Bharti Airtel, Tech Mahindra Gain After Bagging Payment Bank Licence

Shares of Bharti Airtel and Tech Mahindra rose on Thursday after the companies bagged licences for payment banks.

Leading mobile phone network operators Bharti Airtel, Vodafone India and IT services company Tech Mahindra are among the 11 companies selected by the Reserve Bank of India (RBI) to help set up "payments banks", aimed at granting millions of citizens access to basic banking. Payment banks can take deposits but cannot lend.

Energy-to-telecoms conglomerate Reliance Industries Ltd, controlled by India's richest man Mukesh Ambani, which plans to set up a payments bank in a partnership with top lender State Bank of India (SBI), was also among the winners.

The postal department and a joint venture of Aditya Birla Nuvo Ltd and third largest Indian cellphone carrier Idea Cellular were among others selected by the RBI.

At 10:21 a.m., Tech Mahindra was up over 2 per cent while Bharti Airtel rose 1.6 per cent. Reliance Industries edged down over 1 per cent amid a slump in global oil prices. Idea Cellular was down over 1 per cent while Aditya Birla Nuvo rose over 1 per cent.

RBI may issue licences for small banks in the next month: Raghuram Rajan

Reserve Bank of India (RBI) Governor Raghuram Rajan, in an interaction with SBI chief Arundhati Bhattacharya, has said that Payments banks are not a threat to mainstream banks, and that the central bank may issue licences for small banks in the next month. He went on to say that Payments are one of the most exciting space for the banking system.

According to the Governor, Payments Banks will serve as feeders to universal banks, and they will reduce cost of access to banking system.

Expressing his thoughts on the recent devaluation of Chinese currency Yuan, Rajan said that the currency  depreciation should not be a concern if it is held at current rate. He however agreed that depreciating currencies globally is a worrisome trend, which is fuelled by weak demand. 

Addressing the monsoon concerns, Rajan said that he has been praying to weather God.  He added that he would watch out if monsoon doesn't deteriorate and rather do better. This could be bonus to rural demand.

Economy is Showing Signs of a Pickup: Raghuram Rajan

Mumbai: The Indian economy is shown signs of improvement, the governor of the Reserve Bank of India said on Thursday, adding that a pickup in rural demand would further improve economic growth.

"You may see rural demand coming back more strongly, and that would be a very tremendous bonus to the economy compared to we are," Raghuram Rajan said at an industry event.

Dr Rajan said separately that the devaluation of the Chinese yuan was not something to be "concerned" about at current levels. He added, however, that global central banks depreciating currencies as a policy action was a worrisome trend.

On August 11, the Chinese central bank surprised markets by devaluing the yuan by nearly 2 per cent.

Property Prices Must Fall, Raghuram Rajan Tells Developers

Reserve Bank Governor Raghuram Rajan on Thursday said that property prices should fall given the high inventory levels across the country. Developers should bring down house prices else the realty sector will not come out of doldrums, he added.

Dr Rajan's comments come at a time when the realty sector is struggling with low demand and rising inventory of unsold flats. Property prices in some cities have witnessed some correction, but analysts say there's further scope for decline in property prices.

Dr Rajan also said that there is a case for frontloading of interest rate cuts by banks. High interest rates have been cited by analysts as a big factor for the slump in property sales.

The RBI Governor was interacting with State Bank of India boss Arundhati Bhattacharya at a banking conclave in Mumbai.

Derivative Watch: Nifty Range Seen at 8,300-8,600; ACC, Hindalco in Focus

The Nifty ended 29 points higher on Wednesday tracking a late recovery in the Chinese markets. It hit a high of 8,520.45, while on the down side it hit 8,425.95.

Nirmal Bang Securities in a note said looking at the options spread the broad range for Nifty is likely to be 8,300-8,600 for Thursday. Maximum open interest (outstanding positions) remain in 8,600 strike Nifty calls; on Wednesday, OI in the 8,600 strike rose by 4 per cent to 51.8 lakh shares, indicating that Nifty is likely to face resistance around 8,600.

Likewise, maximum open interest was seen in the 8,300 strike Nifty put, which increased 8 per cent to 63.9 lakh shares on Wednesday, indicating Nifty will get support around 8,300 levels on the down side in case of corrections.

Overall, Nifty puts added 48.1 lakh shares in open interest and calls added 8.4 lakh shares, taking the put-call-ratio (PCR) to 1.04 from 0.98 on Tuesday. A PCR of more than 1 suggests that market is firmly in the bull grip and is likely to get support in case of any correction.

Among Nifty stocks ACC and HCL Tech witnessed increase in bullish bets as these stocks gained on Wednesday along with open interest increase. Similarly Hindalco and SBI will be in focus today as bearish bets increased in these stocks. Hindalco shares fell 3.1 per cent on Wednesday along with 3 per cent increase in open interest and SBI shares fell 2.4 per cent along with 1 per cent increase in open interest.

Among non-index stocks, JP Associates witnessed maximum increase in bullish bets; open interest in the stock increased 6 per cent along with 9.5 per cent gain.

