Indian shares are set for a strong start on Monday after finance minister Nirmala Sitharaman announced a series of measures to revive the economy and encourage investment, including withdrawal of FPI tax surcharge and capital infusion in PSU banks. However, a broader selloff in global markets likely to cap gains. At 7:07 AM, the Nifty futures traded 0.45 percent higher at 10,878.50.
1. Asia: Stocks in Asia fell on Monday following an escalation in the US China trade war where President Donald Trump tweeted last Friday that America will hike tariffs on $250 billion worth of Chinese goods to 30 percent from 25 percent. The Nikkei in Japan dropped 2.36 percent in early trade, while the Topix index declined 2.18 percent.
2. US: Stocks plunged on Friday after President Donald Trump ordered that US manufacturers find alternatives to their operations in China. Apple led the way lower. The Dow Jones closed 623.34 points lower, at 25,628.90. The S&P slid 2.6 percent to close at 2,847.11. The Nasdaq Composite dropped 3 percent to end the day at 7,751.77.
3. Markets At Close On Friday: Markets began the day sharply lower but rebounded to end higher on Friday on hopes that the government could announce a rollback of taxes for foreign portfolio investors. The Sensex ended 228 points higher at 36,701, while the broader Nifty50 index added 88 points to end the day at 10,829. In broader markets, the Nifty Midcap rose 1 percent and Nifty Smallcap index advanced 0.76 percent. Meanwhile, foreign institutional investors sold Rs 1,737 crore in the cash market while domestic institutional investors bought Rs 1,548 crore.
4. Currency: The rupee spurted 15 paise to close at 71.66 against the US dollar on Friday on hopes that the government will roll back the FPI surcharge and unveil measures to boost growth.
5. Crude Oil: Oil prices dropped in the morning of Asian trading hours, with international benchmark Brent crude futures slipping 1.5 percent to $58.45 a barrel and US crude futures dropping 1.9 percent to $53.14 per barrel.
6. FPI Surcharge Rollback: Finance Minister Nirmala Sitharaman addressed the media on the state of the economy on Friday. The Finance Minister's first announcement was that CSR violations would not be treated as a criminal offence but a civil one. Her second announcement was a big and expected one. The government has withdrawn the enhanced surcharge on gains by FPIs and domestic investors. The third announcement was that there will be no angel tax on start-ups registered with DPIIT (Department of Industrial Policy and Promotion).
7. US President On China: US President DonaldTrumpsaid on Friday he was ordering US companies to look at ways to close their operations in China and make more of their products in the United States instead, a rhetorical strike at Beijing as trade tensions mounted. Trumpcannot legally compel US companies to abandon China immediately and he gave no detail on how he might proceed with any such order, although he said he would be offering a response later on Friday to tariffs on American products announced by China earlier in the day.
8. Moody' Downgrades India's GDP Growth Rate: ) Moody's Investors Service on Friday revised downwards India's GDP growth forecast for the current year to 6.2 percent, saying the economy remains sluggish due to a combination of factors such as weak hiring, distress among rural households and tighter financial conditions. The GDP growth forecast for 2019 calendar year was revised downwards from its previous estimation of 6.8 percent. The same for 2020 was also lowered by a similar 0.6 percentage points to 6.7 percent, Moody's said in a statement. Announcing revision in its growth forecast for 16 Asian economies, it said weaker trade and investment weigh on GDP growth, despite stable private and public consumption in the region.
9. Government Measures For Auto Sector: Amid deepening distress in the auto industry, the government on Friday announced several relief measures including deferring one-time registration fee, lifting a ban on the purchase of petrol/diesel vehicles by its departments and allowing higher depreciation, but it remained non-committal on the demand for a reduction in GST rates. In a bid to help clear rising inventory of BS-IV emission compliant vehicles, it said such vehicles purchased till March 31, 2020 will be allowed to ply till the validity of their registration. This is because the country is to leapfrog to selling only BS-VI emission compliant vehicles from April 1, 2020.
10. Government Capital Infusion In PSBs: Finance Minister Nirmala Sitharaman on Friday announced upfront capital infusion of Rs 70,000 crore into public sector banks, a move aimed at boosting lending and improving liquidity situation. The move is expected to generate additional lending and liquidity in the financial system to the tune of Rs 5 lakh crore, she said at a press conference. The finance minister further said that banks have decided to pass on RBI rate cut benefits to borrowers through MCLR reduction. Sitharaman said that banks will launch repo rate and external benchmark-linked loan products that will lead to reduced easy monthly instalments for housing, vehicle and other retail loans.