The breakneck rally in stocks globally -- S&P500 has just completed the fastest 50-day rise in nine decades -- amid macro-economic pain has given rise to a very different kind of fear. That the buoyancy in market will lull policymakers into complacency to make them ease up on stimulus, thereby leaving economies to slip into a deeper mess. Remember, these fiscal and monetary sops are the reasons that triggered the rally in the first place. It's open secret that policymakers look at stock markets as a barometer of their performance. Should this dream run in stocks end up stalling the much-needed booster, it could not only push economies into more trouble, but also bring the markets down with them.
MARKET CUES: Where do we stand >>>  | Nifty futures on Singapore Exchange traded some 72 points higher at 7 am (IST) in signs that Dalal Street might see a positive start. |
| On Friday, Nifty's maximum Put open interest stood at 9,000 followed by 9,500 levels, while maximum Call OI was at 10,000 followed by 11,000 level. Options data suggested a wider trading range between 9,800 and 10,300 levels. |
| Stocks in other Asian markets rose after a surprise recovery in US employment gave further confidence of a quick economic recovery. Nikkei opened more than 1% higher and the Kospi rose 1.4%. The Australian market was closed for a holiday. MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.3% |
| US stock futures gained in Asian trade. On Friday, Dow rallied some 829 points, or 3 per cent, after the monthly jobs report revealed 2.5 million positions were added to the economy in May, marking the largest monthly gain on record. The S&P500 closed up 2.6 per cent and the Nasdaq 2 per cent, reaching a record high |
| The rupee surrendered all intra-day gains to close on a flat note at 75.58 against the US dollar on Friday as investors looked for cues to move forward and take positions. |
| Among other currencies, safe-haven ones softened while risk-sensitive ones outperformed. Japanese yen gained marginally against the dollar, while the euro ruled not far off its three-month high touched on Friday and the dollar stood near its highest level this year. |
| Oil prices rose more than 2% early Monday to their highest in three months after OPEC and its allies including Russia agreed to extend record oil production cuts until the end of July. Brent crude climbed to as high as $43.41 a barrel, up $1.02, or 2.4%, while WTI crude gained 83 cents, or 2.1%, to $40.38 |
| Gold and silver prices in India tumbled on Friday in tandem with a fall in global rates. On MCX, gold futures slumped over 2% or about Rs 1,000 to Rs 45,732 per gm. Silver futures on MCX crashed 3% or about Rs 1,500 to about Rs 47,337 per kg. In global markets, gold slipped to $1,681.0 per ounce on Monday to trade near its lowest levels since late April. |
| LOOK WHO'S |  |
FIIs back with a bang... Foreign funds invested nearly 40% of what they sold in entire March in the past seven days as Federal Reserve's pump-priming and the gradual reopening of the economy stoked interest in riskier assets. Overseas funds bought Rs 23,000 crore ($3 billion) in the past seven days compared with sales of Rs 58,600 crore in March and Rs 4,100 crore in April. The purchases were higher in India than in South Korea and Taiwan, which received $345.3 million and $853 million, respectively. Japan has seen outflow of $352 million. Since April, India has seen higher inflows compared to these markets.
Read More Unlock 1.0 begins today... Hotels, restaurants, malls, and places of worship will reopen in most parts of India on Monday after 75 days of lockdown amid observing social-distancing norms. 'Unlock 1', as the government has called it, will see places of worship open with precautions such as no edible offering, and no sprinkling of holy water or touching of idols or holy books. Hotels, restaurants, and malls will reopen with limits on footfalls and occupancy but malls will remain shut until June 30 in several states.
Read More Tax buoyancy still intact... The government on Sunday said that tax buoyancy — a key indicator of the efficiency of the tax system — had remained intact despite a dip in direct tax collections during 2019-20, which was on the expected lines as both income-tax and corporation tax concessions had been offered. While gross direct tax collections were 4.9% lower at Rs 12.3 lakh crore, the government argued that it was on account of the reduction in corporate tax, higher standard deduction and personal I-T exemption limit.
Read More India Inc building in work from home... India Inc is framing long-term policies to enable almost half of employees to work from home. Marico is working with an external consultant to bring about a critical shift in the way it has traditionally operated. This is to ensure that at least 40% of its office-based staff would be in WFH mode. Advertising firm Wunderman Thompson is looking at a 50:50 solution, so that not more than half of its staff on any given day are in office. Mercedes-Benz India, on the other hand, is looking to mandate only three working days in office each week, and two days of WFH.
Read More Surge in rural job scheme beneficiaries.... MGNREGS has set new records on the number of persondays of work generated and households benefited under it in May amid largescale reverse migration from cities. As many as 417.7 million persondays of work, a 13% rise from a year earlier, was generated last month, government data showed. The number of households covered under the scheme shot up 31% on-year in the past month to 28 million, highest ever for a month since the launch of the scheme 15 years ago.
Read More | AND WHO'S |  |
Treasury yields jump defying rate cut... Risk-free short-term rates have surged as much as 56 basis points in the past fortnight, defying a soft interest regime and reflecting stress on the government's cash flows amid the Covid-19 crisis. Yields on treasury bill, a short-term sovereign instrument, have jumped since May 22, when RBI cut the benchmark rate to a record low, with the government raising Rs 80,000 crore via cash management bills (CMBs) outside the borrowing calendar. The rate increase is contrary to the RBI's sharp rate cuts in repo rate amid an economic crisis.
Read More Banks, govt don't favour rate waiver… It is not just the RBI, even bankers and government officials are not in favour of waiving or offering interest concessions to borrowers who opted for the special loan moratorium facility. Last week, the Supreme Court had asked the Finance Ministry to look at the demand raised before it. The government is yet to firm up its stand on the matter. Officials, however, said interest should be levied on the amount that has been lent since banks have also borrowed that from depositors who need to be paid.
Read More FII grouping seeks reforms... An grouping of bulge-bracket foreign investors, with BlackRock, Citi and Goldman Sachs as members, has approached North Block seeking several market reforms, including the abolition of capital gains tax, easier debt investment rules and greater participation in offshore currency markets. The move by the Asia Securities Industry & Financial Markets Association comes at a time when India's appeal as a relative outperformer is on the wane, with FPI net selling Rs 1.2 lakh crore of stocks and bonds in 2020 so far.
Read More Kotak seeks demand push... Veteran banker and new president of the CII Uday Kotak has said a demand-side push is needed to revive the economy. Listing out short-term and medium-term measures needed to ensure that those who have lost livelihoods have some support, Kotak said there is pent-up demand as of now but the key question is what happens beyond that. "Will there be a drop again or will we be able to sustain the level of demand? So, before the point of tapering, we must have the demand-side push coming in," he said.
Read More Meanwhile... More trucks back on road…. The number of trucks moving freight doubled to 2.2-2.5 million in May from the month ago, reflecting the gradual resumption of economic activity as lockdown curbs were eased. Capacity utilisation was 30-35% in May with transport of essential goods — including medicines and specific food items — at pre-Covid levels, several industry associations and fleet operators said. They said unless economic momentum gathers pace, many transporters may be forced to fold up in the next few months.
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