India Markets
Domestic equity markets opened positive, but edged lower on Friday trade
Nifty 50 dropped 20 points or -0.14% to 12,968 and the BSE Sensex dropped 110 points or -0.25% to 44,149
The index formed a small bearish candle on the daily chart and a Doji on the weekly chart, which indicated a consolidative move with the emergence of buying interest on every decline
As long as Nifty stays below 13,000 level, all up moves, if there are any, will stay vulnerable to sharp profit taking bouts
Broader markets outperformed their headline peers — Midcap 100 index added 2.70% ; Smallcap 250 index added 2.53% ; Nifty 500 added 0.42% ; Nifty Alpha 50 added 2.23% and Nifty Alpha Low Volatility 30 added 0.76%
Nifty P/E for Nov 27, 2020 steady at 35.66, as recorded by NSE India
Bank Nifty opened positive but moved lower towards the immediate support level of 29,400. On the day, the index gained 59 points or 0.20% to close at 29,609. Levels of 28,900 and 28,270 to act as good support levels. Resistance area is at 29,750 — 30,000
India VIX slipped -1.02% from 20.22 to 19.81 levels
Overnight call money rate weighted average stood at 3.13% as per RBI data. It moved in a range of 1.90 — 3.40% for Nov 26
The yield on the benchmark 10-year government bond fell two basis points to 5.87%, while the rupee was little changed at 73.8900 against the U.S. dollar
Foreign Exchange Reserves in India increased to a record high of 575,290 USD Million on the week ended November 20th from 572,771 USD Million in the previous week
The Indian economy shrank -7.5% (Real GDP) in the July-September period, less than expectations of an -8.8% drop, as the economy rebounded from a record slump of -23.9% in the previous quarter, amid easing of lockdown restrictions from June, higher demand during festival season and a rebound in manufacturing and utilities. Q2 GDP of 2020-21 is estimated at ₹ 33.14 lakh crore, as against ₹ 35.84 lakh crore in Q2 of 2019-20, showing a contraction -7.5% as compared to 4.4% growth in Q2 2019-20.
India’s Real Gross Value Added stood at -7% YoY for September Q2 of 2020-21, estimated at ₹ 30.49 lakh crore, as against ₹ 32.78 lakh crore in Q2 of 2019-20, showing a contraction -7%, wherein industrial sector posted a strong recovery (down -2% YoY) but services continued to contract in double-digit.
Annual growth of 3.4% in the farm sector and 0.6% in manufacturing raised hopes of an early recovery. Manufacturing clocked a surprise after it had shrunk by a massive 39% in the preceding quarter, while the trade and services sector showed lower-than-expected contraction -15.6%. Consumption, the major component of GDP contracted -11.32% in Q2 FY21 compared to -27% in Q1 FY21. Investment demand as measured by Gross Fixed Capital Formation (GFCF) registered significant improvement in Q2 FY21 at -7.4% compared to -47% in Q1 FY21.
The GDP is still seen contracting in Q3 as the pandemic is far from controlled and the government announced a ₹ 2.65 lakh crore stimulus package, taking to total to ₹ 29.88 lakh crore or 15% of its GDP, in mid-October with a focus on job creation and sectors such as real estate.
The two successive quarters of contraction mean that the country has now entered a “technical recession” for the first time since independence in 1947.
Financial and real estate services — among the biggest component of India’s dominant services sector — shrank -8.1% last quarter from a year ago, while trade, hotels, transport and communication declined -15.6%. Manufacturing gained 0.6%, electricity and gas expanded 4.4% and agriculture grew 3.4%.
Many economists expect the economy to return to expansion mode as early as in the December quarter, as the pickup sustains. They predict a contraction -3% in the December quarter, followed by an expansion of 0.5% in the final January-March period of financial year 2020-21 on hopes of better consumer demand fuelled by progress on coronavirus vaccines.
