India's Motown is about to go back to full capacity, maybe as early as this month. That's when the Covid-19 lockdown still continues in some parts of the country. July auto sales number signalled a significant undercurrent of recovery driven by increased need for personal mobility, and healthy demand growth in the rural sector, which seems to have gone largely unscathed from the pandemic disruption, thanks to back-to-back bumper crops and government's extra efforts to protect rural income. Continuing unavailability of public transport in the wake of Covid-19 is also resulting in better demand. This is telling something about the broader economy too!
MARKET CUES: Where do we stand >>>  | Nifty futures on the Singapore Exchange traded 50 points lower at 7 am (IST) this morning, showing signs of fatigue on Dalal Street. |
| On Friday, Nifty50 slipped for the third straight day, closed below its immediate support at 11,080 and formed a bearish candle on the daily and weekly charts. Analysts said the index is in the overbought zone and its upside looks largely capped. |
| Asian stocks started August in a mixed fashion amid a resurgence in Covid-19 cases and simmering US-China tension. Shares advanced in Japan but declined in Australia. Hong Kong opened little changed and South Korea was flat. |
| S&P 500 futures contracts fluctuated this morning. On Friday, strong earnings from US technology firms drove Wall Street higher. Dow rose 114.67 points, or 0.44%; the S&P500 gained 24.9 points, or 0.77%, and the Nasdaq 157.46 points, or 1.49% |
| The rupee settled 3 paise higher at 74.81 against the US dollar on Friday tracking weakness in the greenback. |
| The dollar edged higher this morning, while the yen fell 0.2% and the euro traded down 0.1%. The offshore yuan was at 6.9884 per dollar. |
| Oil prices fell on Monday on concerns about oversupply as Opec and its allies, together known as Opec +, are due to pull back from production cuts in August. Brent crude futures slid 8 cents, or 0.2%, to $43.44 a barrel while WTI crude futures fell 12 cents, or 0.3%, to $40.15 |
| Gold made a fresh peak early Monday at $1,984 an ounce and seemed on track to take out $2,000 soon. Domestic prices jumped to Rs 53,460 per 10 gm, while silver fell to Rs 65,120 per kg. On MCX, August gold futures fell 1.30% to Rs 53,828 on Friday while silver September contracts came down to Rs 64,984. |
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HNIs find a 10%-plus risk-free return bet… High net worth investors (HNI), ultra HNIs and even corporate treasuries have stepped up trading in silver derivatives, where the risk-free rate of return has shot up to 10% annually from the average 7-8%, said a broker and a jewellery official, who hedges inventory price risk on the futures market. The trade is straightforward cash-and-carry arbitrage, where silver of a specified grade is purchased in the spot market and sold on MCX. The rate of return has hit an annual 10%, from an average 7- 8%, amid the commodity's astounding 32% rise last month.
Read More Bank FDs shoot up by Rs 6.1L cr… Banks have seen an increase in fixed deposits by Rs 6.1 lakh crore during the period April 1 to July 3, compared with Rs 3 lakh crore a year-ago, in an indication that investors expect interest rates to come down further. The increase is also reflective of risk-aversion. From the deposit numbers of large banks that have declared their results so far, it is seen that the share of FDs is either rising or is steady. In FY20, bank deposits accounted for 52.6% of household savings, followed by life insurance (23.2%), currency (13.4%) and mutual fund holdings (7%).
Read More RBI likely to cut reverse repo rate… RBI could prioritise measures to step up credit flows, like reducing the rate on reverse repurchases and nudging banks to lend, instead of tinkering with the headline policy rate after the US Federal Reserve raised concerns about a prolonged delay in global economic recovery. Therefore, Mint Road may not change the policy repo rate but reduce the reverse repo to prompt high-street banks to lend to companies, showed a survey conducted by ET among 22 market participants.
Read More Bandhan set to sell Rs 10,400 cr shares… Bandhan Financial Services, the main promoter of Bandhan Bank, has mandated four brokers to jointly sell nearly 21% in the bank, or about 34 crore shares, through block deals on Monday. The deal size could be as much as $1.4 billion (about Rs 10,400 crore), making it the biggest block deal in the banking, financial services and insurance space.
Read More Sebi may lift MF investment curbs… Sebi is reconsidering restrictions imposed on mutual funds' equity investments that were blamed for exacerbating the slump in mid- and small-cap shares in 2018-19, three people familiar with the matter said. The capital market regulator has sought suggestions from mutual funds on how the existing share categorisation rules can be broadened, the people said.
Read More Car sales bounce back… Passenger vehicle sales almost doubled month-on-month and came close to pre-Covid levels last month as pent-up demand, a spike in production and revival of economic activities drove purchases of small cars, sedans and SUVs across the country. According to industry estimates, 197,523 passenger vehicles were sold in the local market in July, a tad lower than 200,790 units sold in the year-ago period, and significantly higher than 105,617 units sold in June.
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You may avoid new gold bond… Investors already having a sizeable exposure to gold as an asset class could give the upcoming Sovereign Gold Bond Scheme offering a miss as the yellow metal prices have run up sharply in recent months. Wealth managers believe investors should have 10-15% of their portfolio allocation to gold because of the weakening dollar, geopolitical tensions and slowing global growth. However, given the 51% rise in gold prices over the last one year and 11% in July alone, investors could avoid aggressive bets on gold, they said.
Read More Stray lockdowns hit economy rebound… The economy did not gather pace in July after the June spurt amid rising Covid-19 cases and local lockdowns to contain the spread, bending back the recovery trend. Transportation of goods, rail freight, exports, car sales, farming and employment indicators improved further in July from June levels, but retail remained sluggish, credit growth was lower, diesel demand fell and mobility indicators did not suggest increased activity in the month.
Read More Licence raj likely in furniture, toys, sports goods… Imports of furniture, toys and sports goods are likely to require licences soon, a measure the government hopes will reduce imports and encourage domestic production, said people with knowledge of the matter. India has already imposed licensing requirements for tyres and colour TV imports, a big percentage of which comes from China. The government may also raise import duties for certain products to their bound rates to make imports costlier.
Read More Meanwhile... Airline refunds may take time… People who were issued credit shells against tickets cancelled for flights during and after the national lockdown may have to hold on to them longer, as cash-strapped airlines are unlikely to refund about Rs 3,000 crore they owe to passengers. Detailed data of refunds shared by airlines show they have issued credit shells worth Rs 3,000 crore that can be used for travel on a future date. Estimates show about Rs 1,500 crore has been refunded to passengers — a substantial part through the utilisation of credit shells by passengers.
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