need2know: Five market-moving macro triggers to watch today

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RBI has announced the much awaited big bang reforms in India’s corporate bond market, giving direct access to foreign investors in the debt-trading platform.

Also, Mauritius is likely to maintain its edge over Cyprus as preferred source of FDI for India as inflows from the Indian Ocean island nation will get concessional tax treatment till March 2019. While the Cabinet on Wednesday has approved the signing of revised pact with Cyprus, the tax treaty with Mauritius has already been revised.

Here’s a look at five macro-economic triggers that may impact the market today

RBI boost for corporate bonds : The much expected big-ticket regulatory push was announced by the Reserve Bank of India days before Rajan retires as the RBI Governor. These measures are aimed at widening and deepening India’s corporate bond market in order to raise it to global standards and eliminate the risk of banks’ large non-tradable exposures to a particular group. These include the staggered reduction of banks’ loan exposure, increased participation by overseas investors in corporate bonds and making top-rated bonds eligible for borrowing from Reserve Bank for liquidity needs. RBI has also thrown open the avenue of overseas rupee-denominated long-term masala bonds to banks as a means of shoring up their dipping capital and financing infrastructure and affordable housing. Brokers have been allowed to participate in the corporate bond repo market to act as market makers.

Contingency Plan being worked out to bail out NPA-laden PSBs : The government is drawing up a contingency plan to support state-run banks should they collapse under the burden of bad loans. Under this worst-case scenario—in which stressed assets in the entire banking sector are seen rising to Rs 12 lakh crore–the government is prepared to pump in an amount equivalent to 3 per cent of GDP, far exceeding the capital that it’s currently pledged to infuse in banks. Total stressed assets in the banking system stand at about Rs 10 lakh crore.

Small Factories Bill revived: The labour ministry has revived the Small Factories Bill two years after the first draft was unveiled, as the government enters into a mission mode to improve the ease of doing business in the country. The Bill, which benefits companies with less than 40 employees, is likely to get the Cabinet’s approval shortly, a senior labour ministry official told ET. The ministry has “tried enough to take all stakeholders on board”, the official added.

Govt to transfer PMAY funds directly to beneficiaries: The government will transfer about Rs 1.30 lakh crore directly into the accounts of beneficiaries under PMAY over a period of three years for construction of one crore houses, a top official today said. Under the Pradhan Mantri Awas Yojana (PMAY), 60 per cent houses will be constructed for the homeless and those living in kachcha houses belonging to SC and ST communities, Rural Development Secretary Amarjeet Sinha told PTI.

SC verdict on arbitration: The Supreme Court has upheld a Madhya Pradesh High Court decision holding that two Indian firms, Sasan Power Ltd and North American Coal Corporation India Pvt Ltd, may conduct arbitration outside India and under a foreign law if there was an agreement to that effect. The plea of Reliance Power-owned Sasan Power Ltd which operates Ultra Mega Power Project (UMPP) at Singrauli district in Madhya Pradesh was dismissed by the apex court.

…and in financial markets yesterday

Rupee up: Rupee regained its strength after a brief dip and ended higher by 6 paise at 67.05 against the greenback on bouts of dollar selling by banks and exporters.

Bonds down: India Government Bond 10Y decreased 0.012 percent or 0.17% to 7.12 on Thursday August 25 from 7.14 in the previous trading session.