Thursday, February 04, 2016
Indian equity benchmarks may witness a positive opening on Thursday as oil’s rebound to above the USD 32 per barrel mark fueled a resurgence in stocks across Asia and the US, renewing risk taking appetite. A positive trend across most Asian equities, coupled with strength in the CNX Nifty Index futures for February delivery which advanced by 0.97 per cent or 72.5 points at 7,442 at 10:24 am Singapore time, indicates that the three-day gloom at Dalal Street might have been overdone and local bourses may witness a gap up opening today. This week’s manufacturing and services data releases have delivered an upbeat prognosis on the health of Asia’s third biggest economy. While manufacturing returned into positive terrain, services growth hit the highest level in 19 months as the PMI rose to 54.3 in January from 53.6 in December, with a reading above 50 signaling expansion. Signs of a pickup in the Indian economy even amidst heightened global economic uncertainty should support investor sentiment. Shares of ABB India, Tata Steel, Bajaj Auto and JK Lakshmi Cement will be in focus today as these companies unveil their December quarter earnings numbers. Marking a three-day rout, the 30-share Sensex on Wednesday tumbled by 315.68 points or by 1.29 per cent to end at 24,223.32, as a global sell-off, a continued slide in oil prices and a weak rupee which plunged below the 68 mark against the dollar, soured sentiment.
Most Asian stocks rallied as weakness in the dollar helped spur a rebound in crude oil prices, bolstering the lure for risky assets. Oil returned to USD 32 per barrel amid speculation that OPEC and other major oil producing nations have reached an agreement to hold an emergency meeting to combat the ongoing market volatility. China’s Shanghai Composite soared by over 1.5 per cent led by gains in commodity producers and as the central bank pumped in 80 billion yuan into the banking system via reverse repurchase agreements to address a cash shortage before the start of the Lunar New Year holidays. Policymakers set a range for the country’s economic growth for the first time in two decades predicting China’s economy to expand by 6.5 -7 per cent in 2016, weaker than last year’s goal of about 7 per cent. Hang Seng also soared by more than 1.5 per cent but Japan’s Nikkei 225 fell as a stronger yen eroded the appeal of exporter stocks. Bullish sentiment returned to Wall Street on Wednesday as most benchmarks closed higher driven by gains in commodity producers and a renewed rally in oil. Traders cast aside mixed US economic data which showed that services in the world’s biggest economy expanded at the weakest pace in two years in January but private payrolls growth stood solid. While the American private sector added 205,000 workers in January, compared to 267,000 in December, the US services gauge fell to the lowest level since February 2014 at 53.5 in January 2016 from 55.8 in December 2015. The Dow Jones Industrial Average advanced 1.13 per cent; the Nasdaq Composite fell 0.28 per cent while S&P 500 rallied 0.50 per cent.
Top traded Volumes on NSE Nifty – Vedanta Ltd. 24379236.00, State Bank of India 24132003.00, ICICI Bank Ltd. 21447535.00, Axis Bank Ltd. 10077279.00 and Tata Steel Ltd. 7791522.00.
On BSE, total number of shares traded was 31.04 Crore and total turnover stood at Rs. 2708.89 Crore
On NSE Future and Options, total number of contracts traded in index futures was 300456 with a total turnover of Rs. 15302.19 Crore. Along with this total number of contracts traded in stock futures were 578575 with a total turnover of Rs. 25719.63 Crore. Total numbers of contracts for index options were 2924045 with a total turnover of Rs. 159814.42 Crore and total numbers of contracts for stock options were 323703 with a total turnover of Rs. 14885.73 Crore.
The FIIs on 03/02/2016 stood as net seller in equity and net buyer in debt. Gross equity purchased stood at Rs. 4102.32 Crore and gross debt purchased stood at Rs. 1255.17 Crore, while the gross equity sold stood at Rs. 4168.29 Crore and gross debt sold stood at Rs. 1158.84 Crore. Therefore, the net investment of equity and debt reported were Rs. -65.97 Crore and Rs. 96.33 Crore.
