Market Movers: More GST relief on cards\, all eyes on inflation
Good morning! Here’s a lowdown on top macro triggers that may move market on January 14, 2019. This report was compiled from agency feeds.
More GST relief likely for cos Indian businesses may soon be able to amend goods and services tax (GST) return mandated for carrying forward tax credit from the previous regime for non-IT related errors as well. The GST Council has directed a committee for IT grievance redressal to quickly draw up a solution that will give relief to industry. Thousands of crores of tax credit claimed by businesses have been denied because of errors in the filing of returns, prompting many to approach judiciary.
RBI redflags NPA spike in MUDRA loans The Reserve Bank of India (RBI) has raised a red-flag on the spike in non-performing assets (NPAs) under the government's flagship scheme to support micro enterprises in the country -- the Pradhan Mantri Mudra Yojana. According to Finance Ministry sources, RBI has cautioned the ministry that the scheme might turn-out to be the next big source of NPAs, which have plagued the banking system. The central bank has flagged that bad loans under PMMY have risen to Rs 11,000 crore.
PCA norms may be eased for some better-off lenders
The finance ministry and the Reserve Bank of India are expected to soon work out some relaxation in the prompt corrective action (PCA) framework for stressed banks. This will be available only to those lenders that have shown considerable improvement in addressing bad loans. As of now, 11 state-run banks and one private lender are under the PCA framework, which prevents them from riskier lending and expanding branches, among other curbs, until they recover.
Inflation numbers out today India's wholesale and retail inflation prints for December will be released today. Retail inflation, which is calculated on the consumer price index (CPI), plunged to a 17-month low in November at 2.33 per cent, mainly on account of decline in prices of kitchen essentials. On the other hand, country's wholesale inflation fell to a three-month low of 4.64 per cent in November,
IIP falls to 17-month low in Nov Industrial growth unexpectedly plummeted to a 17-month low in November as a post-festival season decline in manufacturing, fewer working days in the month and tighter financial conditions pulled down output. Growth as measured by the Index of Industrial Production (IIP) stood at 0.47% in November, with the high base of last year contributing to the slowdown.
Oil prices edge up on supply cuts Oil prices edged up on Monday, supported by ongoing supply cuts from producer club OPEC and Russia and by a drop in US drilling activity. International Brent crude oil futures were at $60.75 per barrel at 0040 GMT, up 27 cents, or 0.5%, from their last close. US West Texas Intermediate (WTI) crude futures were up 22 cents, or 0.4%, at $51.81 a barrel. In India, transport fuel rates were hiked for the fifth time this month and saw their steepest rise on Sunday. Petrol rates by 49-60 paise per litre on Sunday, while diesel prices were raised by 59-75 paise across the four major metros.
Housing sales up 7% in 2018 in 9 major cities Increased demand for flats that are ready to move in or nearing completion helped housing sales to rise by 7% during 2018 to nearly 2.15 lakh units across nine major cities, according to data analytic firm PropEquity. New launches fell by 22% to 1.46 lakh units during 2018 against 1.87 lakh units in the previous year. Higher sales and fall in new supply led to 10% decline in unsold stock at around 6 lakh units as on December 31, 2018. The nine cities tracked by PropEquity are Gurugram, Noida, Mumbai, Kolkata, Pune, Hyderabad, Bengaluru, Thane and Chennai.
Remission of state levies may get extended to more sectors The government may extend the Remission of State Levies (RoSL) to sectors including chemical and engineering as part of the proposed incentive package for exporters to boost the country's outbound shipments, an official said. Currently, RoSL, which is to offset indirect taxes levied by states such as stamp duty, petroleum tax, electricity duty and mandi tax that were embedded in exports, is provided to textiles exporters.
Fiscal deficit target for 2018-19 likely to be breached Meeting the fiscal deficit target of 3.3% of GDP for the current fiscal could be a challenge for the government, given the shortfall in GST collections, rising expenditure and slowing factory output, say experts. Moreover, some populist announcements by the government to woo voters ahead of general elections would make the task of achieving the fiscal deficit target even more daunting. The government's fiscal deficit touched 114.8% of the full-year estimates at November end.
China says will reduce foreign investment curbs China will reduce restrictions on foreign investment and address difficulties facing foreign companies investing in the country, the commerce minister said, according to a transcript of an interview he gave to state media. China would allow full foreign ownership of companies in more areas of the economy and would reduce the number of industries in which foreign investment was restricted or barred.
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Rupee down: The Indian rupee Friday weakened by 8 paise to close at 70.49 against the US dollar on rise in demand for the American currency from exporters coupled with unabated rise in global crude oil prices.
10-yr bond yields up: India 10-year bonds' yields rose 0.03% to 7.50% on Friday from 7.47% in the previous trading session, according to RBI data.
Call rate: The overnight call money rate weighted average was 6.36% on Friday, according to RBI data. It moved in a range of 5.00-6.55%.
