Even as the trade war continues, there is positive traction coming from US capital goods orders as they hit record highs raising growth turnaround hopes. New orders for capital goods put out by the US government had touched an 8-month high giving an indication of a likely bounce in growth sentiments. As capital goods orders have built up, the fears of a slowdown in the economy are receding and business confidence is improving in the US. Among the various capital equipments there was a sharp spurt in demand for computers and electronics, indicative of investments lined up.
The Jaypee saga may still be playing out in different ways. Indian home buyers continue to struggle despite getting financial creditor status under IBC Act. In fact, a year after home buyers were accorded the status of financial creditors under the IBC, the use of this provision is still quite limited. One of the reasons has been that this calls for concerted effort by the home buyers which rarely happens in practice. In fact, most home buyers have preferred to negotiate with builders and are now demanding for a fast track court to dispose such cases. Builder woes are continuing in the meantime.
Fitch expects a change in policy continuity to be negative for the oil and gas sector. In fact, Fitch has expressed the view that any change in policy continuity post May could derail the reforms process undertaken by the current government on the oil and gas front. While deregulation of oil prices has been a success, it is not clear how they will sustain that policy if crude moves higher. A big thrust of the current government has been on alternate fuels and that could be the real challenge to policy. The Modi government has already set very aggressive targets for alternate energy.
Crude finally relented at higher levels after facing resistance at $75.50/bbl after touching 7-month high. Even as the US stockpiles hit record high levels, the Brent prices touched an intraday high of $75.60/bbl but closed much lower at $74.47/bbl. The relief in oil prices came after fears of demand compression at higher levels started doing the rounds in the oil market. Earlier Russia had decided to cut its exports even as the US is unwilling to budge on its sanctions on Iran and Venezuela. In the meanwhile, the strife in Libya is also hitting the supply of oil. It may finally boil down to demand dynamics.
Sensex and Nifty corrected after a very smart rally on Wednesday on the back of F&O jitters. Heavy unwinding on the long futures was indicative of the fact that traders were not willing to commit when election results would be declared. The big sectors to take the hit of unwinding were metals, banks and autos. The A/D ratio of the Nifty was also extremely negative at 11:39. Meanwhile the Indian rupee weakened 39 bps to 70.25/$ on F&O expiry day. The rupee weakness on Thursday was an outcome of a sharp sell-off in the equity markets as well as crude touching an intraday high of $75.60/bbl. The dollar swaps have also put tremendous pressure on the rupee after the auction on 23rd April was done at a 3-year forward price of above Rs.78/$ which pushed up the forward premiums and weakened the rupee.
We have a new leader in global market value and the latest to cross the $1 trillion mark. Microsoft topped the $1 trillion market cap for the first time in its history even as Apple and Amazon are struggling to retrace the mark. Both Amazon and Apple had crossed the $1 trillion market cap mark in 2018 before heading lower. For the March quarter, Microsoft announced 19% growth in profits to $8.8 billion on revenues of $31 billion. This triggered rally in Microsoft taking it all the way above the $1 trillion mark. Both Amazon and Apple took a big hit last year when the tech stocks faced a meltdown.