The Indian Government has said that the country requires USD 1 trillion for the development of new roads, ports and airports over the next few years. Commenting on the issue, Union Minister Nitin Gadkari told the media, “Upgrading infrastructure is a major challenge for policy makers of the Asia's third largest economy and India needs about USD 1 trillion (about Rs 67,00,000 crore) for new roads, ports and airports over the next few years.” “The NDA Government is set to transform India's infrastructure and there is no dearth of funds for this priority area. In the next five years we are going to change the infrastructure of this country. I know my work, I am doing it,” he added. As per reports, building of infrastructure would add 2 per cent to the India's GDP growth. As per reports, the Ministry is expecting additional Rs 15-20,000 crore in the Union Budget for 2016-17, over the current year's outlay of Rs 45,000 crore.
More than Rs 93,600 crore has been sanctioned under Pradhan Mantri MUDRA Yojana to about 2.26 crore borrowers, Minister of State for Finance Jayant Sinha said as per the PTI report. "2.26 crore loans worth Rs 93,650 crore sanctioned under PM Mudra Yojana. Rs 89,594 crore have already been disbursed. Big boost to small businesses," he tweeted. Under Pradhan Mantri MUDRA Yojana (PMMY), loans between Rs 50,000 and Rs 10 lakh are provided to small entrepreneurs. The Micro Units Development and Refinance Agency Ltd (MUDRA) focuses on the 5.75 crore self-employed who use funds totalling Rs 11 lakh crore and provides jobs to 12 crore people. The scheme was launched by Prime Minister Narendra Modi in April last year. Three products available under the PMMY are Shishu, Kishor and Tarun, to signify the stage of growth and funding needs of the beneficiary micro unit or entrepreneur. Shishu covers loans of up to Rs 50,000 while Kishor covers those above Rs 50,000 and up to Rs 5 lakh. Tarun category provides loans of above Rs 5 lakh and up to Rs 10 lakh. The banking sector has been allocated an overall disbursement target of about Rs 1.22 lakh crore during 2015-16 for MUDRA loans
The Indian Government has said that putting floors and caps on airfares will push the ticket prices higher as competition among airlines has kept the fares lower. Commenting on the issue, Union Minister Ashok Gajapathi Raju told the media, "Competition has kept the prices down and we should not discourage that. In our analysis, if we take a year of ticketing, 1.7 per cent of the ticketing (air tickets) were priced high. So if you go into floors and caps, we will be pushing up the cost of tickets to about 98 per cent and bringing it down for the rest. I don't think that is how policy is formulated. We would like to keep it (ticket prices) down and things to be passed on (to passengers)." "We have been requesting airlines to pass on the benefits of lower ATF prices. Airlines had a rough time till recently, so they have out done it. Their books are better and ATF has contributed to it... Price benefits need to be given to consumers," he added. According to the Minister, airlines should pass on the benefits of lower ATF prices to the flyers.
Funds raised by Indian companies through Qualified Institutional Placement (QIP) plunged by 58 per cent to over Rs 1,600 crore in the third quarter of the ongoing fiscal. Firms had mopped up Rs 4,123 crore through QIP route during the October-December period of previous fiscal 2014-15. The funds have been raised for expansion, refinancing of debt and to meet working capital requirements. According to the data available with the Securities and Exchange Board of India (Sebi), Indian firms garnered Rs 1,697 crore via QIP route during October-December 2015-16, lower than Rs 4,123 crore mopped up in the same period of 2014-15. The funds mobilised by companies through QIP issues rose to Rs 1,288 crore in December from Rs 409 crore in the preceding month. During the first nine months of 2015-16 fiscal, the highest fund mobilisation was seen in July (Rs 4,824 crore), followed by September (Rs 4,338 crore). August saw the lowest amount (Rs 231 crore) garnered through institutional investors. October saw no QIP issues. In terms of numbers, four issues were witnessed during the period under review as compared to 17 issues in the corresponding quarter.
The Indian Railways has said that ahead of monsoon, it will install solar-powered sensors near bridges to monitor the rising water level during the rainy season to prevent any mishap as railway tracks often get submerged due to the overflowing of floodwater affecting train operations during monsoon season. Commenting on the issue, a Senior Railway Official told the media, "Submerging of tracks also causes disruption of train services. At times overflowing of river washed away tracks causing derailment." “If the nearby station authorities get caution messages then preventive steps can be taken before-hand,” the official added. According to the system, the radar will sense water levels at regular intervals and send information to the electronic unit which in turn will send it to the central server here from where it will sent to local servers at stations adjacent to bridge. As per reports, the system is operational in Trichy and it has been found to be very effective in sending messages on water level.
