FPIs may be selling Indian equities in hordes, but our bonds have been a big draw for them due to the relative high yields that they offer. India's real interest rate, the difference between inflation and yield on riskfree return of govt bonds, is now about 3.40% in India, but is negative in the US as retail inflation rate is higher than the benchmark yield there. German Bunds are in the negative territory, where investors actually pay the government to keep their money. This is inducing FPIs' bullish views for Indian rates, which is playing out in the swap market.
STREET PULSE: Where we stand Asian stocks perked up, as apparent progress in the political crises in Britain and Hong Kong gave investor confidence a shot in the arm.
Read More  | SGX Nifty traded 39 points higher at 7 am (IST), signalling buoyancy ahead on Dalal Street. MSCI index for Asia-Pacific shares outside Japan gained 0.24%, but a 1.09% fall in Nikkei and 0.33% rise in Australian shares highlighted improved market sentiment. |
| US stocks rose overnight. Dow rose 237 points, or 0.9%; S&P500 advanced 1.1% to mark its highest close in four weeks while the tech-heavy Nasdaq climbed 1.3% |
Oil prices fell, giving up some of the strong gains of the previous session, after an industry report showed US crude stockpiles rose last week. Brent crude was down 18 cents, or 0.3 per cent, at $60.52 a barrel.
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Promoters' Pets... Promoters have raised their holdings in about 130 companies in August, seizing the opportunity provided by a sharp correction in stock prices to consolidate their stake. These companies include both large and midcaps, such as United Spirits, JSW Steel, Vodafone Idea, Chola Financial, Deepak Nitrite, Sangam India, Atul, Motilal Oswal and Quess. A drop in valuations has encouraged promoters to buy shares, which in another way is giving assurance to investors about the long-term prospects of their companies.
Read More | FDI inflows rise 28% in Q1 of 2019-20 to $16.3 billion>>> |
| External rate benchmarks must for retail, MSMEs loans >>> |
Currency Edge… A sliding rupee has come in as a big positive for India's technology services providers, which are struggling with weak margins amid declining spending by big companies. IT stocks have outperformed the benchmark in last few weeks as every 1% depreciation in the rupee against the dollar improves their earnings margin before interest and tax by 20-25 basis points. Tech Mahindra, HCL Technologies, Infosys, TCS, NIIT Technologies, Hexaware, Mastek, Mphasis and L&T Infotech are some of the top picks of analysts.
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Tax Cuts… Ahead of the crucial GST Council meeting on September 20, the Finance Ministry has begun crunching the numbers to estimate the revenue it would lose in the event of rate reductions aimed at boosting demand during the festive season. Among big-ticket consumer items, auto, tyres, cement, ACs and large LCD TVs are currently in the 28% bracket. Auto also bears a cess, depending on the size of the vehicle, further increasing the total tax incidence.
Read More Creditors' Hit... Creditors of bankrupt Jet Airways are likely to recover less than 10% of the carrier's total outstanding dues in a liquidation scenario if no suitor succeeds in buying the airline. The airline's financial and operational creditors, who are owed nearly $4.20 billion (Rs 30,000 crore) are likely to recover only $300-$400 million from the sale of Jet's assets, the sources with direct knowledge of the matter said.
Read More Meanwhile... The British parliament voted on Wednesday to prevent Prime Minister Boris Johnson taking Britain out of the European Union without a deal on Oct. 31, but rejected his first bid to call a snap election two weeks before the scheduled exit. After wresting control of the day's parliamentary agenda from Johnson, the House of Commons backed a bill that would force the government to request a three-month Brexit delay rather than leave without a divorce agreement.
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