Of BoJ's Bond Purchase Program, 100% FDI in Single-Brand Retail, and Top Cues in Focus Today

Thu, 11 Jan Pre-Open

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After opening the day flat yesterday, share markets in India witnessed volatile trading activity throughout the day and ended their trading session on a dull note. Losses were seen across most sectors with stocks in the auto sector and stocks in the consumer durables sector, leading the losses. While stocks in the IT sector gained the most.

At the closing bell yesterday, the BSE Sensex stood lower by 10 points (down 0.1%) and the NSE Nifty closed down by 5 points (down 0.1%). The BSE Mid Cap index ended down by 0.4%, while the BSE Small Cap index ended flat.

Top Stocks in Focus Today

From the banking space, market participants will be tracking Axis Bank share price. The bank yesterday announced that it is looking to acquire a life insurance business. The bank's executive committee had approved the move in the December quarter. As per the news, the possible targets are IDBI Federal Life Insurance and Tata AIA.

Market participants will also be tracking stocks from the telecom sector as the Telecom Commission accepted recommendations by the industry regulator to ease current spectrum holding caps, smoothening the way for consolidation triggered by Reliance Jio Infocomm Ltd's September 2016 launch.

From the IPO space, market participants will be keeping tabs on the ongoing IPO offer of Apollo Micro Systems. The company's IPO was already oversubscribed by 1.35 times yesterday - the first day of the offer. The offer will be open till 12th January and the company intends to raise Rs 1.5 billion from its public offering.

100% FDI in Single-Brand Retail

The government also allowed 100% foreign direct investment (FDI) in single-brand retail via automatic route. It also eased a rule on 30% mandatory local sourcing of products for five fiscal years after the opening of the first Indian store.

BoJ Trims Bond Purchase Program

In news from global financial markets, the Bank of Japan (BOJ) trimmed the amount of its government bond purchases.

The development triggered speculations that the Japanese central bank may wind back its monetary stimulus this year.

Note that the BoJ is lagging behind the US Fed and ECB in exiting the ultra-easy policy. But sooner or later, Japan will have to withdraw the easy money policy.

India to Regain Fastest Growing Economy Tag?

In news from macroeconomic space, the world bank has pegged India to regain the 'fastest growing major economy' tag in 2018.

After losing the top spot to China in 2017, India is set to bounce back to being the fastest growing major economy, with the World Bank estimating GDP growth at 7.3% in 2018 and to 7.5% for the next two years.

India, despite initial setbacks from demonetization and Goods and Services Tax (GST), is estimated to have grown at 6.7% in 2017, according to the 2018 Global Economics Prospect released by the World Bank.

According to the report, India's future looks good on several fronts. Moreover, the recent recapitalization package for public sector banks announced by the government is expected to help resolve banking sector balance sheets, thereby spurring private investment.

The report added that, on the productivity side, India has enormous potential with respect to secondary education completion rate. All in all, improved labor market reforms, education and health reforms as well as relaxing investment bottleneck will help improve India's prospects.

Crude Oil Trades Near 2014 Highs

In the news from commodity markets, crude oil is witnessing buying interest today. Prices are seen hitting their highest levels since 2014 on the back of ongoing production cuts led by OPEC.

Note that crude oil prices have been on a rising trend this year. However, this is not good news from India's perspective.

As we wrote in a recent edition of The 5 Minute WrapUp...

• Fiscal revenues are at risk. Particularly if the government is forced to consider a cut in fuel excise duties due to a rally in oil prices. In recent times, a sharp jump in excise collections has helped indirect tax collections. Any risk to revenues and subsequent threat to the fiscal deficit target at 3.2% of GDP would require tighter spending cuts.
  
  Secondly, the impact on inflation needs to be monitored. This narrowing the central bank's scope for further rate cuts.
  
  Lastly, low crude prices were a positive growth impetus through higher discretionary incomes for households and lower input costs for manufacturers and farmers. Part of this benefit is likely to be eroded as retail fuel costs rise. As for corporations, expansion in gross margins caused by falling commodity prices is also likely to wane, pressurising profitability.

You can read the entire article here.

To keep a tab on the movements in crude oil and other commodities, you can read the stock market commentary from the Daily Profit Hunter team. Their commentary tracks the developments in the global economy as well as stock, currency, and commodity markets.

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