Market Movers: US ratchets up trade war; Andhra tops ease of doing biz list & housing launches jump

Here’s a lowdown on top macro triggers that may move market on Tuesday. This report was compiled from agency feeds.

Trade War: US Releases List of $200 Bn Tariff Targets
The United States escalated the trade war on Tuesday saying it would impose 10% tariffs on an extra 200 billion worth of Chinese imports. Washington decided to impose the extra tariffs after efforts to negotiate a solution to the trade dispute failed to reach an agreement, senior administration officials said on Tuesday. The new list includes hundreds of food products as well as tobacco, coal, chemicals and tires, dog and cat food, and consumer electronics including television components. The move saw US stock futures extending their losses on Wednesday.


Iran & India
Iran has criticised India for not fulfilling its promise of making investments in expansion of the strategically located Chabahar port and said New Delhi will stand to lose "special privileges" if it cuts import of Iranian oil. Iran also thretened to end the privileges being provided to India if tries to source oil from countries like Saudi Arabia, Russia, Iraq, the US and others to offset cuts in Iranian oil. The Chabahar port is being considered a gateway to golden opportunities for trade by India, Iran and Afghanistan with central Asian countries in the wake of Pakistan denying transit access to New Delhi. Meanwhile, Bloomberg reports that while OPEC is doing its best to offset supply disruptions, it has no intention of “overdoing it”.

Passenger Vehicle Sales Jump
Passenger vehicle sales expanded 37.5% in June, the fastest in nearly eight years, helped by a favourable comparison with the year-earlier period when Indians deferred purchase ahead of the GST rollout. Industry executives expect the growth to normalise in the coming months as the base effect fades away — passenger vehicle sales have been growing 18-20% in recent months. They also flagged the risk of rising fuel prices, currency depreciation and likely price hikes due to costlier raw materials.

Andhra Tops Ease of Biz List
Andhra Pradesh outperformed 28 other states and seven union territories (UTs) to be the best in India to do business in for the second year in a row. The third edition of the annual ranking of all states and UTs under the Business Reform Action Plan (BRAP) conducted by the industry department and the World Bank showed Telangana and Haryana in second and third spots, while Meghalaya stood last at 36th position. This year, only two states – Jharkhand and Telengana – have been able to implement 100% reforms. However, 17 states have scored above 90%. Telangana and West Bengal handheld Tripura and Nagaland, respectively to help them perform better.

Talking Up Tariff
India could be looking at replacing multiple charges imposed on telecom companies with a single levy but any recast will have to be revenue neutral, the finance ministry has said, without giveaways that would reduce collections.

41% Jump in New Housing Launches
During the quarter ended June, top seven cities have witnessed a whopping 41% year-on-year jump in overall new housing launches, with the maximum supply of affordable houses with prices less than Rs 40 lakh, showed data from ANAROCK Property Consultants. Interestingly, the supply in the affordable segment increased 100% during the quarter as against the previous quarter, which drove the overall growth. The top 7 cities including Delhi-NCR, Mumbai Metropolitan Region, Chennai, Bengaluru, Pune, Kolkata and Hyderabad witnessed launches of around 50,100 units during the quarter.

POLICIES & MORE

• The Global Innovation Index (GII) has ranked India as the 57thmost innovative nation in the world. The country has improved its ranking from 60th position last year. India has been improving steadily since it was ranked 81st in 2015. Meanwhile, China improved its ranking from 22 in 2017 to 17 this year. India is is the most innovative country in its region of central and southern Asia.
• Indian inflation likely rose to a near two-year high in June, driven by surging oil and food prices, a Reuters poll showed, a development that would strengthen calls for more monetary policy tightening by the Reserve Bank of India. According to a July 4-9 Reuters poll of 37 economists, retail prices rose at an annual 5.30% last month. Forecasts for the data, scheduled to be released on July 12 at 1200 GMT, ranged from 4.60% to 6.00%.
• Institutional investors, including private equity, sovereign wealth and pension funds, continue to express rising appetite for Indian real estate. Matured yield-producing assets and competition among global investors for these assets have pushed the average investment per deal to $158 million, almost four times the average investment per deal concluded in 2011, showed data from Knight Frank India.

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FUNDAMENTALS

Rupee Down: The rupee fell by 10 paise to close at 68.82 against the US currency on Tuesday due to fresh buying of the dollar by importers after the greenback rebounded in global markets on waning trade war worries.

Long-term Bond Yields Up: Government bonds (G-Secs) ended mixed in a quitrade following alternate bouts of buying and selling. The 7.17% 10-year benchmark bond maturing in 2028 slipped to Rs 95.19 from Rs 95.25, while its yield inched up to 7.90% from 7.89%. The 6.68% G-Secs maturing in 2031 declined to Rs 88.72 from Rs 88.80, while its yield inched up to 8.08% from 8.07%.

Shorter-term Bond Yields Mixed: The 7.80% G-Secs maturing in 2021 eased to Rs 100.00 from Rs 100.10, while its yield moved up to 7.79% from 7.75%. However, the 6.84% G-Secs maturing in 2022 rose to Rs 95.92 from Rs 95.91, while its yield ruled steady to 7.95%. The 7.59% G-Secs maturing in 2026 gained to Rs 96.84 from Rs 96.82, while its yield softened to 8.16% from 8.17%. The 7.80% G-Secs maturing in 2020 went-up to Rs 100.2675 from Rs 100.26, while its yield held stable to 7.63%.

Call Rates Down: The overnight call money rates ended lower to 6.05% from Monday's level of 6.25%. It resumed steady to 6.25% and moved in a range of 6.35% and 6.00%.

Liquidity: The Reserve Bank of India, under the Liquidity Adjustment Facility, purchased securities worth Rs 8,688 crore in 15-bids at the overnight repo operation at a fixed rate of 6.25% as on Tuesday, while it sold securities worth Rs 8,559 crore in 33-bids at the overnight reverse repo auction at a fixed rate of 6.00% as on July 09.