Fed meeting in sight but election looms for stocks
NEW YORK The Federal Reserve meets next week and the U.S. government releases an important report on jobs, but investors could be forgiven for having something else on their minds.
MUMBAI Shares of jewellery companies such as Titan Co Ltd(TITN.NS) surged on Thursday after the Reserve Bank of India (RBI) allowed banks to provide gold loans to the sector, while also expanding the number of private agencies that can import the precious metal.
The moves by the RBI, announced late on Wednesday, should increase supplies of gold and brighten the earnings outlook for jewellery makers after the government took tough measures to curb imports last year, analysts said.
Although the two steps alone are not expected to impact India's current account deficit, they could reinforce expectations that RBI and finance ministry officials will soon move towards removing some of those curbs.
Restrictions on the import of gold were widely credited for helping the current account deficit shrink to 0.9 percent of gross domestic product in the December 2013 quarter compared with a record high 6.5 percent a year earlier, sparking a recovery in the rupee from record lows hit in August.
"Possibly, there will be a $7 billion to $8 billion pickup in gold imports in a year due to this relaxation which is unlikely to put much pressure on the current account deficit and therefore the rupee," said Pradeep Khanna, head of foreign exchange trading at HSBC in India.
Titan shares closed 6.8 percent higher, while Gitanjali Gems Ltd (GTGM.NS) gained 11.9 percent. Other gainers included Tribhovandas Bhimji Zaveri Ltd (TBZL.NS) and Shree Ganesh Jewellery House (SHRG.NS).
After Wednesday's measures, more than 20 entities, including banks and agencies will be allowed to import gold. Meanwhile, the resumption of gold loans to jewellers, stopped last year, will make it easer to fund purchases.
Economists and traders now expect other restrictions on gold imports such as high import duties to be also taken off. The decision rests with the new government.
India's incoming prime minister, Narendra Modi, who led Bharatiya Janata Party to a decisive victory in a just-concluded election, has indicated his willingness to remove gold curbs.
"The current tweak in regulation possibly hints at a direction that gold related restrictions have peaked and the curbs on gold imports will be eventually be relaxed, albeit gradually," said Siddhartha Sanyal, an economist at Barclays.
(Editing by Rafael Nam and Prateek Chatterjee)
NEW YORK U.S. stocks declined in a volatile session on Friday but were able to partially recover from a sharp drop spurred by news the FBI will review more emails related to Democratic presidential candidate Hillary Clinton's private email use.
MUMBAI Tata Capital Financial Services said its loans to Siva Industries and Holdings and Siva Ventures Ltd had a high security cover, were backed by a personal guarantee from Chairman C Sivasankaran and settled over two years ago.