Anticipations of a sharp unwinding of dollar trade are rising. Usually, big crises in last 10-15 years have always seen the world migrate towards the greenback. But the projection now is that the US currency is headed for a trend reversal. As Stephen Roach of Yale University puts it, US' drying domestic savings, the tendency to import surplus savings from abroad, de-globalisation, a record current account deficit of around 6.3 per cent and ballooning trade deficit may cause the dollar to drop 30-35% in a year or so. A rising current account deficit leads to increased supply of a nation's currency in foreign exchange markets, leading to a drop in its external value.
MARKET CUES: Where do we stand >>>  | Nifty futures on Singapore Exchange traded 8 points higher at 7 am (IST) signalling indecisiveness on Dalal Street. |
| Nifty50 on Wednesday failed to capitalise on its gap-up start, as the index lost ground after touching the 78.6 per cent Fibonacci retracement level of the recent fall. The index formed a 'Shooting Star' candle on the daily chart. Analysts said it's a 'sell on rise' market now. |
| Asian stocks were mixed on Thursday ahead of a slew of economic data in China that will provide clues on the path of the economic recovery. Stocks dipped in Japan and Australia, rose in China and fluctuated in South Korea. |
| US stocks gained overnight. The S&P 500 rose 0.9%, the Dow 227.51 points, or 0.9%, and the Nasdaq Composite finished 0.6%. |
| The rupee appreciated by 27 paise to settle at 75.15 against the US dollar on Wednesday on expectations of foreign fund inflows and optimism over development of a Covid-19 vaccine. |
| The dollar kept its decline as riskier currencies found support on signs of progress in developing a coronavirus vaccine. The yen was little changed, while the offshore yuan traded 0.1% lower against the dollar. |
| Oil prices slid on Thursday after OPEC and allies such as Russia agreed to ease record supply curbs from August. Brent crude fell 13 cents, or 0.3%, at $43.66 a barrel while WTI crude dropped 18 cents, or 0.4%, to $41.02. |
| Domestic gold prices rose to Rs 49,150 per 10 gm, while silver climbed to Rs 53,000 per kg on Thursday. On MCX, August gold futures climbed 0.20 per cent to Rs 49,159 while silver September futures jumped to Rs 53,058. In global markets, gold prices edged higher and held above the key psychologically important $1,800 level. |
| LOOK WHO'S |  |
Carmakers rev up production… Maruti Suzuki, Hyundai Motor and Mahindra & Mahindra — the country's top carmakers — are adding factory shifts and hiring more workers to fire up production as pent-up demand has outpaced supply after the lockdown was eased. The demand spurt has moderated in areas that have seen reimposition of lockdown due to localised outbreaks of Covid-19. Retail sales were higher than dispatches in May and June, and booking levels hit 85-90% of pre-Covid levels, compelling car makers to ramp up output.
Read More RIL to develop own 5G tech… RIL on Wednesday said Jio had developed its own 5G technology and plans to offer it to other telecom companies, a move that will pit it against the likes of Nokia, Ericsson, Huawei and Samsung, in what analysts said was the first such initiative by a mobile phone operator. RIL said its telecom unit had created a complete 5G solution, using 100% homegrown technologies that will allow it to launch next-generation, highspeed services in India.
Read More Trade surplus after 2 decades… India registered a trade surplus in June, the first in almost two decades, as imports plummeted, raising concerns over the health of the domestic economy. India's exports contracted for the fourth consecutive month and shrank 12.41% to $21.91 billion in June while imports fell 47.59% to $21.11 billion, yielding a surplus of $790 million, data released on Wednesday showed. The previous trade surplus was in January 2002.
Read More S&P says bank fundraising good… Appreciating the decision of Indian banks to raise fresh capital, S&P Global Ratings on Tuesday said the move will provide stability to the institutions during these rocky times and help them withstand the economic slump amid the Covid-19 pandemic. "The large capital-raising is credit positive," the agency said in a release adding that "large capital increases across India's financial institutions support the system's stability during these rocky times."
Read More A Tata stock doubles amid Covid crisis… The Tata Consumer Products stock has doubled during the lockdown that began on March 25, hitting a record high of Rs 437.8 last week and outperforming its peers. As per data from Bloomberg, the number of analysts tracking the stock has increased more than 50% in one year, with 85% of them being bullish on the stock now compared to 65% a year ago.
Read More | AND WHO'S |  |
Real interest rates in negative zone… A sharp fall in deposit rates due to aggressive rate cuts by banks in response to RBI's reduction in the benchmark rates coupled with a rise in consumer prices have pulled real interest rates into negative territory, disincentivising savings. RBI has reduced its benchmark repo rate by 115 basis points between March and May to support the economy in light of the Covid-19 induced slowdown. As a result, banks have had to reduce their lending and deposit rates to adjust to the new interest rate scenario. One basis point is 0.01 percentage point.
Read More India rejects Chinese firm bids… India has rejected bids of two Chinese companies that emerged as the lowest bidders for developing two stretches of the upcoming Delhi-Mumbai expressway, citing security concerns. The ministry of highways and road transport will not award these projects, entailing a cost of about Rs 800 crore each, to the subsidiaries of Jiangxi Construction Engineering Corporation, government sources said.
Read More Jio plans hit Airtel, Vodafone… Bharti Airtel and Vodafone Idea stocks fell over 4% and 7%, respectively, on news of internet major Google's mega capital infusion into Jio Platforms and their joint ambitions to develop affordable 4G and 5G smartphones to hasten the disappearance of ordinary feature phones from the Indian telecom market. Analysts said the formidable Jio-Google combination's plans to launch low-cost 4G and 5G phones could accelerate feature phone customer migrations to 4G and boost aspirations for 5G technology, and result in heavy customer losses for Vodafone Idea.
Read More Meanwhile... India Inc benefits from rate cuts... Companies have started getting benefits of sharp rates cuts by the Reserve Bank of India, with bond yields plunging this month. The spreads, or the yield differentials between similar-maturity company bonds and sovereign securities, have shrunk in the range of 30-69 basis points since the beginning of this month. This contraction — the sharpest in recent times — helps borrowers tap the debt market at a lower cost, particularly for five-year money. Yield spreads are a barometer to measure interest rate movement. A basis point is 0.01of a percentage point.
Read More 
Buy
No comments:
Post a Comment