Companies and Markets

Companies & Markets

10-year bond yields may shoot up to 7.5-8% range

The 10-year G-sec yields have risen by almost 85 basis points to 7.4 per cent over the past 13 weeks, making bond traders cautious.

Apart from fiscal developments, inflationary concerns, high oil prices and rising US rates may make the Reserve Bank of India (RBI) settle into a long pause.

The ten-year bond yields have risen to 7.4 per cent this month, back to July 2016 highs and up around 90 basis points in 2017, compared to relatively flat movements in the region (ex-India and China).

Crude oil at three-year high of $68.27 per barrel

While the broader commodity market received support from weakening US dollar, crude oil prices hit three-year high levels amid supply concerns.

With the positive sentiment continuing, Brent crude is likely to move up to $70 per barrel in the coming session, said analysts.

Brent crude moved to $68.27 per barrel intraday on Thursday, a level last seen in December 2014. US West Texas Intermediate crude at the New York Mercantile Exchange moved up to $62 per barrel.

Metals rise after months of volatility as US, China show way

Recovering economic sentiment across the world, particularly in China and the US, has resulted in commodities rallying globally in the last two weeks, after years of volatility. India was no exception. While yellow metal glittered, rising to its highest levels in over three months (spot gold hit $1311.14 an ounce, its highest level since September 2017), base metal too was seen wavering near their recent highs.

Moody’s: Recap to narrow gap between public & pvt lenders

The gap between the capital profiles of Indian public and private sector banks is expected to narrow.

This follows the government’s proposed Rs 2.11 lakh crore recapitalisation plan for public sector banks (PSBs), which are financially weaker entities, said Moody’s Investors Service on Thursday.

As of September 2017, the average common equity tier 1 (CET1) ratio of rated public sector banks was 8.7 per cent compared to 12.2 per cent for the rated private sector banks.

However, the gap is expected to narrow, given the government’s recapitalisation package.

Parliament nod for Rs 80K cr recap bonds

The Lok Sabha on Thursday approved the demand for additional expenditure of Rs 80,000 crore through a third tranche of supplementary demand for grants in 2017-18. The funds have been earmarked for issuing the first batch of recap bonds to public sector banks hit by bad loans.

Warm weather affects mustard sowing by 8%

Mustard seed acreage declined 8 per cent to 6.35 million hectare until Dec 29 as warm weather hit sowing operations in Rajasthan. In 2016-17, farmers planted mustard seed on 6.89 million hectares till Dec 29 while total acreages was at 7.05 m hectare, agriculture ministry data showed.

"Warm weather in Rajasthan adversely impacted the overall sowing of mustard seed and acreage fell nearly 26 per cent to 2.05 million hectare and any improvement is unlikely now," a senior official of agriculture ministry said.

Consolidation phase may continue

Volatility continues to reign Dalal Street as profit booking emerged after the market opened higher on Wednesday. The Sensex shed 18.88 points, or 0.06%, to settle at 33,793.38, while the Nifty 50 rose 1 point or 0.01% to settle at 10,443.20. The broader market ended with decent gains, as the BSE Mid-Cap and Small-Cap indices rose 0.53% and 0.98%, respectively.

Outlook for today

RBI may announce OMO purchase next week to cool yields

Bond traders and investors expect the Reserve Bank of India to announce purchase of securities under its open market operation (OMO) next week to provide some respite to the yields amid weak appetite.

"Liquidity is drying up and one segment of participants is speculating that RBI may announce OMO purchase in three tranches," said a bond trader with a foreign bank.

The pace and timing of OMO purchases will be reliant upon how the weekly auction pans out given the weak investor appetite, the trader said.

Valuation concerns shroud proposed ONGC-HPCL merger

The merger of Hindustan Petroleum Corporation (HPCL), the state-run refiner, and Oil & Natural Gas Corporation (ONGC), the state-run largest explorer, is delayed for a year at least on concerns over right valuation and escalating fiscal deficit.

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