Markets may stay volatile amid Turkey lira plunge; TCS, Future Retail in stocks
Asian markets were holding their nerve on Monday as a plunge in the Turkish lira tested risk appetite, with stocks and bonds showing only a limited bid for safe-havens
MUMBAI: Markets are likely to be wobbly on Monday following Asian peers while trends in SGX Nifty suggest a flat to negative opening of Indian benchmark indices. On Friday, the BSE Sensex ended at 49,858.24, up 641.72 points or 1.30%. The Nifty closed at 14,744, up 186.15 points or 1.28%.
Asian markets were holding their nerve on Monday as a plunge in the Turkish lira tested risk appetite, with stocks and bonds showing only a limited bid for safe-havens.
The dollar was trading 12% higher on the lira at 8.100, but that was off an early peak of 8.4850 amid speculation Turkish authorities would intervene to stem the rout. The slide came after President Tayyip Erdogan shocked markets by replacing Turkey’s hawkish central bank governor.
After an initial wobble, sentiment seemed to stabilise and MSCI’s broadest index of Asia-Pacific shares outside Japan was all but flat. Japan’s Nikkei fell 1.4%, not helped by talk that Japanese retail investors could face losses on large long positions in the high-yielding lira.
Future Retail Ltd (FRL) has challenged the Delhi high court’s 18 March order that directed the attachment of founder Kishore Biyani’s assets and his possible detention, while restraining the retailer from selling its assets to Reliance Industries Ltd (RIL). In an exchange filing late on Saturday, Future Group said that it has filed the appeal before the Delhi high court. A division bench of the high court is likely to hear the case on Monday. The group may approach the Supreme Court if the ruling of the division bench is not favourable.
Tata Consultancy Services (TCS) will hand out across-the-board salary increments for 2021–22, becoming the first IT services company to do so. The salary hike roll-out will benefit nearly 4.7 lakh employees of the company.
The Reserve Bank of India (RBI) on Friday said that the initial uptick in household savings seen in the June quarter has waned substantially in the next three months on the back of rising consumption and higher borrowing. Household financial savings stood at 10.4% of the nation’s gross domestic product (GDP) in the July-September period of FY21, down from 21% of the GDP in Q1 of FY21. It is estimated to have further declined in the December quarter as consumption intensified.
Yields on 10-year Treasury notes edged down a couple of basis points to 1.71%, suggesting no widespread rush to safety.
Investors are still struggling to deal with the recent surge in US bond yields, which has left equity valuations for some sectors, particularly tech, looking stretched.
Bonds had another wobble on Friday when the Federal Reserve decided not to extend a capital concession for banks, which could lessen their demand for Treasuries. The damage was limited, however, by the Fed’s promise to work on the rules to prevent strains in the financial system.
Monday’s tumble in the lira saw the yen firm modestly, with gains on the euro and Australian dollar. That in turn dragged the euro down slightly on the dollar to $1.1889. After an initial slip, the dollar soon steadied at 108.86 yen, while the dollar index was a shade higher at 92.080.
There was scant sign of safe-haven demand for gold, which eased 0.3% to $1,739 an ounce.
Oil prices fell anew, having shed almost 7% last week as concerns about global demand prompted speculators to take profits on long positions after a long bull run.
Brent was off 53 cents at $64.00 a barrel, while US crude lost 55 cents to $60.87 per barrel.
