 "Pre-market: Market to open lower on global cues")
Market is likely to open in the red zone on global cues. US market fell on Wednesday as traders locked in recent gains after a provisional budget deal out of Washington removed one of the near-term reasons for the Fed to keep up its current pace of economic stimulus.
Also, market is set for a weak start tracking Nifty futures at the Singapore Exchange (SGX Nifty) which is trading at 6305 down 38 points.
Stocks posted their largest drop in a month on Wednesday after an agreement was reached late Tuesday to end three years of political confrontations and fiscal instability in Washington that climaxed in October with a partial government shutdown. A vote in the U.S. House of Representatives could come as soon as Thursday.
Bach home, investors will wait for the report on consumer prices which will be followed by the wholesale price inflation later Monday. Market participants will keenly watch the two data sets which will help set expectations ahead of the Reserve Bank of India's policy review on December 18.
Consumer prices were forecast to have risen an annualised 10 per cent annually last month, a Reuters poll showed, barely changed from the 10.09 per cent clocked in October.
Tackling inflation will be a key priority, RBI Governor Raghuram Rajan said on Wednesday, raising expectations that the central bank could raise interest rates for a third time in four months if prices remained high.
A day earlier, market participants overlooked trade deficit figures for November which narrowed in the month. Snapping the double-digit growth trend of the previous four months, merchandise exports rose only 5.9 per cent in November over a year, to $24.6 billion, despite the rupee's depreciation. These were dragged down by slower growth in refinery, pharmaceutical and gem and jewellery products. Those in the sectors also blamed a strike in some important terminals for the deceleration. Imports, on the other hand, fell 16.4 per cent to $33.8 billion in November, the lowest since March 2011, compared with $40.5 billion in the corresponding month of 2012-13, official data showed. This narrowed the trade deficit by 46.5 per cent to $9.2 billion in the month, against $17.2 billion in November of 2012-13. This augurs well for the government's efforts to contain the current account deficit (CAD) below $60 billion in 2013-14.
Amid tepid economic growth and weak demand, annual growth in bank credit fell to 14.2 per cent as of November-end. At the end of October, bank credit had recorded 16.1 per cent year-on-year growth. As of November 29, the banking system’s loan portfolio stood at Rs 56,65,025 crore, according to Reserve Bank of India data. Bankers said while demand for credit from the corporate sector was very weak, that from the retail sector had been steady. As the liquidity in the system is set to tighten due to advance tax outflows later this month, the Reserve Bank of India (RBI) is set to conduct a 14-day term repo on Friday.
“As the liquidity conditions are expected to tighten on account of advance tax payments commencing from mid-December, RBI has decided to provide additional liquidity of Rs 10,000 crore through the 14-day term repo scheduled to be conducted on Friday. Accordingly, the notified amount for the 14-day term repo auction to be conducted on Friday will be adjusted upwards by Rs10,000 crore,” said RBI.
According to street estimates there would be liquidity outflow worth Rs 50,000-70,000 crore due to this advance tax payment. Due to tight liquidity borrowing under RBI's daily Liquidity Adjustment Facility (LAF) as well as Marginal Standing Facility (MSF) will also increase.
The street also expects overnight rates to shoot up as liquidity tightens. But it is expected that rates will hover in the range of 7.75% to 8.75%.
The committee entrusted with screening the applications for new bank licences will give its report within three months of the central bank completing the inspection of all 25 applications. The committee is headed by former Reserve Bank of India (RBI) governor Bimal Jalan.
Stocks to watch out today
A day after being slapped with a fine of Rs 1,773 crore by the Competition Commission of India (CCI), Coal India (CIL) on Wednesday faced a new probe by the fair trade regulator into allegations the state-run firm and its subsidiaries abused market dominance in their sale of fuel through e-auctions.
Bankers of power generator Lanco Infratech on Wednesday approved a proposal to restructure a total of Rs 7,700 crore of the company’s debt. Corporate debt restructuring will allow the company a two-year interest holiday.
Debt of Rs 4,400 crore, as well as non-fund-based exposure such as bank guarantees and letters of credit worth Rs 3,300 crore, will be restructured.
