need2know: Nine macro triggers that should matter for market today

The Nikkei India Manufacturing Purchasing Manager’s Index (PMI) rose to 51.2 in August from a 101-month low of 47.9 in July. NSEBSEInfosysLoading data…

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      ChartsValuation & Peer ComparisonCommunity BuzzPEER COMPANIES The much-awaited Cabinet reshuffle and expansion finally took place on Sunday and was aimed at the 2019 Lok Sabha elections. While giving India it’s first woman defence minister in Nirmala Sitharaman, the new-look cabinet saw the induction of a batch of former bureaucrats, two of whom are not even members of Parliament. The new team has the clear-cut task of delivering over the remaining 18 months, on Modi’s electoral promises and programmes rolled out in the past three years.

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

      Back on Track
      After the demonetisation blues and the drastic fall in Q1 (April to June) growth figures, here’s the good news. Manufacturing activity in the country rebounded in August with new orders and output returning to growth territory after contracting in July due to the rollout of the Goods and Services Tax (GST). The Nikkei India Manufacturing Purchasing Manager’s Index (PMI) rose to 51.2 in August from a 101-month low of 47.9 in July. The expansion, came a day after the government said manufacturing growth in the first quarter of the current financial year plummeted to 1.2% from 10.7% a year ago, bogged down by the lingering effects of demonetisation and GST rollout and making India’s GDP growth slump unexpectedly to a three-year low of 5.7%

      Cabinet Revamp
      In the third rejig of his Cabinet which could become the last of this government, Prime Minister Narendra Modi gave India its first full-time woman Defence Minister in form of Nirmala Sitharaman. Dharmendra Pradhan, who belongs to the state of Odisha that is going to polls in 2018, has been given additional charge as the Minister of Skill Development and Entrepreneurship apart from Petroleum and Natural Gas Ministry which has been his charge for quite some time. Piyush Goyal has been given the Railway Ministry, taking over from Suresh Prabhu. Goyal will have the additional charge of Ministry of Coal. Newly inducted, former bureaucrat RK Singh has been made Minister of State (Independent Charge) of the Ministry of Power; and Minister of State (Independent Charge) of the Ministry of New and Renewable Energy.

      FMCG Booster
      Fast-moving consumer goods (FMCG) companies are planning an all-out bid to salvage sales in a year dampened by demonetisation and the goods and services tax (GST) rollout in the upcoming festive months. Big spenders, such as makers of daily grocery products including biscuits, snacks, juices, toothpaste and hair oil, said expenditure on consumer promotions would increase by 15-20% in the September-December period from the year earlier in expectation of upbeat consumer-buying sentiment. FNCG companies like Parle Products, PepsiCo, Marico and Dabur are pinning their hopes on festive season spending. Spends on new launches account for about 25% of overall FMCG ad spends, which stopped completely in Q1 FY18. Moreover, due to de-stocking. Media companies will benefit from FMCG ad spend boost.

      Cess on SUVs, Large Cars
      President Ram Nath Kovind has promulgated an ordinance to raise the compensation cess levied luxury, sports utility and large cars under the goods and services tax (GST) regime to 25% from 15%. The union cabinet had approved recommendation of the ordinance on August 30. The GST Council, the apex decision making body for the new tax regime, will now take a call on the implementation of the higher cess as also the quantum of increase. The council that meets on September 9 would now take a call on this.

      Windfall for Infosys Promoters?
      Infosys promoters, including iconic co-founders N R Narayana Murthy and Nandan Nilekani, have offered to sell as many as 1.77 crore shares — worth up to Rs 2,038 crore — in the company’s Rs 13,000 crore buyback offer. The promoters group — which includes most of the founders and their families — have expressed their intention to be part of the company’s first buyback plan in its over three-decade history and have offered to tender a maximum of 1.77 crore shares. At a buyback price of Rs 1,150 per share, this could mean a windfall of Rs 2,038.94 crore for the promoter group, if all the shares tendered by them are accepted in the buyback offer. The founders and families — classified as promoters group — held 29.28 crore shares, or 12.75%, in Infosys at the end of June 2017.

      Commodity Control
      Just before the festive season starts, the government is undertaking the twin task of keeping the farmer and the consumer happy. The commerce ministry has extended the last date of raw sugar export to the US under tariff rate quota (TRQ) till October 31.While this should help sugarcane farmers, the government has also recently imposed stock restrictions on sugar mills and advised states to take similar action on onion as part of steps to protect the consumer. The government has allowed import of 2,400 tonnes of onions by private traders from Egypt to boost supply. More imports will be allowed if rates go up unreasonably high. The consumer affairs ministry is closely monitoring onion prices, which are ruling high in the range of Rs 40-50 per kg in most retail markets depending on the quality.

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      FUNDAMENTALS
      Rupee Down
      : The rupee on Friday weakened over one week low against the US dollar after India’s economic growth slowed down unexpectedly to three year low. The rupee ended at 64.03 a dollar — a level last seen on 24 August, down 0.19% from its Thursday’s close of 63.91.

      Bonds Surge: Government bonds (G-Secs) surged on rising buying support from banks and corporates. While, interbank call money rates maintained its stable trend as the demand from borrowing banks match supplies. The 6.79% G-Secs maturing in 2027 rose to Rs 102.17 from Rs 101.8675 yesterday, while its yield declined to 6.48% from 6.53%. The 6.79% G-Secs maturing in 2029 gained to Rs 99.80 from Rs 99.52, while its yield eased to 6.81% from 6.85%. The 7.68% G-Secs maturing in 2023 climbed to Rs 105.4850 from Rs 105.3775, while its yield edged down to 6.60% from 6.62%. The 6.68% G-Secs maturing in 2031, the 7.35% G-Secs maturing in 2024 and the 7.72% G-Secs maturing in 2025 were also quoted higher to Rs 100.50, Rs 103.57 and Rs 105.6375 respectively.

      Call Rates Stable: The overnight call money rates ended stable at its yesterday’s level of 5.80%. Its commenced higher to 5.90% and trading in a range of 6.00% and 5.70%.

      Liquidity: The Reserve Bank of India, under the Liquidity Adjustment Facility, purchased securities worth Rs 2365 crore in 6-bids at the 3-days repo operations at a fixed rate of 6.00% as on Friday, while its sold securities worth Rs 38205 crore in 72-bids at the overnight reverse repo auction at a fixed rate of 5.75% as on Aug 31.

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