Dear all,
Markets end higher amidst 7th pay hike and firm global cues
Ø Benchmark indices rose notably, as the rupee climbed and the Union Cabinet approved with some changes the recommendations of 7th Pay Commission that will raise salaries of over 10 million government staff and pensioners by about 23%, a move that will help boost consumption demand in the economy.
Ø Global risk appetite was firm amidst gains in oil prices and as European stocks continued their rally for the second consecutive session as global markets realise that any change to the status quo in the European Union (EU) after the Brexit vote is unlikely to change in the short-term.
Ø Government bonds (G-Secs) surged following persistent demand from corporates and banks. The 7.59% government security maturing in 2029 climbed to INR 99.98 from INR 99.80 previously.
Global Macro
Ø U.K. Consumer Credit increased by EUR 1.5bn in May 2016 following a EUR 1.29bn growth in April 2016 and above market expectation of a EUR 1.4bn growth.
Ø U.S. Pending Home Sales shrank 0.2% in May 2016, following a 4.6% rise in April 2016. It is the first annual decline since April 2014.
Ø U.S. Gasoline Stocks Change increased by 1.36mn barrels in the week ending June 24 2016, the biggest rise in five weeks.
Corporate Buzz
Ø The Model Shops and Establishment (Regulation of Employment and Condition of Services) Bill 2016 has been cleared by the Cabinet, which allows shops, malls and cinema halls, among other establishments, to run 24×7 throughout the year.
Ø ICRA downgraded the outlook on Syndicate Bank's tier II bonds from "Stable" to "Negative" on more than expected weakening of asset quality and profitability. However, affirmed the rating "AA+" for Basel -III compliant tier II bonds.
Ø Virinchi Limited expanded its footprint into healthcare sector by setting up a 600-bed super specialty hospital in up-market Banjara Hills in the city at an investment of INR 3bn.
Ø DLF promoters will infuse INR 100bn in the company through preferential allotment to reduce debt after they sell 40% in DLF Cyber City Developers (DCCDL). DLF has a net debt of INR 45bn in development business and a gross debt of INR 180bn in rental business.
Ø The initial public offering (IPO) of Quess Corp. Ltd, excluding the anchor allotment, was subscribed 41% on day one of the three-day offering. The issue closes on Friday.
Ø Suven Life Sciences received one product patent from Europe and two product patents from Eurasia for a drug used in the treatment of neuro-degenerative diseases. The patents are valid through 2029, 2030 and 2031, respectively.
Outlook
Ø Benchmark indices are likely to open on a flat to positive note on the back of positive global sentiment.
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CSEC Research
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