On the other hand, Hindustan Zinc, Indiabulls Real Estate and Allahabad Bank saw increase in bearish bets. Open interest in Amtek Auto shares shed 23 per cent on Wednesday as the stock is getting excluded out of the derivative segment from October. 

Asian Shares Slide; Dollar Loses Edge on Fed Minutes

Tokyo: Concerns about slowing growth in China sent Asian shares to two-year lows and pressured oil prices on Thursday while minutes from the U.S. Federal Reserve's July meeting dented expectations for a rate hike in mid-September.

MSCI's broadest index of Asia-Pacific shares outside Japan shed 0.9 percent with all markets in the region except New Zealand posting declines.

Hong Kong's Hang Seng Index hit an 8-month low while Singapore-listed shares fell to 1 1/2-year lows. Malaysian shares sank to three-year lows.

Mainland Chinese shares also dropped 1.2 percent while Japan's Nikkei fell 0.7 percent.

"Markets are nervous of risks and investors are pulling funds out of emerging economies and resource exporters," said Daisuke Uno, chief strategist at Sumitomo Mitsui Bank.

Fears that Chinese growth, which carried the global economy following the 2008 international financial crisis, is slowing in the long term are affecting the outlook for many industries, with the commodities sector among the hardest-hit.

U.S. crude oil prices eased 0.8 percent after a fall of more than 4 percent on Wednesday following an unexpectedly large increase in U.S. stockpiles, barely holding above its 6 1/2-year low of $40.40 per barrel.

It last stood at $40.47, with a break below $40 seen as likely to trigger a fresh wave of selling.

Brent crude futures fell 0.6 percent to $46.90, edging near the six-year low of $45.19 touched in January.

Falls in oil and other commodity prices hit many resource-exporting emerging economies hard, and they have already suffered shocks from capital outflows as the prospect of higher U.S. interest rates looms larger.

MSCI's emerging market index set a new four-year low, having fallen 22 percent from this year's high hit in April and coming within a stone's throw of its Oct 2011 trough.

Minutes from last month's Fed monetary policy meeting showed officials in broad agreement that the U.S. economy was nearing the point where interest rates should move higher.

But they also noted lagging inflation and a weak global economy posed too big a risk to commit to "lift off", leading some investors to question the likelihood of a rate hike in September.

U.S. Treasury yields fell and money market futures rolled back expectations of a rate rise in September.

The 10-year U.S. Treasuries yielded 2.122 percent, having declined from an eight-month high of 2.500 percent touched in June.

The dollar also lost its edge against other major currencies. It fell to a three-week low of 123.68 yen on Wednesday and last stood at 123.92 yen while the euro also rose to $1.1138, extending its rebound from this week's low of $1.10165 touched on Tuesday.

Gold also gained, rising to a one-month high of $1,135.40 per ounce.

"Following the July FOMC minutes, we retain our call for September lift-off. However, we see the bar for the rate hike as having been pushed a bit higher. The higher bar, combined with lower energy prices and a modest deterioration in the international outlook since the July FOMC, has raised risks over this call," Rob Martin, economist at Barclays said in a report. 

Oil Prices Dip Further After US Stock-Build, Saudi Export Rise

Singapore: Oil markets opened up weak on Thursday following sharp falls the previous session, with U.S. contracts hovering slightly above $40 per barrel, levels not seen since the credit crunch of 2009, and globally traded Brent tested support at $47.

U.S. West Texas Intermediate (WTI) crude oil slumped over 4 per cent on Wednesday to hit a 6-1/2-year low as a huge unexpected stockpile build in the United States reinforced concerns about a growing global oil glut.

U.S. crude inventories rose 2.6 million barrels last week to 456.21 million barrels, the government's Energy Information Administration said.

And markets opened up weak again on Thursday. U.S. crude futures were trading at $40.69 per barrel at 0024 GMT, levels not seen since the peak of the global financial crisis of 2008/2009. Brent was down 11 cents at $47.05 a barrel.

"WTI prices plunged to the lowest level in more than six years after an EIA report showed that U.S. crude stockpiles unexpectedly rose 2.6 million barrels against market expectations for a small decline," ANZ bank said on Thursday.

"Despite the weak price environment, the biggest OPEC producer, Saudi Arabia, boosted its oil exports," it added.

Saudi Arabia exported 7.365 million barrels per day (bpd) in June, up from 6.935 million bpd in May, figures published by the Joint Organisations Data Initiative (JODI) showed.

The bearish sentiment is also visible in the long-term derivatives market.

Contracts for delivery of crude oil in the future on the big commodities markets such as the New York Mercantile Exchange and the InterContinental Exchange show the price of oil for delivery in five years' time has collapsed in recent months, implying that traders do not expect a price recovery any time soon.

U.S. crude prices for delivery in 2020 cost only about $20 more than they do now, a price difference that falls further when adjusted to expected inflation and interest rates.

Sensex, Nifty Edge Lower Amid Weak Global Cues

9:17 a.m.: Sensex falls 90 points to 27,840 amid weak global markets; Nifty slips to 8,468.

