RBI data on money supply is telling a story. Currency in circulation, which measures money with public and in banks, surged 6.7 per cent in the calendar year till May. Under normal circumstances, more money supply in the economy would signal growth in consumption and business investments. But economists say the current situation may be reflecting higher cash withdrawals by depositors to meet needs and hoard. Which is why discretionary spend is down, bank withdrawls have been high and growth in money held by public has been more than deposits made in banks. This signals heightened uncertainty all around.
MARKET CUES: Where do we stand >>>  | Nifty futures on Singapore Exchange traded 58 points lower at 7 am (IST) signalling a weak start ahead on Dalal Street |
| On Wednesday, Nifty formed a Bearish Engulfing candle on the daily chart. Analysts said this pattern usually indicates a change in trend 'from bullish to bearish or a consolidation' and a negative close on Thursday will confirm this pattern. |
| Asian stocks dropped after a tumble on Wall Street, where worries about a surge in virus cases in multiple US states spurred a flight from riskier assets. Japan's Topix opened 1% lower and Australian shares slid. Markets in Hong Kong and mainland China are closed for public holidays on Thursday. |
| On Wall Street, stocks fell overnight as three US states reported record increases in new Covid-19 cases. The Dow fell 720 points or 2.72%, the S&P 500 2.59% and the Nasdaq Composite 2.19%. |
| The rupee on Wednesday erased initial gains and settled lower by 6 paise at 75.72 against the US dollar, tracking volatile domestic equities and a strong US dollar. |
| The dollar held firm as an increase in coronavirus cases in the US undermined hopes for a quick turnaround. The dollar index strengthened to 97.21 against a basket of currencies. The euro retreated to $1.1251 while the British pound stepped back to $1.2423. |
| Oil prices inched up in early trade after sliding more than 5% in the previous session on worries that a rapid rise in Covid-19 cases. WTI crude futures rose 12 cents, or 0.3%, to $38.13 a barrel. Brent futures climbed 5 cents, or 0.1%, to $40.36. |
| Gold of 24-carat purity crossed the Rs 50,000 per 10 gm mark in Indian market for the first time on Wednesday, tracking overseas bullion, which hit an 8-year high of $1,779 an ounce on increased worries of the Covid fallout on the global economic recovery and a weaker rupee. |
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Closed Templeton schemes receive some money… Franklin Templeton has told investors in its six debt schemes that are being wound up that the plans received Rs 1,964 crore as routine proceeds from their investments, and two of the funds featuring in the unusual list of terminated programmes have repaid their loans to banks. Franklin Templeton India president Sanjay Sapre said the money came in over the past couple of months from maturities, pre-payments and coupon payments since the money manager decided to close the six investment plans.
Read More Auto firms seek to rev up rural sales… Top auto firms Maruti Suzuki, Hyundai Motor India, M&M, Hero MotoCorp and others are turning to rural markets to rev up sales after the lockdown. Fewer Covid-19 cases in villages, higher government spending, a bumper rabi harvest and forecast of a normal monsoon that augurs well for a good kharif crop have triggered hopes of a faster recovery in rural India, even as cities struggle with the pandemic.
Read More Govt seeks to boost dollar inflows… The Centre has sought the inputs of bulge-bracket overseas funds on boosting dollar inflows, with top North Block officials leveraging technology to virtually reach out to key offshore financiers and custodian banks in the second week of June. The issues discussed feature prominently on the wish list of overseas funds: Allowing FPIs to use existing structures to make FDI investments, streamlining the taxation for government securities under Fully Accessible Route and allowing NRIs to invest via portfolio investor route.
Read More Demand for loan against gold rises… Demand for loans against gold is likely to increase this financial year as easy approvals, surging value of gold and risk aversion by lenders push people to pledge their ornaments in exchange for cash. Domestic banks are already seeing an increase in demand for these loans and some have started new gold loan verticals with expectations that it would become the fastest growing segment this financial year.
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Rupee may head to 80 level… The growth shock to India's economy from the coronavirus pandemic will trigger more weakness in the rupee, dragging it toward an unprecedented 80-per dollar level. That's the view from Venkat Thiagarajan, who has traded currency markets for 26 years, and most recently served as the head of forex at Reliance Industries, which runs India's largest corporate treasury. The rupee, he argues, has a stronger link with economic growth, and metrics like current account, balance of payments and global dollar dynamics have a marginal impact in the medium term.
Read More Indian equities most expensive… Indian equities have emerged as the most expensive among major global peers thanks to a sharp rally over the past few weeks amid earnings downgrades. The benchmark Nifty50 now trades at a trailing price-to-earnings multiple of 22.6%, which is the highest among top global markets barring South Korea. In addition, the one-year forward P/E stood at 19, which is at a 25% premium to the 15-year average and higher than 18.2 in February. Nifty has gained 35.2% in the past three months.
Read More Chinese troops re-enter Indian territory… China has brought back the tent-like structure that Indian troops had destroyed on June 15 near Patrol Point 14 in the Galwan Valley, escalating tensions that were expected to cool down after Monday's corps commander-level talks. Indian troops have physically verified the reappearance of a tent and this has been spotted in fresh satellite imagery as well.
Read More Meanwhile... Tatas begin job cuts… The Tata Group may eliminate jobs at some of the businesses to save fixed costs as it grapples with falling profits due to the pandemic, and global economic projections pointing to a challenging time ahead. The pandemic had led to a suspension of the conglomerate's several businesses — including aerospace, automotive and aviation — depressing its earnings in key markets across the world. The conglomerate has already made moves to cut contract workers at various facilities, including at Tata Motors and its arm Jaguar Land Rover.
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