“India’s real GDP declined 7.5% YoY in Q2 FY21, better than the consensus but worse than our forecast. While the decline in personal consumption expenditure was in line with our forecast, investments recovered strongly but fiscal spending was extremely weak. Further, our calculations suggest first sharp contraction in government spending (consumption + investments) since FY15 and the worst on new series, while the fall in private spending eased from -35% to -9% YoY in Q2 FY21. Of course, these two are highly linked with each other. Net exports continued to add to GDP growth,” said Nikhil Gupta, Economist – Institutional Equities, Motilal Oswal
“Till the pandemic does not go away, some of the sectors that are affected by social distancing will continue to experience demand slump,” said Chief Economic Advisor Krishnamurthy Subramanian. “We should be cautiously optimistic. Food inflation expected to soften in third quarter; it is something which has to be tracked closely,” he added.
America Markets
U.S. stocks rose in to a record in thin post-holiday volume on Friday trade as investors assessed valuations with pandemic still raging in parts of Europe and the U.S.
Trading volume was only 60% of the average over the past year
The Dow Jones gained 38 points or 0.13% to 29,910 and the S&P 500 added 9 points or 0.24% to a record 3,638 ; while the Nasdaq gained 111 points or 0.92% to a record high of 12,206
All eyes turn to U.S. Fed Chair Powell’s testimony before Congress next week, as well as the US jobs report due Friday, which will probably point to a further slowdown in the labor market recovery
The U.S. reported more than 200,000 new coronavirus infections for the first time following the Thanksgiving break
Goldman Sachs Group Inc. predicts that half the U.K. public will be vaccinated in March, with the U.S. and Canada reaching that threshold a month later, driving a “sharp pickup” in global growth. The European Union, Japan and Australia are due to follow in May
“If you start looking out over the horizon, there are a lot of things that have lined up incredibly well,” said Mark Stoeckle, a Boston-based fund manager at Adams Funds with $2.5 billion of assets. “You have the vaccines, you have a plan to get them out, you’ve got incredibly low interest rates for likely a very long time.”
Asia-Pacific Markets
Asian equities ended the week on a positive note on Friday trade, with shares underperforming in Australia and Hong Kong
Japan’s Nikkei 225 added 0.40% to 26,644, while Topix 500 added 0.42% to 1,387
South Korea’s Kospi added 0.29% at 2,633
In Hong Kong, Hang Seng added 0.28% to 26,894 while Hang Seng China Enterprises added 0.83% to 10,790
In China, CSI 300 added 1.24% to 4,980 and Shanghai Composite added 1.14% to 3,408
Australia’s S&P/ASX 200 dropped -0.53% to 6,601
Singapore’s Straits Times Index dropped -0.06% to 2,855
Overall, MSCI Asia-Pacific is up 0.33% while MSCI Asia-Pacific ex-Japan is up 0.15%
Hong Kong battles a fourth wave of coronavirus infections with yet another round of social restrictions. A lack of clear public roadmap as to how and when restrictions will be implemented and when the rules will be relaxed is spreading frustration
Tokyo found more than 500 new infections for a second straight day, while South Korea posted more than 500 cases for a third day
China’s rapid economic rebound has driven its imports to record levels this year, helping to offset lower demand in the rest of the world. The country’s latest factory gauge, due Monday, is expected to show activity in the top copper consumer continuing a steady expansion.
President Xi Jinping said in recent weeks that it is “completely possible” for China’s economy to be twice the size by 2035 by growing at an average annual rate of 4.73%
EU Markets
European stock markets closed slightly higher in muted trading on Friday trade, while dominating world’s index chart in November
The pan-European Stoxx Europe 600 added 0.33% to 393, surging 15% in November and set to overtake the previous record set in April 2009 in the aftermath of the global financial crisis
Value and cyclical sectors such as banks, insurance and autos shares are driving the rally with oil stocks
Stoxx 600’s November rally has added $1.7 trillion to the market value of its members
Stoxx 50 added 0.48% to close at 3,527
Germany’s DAX30 added 0.37% to 13,335
London’s FTSE 100 added 0.07% to close to 6,367
France’s CAC40 added 0.56% to 5,598
Denmark’s OMX Copenhagen 20 added 1.31% to 1,401
Luxembourg’s LuxX Index dropped -0.81% at 1,255
Sweden’s OMX Stockholm 30 added 0.26% at 1,937
Italy’s FTSE MIB added 0.68% at 22,352
European nations are attempting to make early contact with President-elect Joe Biden’s team in an effort to accelerate talks to normalize trade relations between the U.S. and European Union
Germany’s federal government will raise new borrowing to just under 180 billion euros ($215 billion) next year to help fund virus aid. The finance plan for 2021 agreed Friday by lawmakers from Chancellor Angela Merkel’s CDU/CSU bloc and their SPD coalition partners also includes total spending of 498.6 billion euros and investments of 61.9 billion euros
JPMorgan strategists anticipate a $300 billion rebalancing flow from equities by year-end
“Longer term, it’s crucial that expectations are met about the effectiveness of the Covid-19 vaccine and its rapid distribution, along with broad coverage by the end of the third quarter of 2021,” according to DWS Group GmbH Chief Investment Officer Stefan Kreuzkamp. “Markets have this optimistic scenario already priced in and there is no big room for any margin of error,” he added.
