10 things you need to know before the opening bell on January 7

SUMMARY

The Indian market is set to open higher on Tuesday following a rebound in global markets. At 7:10 am, the SGX Nifty was trading 71.50 points or 0.59 percent higher at 12,120, indicating at a higher start for the Sensex and Nifty50.

By CNBC-TV18Jan 7, 2020 7:47:06 AM IST (Published)

1. Asia: Asian shares rebounded on Tuesday as a day passed without a new escalation in the Middle East and Wall Street erased early losses to end in the black as tech stocks climbed. Oil surrendered some hefty gains as many doubted Iran would strike back in a way that would disrupt supplies and its own crude exports. Brent crude futures stood at $68.91 a barrel, having been as high as $70.74 at one stage, while U.S. crude fell 32 cents to $62.95.

2. US: Stocks rose on Monday, recovering losses from earlier in the session as oil dipped despite rising geopolitical worries following last week’s U.S. killing of Iran’s top general. The Dow Jones Industrial Average ended the day up 68.50 points, or 0.2 percent at 28,703.38 after falling 216 points earlier in the day. The S&P 500 closed 0.4 percent higher at 3,246.28 while the Nasdaq Composite advanced 0.6 percent to 9,071.46.

3. Markets At Close On Monday: Indian shares plunged nearly 2 percent on Monday as investors flocked to safe havens after tensions in the Middle East lifted crude oil prices. The sentiment was further dragged after rupee also hit its lowest level since November 14 and was last weaker by 0.36 percent to 72.06 against the dollar. The Sensex ended 788 points lower at 40,677, its biggest fall in nearly a year, while the Nifty settled 234 points lower at 11,993, recording its sharpest one-day fall in the last six months. Meanwhile, foreign institutional investors sold Rs 104 crore in the cash market while the domestic institutional investors sold Rs 24 crore.

4. Rupee close: The rupee plunged 13 paise to settle at 71.93 against the US currency on Monday, weighed down by the spike in global crude oil prices as escalating US-Iran tensions fanned fresh fears of conflict in the Middle East. Forex traders said growing geopolitical tensions could continue to keep the domestic unit under pressure. At the interbank foreign exchange, the rupee opened weak at 72.03 against the US dollar. During the day, the domestic unit touched a low of 72.11. The local unit recovered some lost ground and finally closed at 71.93 against the US dollar, lower by 13 paise over its previous closing.

5. Crude Oil: Oil prices steadied on Monday after Brent touched above $70 a barrel on rhetoric from the United States, Iran, and Iraq that fanned tensions in the Middle East after a US airstrike killed a top Iranian military commander. Prices pared gains during the session on growing doubts that Iran would strike back in a way that would disrupt oil supplies. Brent crude futures settled at $68.91 a barrel, up 31 cents, after soaring to a high of $70.74 a barrel from Friday's settlement.

6. PM Modi On Economic Issues: Prime Minister Narendra Modi met the who's who of the Indian corporate world in Delhi on Monday, brainstorming with them to discuss ways to improve growth and boost job creation. As many as eleven conglomerate captains attended the session. In the photo (from left to right) they are N Chandrasekaran, chairman of Tata Sons, Sajjan Jindal, MD of JSW Group, Baba Kalyani, MD of Bharat Forge, Sunil Bharti Mittal, chairman of Bharti Enterprises amongst others. As per a C-Voter survey, 44.5 percent of the respondents hoped that employment opportunity would be better in the New Year, while nearly one-third suggested that it will worsen.

7. RBI June 7 Circular: Starting the January-March quarter, banks will begin to see the impact of the Reserve Bank of India’s June 7 circular, in the form of higher provisioning for stressed accounts that have not found resolution thus far. RBI’s “Prudential Framework for Resolution of Stressed Assets”, or the “June 7 circular” as it is more popularly called, mandates banks to recognize stress, and initiate a review of default within 30 days (review period). This is also applicable for all large accounts which have a system-wide exposure of over Rs 2,000 crores effective June 2019 and for all accounts over Rs 1,500 cr effective January 2020.

8. Government To Cut Spending: In an attempt at fiscal prudence, the Union government is set to cut the annual budgetary expenditure for FY20 by Rs 2.2 lakh crore or 8 percent of the budget estimate (BE) as tax revenues remain significantly lower than the required rate, Financial Express reported. Most ministries will bear the brunt of cost-cutting, it added. In a release dated December 27, the department of economic affairs said that the expenditure would be cut in the last quarter/month of FY20 in view of the fiscal position of the government. “Considering the fiscal position of the government in the current financial year, it has been decided to cap the expenditure in the last quarter/last month of the current financial year,” the DEA said in the official memorandum.

9. Nikkei/IHS Markit Services Purchasing Managers' Index rises: Activity in India's dominant service industry accelerated to a five-month high in December as demand rose at the fastest pace in more than three years, a private business survey showed on Monday. The findings are likely to provide some relief to markets and spur hopes of an economic recovery in Asia's third-largest economy, which registered its weakest growth since 2013 in the July-September quarter. The Nikkei/IHS Markit Services Purchasing Managers' Index rose to 53.3 in December from November's 52.7, holding above the 50-mark that separates growth from contraction for the second straight month.

10. Telecom Industry On Lower Rates: The telecomindustry on Monday urged the government to facilitate funding for telecom companies at lower interest rates to help them reduce capital costs. Representatives from the industry met telecom ministry officials to communicate their suggestions to help the debt-ridden sector. The DoT, which has given time till Tuesday to send in written recommendations, will compile these demands and send them to the Finance Ministry for consideration in the forthcoming Budget. According to a senior government official, most demands made were on similar lines as before, including a reduction in Universal Service Obligation Fund (USOF) levy and licence fees. The official added that one of the recommendations was related to input line credit.