need2know: Six macro triggers that may matter for market today

The Reserve Bank of India (RBI) is expected to hold key interest rates at its monetary policy review – its second after November’s note ban – in the wake of banks being flush with funds post-demonetisation and a firming up of global oil prices. As a result of the surge in bank deposits following the recent demonetisation of high-value currency, lending rates have fallen by up to 1%.

However, with services sector contracting for the third straight month in January, there are hopes that the central bank will be accommodative in its monetary policy.


Here's a look at six macro-economic triggers that could impact the market today.

Services PMI contracts for third month in Jan: India's services languished, with new business orders falling for the third straight month, amid muted inflationary pressure that could offer RBI much room to remain accommodative in its next policy meet next week, says a monthly survey. The Nikkei India Services Purchasing Managers' Index (PMI), which tracks services sector companies on a monthly basis, came in at 48.7 in January, from 46.8 in December 2016, signalling that the sector is heading towards stabilisation.

FPIs pump in Rs 2,300 crore in 3 days: After four months of selling frenzy, overseas investors turned net buyers in February and pumped in over Rs 2,300 crore in the capital market over the last three sessions, enthused by clarity on foreign portfolio investor (FPI) taxation. The latest inflow followed a net pullout of Rs 80,310 crore from equity and debt together in the past four months (October-January). Prior to that, FPIs had invested over Rs 20,000 crore in the capital market. According to depository data, FPIs infused a net sum of Rs 1,246 crore in equities during February 1-3 and another Rs 1,098 crore in the debt segment, translating into a total inflow of Rs 2,344 crore.

India's gold demand at 7-year low in 2016: India’s gold demand has fallen to a seven-year low in 2016 and a sharp decline in smuggling post demonetisation has aided the trend. Data compiled by the global miners’ body World Gold Council (WGC) showed India’s gold demand at 675.5 tonnes in 2016, 21.2% lower than 857.2 tonnes in the previous year. Demand by value declined 15% to $27.2 billion in 2016 from $32 billion a year ago.

Fibre imports from 4 nations in anti-dumping duty crosshairs: India may impose anti-dumping duty on imports of a certain kind of fibre from China, Indonesia, Malaysia and Thailand as it has found sufficient evidence of dumping of the product from these countries. The Directorate General of Anti-dumping and Allied Duties (DGAD), under the commerce ministry, has initiated investigation on the same. Indo Rama Synthetics (India) Ltd, The Bombay Dyeing & Mfg Co Ltd and Alok Industry Ltd have filed the application for imposition of anti-dumping duty on imports of 'non-dyed Polyester Staple Fibre (PSF) ranging from 0.6 to 6 Deniers', DGAD has said in a notification.

Tata no longer in top 100 brands list: The spat between Tata Sons and its former chairman Cyrus P. Mistry seems to have pushed Tata out of the top 100 brands in the world ranked by Brand Finance, a consulting firm. According to Brand Finance’s 2017 report, the Tata group has slipped out of the top 100 for the first time since 2007, the first year for which this data is available. In 2017, it is ranked 103 compared with 82 in the previous year. Tata, however, continues to be the most valuable brand in India ahead of Airtel, LIC, Infosys and State Bank of India, which all find a place in the global top 500.

Merged PSU energy giant to have global edge: The merger of state-run energy companies will provide India the muscle to acquire assets abroad and negotiate better, but the business model of the new entity thus created will be key to its success, chairman of the country's largest oil marketing firm said. Finance minister Arun Jaitley in the Union Budget last week announced a proposal to merge stateowned oil companies to create an integrated oil behemoth, which could potentially top $100 billion in market value and enter the league of global oil heavyweights.

...and in financial markets last Friday

Rupee up: The Indian rupee closed at a twelve-week high against the US dollar as foreign inflows returned to India in the wake of better earnings and the return of risk appetite. The rupee closed at 67.32—a level last seen on 11 November 2016, up 0.1% from its previous close of 67.38.

Bonds down: Government bonds (G-Secs) slipped on selling pressure from banks and corporates. The 6.79% 10-year benchmark bond maturing in 2029 declined to Rs 101.6925 from Rs 101.88, while its yield edged up to 6.59% from 6.57%. The 7.61% G-Secs maturing in 2030 dipped to Rs 107.82 from Rs 107.9850, while its yield moved up to 6.71% from 6.69%. The 6.97% G-Secs maturing in 2026 eased to Rs 103.97 from Rs 104.03, while its yield inched up to 6.41% from 6.40%. The 7.59% G-Secs maturing in 2026, the 7.68% G-Secs maturing in 2023 and the 8.27% G-Secs maturing in 2020 were also quoted lower to Rs 107.04, Rs 106.06 and Rs 105.83 respectively.

Call rates down: The overnight call money rates finished lower at 5.80% from Thursday’s level of 6.20%. It resumed lower at 6.15% and moved in a range of 6.15% and 5.80%. The 3-days call money rates ended 5.80% and moved in a range of 6.25% from 5.75%.

Liquidity: The Reserve Bank of India, under the Liquidity Adjustment Facility, purchased securities worth Rs 1690 crore in 5-bids at the 3-days repo auction at a fixed rate of 6.25% Friday morning, while it sold securities worth Rs 8393 crore in 39-bids at the overnight reverse repo auction at a fixed rate of 5.75% as on February 02.