Here’s a lowdown on top macro triggers that may move market on Thursday. This report was compiled from agency feeds.
Aadhaar Valid but With Riders
The Supreme Court upheld the constitutional validity of the government’s Aadhaar scheme as pro-poor and inclusionary on Wednesday, but scrapped provisions of the legislation that were seen as enabling surveillance by the state. Aadhaar won’t be mandatory for opening bank accounts, getting a phone connection or school admissions, the constitutional bench ruled. The lone dissenter in the 5-judge bench, Justice DY Chandrachud, said the Aadhaar Act was unconstitutional.
Import Duty Raised on 19 Items to Stem Rupee Slide
Imported air conditioners, refrigerator and washing machine are all set to get dearer as the government has hiked customs duty to 20 per cent from 10 per cent at present on 19 items. This follows government announcement to import curbs on non-essential imports to curb ballooning current account deficit (CAD). Changes in rates will be effective from midnight of September 26. The import duty on aviation turbine fuel (ATF) has been hiked by 5%, which will send the air fares soaring.
Fed Hikes Rates by 25 bps
US Federal Reserve raised interest rates for a third time this year and reaffirmed their outlook for further gradual hikes well into 2019, risking fresh criticism from President Donald Trump. The quarter-point increase boosted the benchmark federal funds rate to a target range of 2% to 2.25%. The move reflected an upbeat assessment of the economy that was identical to the central bank’s last policy statement eight weeks ago, despite concerns over Trump’s escalating trade war.
Oil Near 4-year High
Oil prices rose by 1% on Thursday as investors focused on the prospect of tighter marketsdue to US sanctions against major crude exporter Iran, which are set to be implemented in November. Front-month Brent crude futures LCOc1 were at $82.17 per barrel at 0133 GMT, up by 83 cents, or 1% from their last close, just off Tuesday’s four-year highs.US West Texas Intermediate (WTI) crude futures CLc1 were at $72.41 a barrel, up 84 cents, or 1.2% from their last settlement.
China Profit Growth Slows; Announces Fresh Import Tariff Cuts
Profits earned by China’s industrial firms in August rose 9.2% from a year earlier, slowing for the fourth straight month with growth nearly halving from the previous month. China on Wednesday unveiled plans to cut tariffs for products including machinery, electrical equipment and textile products beginning on Nov. 1, as the country braced for an escalating trade war with the United States. China accused US of “putting knife to its neck” as US tariffs on $200 bn worth of Chinese goods kicked in on Monday.
Govt Clears Sugar Package of Rs 5,500 Crore
The Union cabinet has cleared a Rs 5,500-crore package for the sugar industry to help mills pay sugarcane arrears to farmers and provide transport subsidy to mills for export of the commodity in the 2018-19 marketing year, from October to September. The government will provide financial assistance of Rs 13.88 per quintal of cane crushed in sugar season 2018-19 to sugar millsNSE -4.10 %, up from Rs 5.50 per quintal assistance provided this year. Total expenditure is pegged at Rs 4,163 crore.
Cabinet Nod for New Telecom Policy
The Union Cabinet on Wednesday approved the new telecom policy – the National Digital Communications Policy 2018 — which aims to create four million jobs, draw $100 billion of investments into the telecom industry by 2022, boost the sector’s contribution to 8% of GDP from 6% in 2017 besides backing the principles of net neutrality. The government plans to optimally price spectrum, review license fees and SUC as well as M&A rules to ease exits and take a fresh look at spectrum sharing, leasing and trading guidelines.
Coal Allotment to Power Plants with Short-Term PPAs?
The government may lift a nearly decade-old restriction on allotment of coal to merchant power plants that supply electricity to short-term markets, including the power exchanges. This may come as a relief to power projects stressed for want of coal and long-term power purchase agreements (PPAs). Short-term power contracts refer to contracts for less than a year.
POLICIES & MORE
- The Supreme Court is likely to pronounce on Thursday its verdict on a batch of pleas by Muslim groups on the Ram Janmabhoomi-Babri Masjid title dispute seeking reconsideration by a larger bench, the observations made by it in a 1994 verdict that a mosque was not integral to Islam.
- The Supreme Court on Wednesday said that governments do not need data to justify quotas in promotion for SCs/ STs in government jobs, a move that augurs well for the government ahead of general elections. But the top court did not hear the Attorney General’s (AG’s) suggestion for reservations on the basis of share of SCs/STs in the entire population. The concept of creamy layer would apply to SCs and STs as well.
- India is expected to grow at a healthy 7.3% in fiscal year 2018, helped by improved domestic demand and a steady revival in industrial growth, the Asian Development Bank said in a new report.
- The government has initiated discussions with public sector banks for second round of capital infusion. All the banks have asked for recapitalisation programme to be advanced, Financial Services Secretary Rajiv Kumar said.
Well Managed NBFCs with Strong Parents Will Do Well in Future: Navneet Munot, SBI MF
‘How to Identify Multibaggers Among Small and Midcaps’
Rupee Up: The rupee bounced back on Wednesday after a two-day downtrend and ended higher by 9 paise at 72.60 against the American unit on bouts of dollar selling by exporters before the Fed rate decision.
Long-term Bond Yields Ease: Government bonds (G-Secs) gained further following rising demand from corporates and banks. The 7.17% G-Secs maturing in 2028 surged to Rs 94.17 from Rs 93.8350, while, its yield eased to 8.07% from 8.13%. The 6.68% G-Secs maturing in 2031 advanced to Rs 88.38 from Rs 88.0625, while, its yield edged down to 8.15% from 8.19%.
Shorter-term Bond Yields Ease: The 6.84% G-Secs maturing in 2022 climbed to Rs 95.64 from Rs 95.44, while, its yield moved down to 8.07% from 8.13%. The 7.59% G-Secs maturing in 2026, the 8.15% G-Secs maturing in 2022 and the 6.65% G-Secs maturing in 2020 were also quoted higher to Rs 96.75, Rs 100.25 and Rs 98.24 respectively.
Call Rates Stable: The overnight call money rates held stable at its previous level of 6.30%, It resumed higher at 6.60% and moved in a range of 6.65% and 6.15%.
Liquidity: The Reserve Bank of India (RBI), under the Liquidity Adjustment Facility (LAF), purchased securities worth Rs 3,746 crore in 5-bids at the overnight repo opertion at a fixed rate of 6.50% as on Wednesday, while its sold securities worth Rs 78,595 crore in 69-bids at the overnight reverse repo auction at a fixed rate of 6.25% as on September 25.[“Source-economictimes”]