Also, market is set for a weak start tracking Nifty futures at the Singapore Exchange (SGX Nifty) which is trading at 6305 down 38 points.
Stocks posted their largest drop in a month on Wednesday after an agreement was reached late Tuesday to end three years of political confrontations and fiscal instability in Washington that climaxed in October with a partial government shutdown. A vote in the U.S. House of Representatives could come as soon as Thursday.
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Last September, the Fed cited the possibility of a hit to the economy if lawmakers didn't agree on a budget as one reason to maintain its $85-billion-a-month bond-buying program.
Bach home, investors will wait for the report on consumer prices which will be followed by the wholesale price inflation later Monday. Market participants will keenly watch the two data sets which will help set expectations ahead of the Reserve Bank of India's policy review on December 18.
Consumer prices were forecast to have risen an annualised 10 per cent annually last month, a Reuters poll showed, barely changed from the 10.09 per cent clocked in October.
Tackling inflation will be a key priority, RBI Governor Raghuram Rajan said on Wednesday, raising expectations that the central bank could raise interest rates for a third time in four months if prices remained high.
A day earlier, market participants overlooked trade deficit figures for November which narrowed in the month. Snapping the double-digit growth trend of the previous four months, merchandise exports rose only 5.9 per cent in November over a year, to $24.6 billion, despite the rupee's depreciation. These were dragged down by slower growth in refinery, pharmaceutical and gem and jewellery products. Those in the sectors also blamed a strike in some important terminals for the deceleration. Imports, on the other hand, fell 16.4 per cent to $33.8 billion in November, the lowest since March 2011, compared with $40.5 billion in the corresponding month of 2012-13, official data showed. This narrowed the trade deficit by 46.5 per cent to $9.2 billion in the month, against $17.2 billion in November of 2012-13. This augurs well for the government's efforts to contain the current account deficit (CAD) below $60 billion in 2013-14.
Amid tepid economic growth and weak demand, annual growth in bank credit fell to 14.2 per cent as of November-end. At the end of October, bank credit had recorded 16.1 per cent year-on-year growth. As of November 29, the banking system’s loan portfolio stood at Rs 56,65,025 crore, according to Reserve Bank of India data. Bankers said while demand for credit from the corporate sector was very weak, that from the retail sector had been steady. As the liquidity in the system is set to tighten due to advance tax outflows later this month, the Reserve Bank of India (RBI) is set to conduct a 14-day term repo on Friday.
“As the liquidity conditions are expected to tighten on account of advance tax payments commencing from mid-December, RBI has decided to provide additional liquidity of Rs 10,000 crore through the 14-day term repo scheduled to be conducted on Friday. Accordingly, the notified amount for the 14-day term repo auction to be conducted on Friday will be adjusted upwards by Rs10,000 crore,” said RBI.
According to street estimates there would be liquidity outflow worth Rs 50,000-70,000 crore due to this advance tax payment. Due to tight liquidity borrowing under RBI's daily Liquidity Adjustment Facility (LAF) as well as Marginal Standing Facility (MSF) will also increase.
The street also expects overnight rates to shoot up as liquidity tightens. But it is expected that rates will hover in the range of 7.75% to 8.75%.
The committee entrusted with screening the applications for new bank licences will give its report within three months of the central bank completing the inspection of all 25 applications. The committee is headed by former Reserve Bank of India (RBI) governor Bimal Jalan.
Stocks to watch out today
A day after being slapped with a fine of Rs 1,773 crore by the Competition Commission of India (CCI), Coal India (CIL) on Wednesday faced a new probe by the fair trade regulator into allegations the state-run firm and its subsidiaries abused market dominance in their sale of fuel through e-auctions.
Bankers of power generator Lanco Infratech on Wednesday approved a proposal to restructure a total of Rs 7,700 crore of the company’s debt. Corporate debt restructuring will allow the company a two-year interest holiday.
Debt of Rs 4,400 crore, as well as non-fund-based exposure such as bank guarantees and letters of credit worth Rs 3,300 crore, will be restructured.