ETMarkets morning podcast: Yellen’s interest rate remark rocks the boat

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Hello.

Yellen says interest rates could rise, then retract
FIIs reduce bullish bets on Nifty and Bank Nifty futures
RBI bought 42 tons of gold last year
Traders bet on stocks with high visibility on profits

Hi. Welcome to ETMarkets Morning, the money, business and markets show. I am Sandeep Singh.

Let’s start with a quick look at the state of the markets.

Dalal Street appeared poised for a positive start this morning despite warnings of a more serious tragedy in India’s Covid crisis and a massive sell-off of U.S. tech stocks after Treasury Secretary Janet Yellen’s comments on rates. interest shook the markets. The nifty futures traded around 50 points higher on the Singapore Stock Exchange. Many Asian markets are closed for holidays. In T-bills, US 10-year rates remained stable around 1.59%. In commodities, oil extended a rally after falling US inventories and WTI crude rose 0.8% to $ 66.23 a barrel. The dollar was holding gains and gold was trading at $ 1,777.70 an ounce.

That said, here’s what’s in the news.

U.S. Treasury Secretary Janet Yellen threw a bombshell when she said interest rates may need to rise slightly to prevent the U.S. economy from overheating due to higher levels of government spending, without specifying any calendar. “It may be that interest rates will have to rise somewhat to ensure that our economy does not overheat,” Yellen said in an interview with Atlantic. The statement triggered strong profit taking in US tech stocks. Yellen later clarified that she neither foresees nor recommends interest rate hikes.

A clear sign of growing concerns about the economic fallout from the surge in Covid business, the IFIs have sharply reduced their bullish bets on Nifty and Bank Nifty futures. Coupled with spot sales, this has caused Nifty to fall 2.7% over the past three sessions. While selling shares worth Rs 4,821 crore so far this month, the FII have reduced their cumulative bullish bets on the Nifty and Bank Nifty futures contracts from 52,927 contracts on April 29 to just 4,487 contracts on May 4. , according to NSDL data.

RBI bought some 42 tonnes of gold last year amid uncertainty over US Treasury yields. RBI became the second largest buyer of gold among central banks after Turkey in FY21, according to a World Gold Council report. India’s central bank ended fiscal 21 with a loss in the valuation of its foreign exchange reserves as yields on US Treasuries, where most of the reserves are parked, have tightened in recent times.

Meanwhile, RBI had to fight the forex market on Tuesday with a forward premium climbing to 28.95% on short-term onshore contracts, indicating that varying estimates of cash flow could cause strong fluctuations in the local currency. The RBI is said to have intervened through some state-owned banks that have reduced the cost of hedging currency exposure across all maturities, traders said.

Traders are betting on stocks with high profit visibility in the May F&O series. This is particularly evident in metal inventories, as they generate a lot of interest in the context of rising world steel prices. PSU companies are also on the trader’s radar, while some private banks are attracting bearish bets due to below-expectations earnings.

Most brokerages take a neutral or bearish view of Kotak Mahindra Bank after its March quarter profit missed estimates as the lender set aside a larger amount to increase bad loan cushions. On Monday, Kotak Mahindra Bank reported a 33% increase in year-over-year net profit to Rs 1,682 crore, largely missing analysts’ estimates. Sequentially, the lender’s profit declined due to an increase in provisions.

And finally, some good news. At least 20 listed companies in India have lost key board and senior officials since early March, and these untimely deaths have highlighted the need for well-defined succession plans. This balance sheet only includes the list of key executives whose deaths must be disclosed by listed companies under corporate governance rules. Industry insiders say several top executives, who were not key management personnel and yet worked in critical positions, have also died in recent weeks.

NOW Before you go, here’s a look at the actions buzzing this morning …

Billionaire Gautam Adani, controlled by Adani Ports and SEZ, is considering scrapping a plan to build a container terminal in Yangon, Myanmar and writing the investment after a military coup in that country.

IndiGo announced on Tuesday that its board of directors will meet on Friday to consider raising funds through a qualified institutional equity placement.

Infosys is creating 1,000 digital jobs in the UK over the next three years in areas such as cloud computing, data and analytics, AI, open source technologies and business services.

RBL Bank’s net profit fell 34% year-over-year in the March quarter due to lower net interest income as the bank was hit by revenue recoveries from interest in accordance with an order of the Supreme Court.

Also check out over two dozen stock recommendations for today’s trading from top analysts on ETMarkets.com.

That’s all for the moment. Stay with us for all the market news throughout the day. Good investment!



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