INR opens weaker at 71.84 as against yesterday close at 71.71 and may trade in a range of 71.60 to 71.90. As of now the good news is that yields on Govt bonds is in control (10 years at 6.48%) and the fear of fiscal concerns seems to be not reflected in yields. The low yield could be because of surplus liquidity in global markets on back of near negative interest rates in most economies or market having strong hopes of major disinvestment related inflows. Until yields spike up, INR may not weaken in a hurry.
In a major relief to financial sector and employment in general, all the three major telecom companies have decided to raise the tariffs. According to this is a very significant move as it pauses further deterioration in the sector and hopefully will lead to its revival. According to us, Government’s initiative of start up India and Digitisation would need 2 to 3 telecom players or else dependence on one player could be very very detrimental. Therefore we expect Government to also support the industry and not let it be, monopoly or a duopoly.
Overnight US crude inventory reported a big spike and that lead to fall in crude prices. Brent fell from $62.5 to $60. Today most Asian equities are trading with weakness and CNY is well above 7…at 7.03.