in the two countries, the situation on the India-China border, and the need for reforms in the World Health Organisation.
