need2know: Eight facts to know before starting your day on D-Street

With the major part of the earning season being over, RBI's monetary policy review, key macroeconomic data and progress of monsoon rains would influence market sentiment this week, say experts. RBI is likely to maintain status quo at its monetary policy review on Wednesday as it would like to gauge the impact of GST rollout on inflation, say experts.

Meanwhile, directors of companies that have not been carrying out business for a long time are set to be disqualified from holding directorship in any registered firm for up to five years, as part of the government's intensified efforts against the black money menace. Shell companies are dubious entities that are generally used for laundering illegal wealth. With nearly three lakh companies under the scanner, the government is preparing to initiate stringent steps against erring entities, including striking off their names and taking action against directors , said sources.

Here's a look at eight macro-economic triggers that are likely to impact the market and more.

PSU banks to raise Rs 58K cr this year
In a move that will ease the pressure on the exchequer of pumping in capital, public sector banks, including SBI, Bank of Baroda and IDBI Bank, plan to raise Rs 58,000 crore through equity dilution during the current fiscal. The move will help the banks to meet Basel-III norms and clean up their balance sheets. Leading the pack, country's largest lender SBI plans to raise Rs 15,000 crore through share sale by the year-end, probably through a qualified institutional placement (QIP). The Bank of Baroda and Central Bank of India plan to raise Rs 6,000 crore and Rs 65,000 crore from capital markets, respectively. Oriental Bank of Commerce and IDBI Bank have taken board's approval for raising Rs 5,000 crore each through equity dilution, while Mumbai-based Union Bank of India plans to Rs 4,950 crore during the current fiscal. This will be over and above Rs 70,000 crore banks will get as capital support from the government. PSU banks have accumulated bad loans of a staggering Rs 6 lakh crore.

Which sector will create most jobs?
If the latest Assocham report is to be believed, the era of jobless growths is coming to an end and sectors like real estate, retail, wellness and transport and logistics may create the most jobs in the near future. The Associated Chambers of Commerce and Industry of India (Assocham)-Thought Arbitrage Research Institute joint report also said India's information technology and IT-enabled services (ITeS) sector may add at best one million jobs in the next five years. According to the report, building, construction and real estate, including infrastructure, sector would require 31.1 million incremental jobs. Besides, organised retail can create incremental level of at least 10-12 million new jobs in the next five years, while textiles and clothing can also be a potential area of job creation, the report added. The central government think-tank the Niti Aayog on Friday trashed unemployment surveys as unreliable and said it has set up a task force to produce authoritative annual nationwide employment data based on household surveys.

The first-ever bad loan action
In the the first auction of bad loans by the two commercial banks after the Reserve Bank of India revised norms for sale of bad loans, Andhra Bank and Allahabad Bank have put up for sale nearly Rs 6,000 crore of bad loans amid mounting pressure on state-run lenders to clean their books. While Andhra Bank wants to sell off more than 100 accounts adding to about Rs 4,000 crore of loans, Allahabad Bank has invited bids for 73 accounts with outstanding loans of Rs 2,000 crore. The assets on sale include Seven Hills Hospital, Visa Power, Visa Steel, L&T Chennai Tada Toll Road, KS Oil, Transstroy India and a few of its associate companies, Maheshwari Ispat and Abhijeet Power. Nearly two dozen asset reconstruction companies or ARCs will participate in bidding for the bad loans on offer.


RBI likely to hold rates
The Monetary Policy Committee of the Reserve Bank of India is expected to keep the cost of funds unchanged at its scheduled meeting this week, but could lower their forecast on inflation and retain the option of cutting rates toward the latter half of the year if consumer prices remain muted. An ET poll of 21 FIs showed that most respondents expect the central bank to hold headline rates. Yet a change in sentiment is quite palpable. For FY18, the RBI has projected inflation to average 4.5% between April and September, and 5% in the latter half, with the risks balanced along the inflation trajectory. But India’s retail price gauge has dropped to a record low of 2.99% in April, from a near five-month high of 3.89% in March, because of the base effect and lower food prices. But, as long as liquidity is not posing a threat to inflation, RBI will not be in a hurry to raise the policy rate.


India slides in competitiveness index, China moves up
India has been ranked 45th, down four notches from last year, in terms of competitiveness in the annual rankings compiled by IMD which saw Hong Kong topping the list. As India slid, China improved its position by seven places to 18th, thanks to its dedication to international trade. US was "pushed out" of the top three slots while Hong Kong consolidated its dominance of the annual rankings for the second year in the list compiled by the International Institute for Management Development's (IMD) World Competitiveness Center. Switzerland and Singapore were ranked second and third respectively, with the USA at the fourth spot -- its lowest position in five years and down from third last year. The Netherlands completed the top five, jumping up from eighth last year. For the first time this year, the IMD World Competitiveness Center also published a separate report ranking countries' digital competitiveness. At the top of the digital ranking is Singapore, followed by Sweden, the USA, Finland and Denmark, while the bottom five are Indonesia, Ukraine, Mongolia, Peru and Venezuela.


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Financial markets last Friday

Rupee up: The rupee on Friday rose by 4 paise to a fresh one-week high of 64.44 against the US dollar on sustained selling of the American currency by exporters.

Bonds down: Government bonds (G-Secs) slipped on selling pressure from banks and corporates. The 6.79% G-Secs maturing in 2029 declined to Rs 99.85 from Rs 99.9650 previously, while its yield edged up to 6.81% from 6.79%. The 6.79% G-Secs maturing in 2027 dipped to Rs 101.19 from Rs 101.20, while its yield held stable to 6.62%. The 6.97% G-Secs maturing in 2026 fell to Rs 101.47 from Rs 101.57, while its yield inched up to 6.75% from 6.74%. The 7.72% G-Secs maturing in 2025, the 7.61% G-Secs maturing in 2030 and the 7.68% G-Secs maturing in 2023 were also quoted lower to Rs 104.33, Rs 104.90 and Rs 104.23 respectively.

Call rates down: The overnight call money rates ended lower at 6.05% from Thursday's closing level 6.10%. It resumed lower at 6.00% and moved in a range of 6.25% and 6.00%. The 3-days call money rates finished 6.10%, it opened 6.25% and moving in a range of 6.25% and 5.90%.

Liquidity: The Reserve Bank of India (RBI), under the Liquidity Adjustment Facility (LAF), purchased securities worth Rs 1975 crore in 3-bids at the overnight repo auction at a fixed rate of 6.25% as on Friday, while it sold securities worth Rs 23674 crore from 58-bids at the overnight reverse repo auction at a fixed rate of 6.00% as on June 01.