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Market Movers: Business optimism up; China factory growth down, oil prices slip & more

A look at top macro triggers that may move market on Tuesday.

Jul 31, 2018, 07.59 AM IST
Here’s a lowdown on top macro triggers that may move market on Tuesday. This report was compiled from agency feeds.

Biz Optimism Index for Q2 Rises 12%
Corporate India's business optimism index for the July-September quarter registered an 11.7% increase over last year, while on a quarter-on-quarter basis it has declined, says a report. The Dun & Bradstreet Composite Business Optimism Index stood at 80.6 during the third quarter of 2018, an increase of 11.7% as compared to the corresponding period last year. Business optimism was low in the July-September quarter of 2017, as a result of GST and effects of demonetisation.

US Eases Controls for Hi Tech Exports
The US has eased export controls for high-technology product sales to India by designating it as a Strategic Trade Authorization-1 (STA-1) country, the only South Asian nation on the list. The granting of STA-1 status to India comes after the US recognised India as a "Major Defence Partner" in 2016, a designation that allows India to buy more advanced and sensitive technologies from America at par with that of the US' closest allies and partners, and ensures enduring cooperation.

BoJ Policy Today
The Bank of Japan will likely trim its inflation forecasts on Tuesday and consider changes to its massive stimulus programme to make it more sustainable, reflecting a growing recognition it will take longer than expected to meet its elusive price goal. There is uncertainty on how long it can sustain the current ultra-easy policy given the strain near-zero rates are inflicting on Japanese banks and the bond market. The yen edged up against the US dollar before the policy decision.

China's July Factory Growth Slows
Growth in China’s manufacturing sector slowed more than expected in July, as the worsening trade dispute with Washington and bad weather weighed on factory activity. The official Purchasing Managers’ Index (PMI) released on Tuesday fell to 51.2 in July, from 51.5 in June, but remained above the 50-point mark that separates growth from contraction for a 24th straight month.

Oil Prices Slip
Oil prices slipped on Tuesday after a report showed that OPEC production reached a 2018 high in July, although the losses were limited as concerns about supply lingered. Sept Brent crude futures fell 7 cents to $74.90 a barrel by 0109 GMT after rising 68 cents, or 0.9%, on Tuesday. U.S. West Texas Intermediate crude futures (WTI) were down 6 cents at $70.08, after rising more than 2% in the previous session. In India, petrol and diesel rates inched up on Monday after falling for two weeks. Prices went up 9 paise per litre in case of petrol and 13 paise in case of diesel.

SBI Hikes FD Rates
Just two days before the Reserve Bank of India's bi-monthly monetary policy review, the country's largest lender, State Bank of India (SBI) announced a hike in its fixed deposit (FD) rates on Monday.
SBI FD Rates

Merger of LLP, Private Cos Allowed
In what could kick off a new wave of mergers and acquisitions and open a new frontier in the resolution space, Chennai National Company Law Tribunal has given the green signal to merger of a Limited Liability Partnership with a private company. The move, experts say, sets a distinct precedent as the Companies Act, 2013 and the LLP Act, 2008 do not contain any express provisions providing for such cross-entity amalgamation.

  • The government’s draft e-commerce policy makes a strong case for championing ‘Indian’ online enterprise and may have major implications for foreign-owned e-commerce majors operating in India. Key recommendations include barring group companies of e-commerce players from “directly or indirectly influencing” sale prices.
  • India is much better placed than many other emerging market peers or compared to its own situation in 2013 during the `taper tantrum’, to tackle risks arising out of asymmetry in monetary policy of advanced economies, the rise in crude prices and the escalation of trade war tensions, said a report by ratings firm Crisil.
  • S&P Global Ratings says India's infrastructure deficit is "too large" and the country still has a long way to go before it can close the sizable deficit between supply and demand.
  • The final list of the National Register of Citizens (NRC), which is being updated in Assam, will be published by December this year, the Home Ministry announced yesterday. The declaration came on a day the draft NRC, a list of Assam's citizens, was published with exclusion of 40.7 lakh out of a total 3.29 crore applicants.
  • The Ministry of Finance has notified the Directorate General of Trade Remedies decision to impose safeguard duty on solar panels imported from China and Malaysia, which is certain to raise tariffs of future solar projects.
  • The government plans to launch the auction of 60 oil and gas fields being offered in the second round of bidding for Discovered Small Field (DSF) on August 9.

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Rupee Down: The rupee on Monday closed down by a modest 2 paise at 68.67 against the US currency to end its three-session gaining streak due to month-end dollar demand.

Long-term Bond Yields Up: Government bonds (G-Secs) ended mixed in a quitrade due to alternate bouts of buying and selling. The 7.17% 10-year benchmark bond maturing in 2028 declined to Rs 95.90 from Rs 95.97 previously, while its yield inched up to 7.79% from 7.78%. The 6.68% G-Secs maturing in 2031 slid to Rs 89.55 from Rs 89.5850, while its yield inched up to 7.98% from 7.97%.

Shorter-term Bond Yields Mixed: The 6.84% G-Secs maturing in 2022 went-down to Rs 96.3950 from Rs 96.4250, while its yield ruled steady 7.82%. However, the 7.59% G-Secs maturing in 2026 rose to Rs 97.5125 from Rs 97.48, while its yield softened to 8.04% from 8.05%. The 7.40% G-Secs maturing in 2035 gained to Rs 93.15 from Rs 93.12, while its yield held stable to 8.15%. The 7.37% G-Secs maturing in 2023 climbed to Rs 97.96 from Rs 97.9550, while its yield ruled steady 7.89%.

Call Rates Up: The overnight call money rates ended higher to 6.20% from last Friday's level of 6.10%, it resumed higher to 6.30% and moved in a range of 6.35% and 6.05%.

Liquidity: The Reserve Bank of India, under the Liquidity Adjustment Facility, purchased securities worth Rs 15,666 crore in 20-bids at the overnight repo operation at a fixed rate of 6.25% as on Monday, while its sold securities worth Rs 19,029 crore in 50-bids at the 3-days reverse repo auction at a fixed rate of 6% as on July 27.

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