need2know: Seven macro triggers that may matter for market today

The G20 leaders on Monday committed to roll back protectionist measures by end-2018 to boost free trade but the summit failed to take steps in defence of globalization and against isolationism. On the concluding day of the two-day summit, Prime Minister Narendra Modi asked fellow G20 leaders to act decisively to eliminate safe havens for economic offenders, unconditionally extradite money launderers and end excessive banking secrecy. The summit, marked by diplomatic tiffs between US and China and distracted on the last day by firing of missiles by North Korea, ended without consensus on key issues.


Here's a look at seven macro triggers that may impact the market today

Patel assumes charge as RBI Governor: Urjit Patel assumed charge as the 24th governor of the Reserve Bank of India with effect from September 4. Given the rise in food prices rise along with the recent rise in fuel prices creating doubts over inflation movement, it is unlikely that the new Governor will be able to cut policy rates immediately. A clearer picture on price movements may emerge on September 12 when the government will release the consumer price index (CPI) data.

Aug services activity up at 3.5-year high: India's services activity jumped to a more than three-and-a-half year high in August, a private survey showed, providing some comfort about the economy looking up and indicating that the poor first quarter was likely an aberration. The Nikkei India Services Business Activity Index came in at 54.7 in August, a sharp spike from 51.9 in July and the highest since January 2013, riding on strong local and foreign demand. A reading above 50 on this survey-based index indicates expansion, while a figure below that denotes contraction.

Fitch sees telecom tariff rates falling by 10-15% in 1 year: The start of full-fledged 4G services by Reliance Jio will prompt incumbent operators to lower their tariffs to retain customers, and industry blended tariff could fall by 10-15% in the next year, Fitch Ratings said yesterday. "The incumbents are likely to respond by lowering their own tariffs to retain customers. We expect the industry blended tariff to fall by 10-15% in the next year," Fitch said. It said Reliance Jio's entry will be "credit negative" for the incumbent operators, particularly smaller telcos, and will hasten industry consolidation.

Universal Basic Income idea likely in next economic survey: Universal Basic Income, or a single unconditional income that reduces government efforts to ensure last-mile delivery of individual social security schemes, could feature in the next economic survey, says India's Chief Economic Advisor Arvind Subramanian. Universal basic income promises every citizen unconditional cash transfer in place of the many benefits, ( health for example) and subsidies (like Odisha's popular Re 1 a kilo rice). The case for a single unconditional income is that it reduces government efforts in trying to make sure individual schemes reach the right targets. Its critics fear it will be expensive and disincentivise work or fail to bring the specific results that schemes like school midday meals achieve.

M-SIPS set for revamp: A key programme of the government, aimed at boosting electronic manufacturing, is set for a revamp after a prolonged tussle between the Department of Electronics and Information Technology and the finance ministry led to scores of investment proposals getting stuck. This is after the finance ministry raised concerns over the lack of clarity in the quantum of subsidy outgo under the open-ended M-SIPS (Modified Special Incentive Package Scheme) framework, valid till 2020. The M-SIPS policy incentivises companies to manufacture domestically by providing them a 20-25% subsidy on capital expenditure.

Oil block auctions under HELP by early next year: India will likely begin auctioning its major oil and gas blocks early next year under its fresh Hydrocarbon Exploration Licensing Policy (HELP) that heralds a major shift from the previous policy by bringing in revenuesharing between companies and the government, offering companies the option to carve out blocks, and the freedom to market gas. In March, the government notified the new hydrocarbon policy, replacing the NELP, or New Exploration Licensing Policy that guided Indian hydrocarbon space for more than a decade.

Next round of capital infusion in PSBs post Q3 results: Government has set parameters for public sector banks for receiving capital support and only those lenders which fulfil the criteria post third quarter results would be eligible for funds. The government in July had announced the first round of capital infusion of Rs 22,915 crore for 13 banks. ources said that the second round of funding would be in addition to the remaining 25% of the Rs 22,915 crore capital infusion announced in July.

...and in financial markets last Friday

Rupee up: The rupee closed at 66.83 per dollar — a level last seen on 18 August, up 0.2% from its previous close of 66.96. The rupee opened at 66.83 per dollar and touched a high of 66.81 at one point.

Bonds down: Government bonds (G-Secs) continued to remain lower on heavy selling pressure from banks and corporates. The 7.59% G-Secs maturing in 2026 dropped to Rs 103.16 from Rs 103.17 previously, while its yield held stable to 7.12%. The 7.61% G-Secs maturing in 2030 declined to Rs 104.4475 from Rs 104.56, while its yield inched up to 7.09% from 7.08%. The 7.59% G-Secs maturing in 2029 fell to Rs 103.58 from Rs 103.66, while its yield edged up to 7.15% to 7.14%. The 7.88% G-Secs maturing in 2030, the 7.68% G-Secs maturing in 2025 and the 6.97% G-Secs maturing in 2026 were also quoted lower at Rs 106.21, Rs 103.21 and Rs 100.0350, respectively.

Call rates down: The overnight call money rates finished lower at 6.20 per cent from Thursday's level 6.40 per cent. It resumed steady at 6.40 per cent and moved in a range of 6.40 per cent and 6.20 per cent.

Liquidity: The Reserve Bank of India (RBI), under the Liquidity Adjustment Facility (LAF), purchased securities worth Rs 4740 crore in 14-bids at the 4-days repo auction at a fixed rate of 6.50% as on Friday, while its sold securities worth Rs 8237 crore from 36-bids at the overnight reverse repo auction at a fixed rate of 6% as on September 01.