August 1, 2019 / 3:23 AM / 23 days ago

Morning News Call - India, August 1

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FACTORS TO WATCH

9:30 am: S&P Global Ratings annual India seminar on India Outlook 2019-2020 in Mumbai.

LIVECHAT - BONDS CHAT

Reuters European government bonds correspondent Virginia Furness looks at bond markets on the continent after the U.S. Federal Reserve rate decision and outlook at 5pm IST. To join the conversation, click on the link: refini.tv/2P8N0Wp

INDIA TOP NEWS

• India’s monsoon rains to make up early shortfall: weather chief

Monsoon rains in the coming weeks are likely to make up for a shortfall in the first two months of the season that began in June, the head of the India Meteorological Department said on Wednesday, boosting prospects for the agricultural sector.

• India expects coal-fired power capacity to grow 22% in three years

India’s coal-fired power generation capacity is expected to rise by 22.4% in three years, the federal power ministry’s chief engineer said on Wednesday, potentially neutralising its efforts to cut emissions by boosting adoption of renewable energy.

• Fiscal deficit crosses 61% of budgeted target in first three months of 2019/20

India’s fiscal deficit in the three months ending in June stood at 4.32 trillion rupees, or 61.4% of the budgeted target for the current fiscal year, government data showed on Wednesday.

• Oppenheimer boosts stake in Zee Entertainment

Essel Group on Wednesday said it will sell part of its stake in its ZEE Entertainment for 42.24 billion rupees to Invesco Oppenheimer Developing Markets Fund.

• Major Indian farm union cautions govt over China-backed trade deal

A leading Indian farmers’ organisation on Wednesday warned the government against joining a major 16-member Asia-Pacific trade pact that the union fears could spur imports of cheaper produce, undermining its agricultural sector.

• Vedanta Resources launches arbitration in dispute with Zambia

Vedanta Resources said on Wednesday it had notified its Zambian joint venture partner ZCCM-IH that it had launched arbitration proceedings related to an attempt by the Zambian government to liquidate Vedanta’s majority-owned Konkola Copper Mines.

CHINA, INDIA CAR SALES

Sales slumps in China, India clobber automakers banking on Asia for growth

Steep drops in auto sales for China and India over recent months are serving as a painful reminder that the two world's most populous markets are not living up to earlier heady expectations. With 1.3 billion people, India's population is similar in size to China's but annual vehicle sales stood at 3.3 million in the last financial year to end-March. That's far short of earlier analysts' predictions of more than 5 million by 2020. Click on the link for a graph showing change in car sales: tmsnrt.rs/2ymSUgH

GLOBAL TOP NEWS

• Fed cuts interest rates, signals it may not need to do more

The Federal Reserve cut interest rates on Wednesday, but the head of the U.S. central bank said the move might not be the start of a lengthy campaign to shore up the economy against risks including global weakness.

• U.S., China to keep talking on trade after little progress in Shanghai

U.S. and Chinese negotiators ended a brief round of trade talks on Wednesday with little sign of progress and agreed to meet again in September, prolonging an uneasy truce in a year-long trade war between the world’s two largest economies.

• China factory activity shrinks again in July, pressure eases slightly - Caixin PMI

Pressure on China’s factories eased a little in July thanks to growth-boosting steps from the government, but overall manufacturing activity remained in contraction as a trade war with the United States dented export orders, a private survey showed.

LOCAL MARKETS OUTLOOK

(As reported by NewsRise)

• SGX Nifty nearest-month futures were trading 0.4% lower at 11,081.50.

• The Indian rupee is expected to open lower against the dollar after U.S. Federal Reserve Chairman Jerome Powell’s remarks tempered expectations of a deeper rate-cutting cycle.

• Indian government bonds are likely to open lower, as the Federal Reserve cut policy rate but appeared cautious in its commentary that dented hopes for aggressive rate cuts going ahead, which may impact the outlook for India’s policy easing. The yield on the benchmark 7.26% bond maturing in 2029 is likely to trade in a 6.33%-6.40% range today.

GLOBAL MARKETS

• The Dow and S&P 500 registered their biggest daily percentage drops in two months on Wednesday after Federal Reserve Chair Jerome Powell dampened expectations for further cuts following the central bank’s first interest rate cut in a decade.

• Asian shares fell to six-week lows while the dollar jumped to two-year highs as the U.S. Federal Reserve poured cold water on market expectations of a lengthy easing cycle following a 25 basis-point rate cut.

• The dollar rose to a two-year peak against the euro and hit a two-month high versus the yen as U.S. Federal Reserve Chairman Jerome Powell ruled out a lengthy easing cycle after delivering the first rate cut since the financial crisis.

• The margin between U.S. short- and long-dated yields collapsed to its lowest level in over four months on Wednesday, as Federal Reserve Chairman Jerome Powell tempered bets on more rate cuts after the central bank made the first cut since 2008.

• Oil prices fell more than $1, declining for the first time in six days, after the U.S. Federal Reserve dampened hopes for a string of rate cuts and Sino-U.S. trade talks ended without progress.

• Gold prices slipped to a two-week low after the U.S. Federal Reserve delivered a 25-basis-point rate cut as expected but ruled out a lengthy easing cycle, sending the dollar to a two-year peak.

For additional data:

India govt bond market volumes

Stock market reports

Non-deliverable forwards data

Corporate debt stories [IN CORPD]

Local market closing/intraday levels [IN SNAPSHOT]

Monthly inflows [INFLOWS RTRS TABLE IN]

$1 = 69.2200 Indian rupees Compiled by Swathi Nair in Bengaluru

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