need2know: Six macro triggers that may matter for market today

As the second leg of the Budget Session started yesterday, the passage of bills like Consumer Protection Bill and Maternity Benefit Bill (Amendment) Bill, 2016, along with the passage of many GST-related bills are expected during the session. The first half of the Budget Session that lasted from 31st January to 9th February to adjourn for a recess of 27 days, was a productive one. It saw two key bills being passed, namely, The Payment of Wages (Amendment) Bill, 2017 and The Specified Bank Notes (Cessation of Liabilities) Bill, 2017.

Here's a look at six macro-economic triggers that are likely to impact the market today


Universal social security cover for over 45 crore workers soon: An all-inclusive universal social security cover will be available soon for over 45 crore workers in the country, covering all potential risks, along the lines of systems prevalent in the West. The universal social security will cover loss of income; death and disability; illness and medical bills; and unemployment benefits for all. The government will meet the cost of the programme for the poor. Under the proposal firmed up by the labour ministry, social security contributions will be mandatory but the deduction could be lower than those made currently, all of which adds up to about 30% of income. While the social security cover for people the below poverty line (BPL) would be paid from the taxpayers' kitty, those above the poverty line would have to suffice for themselves.

IT clients in US cautious of Donald Trump's new tax regime: US clients of India’s $150-billion information technology services industry are inserting new caveats and exit clauses into outsourcing contracts on fears that the Donald Trump administration may bring in a new tax regime that would make offshoring more expensive, experts say. “The worry for several companies that are outsourcing work is that, going ahead, they may face additional taxes of around 20% if they are offshoring their business under new laws that may be introduced within a year or so,” said Girish Vanvari, national head, tax, at KPMG India.

India’s top 50 cities have seen huge spurt in consumption: India’s biggest 50 cities have seen a huge spurt in consumption as the country races towards high gross domestic product, according to an EY research report. The 50 largest cities have transformed India into a major consumption hub, the research report said. According to the research report, about 12.3 crore people live in these cities and have a household income of Rs 2.6 lakh crore. This at the same time when top 8 Indian cities have a household income of Rs 80,000 crore, the research report—India’s growth paradigm, said.

Select farm goods to be taxed under revamped GST: India has incorporated a new definition of 'agriculturalist' in the goods and services tax law to enable select farm items to be brought under the tax net nationwide. While farmers won't have to register to pay the tax, registered buyers may need to collect the levy on a 'reverse charge' basis, similar to the purchase tax principle adopted in Punjab and Haryana. Most farm produce will likely be exempted from the new tax and some cash crops are expected to attract the threshold rate.

Draft rules for m-wallets, smart cards released: The government has released draft guidelines for transactions made through prepaid payment instruments (PPIs) like mobile wallets, smart cards and paper vouchers and also sought feedback from various stakeholders. The draft IT (Security of Prepaid Payment Instruments) Rules 2017 have been designed to ensure adequate integrity, security and confidentiality of electronic payments effected through PPIs.

Private sector revival unlikely in FY 2018, says Crisil: A revival in private sector investment cycle is likely to be deferred to fiscal 2019 as there is ample headroom in capacity utilisation, stretched balance sheets, and just a moderate pick-up in demand credit rating agency Crisil said on Thursday. In the next fiscal year ending March 2018 Crisil predicts only a mild recovery due to an absence of fiscal and monetary stimuli and unsupportive global environment. India’s GDP will edge up by only 30 basis points to 7.4% over fiscal 2017, riding on pent-up consumption demand after demonetisation. One basis point if 0.01%age point.

...and in financial markets yesterday

Rupee flat: The rupee ended virtually unchanged at 66.71 against the US dollar as traders avoided taking any positions ahead of the exit polls outcome and concerns over an impending Fed rate hike.

Bonds mixed: Government bonds (G-Secs) ended mixed on alternate bouts of buying and selling. The 7.59% G-Secs maturing in 2026 fell to Rs 103.27 from Rs 103.34 previously, while its yield inched up to 7.08% from 7.07%. The 6.97% G-Secs maturing in 2026 gained to Rs 100.80 from Rs 100.7250, while its yield inched down to 6.85% from 6.86%. The 7.61% G-Secs maturing in 2030 also moved down to Rs 102.16 from Rs 102.2150, while its yield inched up to 7.35% from 7.34%. The 7.72% G-Secs maturing in 2025 rose to Rs 102.85 from Rs 102.78, while its yield edged-down to 7.25% from 7.26%. The 8.27% G-Secs maturing in 2020 rose to Rs 104.4750 from Rs 104.42, while its yield fell to 6.71% from 6.73%.

Call rates down: The overnight call money rates ended lower to 5.80% from Wednesday's level of 6.25%. Its resumed higher at 6.10% and moved in a range of 6.80% and 5.80%.

Liquidity: The Reserve Bank of India, under the Liquidity Adjustment Facility, purchased securities worth Rs 5868 crore in 26-bids at the overnight reverse repo operations at a fixed rate of 5.75% as on March 8, while it sold securities worth Rs 550 crore in 1-bid at the overnight repo operation at a fixed rate of 6.75% as on Thursday.