Monday's market correction is definitely an opportunity to buy stocks, especially for those who missed the bus earlier. But, careful! An easing of war anxiety may not be enough to undo the damage in India. Geopolitics tends to linger on and the hit here has been on the fiscal side. Rising fuel prices are going to damage a lot of government arithmetic. There is already news that the government is likely to cut spending by about Rs 2 lakh crore. Those who wish to jump the gun should read the writing on the wall.
STREET PULSE: Where we stand Nifty futures on Singapore Exchange traded nearly 70 points higher at 7 am (IST), signalling a strong rebound ahead on Dalal Street after the Monday mayhem. Elsewhere in Asia, share markets rebounded as a day passed without a new escalation in the West Asia and Wall Street erased early losses to end in the black as tech stocks climbed.
HERE'S WHAT TO WATCH  | MSCI's broadest index of Asia-Pacific shares outside Japan added 0.3%, after a 0.7% drop the previous session. Japan's Nikkei edged up 0.5% and South Korea 0.6%. |
| Wall Street chose to hope for the best and the Dow rose 0.24%, while the S&P500 gained 0.35% and the Nasdaq 0.56%. |
| Crude oil surrendered some hefty gains as many doubted Iran would strike back in a way that would disrupt supplies, and its own crude exports. Brent crude futures stood at $68.91 a barrel, having been as high as $70.74 at one stage, while WTI crude fell 32 cents to $62.95. |
| The rupee plunged 13 paise to settle at 71.93 against the US currency on Monday, weighed down by the spike in global crude oil prices as escalating US-Iran tensions fanned fresh fears of conflict in West Asia. |
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Safer Bets… With yields on government securities at multi-year lows, stocks with higher dividend yields will be back in the limelight. The 10-year G-Sec yield has fallen to 6.5% from more than 8% at the end of 2018. This may prompt investors to search for stocks that offer higher dividends relative to their market prices or dividend yields. Stocks like Vedanta, Hindustan Zinc, SJVN, Nalco, Balmer Lawrie Investments, REC, NHPC, Indian Oil Corporation, Oil India, and Coal India trade at FY19 dividend yields of more than 7%.
Read More More Green Shoots… India's service sector activity expanded to a five-month high in December on the back of a sharp jump in new business growth, raising hopes of sustained economic recovery, a survey released on Monday showed. The IHS Markit India Services Business Activity Index stood at 53.3 in December, up from 52.7 in November. This is the second-strongest rate of increase in output in more than a year behind 53.8 in July. A reading below 50 on the index shows contraction while above that threshold indicates expansion.
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FII Flows May Slow Down... The flow of money from foreign funds into the Indian equity market could taper off as rising geopolitical tensions between US and Iran could lead to a prolonged risk-off sentiment in emerging markets. India, which has high dependence on crude oil imports, could be among the most impacted in this basket, said market watchers. In 2019, Indian equity markets received the highest quantum of foreign flows in a year since 2013 at nearly $14 billion, which was also among the highest in major emerging markets.
Read More RCom Bargain Hots Up… Lenders to bankrupt Reliance Communications are unlikely to agree to the current bids and will push for a better deal with more upfront cash, said people familiar with the matter. The committee of creditors is weighing whether to pick up equity in RCom and its two arms or sell the parent and its units separately to extract maximum value, these people said. Reliance Jio Infocomm, Bharti Airtel, UV Asset Reconstruction Co and private equity firm Varde Partners have bid for either part or all the assets of RCom and its two units.
Read More Spike in Fuel Cost.. Local rates of petrol and diesel, already at a 13-month high, are poised to rise further as crude oil advanced another 2% to inch closer to $71a barrel on Monday. Oil futures climbed to $70.74 as traders weighed every aggressive comment from both US and Iran that kept pushing up probabilities of a wider conflict in the world's largest oil producing and exporting region, and bolstering fears of a supply disruption.
Read More Meanwhile... The cleanup act has begun at Dewan Housing. Lenders have decided to float a combined bid for DHFL's retail and wholesale books after fresh funding starts in the third week of this month. If the company fails to get interest for the combined asset, it will float separate bids, said a person with the direct knowledge of the matter. SBI and Union Bank of India have appointed SBI Capital as the commercial transaction advisor and Cyril Amarchand Mangaldas as transaction advisor for the deal. DHFL is the first financial services company to be admitted to the bankruptcy courts after the rules were changed.
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