A spike in consumer inflation beyond the 6% mark and a drop in bank savings rate due to RBI’s repeated rate cuts have pushed real interest rates into the negative territory, disincentivising savings. In September, 2019, one-year SBI deposits earned 6.50% when inflation was at 3.92%, thus giving a real return of 250 basis points. Today, SBI’s one-year term deposit rate is 5.10% and June CPI inflation came in at 6.09%. This means if you save today for something that you need next year, you might not be able to buy as much then as you could today. The only hope is the expectation that inflation will come down and stay lower for next one year.
MARKET CUES: Where do we stand >>>  | Nifty futures on the Singapore Exchange traded 60 points, or 0.56 per cent higher at 10,763.50, in signs that Dalal Street was headed for a positive start on Friday. |
| On Thursday, India VIX fell 3.53 per cent to 25.36 level. Overall, lower volatility is ruling out any major decline, but suggests a limited upside as well. Options data suggested an immediate trading range between 10,500 and 10,900 levels. |
| Asian shares edged higher this morning. Japan's Nikkei 225 rose 0.29 per cent , China's Shanghai Composite index edged up 0.13 per cent and the Hang Seng added 0.69 per cent. |
| US stocks dropped on Thursday on elevated levels of unemployment claims. Dow fell 0.5%, the S&P500 0.34% and the Nasdaq 0.73%. |
| The rupee settled 3 paise lower at 75.18 against the US dollar on Thursday, tracking a strengthening American currency amid worries over mounting virus cases. |
| The dollar held on to gains against most currencies as worries that a resurgence in the coronavirus is starting to curb economic activity drew in safe-haven flows. Euro held up on fresh stimulus hope, Sterling was little changed and the yuan was steady in offshore trade. |
| Oil prices were unchanged on Friday, with trading marked by growing uncertainty about global recovery in fuel demand. WTI crude futures rose 1 cent to $40.76 a barrel, while Brent futures were steady at $43.37. |
| Gold prices slumped to Rs 49,267 per 10 gm while silver dipped to Rs 52,085 per kg on Friday. On MCX, gold prices dropped 0.74% to Rs 48,796 on Thursday, while silver futures fell 0.85% to Rs 52,605. In international market, gold eased on Thursday after the ECB kept its policy on hold. Spot gold fell 0.4% to $1,804.29 per ounce. |
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Green flag for international flights… India on Thursday allowed limited international flights to select countries, nearly four months after shutting down all travel in the wake of Covid-19 restrictions. While tourists will not be allowed to travel if the destination country bars their entry, private and foreign airlines have been granted permission to operate services between Germany, the US and the UAE. United Airlines and Delta will operate from the US, Air France will fly from France, and various other airlines will operate from the UAE. No UK-based airline will fly in and Air India will, for now, be the only carrier operating flights to London from India. Germany’s Lufthansa is yet to submit a schedule of flights for approval.
Read More Stock investors see moat in IT... Technology shares posted strong gains on Thursday led by bellwether Infosys, which rose to a record and emerged as the biggest gainer on the Sensex and Nifty after a better-than-expected earnings performance in June quarter. Infosys closed at a record Rs 910, up 9.6%, on NSE, marking its biggest one-day advance since March 24. Investors, looking for moats of safety in an uncertain economic backdrop, have been impressed by the ability of top Indian software exporters to grow and keep costs under control.
Read More Gold rush among Indian investors… Indian residents have purchased a record 4.13 tonnes of sovereign gold bonds in the fourth tranche of the current fiscal (FY21), the most in any tranche since RBI first issued these bonds on behalf of the government in 2015. The demand for SGBs underscores investment appetite in gold, which has risen 43% year on year to a record Rs 49,000-plus (ex 3% GST) per 10 gm.
Read More China grows out of Covid disruption… China has become the first major economy to return to growth since the coronavirus started sweeping across the world earlier this year. China’s GDP expanded 3.2% in the three months to June from a year ago, reversing a 6.8% decline in the first quarter and beating the median forecast of 2.4%. In the first half however, output is still down 1.6% compared to the same period in 2019.
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Economy hit due to lockdowns worries govt…Extensive shutdowns being imposed with little warning by states have worried policymakers at the Centre as they threaten the revival of an economy stunted by the Covid-19 pandemic. The issue is being discussed by top government officials as the most recent economic indicators such as e-way bills, electricity demand and mobility indices suggest the recovery seen after opening up since June 1 may have lost momentum.
Read More Vista challenges Sebi ruling… US private equity firm Vista Equity Partners has taken the Indian market regulator to the Securities Appellant Tribunal over what it called “interference†in an ongoing open offer. The case pertains to the acquisition of listed software company Accelya Solutions. At the heart of the dispute is an order passed by Sebi in February appointing Verma & Verma to conduct an independent valuation and recommend an open offer price afresh, rejecting the one made by Vista.
Read More Fuel demand recovery losing steam… India’s fuel demand recovery is losing steam amid sluggish economic revival, local lockdowns, arrival of monsoon and record prices. Demand for diesel fell 18% and for petrol 6% in the first half of July, as against that a month earlier. Compared to the year-ago figures, diesel sales fell 21% and petrol sales 12%, according to industry executives.
Read More New housing unit launch at decade low... Launch of new residential units and sales hit a decade-low in the first half of this year, a report from property consultancy firm Knight Frank showed. Launches were down 46% to 60,489 units compared to the year-ago period, while sales tanked 54% to 59,538 units. Inventory of unsold stock was stagnant, showing that negligible sales took place. The second quarter, between April and June, was the drag â€" launches across the eight major cities in the period were down 90% and sales 84%. In the first quarter, it was down 3% and 27% respectively.
Read More Meanwhile... Stop-start lockdowns hurting auto firms… Local start-stop-start lockdowns are playing havoc with the auto industry’s production and sales ramp-up plans. Companies readying to scale up to pre-Covid levels as they start launching models or upgrades are having to grapple with frequent off-and-on local restrictions, which have thrown a spanner into production plans and hit supply lines, even though the countrywide lockdown ended on May 4.
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