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Market mood to remain cautious on the last trading day
of week
The
Indian markets showing a lackluster trade ended marginally in red in the last
session. Today, the start is likely to remain cautious and traders will be
eyeing the major global developments following the mixed cues after an exit
poll suggested British Prime Minister Theresa May’s Conservative party not
getting majority. On the domestic front traders will be getting some support
with UN trade report that despite stagnant foreign direct investment (FDI)
inflow of $ 44 billion in 2016, India will most likely remain most favoured
destination due to its attractiveness among MNCs for cross-border mergers and
acquisitions. Meanwhile, Chief Economic Adviser Arvind Subramanian has
expressed concern over growing protectionism in global markets and felt that
India needs open markets to grow at 8-10%. He said that the biggest
beneficiaries of the open market policy or globalisation have been middle
income countries and the continuation of this is in their interest. There will
be some buzz in the power and coal stocks on report that India’s coal imports
in May declined 6 per cent due to lacklustre demand from the power sector and
sufficient supply of domestic fuel.
Indian benchmarks settle with moderate losses; Nifty
ends below 9650 mark
It
turned out to be a lethargic performance from Indian benchmark indices on
Thursday, as they failed to snap the session in the green territory and settled
marginally below the neutral line. Today’s session largely remained
characterized by choppiness, as the aimless indices moved only sideways in a
tight band for most part of the day, as investors and foreign funds were
adopting a cautious approach, ahead of key political and economic events in the
U.S. and Europe. Sentiments remained subdued after Reserve Bank of India (RBI)
raised concerns over the possibility of fiscal slippages due to the farm loan
waivers. RBI Governor Urjit Patel said unless that state governments' budgets
allow that fiscal space to go in for a loan waiver, it would be risky to tread
on that path. RBI also cut the economic growth projection to 7.3% for the
current fiscal from 7.4% earlier. The central bank, however, used a less
hawkish tone and reduced the Statutory Liquidity Ratio (SLR) in its second
bimonthly momany liquor stocks gained traction after Karnataka state government
decided to send a proposal to the union government seeking to denotify the
national highways (NH) pass through urban local bodies in Karnataka as local
roads. Likewise, shares of steel companies were trading higher in an otherwise
subdued market on the expectations of a revival in consumption during the
current financial year 2017-18. The market breadth remained pessimistic, as
there were 1328 shares on the gaining side against 1351 shares on the losing
side, while 177 shares remained unchanged.netary policy for financial year
2017-18.
Traders
turned anxious after chief economic adviser Arvind Subramanian expressed his
unhappiness over the Reserve Bank's inflexibility on interest rates. He warned
that real policy rates are becoming tighter and rising at a time of low
inflation and slowing growth. However, losses remained capped with UNCTAD’s
latest report that India would be the top prospective foreign direct investment
(FDI) destination globally after the US and China. It also said that an improved
economic outlook in major Asian economies such as India, China is likely to
lift investor confidence and help boost FDI inflows by about 15 percent in 2017
Asian markets end mixed on Thursday
Asian
equity markets made a mixed closing on Thursday as investors awaited
directional cues from three big upcoming events today and next week's Federal
Reserve meeting. The European Central Bank (ECB) will announce its latest
interest rate decision later today, with traders on the lookout for any hints
of policy changes on rate and stimulus outlook. Polls have opened in the UK
with the latest polls predicting a narrow victory for Theresa May's party over
the main opposition Labour Party. Former FBI Director James Comey's testimony
before the Senate Intelligence Committee also remained in the spotlight after
he confirmed media reports that President Donald Trump demanded his loyalty and
asked him to drop at least part of the bureau's investigation of former National
Security Adviser Mike Flyn. Japanese shares ended lower as the yen edged higher
in late Asian deals on a report that the Bank of Japan was re-calibrating its
communications to acknowledge it is thinking about how to handle a withdrawal
from its monetary stimulus. Meanwhile, Chinese shares ended higher after
Chinese exports and imports data topped expectations. Exports advanced 8.7
percent year-on-year in dollar terms in May, faster than the 7.2 percent
increase economists had forecast. Imports climbed 14.8 percent, much above
expectations for 8.3 percent growth.
US markets closed higher following Comey's testimony
The
US markets closed higher on Thursday, with the Nasdaq Composite Index finishing
at a record, marking its 38th all-time closing high in 2017. The former FBI
Director James Comey’s appearance in front of the US Senate Intelligence
Committee concluded without any significant revelations. The street had
signaled that above events don’t appear to threaten the stock market’s extended
push into record territory, which has been driven by President Donald Trump’s
promises of tax cuts, infrastructure spending and deregulation.
The
Dow Jones added 8.84 points or 0.04 percent to 21,182.53, Nasdaq was up 24.38
points or 0.39 percent to 6,321.76, while S&P 500 edged higher by 0.65
points or 0.03 percent to 2,433.79
Indiato be one of the top prospective FDI destination:
UNCTAD
The
United Nations Conference on Trade and Development (UNCTAD), in its latest
report ‘World Investment Report 2017’ has saidthat India would be the top
prospective foreign direct investment (FDI) destination globally after the U.S.
and China. The report however noted that although new liberalization efforts continue
to improve the investment climate in India, tax-related concerns remain a
deterrent for some foreign investors.
UNCTAD
report said that an improved economic outlook in major Asian economies such as
India, China is likely to lift investor confidence and help boost FDI inflows
by about 15 per cent in 2017. Besides, it has said that the country’s renewed
policy efforts to attract FDI may also contribute to higher inflows in 2017,
adding that foreign multinational enterprises (MNEs) are increasingly relying
on cross-border M&As (mergers and acquisitions) to penetrate the rapidly
growing Indian market.
It
said that in major recipients such as China, India and Indonesia, renewed
policy efforts to attract FDI could contribute to an increase of inflows in
2017. However, the report found that FDI in India remained almost flat in year
2016 at about $44 billion, up only 1 per cent from 2015. At the same time
India's outward FDI declined by about third from $7.572 billion in 2015 to
$5.12 billion in 2016. UNCTAD has also reported that FDI inflows to developing
Asia shrank by 15 per cent to $443 billion in 2016, the first decline since
2012.
Record jumpin FDI from $34,487 billion to $61,724
billion since 2013: Modi
Giving
an overview of his three-year-old government, Prime Minister NarendraModi has
said that there has been a record jump in Foreign Direct Investment (FDI) from
$34,487 billion to $61,724billion since 2013. Terming India a bright spot in
the cloudy global
economy,
he said that doing business here has been made easier and the tax regime is
more predictable and stable. He pointed out that the goods and services tax
(GST) regime is also going to have long standing benefits for the nation.
Talking
about his 'guiding tenet-reform to transform', Modi said that the reform agenda
of government is comprehensive and inclusive, covering all sections of society,
all regions of India and all aspects needing attention. He also said that it
was a matter of immense happiness that a friendly spirit of competition has
developed among the states for accelerating reforms and getting more
investment.
On
matters related to next-gen infrastructure for a new India, PM said that they
are giving the added push to infrastructure projects with a special emphasis on
timely completion. Adding further, he said that the government’s goal is a new
India, powered by the skills and talent of the youth. He also said that
substantial ground has been covered in the last three years and India is poised
to scale newer heights of progress.
Farm loan waivers may harm country’s fiscal health,
spur inflation: RBI
Raising
concerns over the recent spate of farm loan waivers across the country, the
Reserve Bank of India (RBI) Governor Urjit Patel has said that rush for such
actions may harm the country’s fiscal health and may have inflationary
spillovers. He said that past episodes have shown when there are significant
fiscal slippages they do permeate through inflation sooner or later.