10 things you need to know before the opening bell on July 15

SUMMARY

The Indian market is likely to open higher on Wednesday tracking gains in the global markets as hopes for a coronavirus vaccine rise. At 7:23 am, the SGX Nifty traded 41 points higher at 10,702, indicating a positive start for the Sensex and the Nifty50. (Inputs from agencies)

By CNBCTV18.comJul 15, 2020 8:22:55 AM IST (Updated)

1. Asia: Stocks rose in the Asian market on Wednesday over hopes of a coronavirus vaccine. In Japan, the Nikkei 225 gained 1.22 percent in early trade while the Topix index added 1.11 percent. South Korea’s Kospi surged 1.31 percent. Over in Australia, the S&P/ASX 200 advanced 0.68 percent. Overall, the MSCI Asia ex-Japan index traded 0.39 percent higher, reported CNBC International.

2. US: American markets also rose in the overnight trading on Tuesday after Moderna said that its coronavirus vaccine produced antibodies in an early trial. This led to a positive sentiment wave across investors. Futures on the Dow Jones Industrial Average jumped 300 points, pointing to a 270-point gain at Wednesday’s open. The S&P 500 futures and the Nasdaq 100 futures rose 0.8 percent and 0.5 percent, respectively, said the data by CNBC International.

3. Market At Close On Tuesday: Indian benchmark indices, Sensex and Nifty, ended lower on Tuesday on weak global cues as rising coronavirus cases weighed on investor sentiment. The Sensex ended 660.63 points or 1.80 percent lower at 36,033.06 while the Nifty lost 195.35 points or 1.81 percent to settle at 10,607.35. Broader markets ended in the red as well with the Nifty Midcap and Nifty smallcap indices down over 1 percent each.

4. Crude Oil: Oil prices rose slightly on Tuesday as OPEC and its allies cut production by more than agreed to in June, although demand concerns lingered due to increased cases of COVID-19 in the United States. Brent crude futures gained 18 cents, or 0.42 percent, to settle at $42.90 per barrel, after moving lower earlier in the session. West Texas Intermediate crude futures settled 19 cents, or 0.47 higher at $40.29 per barrel, said CNBC International report.

5. Rupee Close: The Indian currency tumbled 23 paise to settle at 75.42 (provisional) against the US dollar on Tuesday as risk appetite remained weak amid heavy selling in domestic equities and strengthening American currency. The rupee, which had opened at 75.33 at the interbank forex market, lost ground and settled at 75.42 against US dollar, down 23 paise over its last close. It had settled at 75.19 against the US dollar on Monday. Forex traders said steady crude oil prices supported the rupee, but risk appetite remained weak amid rising tensions between US and China.

6. WPI Inflation Contracts 1.81% In June: Prices in the wholesale market fell for the third straight month, declining 1.81 percent in June, due to sharp decline in fuel and power items even as food articles remained expensive. Inflation in May and April was (-) 3.21 percent and (-) 1.57 percent, respectively. In March it was 0.42 percent. "The annual rate of inflation, based on monthly Wholesale Price Index (WPI), stood at (-1.81 per cent) (provisional) for the month of June, 2020 as compared to 2.02 percent during the corresponding month of the previous year," the industry ministry said in a statement on Tuesday.

7. Former RBI Governor Subbarao On Farm Sector: On Tuesday, he said the government needs to build on "some silver linings" in the farm sector, driven by the prospect of a favourable monsoon, to speed up the economic recovery. "The rural economy is doing slightly better than the urban economy which is still grappling with COVID-19. Rural economy, which accounts for 65 percent of population and 25 percent of GDP, is actually proven to be a buffer because of expanded MGNREGA spending...," he said at a webinar organised by economic think tank NCAER. Subbarao further said that spendings under the Pradhan Mantri Garib Kalyan Yojana (PMGKY) and procurement of agri produce by the Food corporation of India (FCI) have put money in the hands of farmers.

8. Analysts On Inflation, RBI Rate Cuts: Despite high inflation numbers, analysts do not see a change in stance by the RBI, and still expect a repo rate cut at the next Monetary Policy Committee (MPC) meeting in order to propel growth. The RBI had cut repo rate by 135 bps in 2019 and 115 bps since the onset of COVID to 4 percent. Global brokerage CLSA expects the RBI to cut repo rate by another 125 bps cut to 2.75 percent by the end of the fiscal year in March 2021. However, analysts at Nomura expect a pause in the August policy to be followed by a 50 bps cumulative rate cut in Q4, as inflation eases and growth concerns mount.

9. SIAM Warns Of Deep Slowdown In Automobiles Sector: The Society of Indian Automobile Manufacturers (SIAM) have warned of the possibility of a deep slowdown in the absence of a fiscal intervention by the government. This comes at a time when auto sales dipped by 75 percent in the first quarter of FY21 with commercial vehicles segment registering a sharp 85 percent decline over the last year. Rajesh Menon, Director General of SIAM, said that passenger car sales are going through the longest spell of slowdown in twenty years. As a result of COVID-19 and the lockdown, auto sector production declined by almost 80 percent and exports fell by 63 percent in the first quarter.

10. CLSA On Recapitalisation Of Banks: In the five years from FY16-FY20, there has already been an estimated Rs 3.08 lakh crore capital infusion in the public sector banks, brokerage CLSA noted. The brokerage expects that the recovery prospects of the banking sector would be complicated and a fiscal and public debt position that was (beyond) fully-stretched. In order to facilitate the next credit and investment cycle, it feels that along with recapitalisation of the banking sector, low interest rates (optimally negative in real terms) will be needed.