Financial markets defied age-old correlations among different asset classes in 2019 to make investing equations go haywire. Assets that always showed negative correlations moved in lock-steps. Gold is a traditional hedge against inflation, but it rose in tandem with crude oil, as did equity and bonds. What caused these aberrations? As someone pointed out, these are not normal times. Theoretically, equity PE is the inverse of interest rates; then what should be the PE, when interest rates are negative? Food for thought!!!
STREET PULSE: Where we stand Nifty futures on Singapore Exchange traded 7 points higher at 7 am (IST), signalling a positive start on Dalal Street. Elsewhere in Asia, the risk-on sentiment that ushered in the New Year continued apace on Friday as stocks climbed following fresh all-time highs on Wall Street, though gains were trimmed as tensions flared in the West Asia.
HERE'S WHAT TO WATCH  | Equity indices from Sydney to Seoul and Hong Kong all advanced, while Japan remains shut until Monday. The advance eased and the yen gained after a US airstrike in Baghdad reportedly killed a top Iranian commander. |
| Wall Street's major indexes notched record highs to open the new year on Thursday, as fresh economic stimulus from China added to optimism fueled by easing trade tensions and an improving global outlook. Dow rose 330 points to 28,868, the S&P500 gained 27 points to 3,257 and the Nasdaq added 119 points to 9,092. |
| Oil prices jumped more than $1 on Friday after a US air strike killed key Iranian and Iraqi military personnel, raising concerns that escalating West Asia tensions may disrupt oil supplies. Brent crude futures rose $1.23 to $67.48 a barrel, while WTI crude futures gained $1.03 to $62.21 |
| The rupee lost 16 paise to close at 71.38 against the US dollar on Thursday as a steady rise in crude oil prices and stronger dollar against key global currencies weighed on sentiment. |
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Green Shoots!… Retailers and consumer goods companies said sales in the October-December festive quarter had been the best in past four years on account of 'pent-up demand', a buoyant stock market, wider availability of consumer credit at 0% interest, and the harsh winter in the North that triggered sales of heating products and winter wear. Sales of white goods grew 7-8% during the three month compared with a contraction of 2-4% during the same period in 2018 and 2017, and 3-4% growth in 2016. The only exception was TVs, which saw sales shrink 9-10%.
Read More Manufacturing Uptick... India's manufacturing activity in December expanded to the highest level in the past seven months as a rise in factory orders boosted production and employment, a private survey showed on Thursday. The IHS Markit India Manufacturing PMI rose to 52.7 in December from 51.2 in November. A reading of over 50 on this survey-based index indicates expansion.
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Body Blow to Stockbrokers... Intra-day trading on Indian bourses may soon become a thing of the past. Stock exchanges have asked stock brokers to mandatorily collect the entire initial margin before a trade from clients even for transactions that are not carried forward to the next day. This means broking firms will no longer be able to offer 'intra-day trading' products, a move aimed at reducing risks to the system.
Read More Bad Loans Return… Indian banks could be staring at bad-debt provisions of an estimated Rs 30,000 crore against loans to DHFL, the Anil Ambani-led Reliance Home Finance, KKR-backed Coffee Day Enterprises and CG Power. Resolution hasn't been finalised in any of these accounts, which means the December quarter could possibly see a reversal in the brief fall in provisioning in September quarter.
Read More H-1B Pain...The Indian IT industry could suffer from delays in grant of work visas by the US in 2020 due to lack of clarity in the new registration process that kicks off in April. The new system of USCIS, the agency that issues H-1B visas, requires employers to register in advance names of employees who need work permits. It will then select which of the registered candidates can apply for the visa.
Read More Meanwhile... The Tatas have taken NCLAT to the apex court. Tata Sons has urged the Supreme Court to set aside the NCLAT order reinstating Cyrus Mistry, saying it had been made without "application of mind." Its petition also said Mistry had declined a meeting with Ratan Tata that would have allowed for a graceful exit, forcing Tata Sons board to oust him in October 2016.
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