macro

Central banks create space for growth; event risks keeps market on tenterhooks

Series of stance changes from the global central banks and RBI, along with sudued commentary on inflation creates a timely monetary policy space for growth. We expect financial market conditions would also ease out as the event risks gets mitigated. However as we go closer to deadlines 1st March (Trade truce) and (29th March) Brexit and end game plays out – volatility will remain elevated.

Monetary policy: Rate cut unlikely to impact banks; it's advantage stronger NBFCs

The policy is broadly neutral for banks and puts stronger NBFCs in a vantage position

Union Budget 2019-20: The agri push can make a difference if implemented with sincerity

Budget 2019 impact on FMCG: Incremental push for bottom of pyramid consumption; positive for rural infra

While a direct income benefits are supportive to the staple consumption on the margin, steady push for the food processing industries is positive.

Budget 2019 makes vote banks happy, but rating agencies, FIIs not so much

The additional revenue expenditure is not adding to any productive capacity and could well be potentially inflationary and could hamstring RBI from reducing rates in the near term.

Global market cues: Second half of 2019 will be better for risk assets

Quick Take | US Fed gives in to market expectations; stance supportive of EM assets

While the US Fed continues to emphasise that US economy is fine fettle with labour market dynamics and wage growth improving, cross currents across the globe remain concerning

Quick Take | US earnings broadly in line with long term trends; tariffs & currency key factors to watch

Projected earnings growth for Q4 CY18 has softened a bit from the start of the year (10.6 percent versus 12.2 percent YoY). While improvement is seen in industrials; financials, IT, materials and energy sectors have seen downward revisions. For CY19, analysts are projecting single-digit earnings growth of 6.5 percent and revenue growth of 5.3 percent as benefits of fiscal stimulus fade away

How Universal Basic Income can see light of day

UBI even in a diluted format can only see the light of the day if the government is ready to dump all its existing schemes

Unrelenting farmer distress highlights pressing need for an overhaul

Brexit in limbo: Here are the 4 options ahead

The silver lining from May’s defeat is that options like second referendum or UK effectively cancelling Brexit (reversing Article 50) is also alive. But so is the possibility of total stalemate and hence a no-deal Brexit

Quick Take | China trade data accentuates importance of key events – China plenum & trade talks

Next round of trade negotiation is expected to happen later this month wherein Chinese side would be led by Vice Premier Liu He. Sequence of events gets interesting as China’s communist party plenum (19-22 Jan’19) is also around the corner. This is important as traditionally major reforms are announced in such events which may point towards more opening of the Chinese economy.

Quick take GST changes: Calamity cess is not equal to sin tax; positive for ITC

This also sets a reference for future as the GST legislation provides for levy of special taxes for a specified period to raise additional resources during any natural calamity or disaster. And hence, on each such occasion tobacco companies may not be on the receiving side.

Fed in wait and watch mode; minutes lay importance on financial conditions and global growth

Fed minutes suggest a longer pause than that reflected post the December Fed meet

PMI contraction suggests China gasping for domestic stimulus & breakthrough in trade talks

New announcements from Chinese authorities are expected to target a revival in consumption, improve the credit situation and offer a calibrated approach for reduction in debt so that growth in minimally hampered

Fed reaches lower range of neutral rate; global growth, event risks need to be watched

The markets expected a far more dovish tone and is now concerned about global growth slowdown

India’s chronic agri distress led to a change in political flags

OPEC’s production cut: Should India worry?

In the shorter run, while crude prices might see some support, we remain bearish on the overall crude prices in the longer term

Here’s what to expect from today’s OPEC meet

OPEC’s meeting in Vienna, which kicks off today, will decide the cartel’s future course of action. We look some major developments in the oil world, which could be taken up at the meeting

RBI credit policy: No rate action and signs of a truce

This is the first policy after the rift between the Reserve Bank of India and government came to light and the tone and measures will be the first sign of who is ceding ground.

G20 meet: A sentiment boost to global risk appetite; long road ahead

If the sudden decline in oil prices and the apparent change in the Federal Reserve’s stance was not enough, the takeaways from the recently concluded G20 meet is boosting risk appetite. Among its key highlights, US agreed not to escalate tariffs from 10 percent to 25 percent on imports of $200 billion Chinese goods for a 90 day period and utilise the time window for trade talks. China, US President Donald Trump said, has agreed to reduce tariffs on US cars exported to the country and substantially increase US imports.

What the new GDP data says about corporate earnings, and doesn't

It was earlier believed that the real GDP growth was higher during the UPA regimes pre-2014 and that the domestic economy remained largely insulated from the global recession in 2009.

Battle for capital: Is RBI kitty big enough to warrant a transfer to government?

Levels of central bank capital amounting to about 3 per cent of GDP are not uncommon.

Fed’s neutral rate stance can have a positive rub off on Indian equities

A moderate rate path by Fed could ease off pressure on EM currencies and have a positive implications for EM in terms of fund flows, commodity imports and inflation.

Trump’s two years and midterm elections: Checks and balances to potentially lower risks from executive actions

With political uncertainty out of way, market’s focus is back to monetary policy. Federal Reserve’s Nov meeting brings in improving context for a Dec rate hike and so not surprisingly USD and yield are strengthening again.