The number of mobile users in India is projected to grow at a CAGR of 4.4 per cent to 990.2 million, covering about 71 per cent of the country's population, by 2020 from 798.4 million last year, according to a report by networking giant Cisco.
Also, mobile data traffic generated is forecast to grow 12-fold to reach 1.7 Exabytes (about 430 million DVDs) per month by 2020, driven by availability of cheaper smartphones and affordable data tariffs, said Cisco's Mobile Visual Networking Index.
Mobile data traffic was about 148.9 Petabytes (34 million DVDs worth of data) per month in 2015, reported PTI.
"With the ever-increasing billions of people and things that are being connected, mobility is the predominant medium that's enabling today's global digitisation transformation," Cisco Vice President Service Provider Marketing Doug Webster said.
Future mobile innovations in cellular like 5G and wi-fi solutions will be needed to further address new scale requirements, security concerns, and user demands, he added.
The report said 4G connections in India are expected to grow at a compound annual growth rate (CAGR) of 144 per cent in 2015-2020, accounting for 26.2 per cent of the total mobile connections by 2020.
3G connections are forecast to be 52.6 per cent of the total mobile connections by 2020, compared to 15.7 per cent in 2015, it added.
The Indian Government has said that in order to prevent leakages in the flagship rural job programme, all wage payments to MGNREGA workers will be made through Direct Benefit Transfer to bank accounts of the beneficiaries from April this year. Commenting on the issue, Rural Development Minister Chaudhary Birender Singh told the media, “From April 1, 2016 all wage payments to MGNREGA workers will be done through DBT. Currently, 94 per cent of the wage payments are directly deposited in the account of beneficiaries.” “Among the reforms responsible for revival of MGNREGA are timely release of funds to states to provide work on demand, an electronic fund management system, consistent coordination between banks and post offices besides monitoring of pendency of payments,” he added. As per reports, the focus for the upcoming years will be on simplification and strengthening of procedures and a Master Circular is being issued which consolidates all key instructions from the central government on the implementation of the Act.
There is a liquidity deficit in the banking system and the Reserve Bank needs to be more proactive in managing this area of concern, the economic research wing of SBI said as per the media reports.
"With enhanced Liquidity Coverage Ratio kicking in from January 2016 (from 60 per cent to 70 per cent) and deposit growth lagging, RBI may have to be proactive in managing the liquidity deficit through tools available at its disposal," its economists said in a note.
Terming it as a "concern", the note said the systemic liquidity has turned into a significant deficit mode.
It said as of now, the liquidity deficit is averaging around Rs 1.5 trillion compared to around Rs 500 billion over October-November period but conceded that there might be some seasonal factors causing it.
It also acknowledged that the RBI is engaged in doing term repos for mitigating the liquidity tightness.
Indian households expect inflation at over 10 per cent in the year ahead, twice as much as RBI's retail inflation target of 5 per cent by March 2017, according to a survey conducted by the Reserve Bank of India.
According to Reserve Bank's 'Inflation Expectations Survey of Households: December 2015' results, which were out today, Indian households expect inflation at 10.5 per cent in the next one year and 10.3 per cent each for current and next three months.
These survey results act as useful information for RBI to decide on its monetary policy, reported PTI.
At its policy review yesterday, RBI kept repo rate unchanged at 6.75 per cent, awaiting inputs from the Budget on February 29 and further data on inflation.
In general, a majority of the respondents -- 90 per cent -- expect prices to increase over the next three months and a year ahead.
The survey covered inflation expectations of 4,828 urban households' individual consumption basket across 16 cities.
RBI has been conducting Inflation Expectations Survey of Households since September 2005.
In a separate 'Consumer Confidence Survey: December 2015', RBI said the one-year outlook on economic conditions has been consistently better than a year ago.
The survey studies respondents' perception on general economic conditions and their own financial situation.