10 things you need to know before the opening bell on November 5

SUMMARY

Indian shares are expected to open little changed on Tuesday as SGX Nifty, an indicator of the opening for the Sensex and the Nifty, traded lower by 15 points or 0.13 percent at 7:00 PM, hinting at a flat start for the domestic market. However, support from global stocks on increasing signs of a truce between the US and China is expected to keep the market positive.

By CNBC-TV18Nov 5, 2019 7:25:09 AM IST (Published)

1. Asia: Asian shares closed in on their July peak on Tuesday on increasing signs the United States and China are inching closer to a truce in their trade war and on optimism the U.S. economy is well poised for solid, consumer-driven growth. MSCI's broadest index of Asia-Pacific shares outside Japan was little changed in early trade after hitting a four-month high the previous day. Japan's Nikkei rose 1.34 percent to a one-year high after a market holiday on Monday.

2. US: All three major U.S. stock indexes posted record closing highs on Monday, extending a recent run of gains on further hopes of a U.S.-China trade deal. It was the second consecutive session of closing records for the S&P 500 and Nasdaq, and the first closing record for the Dow since July. After U.S. officials indicated on Friday that a trade deal with China could be signed this month, Commerce Secretary Wilbur Ross said on Sunday that licenses for U.S. companies to sell components to Huawei Technologies Co Ltd [HWT.UL] would come "very shortly." The Dow Jones Industrial Average rose 114.75 points, or 0.42 percent, to 27,462.11, the S&P 500 gained 11.36 points, or 0.37 percent, to 3,078.27 and the Nasdaq Composite added 46.80 points, or 0.56 percent, to 8,433.20.

3. Markets At Close On Monday: Indian shares ended higher on Monday, extending gains for the seventh straight session, amid reports of further tax reforms. Prime Minister Narendra Modi said, on Sunday, that India is committed to improving its tax regime. The Sensex ended the day with 137 points higher at its new closing high of 40,302, versus its previous closing high of 40,267, hit on June 3. The broader Nifty50 index added 51 points to end the day at 11,941 which is 148 points away from a record closing high. Meanwhile, foreign institutional investors sold 139 crores in the cash market while domestic institutional investors sold 500 crores.

4. Crude Oil: Oil prices rose on Monday, buoyed by an improved outlook for crude demand as better-than-expected U.S. jobs growth added to market hopes a preliminary U.S.-China trade deal would be reached this month. Brent crude futures gained 47 cents to settle at $62.17 a barrel. US West Texas Intermediate gained 34 cents or 0.6 percent to settle at $56.54.

5. Currency: The rupee closed at a five-week high on Monday boosted by the gains in Asian currencies after reports indicated that the US and China may soon reach an interim trade deal. The rupee rose to as high as 70.55 against the dollar on Monday before closing the session at 70.765 against the greenback.

6. RBI Tightens Bank Chiefs' Payment Norms: The Reserve Bank of India has overhauled the compensation norms for heads of private banks, aligning the paychecks with the performance of banks as well as risk outcomes. The regulator on Monday released final guidelines on the compensation of Whole Time Directors/ Chief Executive Officers/ Material Risk Takers and Control Function staff of all private banks, which will come into effect starting April 2020. As per the new guidelines, banks will have to ensure that the compensation of the CEOs, directors and other key personnel are adjusted for all types of risks. It said that compensation outcomes must be symmetric with risk outcomes, and payouts sensitive to the time horizon of the risks. The mix of cash, equity and other forms of compensation must be consistent with risk alignment, RBI noted.

7. India Not To Join RCEP Deal: India on Monday decided not to join the mega Regional Comprehensive Economic Partnership (RCEP) deal as negotiations failed to address New Delhi's concerns, government sources said. India's stand at RCEP is a strong reflection of Prime Minister Narendra Modi's strong leadership and India's rising stature in the world. India's decision will greatly help Indian farmers, MSMEs and dairy sector, they said. India's stand is a mixture of pragmatism, the urge to safeguard interests of the poor and the effort to give an advantage to India's service sector. While not shying away from opening up to global competition across sectors, India made a strong case for an outcome which is favourable to all countries and all sectors, they said.

8. RBI On NBFCs Liquidity Strains: Reserve Bank on Monday asked the already fund-starved NBFCs to adopt better risk monitoring tools that capture the strains early on and also to maintain a liquidity buffer as per the mandated liquidity coverage ratio. The regulator also wants the shadow banks to monitor their liquidity risks based on a stock approach to liquidity. The new norms will be applicable to all non-deposit taking NBFCs with an asset size of Rs 10,000 crore and above, and all deposit-taking NBFCs irrespective of their asset size and mandate them to maintain a liquidity buffer in terms their liquidity coverage ratio.

9. ICRA On Bank Credit Growth: Growth in bank credit may decelerate sharply to 8-8.5 percent during 2019-20 from 13.3 percent last fiscal, mainly due to a decline in incremental credit in the first half of the current financial year, rating agency Icra said in a report. "Moreover, with the bond markets remaining risk-averse towards NBFCs, the YoY growth in the volume of bonds outstanding is expected to moderate to about 4 percent in FY2020 from 12 percent in FY2019," it said. Additionally, the recent changes in mutual funds regulations are likely to result in a decline in the volume of commercial paper (CP) outstanding by March 2020, it said.

10. BoFAML On Diwali Demand, GDP Growth: Despite efforts mounted by the government, demand has been "muted" during the festive time, and this leads to a 0.30 percent cut in FY20 GDP growth forecast to 5.8 percent, a foreign brokerage said on Monday. The Reserve Bank will cut key rates by a further 0.15 percent in February review, over the 0.25 percent expected after the December meeting, Bank of America Merrill Lynch said. "The bad news is that still-high real lending rates and relatively muted Diwali demand have led us to formalize a 30bp cut to our FY20 GVA growth forecast to 5.8 percent," analysts at the brokerage said. (Representational Image)