Markets can rally to global support; RIL, Future Retail, banks in brief

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MUMBAI: Indian stocks are expected to rise on Monday after the rally of global peers. SGX Nifty trends suggest a positive opening for Indian benchmarks. On Friday, the BSE Sensex closed at 39,467.31, adding 353.84 points or 0.90%. The 50-stock Nifty closed at 11,655.25, adding 96 points or 0.83%.

Asian stocks hit a 29-month high on Monday as investors bet global monetary and fiscal policies will remain very stimulating, while a bullish reading on China’s services sector bodes well for a continued recovery in this country.

The largest MSCI index of Asia-Pacific stocks outside of Japan rose 0.5% to its highest level since March 2018, extending a gain of 2.8% last week.

Indian markets will focus on the Reliance Industries-Future Group deal. Reliance Retail Ventures Ltd. (RRVL) to acquire the retail, wholesale, logistics and warehousing businesses of Future Group to 24,713 crore. The long-awaited deal between RIL and Future Group got the green light on Saturday following a board meeting of Future Enterprises Ltd (FEL).

The actions of banks and financial services are expected to be the focus as the Reserve Bank of India is not expected to extend the moratorium on loan repayments past the end of August 31.

Metals and mining conglomerate Vedanta Ltd will be watched as the company has pledged its entire stake in subsidiary Hindustan Zinc Ltd (HZL) to help fund its delisting proposal.

Investors will focus on GDP data for the April-June period of FY21 on Monday, which is expected to be the worst impression since India started releasing quarterly data in 1996.

India’s contraction of the economy in the June quarter could be one of the worst among G-20 countries, weighed down by the coronavirus pandemic and the most severe lockdown that has led to the shutdown of business activities and a sharp decline in consumer demand.

Meanwhile, US 30-year bond yields jumped almost 16 basis points last week and were last at 1.52%, 139 basis points above the two-year yield. The spread was now approaching the June spread of 146 basis points, the largest since late 2017.

This change did little to benefit the US dollar given the prospect that short rates will stay extremely low for longer, and the currency fell overall.

Early Monday, the dollar index was at 92.341 and just a mustache above the recent two-year low of 92.127. The euro settled at $ 1.1902, after climbing 0.9% last week.

The dollar stabilized somewhat against the yen at 105.55, after falling 1.1% on Friday before finding support in the 105.10 / 20 area.

In commodities markets, the weak dollar helped prop up gold at $ 1,969 an ounce.

Oil prices have stabilized after falling on Friday after Hurricane Laura passed through the heart of the US oil industry without causing significant damage. Brent LCOc1 crude futures rose 26 cents to $ 46.07 a barrel, while US CLc1 crude gained 13 cents to $ 43.10.

(Reuters contributed the story)

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