In its growth push, India is seeking two quick turnarounds: revival of consumer demand and revival of investment. Festive season is a trigger for the first. RBI may cut rates further to double down on that. The second part is tricky: India Inc's capacity utilisation levels are still at 65-70 per cent and government sops will take time to trickle down. Looks like, we are waiting for some big-ticket FDI or global manufacturers' shift of base from China to pull off the rescue act.
STREET PULSE: Where we stand Asian stocks, already under pressure from growing global growth fears, tumbled after New York markets slumped overnight because the US opened a new trade war front by saying it will impose tariffs on $7.5 billion of EU goods.
Read More  | SGX Nifty traded nearly 18 points lower at 7 am (IST), signalling negativity on Dalal Street during the day. MSCI index for Asia-Pacific shares outside Japan dropped 0.38%. Japan's Nikkei dropped 1.96% and Australian shares 2.19%. |
| US stocks tumbled to the lowest since August on Monday after manufacturing gauge slumped to the lowest in a decade, fuelling fears that the American economy is slowing. Treasuries climbed with gold and the yen on demand for haven assets. The Dow closed a little below 500 points, some 1.9% lower. The S&P500 fell 1.8% and the Nasdaq 1.6%. |
Oil future extended their decline in Asia as a bigger-than-expected increase in US crude inventories and growing evidence of slowing economic growth point to lower energy demand. WTI crude dipped 0.3% to $52.48 a barrel.
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Feel-Good Factor… Good news for auto stocks! Fast-tracking norms for creation of formal scrapping centres, the government will soon announce a voluntary vehicle scrappage policy to set out a clear framework. The policy is expected to bring the auto sector out of its worst slump in the past 20 years, and create demand for new vehicles. Draft guidelines are expected to be out for public comments this month, before the scrappage policy is announced.
Read More Rate Cut Again!… RBI is expected to cut benchmark interest rates for the fifth time this year on Friday as recent fiscal measures to boost ailing growth seem largely inadequate and benign inflation offers room for more easing. Money policy watchers expect the central bank to lower its key lending rate or the repo rate by 25 basis points to 5.15%, which would take cumulative cuts so far this year to 135 bps. They forecast one more rate cut of 15 bps in December.
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YES & NO… Yes Bank says Tuesday's massive fall in its stock price was due to the sale of shares pledged by one of the promoters and didn't reflect the financial state of the private-sector lender, where liquidity coverage is 25 percentage points more than what is prescribed by the regulator and deposit growth remains robust. On Tuesday, the Yes Bank stock declined 23% to Rs 32 apiece. Total traded volumes were 865 million shares, with mutual funds selling promoter Rana Kapoor's pledged holdings. The Ashok Kapur family on Wednesday affirmed full support to Yes Bank, following co-promoter Rana Kapoor's near-complete exit from the private sector lender.
Read More PMC Pain… Some banks have voiced concerns to RBI over the maturing letters of credit issued by the failed Punjab & Maharashtra Co-operative Bank. Among its regular clients was a Mumbai-headquartered steel company with which it has shared a long relationship. The total contingent liability — or off balance sheet item — of the bank was about Rs 1,721 crore as on March 2019. About Rs 176 crore of L/Cs issued by the co-operative bank and discounted by other banks will fall due shortly.
Read More DHFL Hangover... Lenders to bankrupt mortgage firm DHFL may have to take up to 30% haircut on their loans even though the company in its resolution plan promised full payout of its debt over 10-20 years. The loan amounts to about Rs 84,000 crore. However, the exposure of most banks to the embattled company may not impact the earnings due to early provisions taken by lenders on their books.
Read More Meanwhile...The Central Board of Direct Taxes has clarified that companies looking to switch to the just-lowered 22% corporate tax rate without exemptions, will not be able use accumulated credit of minimum alternate tax. In a detailed circular, CBDT however said companies will have the option to go for the new regime after completely utilising MAT credit. Tax experts say companies sitting on large MAT credits will continue in the old rate regime.
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