Indian markets may continue to consolidate; Jet Airways, PSU banks in focus

Public sector banks are exploring the idea of setting up a company to build and share digital infrastructure in response to the rapid digital adoption in the banking sector because of the pandemic

Indian equities will likely continue to witness consolidation on Monday, with trends on SGX Nifty suggesting a flat opening of domestic benchmark indices.

On Friday, the 50-share index Nifty closed at 14,981.75, down 137.20 points or 0.91%. The BSE Sensex ended at 50,889.76, down 434.93 points or 0.85%.

Asian share markets inched up on Monday as expectations of a faster economic growth and inflation across the world, battered bonds and boosted commodities, though rising real yields were making equity valuations look more stretched in comparison.

Bonds have been bruised by the prospect of a stronger economic recovery and yet greater borrowing as US President Joe Biden’s $1.9 trillion stimulus package progresses.

Federal Reserve Chair Jerome Powell will deliver his semi-annual testimony before Congress this week and is likely to reiterate a commitment to keeping policy super easy for as long as needed to drive inflation higher. European Central Bank President Christine Lagarde is also expected to sound dovish in a speech later Monday.

Back home, the consortium comprising asset management firm Kalrock Capital and entrepreneur Murari Lal Jalan, who are currently awaiting an approval from The National Company Law Tribunal (NCLT) to restart operations at Jet Airways (India) Ltd, plan to keep the airline operating as a publicly listed company. The consortium hopes to restart operations within four to six months of getting an approval from the tribunal, which is set to hear the resolution plan on Monday.

Public sector banks (PSBs) are exploring the idea of setting up a company to build and share digital infrastructure in response to the rapid digital adoption in the banking sector because of the pandemic.

The government may consider privatising Oriental Insurance or the United India Insurance Co as their financial health has improved after a series of capital infusions, according to a PTI report.

Punjab National Bank (PNB) will not participate in capital raise plans of its housing finance subsidiary, PNB Housing Finance, but the company will continue to scout for raising equity from other sources, according to a regulatory filing. In August last year, PNB Housing Finance Ltd had informed about its plan to raise tier I capital up to ?1,800 crore through various modes including QIP, preferential issue of shares or a rights issue.

Meanwhile, yields on 10-year Treasury notes have already reached 1.38%, breaking the psychological 1.30% level and bringing the rise for the year so far to a steep 43 basis points.

Oil prices have gone along for the ride, aided by tightening supplies and freezing weather, giving Brent gains of 22% for the year so far.

Early Monday, Brent crude futures were up another 50 cents at $63.41 a barrel, while U.S. crude added 45 cents to $59.69.

The U.S. dollar index has been relatively range-bound, with downward pressure form the country’s expanding twin deficits balanced by higher bond yields. The index was last at 90.341, not far from where it started the year at 90.260.

One commodity not doing so well is gold, partly due to rising bond yields and partly as investors question if crypto currencies might be a better hedge against inflation.

The precious metal stood at $1,786 an ounce, having started the year at $1,896. Bitcoin was off 1.8% on Monday at $56,403, but started the year at $19,700.
 

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