need2know: six macro cues for market today

In the second strategic sale approval in over 12 years, the Cabinet on Wednesday cleared the sale of India’s first pharma company, Bengal Chemicals and Pharmaceuticals Ltd as well as Hindustan Antibiotics Ltd after selling their surplus land.

The Cabinet headed by Prime Minister Narendra Modi also approved closure of Indian Drugs and Pharmaceuticals Ltd (IDPL) and Rajasthan Drugs and Pharmaceuticals Ltd (RDPL).

Here’s a look at six macro triggers for the market today

New ordinance makes it illegal to hold old notes post March 31 : The Cabinet approved the promulgation of an ordinance extinguishing the Reserve Bank of India‘s liability for cancelled Rs 500 and Rs 1,000 notes as the logical conclusion to the government’s demonetisation initiative. The move will also give the finance ministry enough time to factor into the budget the amount of cash that hasn’t been returned to the system if required, officials said. The ordinance is expected to provide a limited window for depositing the cancelled notes at select RBI branches until March 31 and also prescribes a monetary penalty for anyone holding such currency in large quantities after the deadline. A fresh set of guidelines will be issued on December 30 detailing procedure for exchange of currency at RBI counters until March 31.

Direct subsidy for power consumers may be next: After cooking gas, consumers may now get direct subsidy on electricity. An expert panel comprising senior officials from states and industry is studying the matter and will present its report to the power ministry next month. The expert committee, set up by the ministry to suggest ways to increase electricity demand and consumption, is examining subsidising the target consumers in a manner similar to what has been done in the case of LPG cylinders for plugging leakages and bringing down the subsidy burden. The Niti Aayog and industry experts have been advocating the scheme to lower subsidy, prevent its misuse and strengthening power distribution utilities.

Sugar prices to be firm: Sugar prices are likely to stay firm in the first quarter of 2017, say traders and companies, as cost of production increases in Uttar Pradesh and mills in Maharashtra plan to shut early. At Kolhapur in Maharashtra’s sugar belt, the sweetener is quoting Rs 34-35.68 a kg, depending on quality. Taking a cue from lower cane crop and the possibility of a fall in sugar production, the NCDEX March sugar prices traded 0.16% higher at Rs 3,730 a quintal on Wednesday with open interest of 5,020 lots.

Grace period for NPA classification extended by 30 days: The Reserve Bank of India on Wednesday further extended the grace period for banks, non-banking finance companies and microfinance companies to classify bad loans by 30 days in the case of agriculture and term loans of up to Rs 1 crore. The central bank had on November 21 had asked lenders to provide additional 60 days to small ticket borrowers to pay instalments due between November 1 and December 31 in view of the cash crunch following the demonetisation drive.

Direct tax collections in Mumbai, Delhi in single digit: Direct tax collections by both Mumbai and Delhi zones of the Income Tax department were in single digit until December 24, a department official said. It is inspite of the fact that the net revenue collections were in double digit during the period not only at the national level, but also at zonal level. However, the growth was in double digit in all the other parts of the country during the period. Even small places like Pune and Thane have also shown a double-digit growth in direct tax collections during the period.

Trade talks in January: India-EFTA trade deal talks to be held in January: With India and the European Free Trade Association (EFTA) members resuming talks for the long-stalled proposed free trade agreement last month, senior officials of the four-nation bloc will visit here in January to iron out differences related with the pact. The four members of EFTA are – Switzerland, Iceland, Norway and Liechtenstein.

…and in financial markets yesterday

Rupee down: The Indian rupee on Wednesday closed one month low against the US dollar on consistent selling by foreign institutional investors. The rupee closed at 68.24 per US dollar—a level last seen on 1 December, down 0.27% from its previous close of 68.06.

Bonds up: Government bonds (G-Secs) rebounded following fresh demand from corporates and banks. The 7.61% 10-year benchmark bond maturing in 2030 rose to Rs 105.23 from Rs 105.21, while its yield held stable to 7.00%. The 7.59% G-Secs maturing in 2026 climbed to Rs 105.72 from Rs 105.59, while its yield edged down to 6.73% from 6.75%. The 6.97% G-Secs maturing in 2026 gained to Rs 102.74 from Rs 102.6950, while its yield inched down to 6.58% from 6.59%. The 6.79% G-Secs maturing in 2029, the 7.68% G-Secs maturing in 2023 and the 7.59% G-Secs maturing in 2029 were also quoted higher to Rs 99.88, Rs 105.11 and Rs 104.48 respectively.

Call rates down: The overnight call money rates ended lower to 6.20% from Tuesday’s level 6.25%. It resumed steady to 6.25% and moving in a range of 6.30% and 6.05%.

Liquidity: The Reserve Bank of India, under the Liquidity Adjustment Facility, purchased securities worth Rs 4294 crore in 7-bids at the overnight repo auction at a fixed rate of 6.25% on Wednesday morning, while it sold securities worth Rs 7190 crore in 24-bids at the overnight reverse repo auction at a fixed rate of 5.75% as on December 27.

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