The finance minister has underlined the efforts taken by the government in conjunction with banks and RBI to revive real estate companies. Nirmala Sitharaman underlined the Finance Ministry was working closely with the RBI and the banks to revive the beleaguered real estate sector in India. The FM pointed out that the housing sector had been identified by the government as a key launching pad for reviving overall economic growth due to its likely multiplier effect on growth. Banks have been quite cagey about lending to realty and the NBFC crisis had created a major liquidity crunch for the realty sector.
The costs of the trade war may have been really steep, according to the UN. It is estimated that the trade war caused losses worth $35 billion to China. The United Nations also pointed out that the trade war had cost China close to $35 billion in the first half of 2019 as higher tariffs had led to a cut in Chinese imports by nearly 25% due to higher import prices. The UN also pointed out that the trade war had hit both the economies as the US had also suffered on farm exports front. China had reduced its effective losses by weakening the Yuan but the growth hit on the GDP still remained.
Titan disappointed in the September quarter even as high gold prices become a proxy for the weak Titan Q2 performance. According to a report in the Business Standard, Titan saw flat sales and a 3.7% fall in profit before tax for the second quarter ending September 2019. Most jewellers felt the heat of high gold prices and weak demand with gold imports for the latest month down by 33%, accentuating the pressure on gold prices. Jewellery and gold account for 85% of the total sales of Titan, making it a gold proxy. In the past, the company had immensely benefited from higher gold prices.
Mutual Funds gravitate towards large-cap bets in September quarter. The portfolios of mutual fund saw a clear shift towards the large caps during the September quarter as mutual funds increased their stake in 69 large-cap companies and trimmed their stake in 29 large caps. Buying was a lot more selective in the mid-caps with the increase / decrease ratio at 77:57. Mutual funds also showed a market preference for the public sector units on the back of growth prospects and attractive valuations. PSU banks and other PSUs that were privatization candidates came in the radar of the mutual fund managers.
The Nifty and the Sensex halted a 7-day rally after profit taking at higher levels hit banking and metal stocks. However, the correction was nowhere close to being sharp. Meanwhile, hopes of an early trade truce between the US and China led to a strengthening of the US dollar and hardened crude prices, resulting in US indices retreating from their all-time peak levels on Tuesday. One outcome of the strong dollar was the weakening of safe haven currencies like the SFR and JPY. Over the last few years the Swiss Franc and Japanese Yen were the preferred safe haven currencies but that tide appears to be turning with the trade deal between the US and China imminent. Hinting at a shift to risk-on allocation, the dollar strengthened even as safe haven currencies like the SFR and the JPY lost steam during the day.
Brent Crude rallied 135 bps to $62.96/bbl on trade resolution hopes. The rally in crude prices continued for the third consecutive day as hopes of a trade resolution continued to be buoyant. China managed to push Trump for more roll back of tariffs ahead of signing the new trade deal and that gave hope to the markets that the resolution may come sooner. Oil also benefited as Russia avoided committing to the OPEC on supply cuts beyond 1.2 million bpd. Russia has cooperated with the OPEC in synchronizing oil supply cuts over the last 3 years and that had been instrumental in holding oil prices.
