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Indian Bourses directionless: Rupee slides: Crude,Dollar,Gold up:
Investors confused over Adani Group companies” valuations:
Mid caps in for upgrades!
A BofA survey shows global fund managers are bullishly positioned for permanent growth, transitory inflation and a peaceful Fed taper and are long on commodities, cyclicals and financials. As many as 72% of those who took part in the survey said inflation is transitory, while 23% said it is permanent. Some 63% expect Fed to signal taper in Aug-Sept. They also said long commodities overtakes long Bitcoin as most ‘crowded trade’ at the moment. That should give markets a lot of confidence ahead of the Fed outcome later tonight.
Nifty futures on Singapore Exchange traded some 25 points lower at 7:30 a.m (IST), signalling a likely gap-down start for Dalal Street.
Stocks in other Asian markets saw a muted start. Shares opened a touch higher in Japan and Australia, while South Korean stocks led gains.
Wall Street indices retreated from all-time highs in overnigth trade, as investors awaited the Fed policy decision. Dow fell 94.42 points, or 0.27%; S&P 500 lost 8.56 points, or 0.20%, and the Nasdaq dropped 101.29 points, or 0.71%.
Crude oil traded at the highest since 2018. WTI crude rose 0.5% to $72.49 a barrel as investors weighed the outlook for rising demand.
The 10-year Treasury yield held around 1.5% after Commerce Department figures showed retail sales declined in May.
Falling for the sixth day in a row, the rupee closed lower by 2 paise at 73.31 against the US currency on Tuesday amid rising crude oil prices and dollar demand from oil importers.
The dollar held gains versus major peers. The yen was little changed against the dollar as was the euro, while the offshore yuan traded at 6.4059
Bitcoin fluctuated around $40,000.
Domestic gold rose by Rs 303 to Rs 47,853 per 10 gm on Tuesday reflecting overnight recovery in the global precious metal prices. Silver gained by Rs 134 to Rs 70,261 a kg. In international market, gold traded at $1,856.18 an ounce on Wedesday.
Many midcaps in for upgrades… On average, red outscored green on earnings outlook after the March quarter, but several midcap companies have seen significant upgrades to profit estimates despite the second Covid wave. Aditya Birla Fashion, Moil, Teamlease, Fortis Healthcare, Jamna Auto, and JK Lakshmi Cement are among the dozen companies that have seen earnings upgrades between 15% and 70% in the past four weeks. The Covid surge notwithstanding, analysts expect these companies to make significant cash in the next few months.
Motherson well-poised to ride demand pickup… Motherson Sumi Systems, which provides components to global automobile majors, looks well-positioned to take advantage of a gradual pick-up in demand given the turnaround in its European subsidiary SMP and efforts to prune debt. Besides, value unlocking from the proposed demerger of the domestic wiring harness business would offer further support to the stock, which has remained rangebound over the past three months.
Banks book profits on falling yields… Record-low interest rates didn’t immediately trigger demand for loans in Covid-ravaged India, but falling yields across the board sustained a bond rally that allowed many state-run banks to log profits for the first time in five years. They reported a net profit before tax in FY21 of about Rs 45,900 crore, of which more than twothirds came from bond portfolios, show data from ICRA. Those government banks earned PBT of Rs 31,600 crore in bond sales. When bond yields fall, prices rise.
JP Associates weighs debt recast… Nearly four years after RBI ordered bankruptcy action against Jaiprakash Associates, the parent of Jaypee Infratech, banks led by ICICI Bank have been slow in pursuing the case in the NCLT, amid fresh attempts to restructure the company’s loans. A loan restructuring, for which a meeting of lenders will be convened over the next few days, will provide relief to the promoters led by the Gaur family, which has lost Jaypee Infratech, its crown jewel, that had a massive land bank, running from Noida to Agra along expressways.
New confusion for Adani stock investors… Confusion over three Mauritius-based funds that whipsawed shares of companies controlled by Gautam Adani this week has underscored a deeper risk for investors in such stocks owned by opaque entities. Shares of Adani’s firms nosedived Monday after a local media report said accounts of these funds — owning about $6 billion of shares across the conglomerate — were frozen by India’s national share depository. The stocks recouped losses after the conglomerate refuted it. A Tuesday filing stoked doubts after Adani group said the funds were facing suspension due to a years-old regulatory order.
Fed to walk tightrope… The US Federal Reserve is inching toward the start of a long road to normalizing its relationship with the rest of Washington and Wall Street. After spending the past 15 months providing unprecedented help to the federal government and investors via trillions of dollars of bond purchases, it could start preliminary discussions about scaling back that support at a pivotal two-day policy meeting that kicked off on Tuesday.
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