Market Movers: Market awaits Assembly poll results; oil up on Opec-Russia output cut deal, dollar slips & more

Good morning! Here’s a lowdown on top macro triggers that may move market on Monday. This report was compiled from agency feeds.


Assembly results & exit polls
The results of the assembly polls in five states -- Chhattisgarh, Madhya Pradesh, Rajasthan, Telengana and Mizoram -- which wil be out tomorrow are set to draw the battle lines between the Bharatiya Janata Party (BJP)-led government and the opposition parties, which are trying to come under one umbrella ahead of the 2019 Lok Sabha elections. Earlier, in the Lok Sabha and state assembly bypolls, BJP and its allies won just three, and only five of 22 seats in states. The exit polls on Friday showed The BJP and Congress are locked in a close contest in Madhya Pradesh and Chhattisgarh while the latter has an edge in Rajasthan.

Oil prices up after Opec & Russia agree on output cut
International oil prices rose on Monday, extending gains from Friday when producer club OPEC and some non-affiliated producers agreed a supply cut of 1.2 million barrels per day (bpd) from January. Brent crude oil futures were at $61.81 per barrel at 0016 GMT, up 14 cents, or 0.2%, from their last close. Prices surged on Friday after the Organization of the Petroleum Exporting Countries (OPEC) and some non-OPEC producers including heavyweight Russia announced they would cut oil supply by 1.2 million bpd, with an 800,000 bpd reduction planned by OPEC-members and 400,000 bpd by countries not affiliated with the group.

Preference for India-made vehicles in public procurement
The government has notified that preference will be given to domestically-manufactured vehicles with minimum 65% local content in public procurement of automobiles. This is as per the new norms notified by the Heavy Industries Ministry with an aim to "encourage Make in India" and to promote manufacturing and production of goods and services locally. The new norms have already come into effect and would be reviewed after March 31, 2019.

Hiring outlook good for 2019: Mercer
More than 50 per cent of companies intend to increase hiring next year while only 3 per cent firms may reduce the headcount, a senior official of global consulting HR firm Mercer said. Mercer (India) CEO Anish Sarkar also noted that the trend for the last couple of years has been good in terms of hiring and next year the outlook seems positive. "Besides the demand for key skills like sales, research and development become predominant," he said.

CAD widens to 2.9% in Q2
India's current account deficit (CAD) widened to 2.9% of the GDP in the second quarter of the fiscal compared to 1.1% in the year-ago period, mainly due to a large trade deficit, the RBI said Friday. The CAD, or the difference between outflow and inflow of foreign exchange in the country's current account, was $19.1 billion during the quarter ended September 30, 2018. It increased from $6.9 billion or 1.1% of GDP in Q2 of 2017-18. The CAD stood at $15.9 billion (2.4% of GDP) in Q1.

Dollar slips; pound, yuan on backfoot
The dollar slipped against the yen and the euro on Monday after soft US payrolls data fuelled speculation that the Federal Reserve may stop raising interest rates sooner than previously expected. The British pound also was on the defensive as Prime Minister Theresa May’s deal to exit the European Union looks set to be rejected by parliament on Tuesday, while the Chinese yuan dipped in offshore trade following weak trade and inflation data over the weekend. The dollar slipped 0.2 percent against the yen to 112.52 JPY=, edging near Thursday's 5 1/2-week low of 112.23.

Uday Kotak says note ban was poorly executed
The outcome of the controversial demonetisation drive would have been "significantly better" if "simple things" like introducing Rs 2,000 currency notes were avoided, banker Uday Kotak has said. Kotak said as part of the "execution" strategy, it was essential to ensure larger quantum of notes of the right denomination were made available. If such things were undertaken, "we would have been talking very differently today than now," he said.

POLICIES & MORE

• In a meeting with industry executives last week, RBI officials indicated they were keen on rolling out a digital authentication method that would use the XML internet format to extract limited information on customers from the Aadhaar database. This wouldn’t include the biometrics.
• Former Chief Economic Adviser Arvind Subramanian on Sunday warned the Indian economy was in for a slowdown for some time as agriculture and financial system were under stress.
• The currency swap deal between India and the UAE will enhance and strengthen trade relations between the two countries and reduce India's dependency on currencies like US dolllars. The swap is for an amount of Dh2 billion or Rs35 billion, depending on the central bank which is requesting the amount.
• PM Modi’s voice against high oil prices counts much for Opec and forms a valuable component of deliberations by the grouping of 14 countries. The acknowledgement of India’s positon in the global oil market came from Khalid A Al-Falih, oil minister of Saudi Arabia — the de-facto leader of Opec — on Thursday in Vienna.

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TOP QUOTE
'India has no reason to worry; crude unlikely to hit $70'

FUNDAMENTALS

Rupee up: The Indian rupee Friday staged a mild recovery to close at 70.82, rising 8 paise against the US dollar in line with rally in domestic stocks and positive global cues.

10-yr bond yields up: India 10-year bonds yields rose 0.04% to 7.46% on Friday from 7.42% in the previous trading session, according to RBI data.

Call rate: The overnight call money rate weighted average was 6.34% on Friday, according to RBI data. It moved in a range of 5.00-6.55%.