Go, cover your shorts, no matter how grim global markets are! Finance Minister Nirmala Sitharaman's liquidity-boosting measures may not be game changer for the economy, but they will help turn around sentiment in certain sectors, leading to pairing of bearish bets in the market. Few doubt that the current economic slowdown, which is a combination of cyclical and structural issues, will take time to fade away. But the FM has removed some irritants and tried to tackle some structural issues, which should help prevent incremental damage.
STREET PULSE: Where we stand Asian shares sank on Monday as the latest salvo in the Sino-US trade war shook confidence in the world economy and sent investors steaming to the safe harbors of sovereign bonds and gold. President Donald Trump on Friday announced a 5% additional duty on $550 billion in targeted Chinese goods, hours after China unveiled retaliatory tariffs on $75 billion worth of US products.
Read More  | SGX Nifty traded 58 points higher at 7 am (IST), signalling buoyancy ahead in Indian shares. MSCI index for Asia-Pacific shares outside Japan shed 2.0%, and Australian shares 1.5%. Japan's Nikkei lost 2.3%, while Shanghai blue chips fell 1.2%. |
| Wall Street nosedived on Friday. Dow tanked 623 points, or 2.4%, the S&P500 slid 2.6% and the Nasdaq 3% |
Oil prices fell, as a ratcheting up of tensions in the US-China war knocked confidence in the global economy. Brent crude fell 89 cents to $58.45 a barrel while WTI crude fell $1 to $53.17.
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Joyride!... Indian stocks, especially automakers, public sector banks and housing finance companies look set for a major rally on Monday after the government announced liquidity-boosting measures and withdraw an enhanced tax surcharge on overseas investors post market hours on Friday. While these measures are not game-changers, nonetheless they will provide relief to holders of the shares, which have been battered in recent weeks.
Read More | RBI board to consider Jalan Panel Report today >>> |
Haircut... Troubled mortgage lender Dewan Housing Finance has proposed a 35% haircut to all lenders as part of its resolution plan submitted to Union Bank of India. As per the plan, there will not be any principal haircut. However, maturities are expected to be elongated by five to 10 years with some coupon haircuts. On net present value basis, bond holders may get a 30-35% hit on principal.
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Trust deficit… A crisis of confidence has gripped investors putting money in debt papers of NBFCs. More than three-fourths of the total 28 NCD issues of NBFCs in past 10 months have remained undersubscribed, despite offering higher yields. Between September 2018 and June 2019, only six of the 28 NCD public issues by non-bank lenders, including those of Indiabulls Consumer Finance, JM Financial Credit Solutions, Srei Infrastructure Finance and Manappuram Finance — were under-subscribed by 73-80 per cent.
Read More | Rupee could lose another 3% on yuan, EM woes>>> |
Trump Twister... US President Donald Trump on Sunday rowed back from a suggestion made just hours earlier that he regrets his trade war with China, saying instead he's only sorry not to have raised tariffs even higher. Earlier on Sunday, Trump appeared to signal he might be considering a softening of his position in the trade war when he had said "I have second thoughts about everything."
Read More Meanwhile... While the Indian government's decision to roll back additional tax surcharge on share trades has come as a relief to several overseas funds, but promoters and PE firms wanting to sell their stake off-market have little to cheer about. They will have to pay higher taxes if they are selling their stakes by direct transfer of shares, especially in case of mergers and acquisitions.
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