RBI says soured loans hurting monetary transmission

Hi there! Welcome to ETMarkets Morning, the show about money, business and markets. I am Nandini Sanyal, and here is what we have to start your day.

>> Mrs Bectors sets IPO mart on fire
>> M&M unit SsangYong defaults
>> Markets await Fed view if US is headed for double-dip recession
AND
>> RBI says soured loans hurting monetary transmission

And there is more. But first, a quick glance at the state of the markets...

>> Nifty futures on the Singapore Exchange traded 15.75 points higher at 7:35 am (IST), signalling possible gains ahead on Dalal Street.

ELSEWHERE

>> Asian stocks gained after their US peers halted a four-day losing streak, as Congress moved toward a spending package that would boost the economy. Shares opened with gains after in Tokyo, Sydney and Seoul

>> In overnight trade on Wall Street, Dow rose 1.13% to 30,199; the S&P500 gained 1.29% and the Nasdaq Composite 1.25%, exceeding its previous record close on December 8.

IN CURRENCIES

>> The dollar held losses, the euro traded flat while the British pound fell 0.1% after Tuesday's 1% gain. The yen was little changed

IN OIL MARKET

>> Oil prices dropped on Wednesday on a surprise gain in crude oil inventories in the US. Brent futures fell 0.2% to $50.68 a barrel while WTI crude futures fell 0.1% to $47.56

AND IN BULLION

>> Domestic gold futures saw volatile trading on Tuesday, as the yellow metal soared amid a strong global trend. MCX gold futures for February 5 delivery rose 0.93 per cent to Rs 49,396, while March silver futures rose 1.78 per cent to Rs 64,598. In international markets, gold was flat at $1,852.55 an ounce.

All in all, the trade setup on Dalal Street looked positive. On Tuesday, Nifty50 formed an indecisive Doji candle for the fourth consecutive day. Analysts said the bulls seem to be defending the support levels, but the upside seems limited

LET ME NOW GIVE YOU A HEADS-UP on some of the top news we are tracking at this hour.

.... Mrs Bectors IPO is flying off the shelves. The Rs 541 crore issue was fully subscribed within the first two hours of the bidding process on Tuesday. The subscription level rose to 3.73 times by the end of the first day of the offer. The issue received bids for 4.93 crore shares against the issue size of 1.32 crore. Retail investors’ portion was subscribed 6.8 times

.... US asset manager Oaktree Capital, which is in a fierce race to acquire the bankrupt mortgage lender DHFL, plans to use an alternative investment fund for taking over DHFL’s life insurance venture Pramerica and comply with India’s foreign ownership rules in the insurance industry. AIF is the regulatory term for pooled private investment vehicles like private equity and venture capital funds.

... Markets will look to the US Federal Reserve tonight for new projections on whether the economy will suffer a double-dip recession or is on the cusp of a vaccine-inspired boom. The central bank is to release a statement later on Wednesday, with a press conference set for the afternoon. Some analysts expect Fed Chair Jerome Powell will underscore the increasing short-term risks to the US economy.

... Bandhan Financial Holdings, the promoter of Bandhan Bank, has widened its search for acquiring a controlling stake in a life insurance company even as it has bid for the 51% Reliance Capital’s equity shares in Reliance Nippon Life Insurance. The holding company is in talks with two more insurance firms, showing urgency for its proposed foray into insurance. It has signed non-disclosure agreements with these firms

... Soured loans and weak capital positions mean Indian banks cannot cut their interest rates in step with the central bank’s main policy rate, reducing the effectiveness of monetary policy, the Reserve Bank of India said in a working paper on Tuesday. The paper, co-authored by RBI monetary policy committee member Janak Raj and three others, said concerns about asset quality must be addressed and lenders’ capital positions strengthened to ensure policy actions have their full impact.

LASTLY, AN UPDATE ON ALL THE STOCKS BUZZING THIS MORNING

>> M&M's South Korean subsidiary SsangYong Motor is in talks with banks to restructure and extend moratorium of its outstanding loans after the Korean major defaulted on the repayment of loans amounting to Rs 408 crore (Korean won 60 billion).

>> HSBC has downgraded InterGlobe Aviation to ‘reduce’ from ‘hold’ as the firm believes the stock is expensive and it does not see any potential positive catalysts.

>> Embassy Office Parks REIT is looking to raise $500 million through a qualified institutional placement, to support the proposed $1.3 billion acquisition of the Embassy TechVillage, an integrated office park in Bengaluru

>> The National Investment and Infrastructure Fund (NIIF) has become the frontrunner for acquiring 617 MW of Mahindra Susten assets, outbidding Brookfield and KKR with an offer of Rs 3,500 crore

>> The market value of Bajaj Finance crossed Rs 3 lakh crore for the first time on Tuesday as the share price of the NBFC hit a record high in an otherwise lacklustre market.

That’s it for now. For all the market news through the day, do track ETMarkets.com. Have a great day ahead! Bye-bye