10 things you need to know before the opening bell on October 16

SUMMARY

Indian shares are set for a positive start on Wednesday in line with global markets. Investors are likely to remain cautious amid mixed earnings for the quarter ended September 30. Asian shares advanced after Brexit and EU negotiators said they have overcome differences. At 7:27 AM, the SGX Nifty futures traded 42.50 points, or 0.37 percent, up at 11,477.50, indicating a strong start for the Sensex and the Nifty50.

By CNBC-TV18Oct 16, 2019 7:35:37 AM IST (Published)

1. Asia: Asian shares took off on Wednesday and sterling held near six-month highs as Britain and the EU made headway on a Brexit deal ahead of a leaders' summit though it remained unclear if London could avoid postponing its scheduled departure on October 31. Japan's Nikkei jumped 1.7 percent while Australian shares added 0.9 percent and South Korea's KOSPI index climbed 0.7 percent.

2. US: Stocks on Wall Street jumped about 1 percent on Tuesday on strong U.S. corporate results and a possible deal to avoid a disorderly British exit from the European Union, while oil prices fell as weak China data kindled global economic fears. The Dow Jones Industrial Average rose 237.44 points, or 0.89 percent, to 27,024.8. The S&P 500 gained 29.53 points, or 1.00 percent, to 2,995.68 and the Nasdaq Composite added 100.06 points, or 1.24 percent, to 8,148.71.

3. Markets At Close On Tuesday: Indian shares ended higher on Tuesday led by gains in banking, auto and metal stocks on US-China trade deal optimism and lower crude oil prices. The Sensex ended 292 points higher at 38,506, while the broader Nifty50 index added 87 points to end the day at 11,428. All sectoral indices, except the Nifty IT ended in green for the day. Meanwhile, foreign institutional investors bought 436 crores in the cash market while domestic institutional investors bought 929 crores.

4. Crude Oil: Oil prices fell on Tuesday, as investors worried that the unrelenting U.S.-China trade war would keep squeezing the global economy, and that swelling U.S. crude inventories would further pressure prices. Losses were limited by optimism about a potential Brexit deal and signals from OPEC that further supply curbs are possible. Global benchmark Brent futures lost 61 cents, or 1.0 percent, to settle at $58.74 a barrel, while U.S. West Texas Intermediate (WTI) crude fell 78 cents, or 1.5 percent, to settle at $52.81.

5. Currency: The rupee on Tuesday dived 31 paise to end at a nearly one-month low against the US currency due to heavy dollar buying amid fresh concerns over the progress of China-US trade talks. The rupee closed at 71.54 to the dollar, down by 31 paise or 0.44 percent -- the biggest one-day loss in this month. This is the lowest closing level since September 17 when the rupee had closed at 71.78 to the dollar. The US dollar also advanced against the major global currencies with the dollar index gaining 0.07 percent to 98.52 despite a surge in British pound.

6. IMF cuts India's Growth Forecast: The International Monetary Fund (IMF) on Tuesday projected a slower growth rate for India in 2019 and 2020, cutting the country's growth forecast by 90 bps to 6.1 percent for FY20 and 7 percent for FY21, a downward revision of 20 bps, compared to its July forecast. The downward revision relative to the April 2019 World Economic Outlook of 1.2 percentage points for 2019 and 0.5 percentage point for 2020 reflects a weaker-than-expected outlook for domestic demand. IMF sees India’s economy to grow at 6.1 percent in FY20, compared to 6.8 percent growth the previous year and then picking up to 7 percent in FY21.

7. Analysts On RBI Cutting Rates: The Reserve Bank will continue to be accommodative and deliver one more rate cut in the December policy review despite the "surprising" spike in headline inflation for September, say analysts. Some analysts also wonder if the economy is headed towards "stagflation", which is characterized by persistently high inflation and low economic and job growth. Analysts on Tuesday attributed the sharp spike in the headline number to a rise in food prices, particularly onions which alone accounted for 0.43 percentage points of the jump. Foreign brokerage Bank of America Merrill Lynch's economists said the sudden spurt in inflation is "temporary" and expects it move up further to 4.6 percent in October.

8. Ind-Ra On Scrappage Policy: The much-awaited vehicle scrappage policy, which is under consideration of the Cabinet, is unlikely to help revive demand for new commercial vehicles (CVs) in the short-term, though used CVs sale may see an improvement, a research note said on Tuesday. However, if CVs with the vintage of 15 years and above are made eligible for scrapping, the impact is likely to be more meaningful in terms of pollution control and catalyzing replacement demand than fixing the eligible scrapping age to 20 years and above, rating agency Ind-Ra said.

9. India's Services Exports Rises: India's services exports rose by 10.4 percent to USD 18.24 billion in August in the current financial year, data from Reserve Bank showed on Tuesday. The services exports or receipts were USD 16.53 billion in the same month of 2018. It was at USD 19.08 billion in July this year. The services imports or payments were valued at USD 12 billion during the month, up by 16 percent from USD 10.35 billion in the year-ago period, as per the RBI monthly data on India's International Trade in Services.

Services imports during the previous month stood at USD 12.83 billion.

10. CRISIL On New Tax Regime: A third of India Inc is yet to decide on whether to shift to the newer corporate tax regime offering lower outgoes and those planning to switch have no plans to pump the gains into capex investments, given the plunging demand, finds a survey. Two-thirds of the 850 companies surveyed by rating agency Crisil want to shift, but the benefits are unlikely to result in higher investments by them immediately, the agency said Tuesday. The move to lower corporate tax "spawns optimism with a tinge of cautiousness within companies", Crisil said, pointing out that while the prospect of saving on taxes makes them optimistic, they are well aware that savings alone cannot lead to immediate capex given the weak demand which is the root of their caution.