9:10 a.m.: The Sensex jumped 28 points to 27,959 and Nifty slipped 24 points to 8,471 in the pre-market session.

9:05 a.m.: The Nifty ended 29 points higher on Wednesday tracking a late recovery in the Chinese markets. It hit a high of 8,520.45, while on the down side it hit 8,425.95.

Nirmal Bang Securities in a note said looking at the options spread the broad range for Nifty is likely to be 8,300-8,600 for Thursday. Maximum open interest (outstanding positions) remain in 8,600 strike Nifty calls; on Wednesday, OI in the 8,600 strike rose by 4 per cent to 51.8 lakh shares, indicating that Nifty is likely to face resistance around 8,600.

9:00 a.m.: Rupee opens higher at 65.17/dollar against Wednesday's close of 65.27.

8:59 a.m.: For Indian markets Wednesday was a day of consolidation with the Nifty managing a comfortable close above its 200 day moving average (8461). 8300-8600 stays the range for the Nifty.

8:25 a.m.: Below are the stocks which will be in focus today:

Reserve Bank of India granted "in-principle" Payment Bank licenses to 11 applicants. Companies like Aditya Birla Nuvo, Bharti Airtel, Reliance Industries and Tech Mahindra which got the payment bank license may react to this development.

Sun Pharma: Sun Pharma will be in focus today as the company has received USFDA approval for generic Xenazine. Total sales for Xenazine were $319 million for 12 months ended June 2015. Sun Pharma expects to launch this product in last quarter of 2015.

Lupin: Lupin has got approvals for fenofibrate 160 mg and 54 mg tablets. Total annual revenues expected from drug is about $154 million and the competition in this drug is limited to three generic players.

Crompton Greaves, Oberoi Realty: Reports suggest that Oberoi Realty plans to buy Crompton Greaves' Worli building for over Rs 200 crore.

Jet Airways: Jet Airways has raised bridge rupee loan of about Rs 1,650 crore.

Dredging Corp: Government plans to sell up to 14 lakh shares in company via OFS tomorrow.

8:20 a.m.: Back home, the foreign institutional investors sold shares worth Rs 423.7 crore while the domestic institutional investors purchased shares worth Rs 383 crore on Wednesday.

In the F&O segment, FIIs sold index futures worth Rs 522 crore.

8:00 a.m.: The Sensex and Nifty are likely to witness a gap down opening in trades today tracking weak global cues and negative trading of Nifty futures on the Singapore Exchange. The Nifty futures traded on the Singapore Stock Exchange also known as the SGX Nifty was down 0.6 per cent or 53 points at 8,453.

Meanwhile, other Asian markets were also trading with a negative bias on concerns over slowing growth in China. Hong Kong's Hang Seng fell 1.5 per cent, Japan's Nikkei was down 0.6 per cent and China' Shanghai Composite index fell 1.5 per cent.

Overnight, the US stocks also moved lower as minutes from the latest Federal Reserve meeting highlighted concern over the state of the global economy, driving markets to question the likelihood that the Fed will raise rates next month.

The minutes showed policymakers continued to express broad concerns about lagging inflation and the weak world economy even as the U.S. job market improved further. Market expectations for a Fed hike in September fell from one in two to roughly one in three after the minutes were published.

The Dow Jones industrial average fell 162.61 points, or 0.93 per cent, to 17,348.73, the S&P 500 lost 17.31 points, or 0.83 per cent, to 2,079.61 and the Nasdaq Composite dropped 40.30 points, or 0.8 per cent, to 5,019.05.

Global Cues To Weigh on Indian Markets

Wall Street fell as the FOMC minutes showed the Fed caught between a solid domestic environment and global deflationary environment. The minutes indicate that the time for policy tightening is drawing closer but give no clear nod to September rate hike. The U.S. July CPI proved softer than forecast. In Europe the Stoxx-600 was down 1.8 per cent even as the German & Dutch parliaments approved the Greek bailout plan and the deal was formally signed by Eurogroup ministers.

Data showed that U.S. crude inventories rose and sent WTI crude down more than 5 per cent lower to hit a low of $40.61/bbl. In Asian yesterday, the highlight was once again China. The CSI-300 overcame early weakness, to actually end higher by 1.6 per cent. Most other major Asian stock indices closed in the red yesterday.

For Indian markets Wednesday was a day of consolidation with the Nifty managing a comfortable close above its 200 day moving average (8461). 8300-8600 stays the range for the Nifty.

We have seen Nifty & Bank Nifty shedding open interest over the last few days. Rupee showed some signs of stability at 65 per dollar. Pharma and tech did the best on Wednesday while banks saw some selling. No specific news flow was there in pharma except the INR depreciation which should help most. Same story was for the IT stocks as well.

The RBI has given in-principle approval to 11 payments banks against the 41 applications it received. Payment banks will be allowed to distribute financial products such as mutual funds, insurance etc. It would also be allowed to act a business correspondent for other banks. It would be allowed to issue ATM/debit cards & provide payment and remittance related services.