After a manic Monday, it was back to a more reasonable Tuesday. In fact, reality check hit Nifty and Sensex on Tuesday as they gave up nearly a fourth of their gains of Monday with a virtual absence of buying at higher levels after the short covering in most counters started tapering. The VIX which had fallen sharply on Monday, again rose by 9% to get back to the 26 levels. Despite the exit polls giving the NDA thumbs up, markets are unlikely to be convinced till they see the actual results. In fact, markets were giving an indication that from now on it will be more of global cues and corporate numbers.
After the trade war intensified leaving the markets in a state of panic, the US relented a bit on Huawei. Just a couple of days after black-listing Huawei and almost preventing them from doing business in the US, Trump has agreed to soften his stand on Huawei and allow them limited access. In fact, Google and Android had already stopped supporting Huawei instruments and that had created a trust deficit for the US. While the issue is not yet resolved, markets (especially IT stocks) reacted positively. There had been pressure on the US not to exacerbate the trade war by putting a total ban on Huawei.
MFs were permitted into commodity derivatives a few months ago but SEBI has finally given the go-ahead to Indian mutual funds to participate in the commodity markets. They will have to stay away from commodities defined as “Sensitive Commodities” by the government of India. MFs can participate through gold ETFs and hybrid multi-asset schemes and must appoint a dedicated fund manager for this purpose with commodity market expertise. Trading in commodities gives these mutual funds an additional asset class to invest in and also the scope to hedge their commodity risk.
RBI appears to be moving on a war footing on the regulatory aspects of the financial services sector. The RBI will now step up supervision through a new division of trained cadre of supervisory professionals. In a significant move, the RBI has decided to create a separate division for supervision. This has become all the more necessary after the spate of banking and NBFC cases that have exposed the vulnerability of these sectors. The ambit of supervision will include commercial banks, NBFCs and cooperative banks. This is in line with the growing complexity of the financial market place and was long felt necessary.
Iraqi minister has admitted that Middle East tensions post a threat to oil price stability. The rising tensions in the Middle East will be one of the major items when the OPEC meets in Vienna. Two of the most prominent members of the OPEC; Saudi Arabia and Iran have been sabre rattling ever since the US imposed sanctions on Iran. The price of Brent Crude has decisively turned above the $72/bbl mark after the Middle East tensions started simmering. While the attacks by Saudi Arabia on Yemen has been going on for some time, Saudi Arabia has recently accused Iran of firing at its vessels and also at Aramco oil facilities from Iraqi soil. This was done after the US imposed sanctions on Iran virtually cutting them off from the global oil market. Iran has already threatened to block the Strait of Hormuz.
Almost a week after SEBI issued the stringent order on NSE, the exchange has filed an appeal with SAT on the SEBI order over the co-location issue. SEBI had passed 3 orders against the NSE covering co-location, dark fibre and corporate governance. NSE has challenged all the 3 orders in the SAT. Currently, NSE is barred from accessing the capital market for a period of 6 months but that is subject to the case being resolved by then. Large investors of NSE had asked for the NSE to pay the penalty and get on. NSE has been alleged to have given preferential access to the trade server to some of its brokers.
