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    Market Movers: No relief for power cos; Oil prices up; NAFTA overhaul & more

    Synopsis

    Alowdown on top macro triggers that may move market on Tuesday.

    markets5Agencies
    Here’s a lowdown on top macro triggers that may move market on Tuesday. This report was compiled from agency feeds.


    US-Mexico Reach Deal to Ovehaul NAFTA
    The United States and Mexico agreed on Monday to overhaul the North American Free Trade Agreement (NAFTA), putting pressure on Canada to agree to new terms on auto trade and dispute settlement rules to remain part of the three-nation pact. Negotiations among the three partners, whose mutual trade totals more than $1 trillion annually, have dragged on for more than a year, putting pressure on the Mexican peso MXN= and the Canadian dollar CAD=. Both currencies gained against the U.S. dollar after Monday's announcement.

    No Relief for Power Cos
    The Allah
    Power Pangs
    abad High Court declined to give private power companies any interim relief on Monday on the Reserve Bank of India (RBI) circular that tightened bad loan norms, on the deadline for finalising resolution plans for the stressed assets. The court suggested the government could use a special dispensation that has never been used before to give directions to the central bank. Meanwhile, Central Electricity Regulatory Commission has been to allowed to make changes in any central or state government duty to be passed on to consumers even after award of bids, a move that may help revive some stuck power project.





    Rupee at Record Closing Low
    The Indian rupee on Monday retreated sharply to hit a record closing low of 70.16 against the US dollar, plunging by 25 paise despite a huge rally in equities amid easing worries over near-term monetary policy tightening by the US Fed. The rupee has been hit by a range of factors including swelling current account deficit, surging global crude prices and lukewarm export growth. Besides, US trade protectionism has also contributed to excess volatility in the forex market.


    Oil Prices Trekking Up
    Oil prices rose on Tuesday as risks of supply disruptions from places such as Venezuela, Africa and Iran triggered expectations of a tightening market. International Brent crude oil futures LCOc1 were at $76.51 per barrel at 0037 GMT, up 30 cents, or 0.4%, from their last close. US WTI crude futures CLc1 were up 24 cents, or 0.4%, at $69.11 a barrel. In India, diesel price was hiked about 14 paise per litre and petrol by 13 paise after a fall in rupee made imports costlier.


    Gold Holds Steady on US-Mexico Trade Deal
    Gold prices held steady on Tuesday after hitting a two-week high in the previous session, with the dollar under pressure in the wake of a trade deal between the United States and Mexico. Spot gold XAU= was steady at $1,211.31 an ounce at 0047 GMT. Prices hit their highest since Aug. 13 at $1,212.38 on Monday, while the metal rose about 1.7% on Friday in its biggest one-day%age gain since May 17, 2017. The dollar fell to a four-week low on Monday, as risk appetite improved and investors unwound some safe-haven bets on the currency after the United States and Mexico reached a trade deal.


    Strong Macro, Challenges External: FM
    The crusade against recovery of funds from defaulters would continue and if necessary be intensified as the nation transforms its credit culture, said Finance Minister Arun Jaitley in what appeared to be backing the regulator’s stance on defaulters. India still remained a strong growth economy despite many complaints, but the external factors such as political crisis in Turkey or a sudden jump in Crude oil prices affect the economy, he said.


    Can India Grab The Commodity Space in China?
    A commerce department study has found that India can capture the Chinese commodity market vacated by US exports following the trade war between the world’s two biggest economies. The study has analysed and identified at least a 100 products where India can replace US exports to China.
    Chinese Pie


    POLICIES & MORE
    • Foreign direct investment in India grew by 23% to $12.75 billion during the April-June quarter of 2018-19, according to official data.
    • The country's current account deficit (CAD) is likely to touch 2.8% of GDP in the current financial year on surge in crude oil prices and moderate growth in exports, a SBI research report said. The merchandise trade imbalance is also expected to rise to $188 billion in FY19, compared with USD 160 billion in FY18.
    • The Kerala deluge has shaved off at least 2.2% of state GDP, which will push up its fiscal deficit to 5.4% this fiscal, says a report by Acuit Ratings (earlier Smera Ratings).
    • The Supreme Court on Monday issued notices to WhatsApp and Indian authorities, seeking their responses over a petition questioning the way the messaging service functions and its move to launch a payments platform while not having a physical presence in the country.

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    Top Quote
    Too Much Benchmark Hugging Hurting Investment Judgment'

    FUNDAMENTALS
    Long-term Bond Yields Mixed: Government bonds (G-Secs) declined on selling pressure from banks and corporates. The 7.17% 10-year benchmark bond maturing in 2028 eased to Rs 95.26 from Rs 95.3950 previously, while its yield edged up to 7.89% from 7.87%. The 6.68% G-Secs maturing in 2031 fell to Rs 88.92 from Rs 89.0050, while its yield held stable to 8.06%.

    Shorter-term Bond Yields Steady: The 7.59% G-Secs maturing in 2026 slid to Rs 97.40 from Rs 97.43, while its yield ruled steady to 8.06%. The 6.84% G-Secs maturing in 2022, the 7.06% G-Secs maturing in 2046 and the 7.37% G-Secs maturing in 2023 were also quoted lower to Rs 96.16, Rs 87.41 and Rs 97.78 respectively.

    Call Rates Down: The overnight call money rates turned lower to 6.30% from last Friday's closing level of 6.50%. It resumed higher at 6.55% and moved in a range of 6.55% and 6.20%.

    Liquidity: The Reserve Bank of India, under the Liquidity Adjustment Facility, purchased securities worth Rs 3,948 crore in 6-bids at the overnight repo auction at a fixed rate of 6.50% on Monday morning, while it sold securities worth Rs 29,634 crore in 59-bids at the 3-days reverse repo auction at a fixed rate of 6.25% as on August 24.




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