need2know: Nine macro cues for your day on D-Street

The government is formulating a novel scheme to revive stressed power assets by inviting competitive bids from them to supply electricity for five years India and China on Tuesday indicated that the 73-day Doklam stand-off was an issue in the past, and the two neighbours were keen to move on. India and China resolved on Tuesday to maintain strong contacts between the defence and security mechanisms to avoid any recurrence of such situations and maintain peace and tranquillity on the borders. Xinhua, the state run Chinese news agency, quoted Chinese President Xi Jinping to have told Prime Minister Narendra Modi during their bilateral meeting that “China and India should see each other as development opportunities, not threats.”

Here’s a lowdown on eight more macro triggers that are likely to impact the market on Wednesday. This report was compiled from agency feeds.

2.09 Lakh Cos Deregistered
Bank accounts of more than 200,000 shell companies have been frozen after they were struck off the Register of Companies as the government intensifies its crackdown against black money. The government urged banks to step up diligence while dealing with companies in general. “Banks will also flag such firms which are not complying with the mandatory (regulatory) filings,” said financial services secretary Rajiv Kumar, adding that the move will ensure compliance in the corporate sector. In his Independence Day speech, Prime Minister Narendra Modi had said the drive against black money had led to the discovery of a vast number of shell companies.

Indo-Russian Cooperation
India and Russia on Monday agreed to expand cooperation to stabilise war-torn Afghanistan where both have stakes, besides exploring ways to further trade, investment and energy ties amid New Delhi’s attempt to expand presence in far eastern Russia where China has made inroads. Prime Minister Narendra Modi met Russian President Vladimir Putin on the sidelines of the BRICS Summit. Amid growing Chinese presence in the resource-rich Russian far eastern region, Moscow has courted India by inviting Foreign Minister Sushma Swaraj to the Eastern Economic Forum (EEF), to be held in Vladivostok on September 6 and 7. Russia is understood to have played a quiet role in defusing the crisis in Doklam ahead of the BRICS Summit.

Kharif Crop Hit?
This year’s kharif harvest may be lower than 2016 because of floods in several states and lower planting of some crops, but the country has enough stocks to meet food requirements and keep prices under control, traders and analysts said. Output of pulses and oilseeds is expected to fall because of lower planting, while production of rice, the main kharif crop, is likely to be the same as last year as higher yields will offset lower sowing, trade bodies representing buyers of pulses and rice said. Cash crops are likely to do much better. Companies and traders were bullish about sugarcane and cotton, which have seen an increase in acreage by 9% and 18%, respectively, this year.

Bidding For Power
The government is formulating a novel scheme to revive stressed power assets by inviting competitive bids from them to supply electricity for five years – a move that will give state utilities cheaper electricity and help stranded plants start operation and start repaying debt. The proposal is the government’s biggest plan to help 34 stressed plants with a capacity of 40,000 megawatts. The power ministry, reportedly, is considering pooling electricity demand of various states and call tariff-based bids. The contracts will be passed on to the states later. Guidelines for the scheme are likely to be issued in a month. The proposal also seeks to comfort state-owned discoms by waiving fixed cost payment when they do not offtake power from such plants.

DeMo Blues
Demonetisation hurt the informal economy and triggered a rush for distress labour under job guarantee scheme (MGNREGA), says Economic Survey-II, though the wages available under the scheme may also have helped contain rural unrest and a political backlash to some extent. Studying various dimensions of a spike in demand for work under MGNREGA after demonetisation in November 2016, the survey, the official document capturing the state of economy for 2016-17, noted that there was a 14-week stretch when demand for work surged before falling into a familiar groove following March, 2017.

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Services Contract: Service activity in India remained subdued in August as companies reeled under pressure from the rollout of the Goods and Services Tax (GST), although the downturn was less severe than in July, a private survey showed on Tuesday. The Nikkei India Services PMI Business Activity Index rose to 47.5 in August from a five-year low of 45.9 in July. A reading above 50 denotes expansion while a figure below is a sign of contraction.

Rupee Down: The rupee dropped by 13 paise to 64.18 against the dollar at the interbank forex market today amid sustained foreign fund outflows.

Bonds Mixed: Government bonds (G-Secs) ended mixed in a quiet trade due to alternate bouts of buying and selling. The 6.79% 10-year benchmark bond maturing in 2029 were weakened to Rs 99.75 from Rs 99.7750 yesterday, while its yield held stable to 6.82%. The 6.79% G-Secs maturing in 2027 were declined to Rs 102.0650 from Rs 102.08 previously, while its yield ruled steady to 6.50%. The 7.72% G-Secs maturing in 2025 were slid to Rs 105.49 from Rs 105.51 previously, while its yield held steady to 6.79%. However, the 6.68% G-Secs maturing in 2031, the 7.68% G-Secs maturing in 2023 and the 6.57% G-Secs maturing in 2033 were quoted higher to Rs 100.4475, Rs 105.40 and Rs 97.20 respectively.

Call Rates Steady: The overnight call money rates continued steady at its yesterday’s level of 5.80%, It resumed higher to 5.95% and moved in a range of 6.00% and 5.70%.

Liquidity: The Reserve Bank of India, under the Liquidity Adjustment Facility, purchased securities worth Rs 1635 crore in 3-bids at the overnight repo operation at a fixed rate of 6.00% as on today, while it sold securities worth Rs 10679 crore in 43-bids at the overnight reverse repo auction at a fixed rate of 5.75% as on September 04.

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