Indian stocks markets are likely to be steady on Wednesday in the truncated week. Asian equities held firm and bond yields rose on Wednesday as hopes of diminishing US-China tensions and reduced risk of no-deal Brexit prompted investors to take profit in risk-off trade ahead of key central bank policy meetings.
In early trade, MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.10% while Japan’s Nikkei rose 0.32%. On Wall Street, the S&P 500 ended little changed as a rally in energy and industrial shares countered a drop in technology and real-estate sectors with investors favouring value over growth.
Shares of Yes Bank are likely to be in focus as the bank’s shareholding structure may witness a major churn by the year-end as founder Rana Kapoor has initiated talks to sell a part of his holding to One97 Communications Ltd, the parent of Paytm and Paytm Payments Bank. according to a Mint report. Independently, a Reuters story on Tuesday cited Yes Bank CEO Ravneet Gill as saying that the bank is close to selling a minority stake to a global tech company as part of its capital-raising exercise.
Shares of Essel group companies also will be in focus in today’s trade. Subhash Chandra-led Essel group has received the first instalment of money from its stake sale in flagship firm Zee Entertainment Enterprises Ltd (ZEEL), as it races to meet a month-end payment deadline. In July, Essel group announced the sale of 11% stake in ZEEL to Invesco Oppenheimer Developing Markets Fund for ₹4,224 crore. Of this, the sale of 8.7% stake has now been successfully concluded, the group said in a statement.
Finance minister Nirmala Sitharaman on Tuesday said the government will soon respond to the demands of the automobile sector, which is facing the worst slump in more than two decades.
Meanwhile, position unwinding was apparent in bond markets ahead of key central bank policy announcements, including that of the European Central Bank on Thursday and the US Federal Reserve next week.
US bond yields jumped with the 10-year Treasuries yield rising more than 10 basis points to a one-month high of 1.745%.
It last stood at 1.726% in Asia. Japanese 10-year JGB yield rose 1.5 basis point to minus 0.215% while the Australian 10-year yield rose more than 5 basis points to six-week high of 1.142%. In Europe, Germany’s 30-year benchmark bond yield briefly broke into positive territory for the first time since 5 August.
Investors had bought bonds for many weeks on expectations that the ECB will dole out stimulus, with a cut in interest rates of at least 10 basis points fully priced in. Some traders also expect more measures including a deeper interest rate cut and a restart of its asset purchase programme.
The US Federal Reserve is also widely expected deliver an interest rate cut next week.
Germany also signalled its readiness for relaxing its staunch opposition to deficit spending to support the economy, leading to speculation Berlin could issue more debt and curbing appetite for German bonds.
In the currency market, the dollar traded at 107.58 yen, having hit a six-week high of 107.63 earlier on Wednesday. The euro stood little changed at $1.10485 while the British pound stood at $1.2358, near its six-week high of $1.2385 hit earlier in the week.
Oil prices held firm near their highest levels in six weeks despite small losses on Tuesday after US President Donald Trump fired national security adviser John Bolton. Geopolitical tensions in the Middle East are nowhere near subsiding after Israeli Prime Minister Benjamin Netanyahu announced his intention to annex a large swathe of the occupied West Bank, a move condemned by Arab League foreign ministers.
Brent crude LCOc1 futures rose 0.82% to $62.89 a barrel while U.S. West Texas Intermediate (WTI) crude CLc1 gained 0.96% to $57.95 per barrel.