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Sensex, Nifty and Rupee Tumble on Account of Kashmir Developments, Global Jitters, Japan’s 10-year Bond Yield Curve Nears Inversion

Professor of Financial Economics and Part-time Value Investor, Transfin.
Aug 5, 2019 1:15 PM 4 min read

Sensex, Nifty and Rupee tumble on account of Kashmir developments, global jitters. China’s Yuan falls to lowest point since 2008 financial crisis. Japan’s 10-year bond yield curve nears inversion. After contracting in June, India’s services PMI picked up last month. Monsoon picks up, 100% normal rains predicted for next two months. 


Moving on to the top Business news of the day.




Sensex, Nifty and Rupee tumble on account of Kashmir developments, global jitters.

All Fall Down: The economy has seen better days. Today, Sensex and Nifty witnessed sharp declines. While the former dipped by 418 points, the latter ended the day at 10,863 after a 1.2% drop.

This downturn is because of recent developments in Jammu and Kashmir and troubles abroad – namely, trade tensions, the Chinese Yuan being depreciated, and Japanese bond yields going negative. 

Currency Contractions: After the Yuan tumbled beyond the critical 7-per-Dollar level for the first time since the 2008 financial crisis, the global currency market panicked. The Indian Rupee was not spared - it weakened to 70.71 against the Dollar after suffering its worst single-day fall since December 2018.




Blackstone may buy out Indiabulls' commercial properties for INR4,800cr. Former Myntra-Jabong CEO Ananth Narayanan joins Medlife. HSBC asks CEO John Flint to step down. 

The Raging Bull: In what could potentially be one of the largest real estate portfolio transactions in the country, US-based private equity giant Blackstone Group is set to acquire the remaining 50% stake in Indiabulls Real Estate’s commercial properties for c. INR4,800cr, as per an ET report.

The transaction is seen as part of the Indiabulls Group’s strategy of exiting real estate completely and focusing on financial services as it seeks to merge with Lakshmi Vilas Bank. 

New Appointments: Ananth Narayanan, former CEO of Myntra-Jabong has joined e-pharmacy platform Medlife, as the company’s co-founder and CEO. Narayanan’s entry into Medlife comes with an investment into the company of an undisclosed amount. 

The news comes at a time when the company has been in talks with multiple financial and strategic investors to raise around $150m.

An Exit: HSBC has announced the departure of its CEO John Flint merely 18 months after Flint took the helm at Europe's biggest bank. The move was taken to speed up progress on priority areas such as the turnaround of its US business, reported the bank. 

Noel Quinn, 57, the head of its Global Commercial Banking unit will hold the role of interim CEO.




After contracting in June, India’s services PMI picked up last month. Monsoon picks up, 100% normal rains predicted for next two months. 

At Your Service: India’s services activity last month expanded at its fastest pace in a year, a private survey by IHS Markit Services Purchasing Managers' Index showed. The index rose to a one-year high of 53.8 in July, as opposed to 49.6 in June, when it contracted.

This renewed vigour has been attirubted to resurgent demand, both domestic and international, in addition to renewed optimism about new business in the coming year. 

It’s Raining Rain: A lot of this renewed optimism about the economy might have to do with the subcontinent’s skies, which are overcast and filled with copious precipitation. Because after picking up in July, the monsoon, which is the Indian economy’s mainstay, is back on track

Remember two months ago when most of the country was staring at drought-like conditions and a frightening rain deficit of 33%? Farmers would rather forget and focus instead on the remaining two months of the monsoon, for which the (happy) forecast is 100% normal rains.




China’s Yuan falls to lowest point since 2008 financial crisis. Japan’s bond yield curve goes negative.

Beijing to Tokyo: Lowest value in over a decade, weakest offshore valuation since it began, and biggest one-day drop in four years. Those were the phrases used to talk about the Yuan today. The Chinese currency was weakened to below 7 Yuan per Dollar, “a psychologically important level”, as Beijing dealt with the ramifications of America’s new tariffs. Investors fled to non-export-dependent Asian economies (pushing the Japanese yen to a seven-month high).

Also in focus is Trump’s reaction to this move. The US President, who has routinely accused China of being a currency manipulator, will no doubt be peeved. He might even go so far as to weaken the US Dollar. 
Party Like It’s 1991: Across the East China Sea, Japan’s bond yield curve has inverted for the first time since 1991. The 10-year yield fell to -0.2% while the 2-year yield dropped to -0.22%. Why is this important? Yield curves going negative is considered a “fairly accurate” predictor of recession.




Why Huawei’s sales and revenue are reaching new heights despite international backlash and sanctions. Elite marathon runners are partnering with technology to push all limits. 

Huawei All The Way: It’s been accused of spying for China, has been barred from purchasing equipment from American companies, found itself barred from countries’ 5G programmes, and alleged to have helped build North Korea’s wireless infrastructure in the face of international sanctions. So one would expect Huawei to be in dire straits. 

But the Chinese tech giant made $32bn in the April-June quarter, a 23% increase over the previous quarter. Smartphone sales are up 24% YoY and local market share has consistently grown to 38% today, even as its major competitors have suffered losses.

Made in China, Buy in China: Huawei must be thanking its stars – specifically, the five golden stars on the Chinese flag. Because the company’s saving grace are Chinese consumers, who are engaged in a patriotic buying spree as Huawei’s troubles abroad bolsters its popularity back home.

Extra: If you’re an elite marathon runner, how do you keep pushing the limits? With spaceship-like pods, compression boots and waterbottles synced to your smartphone, of course.


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