“I understand that these huge sums provoke mixed feelings,” Finance Minister Olaf Scholz said at a news conference, comparing the virus to a natural disaster like an earthquake or volcanic eruption. “But if we hesitate now, then we’ll feel the effects even more later on, and it’s important to realize that caution would have a much greater cost.”
“The combination of sharp economic growth improvement and the extended valuation differential between growth and value should support a rotation into value,” said Goldman Sachs strategist Sharon Bell, who has an overweight stance on sectors including energy, banks, autos, basic resources and construction.
Oil & Natural Gas Markets
Oil rose for a fourth straight week, buoyed by optimism over Covid-19 vaccine progress ahead of an OPEC+ ministerial gathering next week
WTI Crude traded higher at $45.54 per barrel on Friday
Brent Crude is trading lower at $48.24 per barrel on Friday
Natural Gas futures traded lower at $2.850/MMBtu on Friday
On MCX-India, Crude oil futures added 1.20% to 3,364 on Friday trade
On MCX-India, Natural gas futures fell -2.68% to 211/MMBtu on Friday trade
Gold & Silver Markets (+ Copper Futures)
Gold plunged further on Friday trade with increasing optimism that a vaccine will spur a global economic recovery from the pandemic
Meanwhile, Copper surged to a seven-year high in London
Gold’s decline quickened pace as investors continued to swap into riskier assets looking to profit from an eventual recovery from the pandemic
U.S. Gold futures (Comex) weakened to $1,788.10 an ounce
U.S. Spot Gold weakened to $1,787.79 an ounce
Silver futures (Comex) weakened to $22.64 an ounce
Copper futures (Comex) strengthened to $3.4175 per pound — highest since 2014
Copper is seen as a Bellweather for the global economy & an important part of the transition to low-carbon energy resources. On Friday, data from the Shanghai Futures Exchange showed copper stockpiles in its warehouses falling to the lowest since late 2014
In India, Spot Gold weakened to INR 47,207 per 10 grams
India — NCDEX Agridex
Agricultural futures index tracking the performance of the 10 liquid commodities, was up 1.21% trading at 1,192.90 ; with major demand in Ref Soya Oil, Coriander and Cotton Seed Oilcake futures on Friday trade
Currency Markets
The U.S. dollar index, DXY has broken its main support level at 92 to trade at 91.790 on Friday trade, leaving the door open for deeper retracements as a vulnerable job market raised speculation over further monetary easing or additional government stimulus
INR weakened -0.22% with USD — INR at 74.0475
JPY strengthened 0.16% with USD — JPY at 104.0900
CNY weakened -0.04% with USD — CNY at 6.5781
EUR strengthened 0.42% with EUR — USD at 1.1963
GBP weakened -0.35% with GBP — USD at 1.3311
SEK strengthened 0.30% with USD — SEK at 8.4992
3-Month LIBOR Rate | As on 27 Nov 2020 |
US DOLLAR | 0.23 per cent |
Euro | – 0.54 per cent |
British Pound | 0.04 per cent |
Swiss Franc | – 0.78 per cent |
Japanese Yen | – 0.10 per cent |
Bond Markets — 27 Nov 2020
Americas : 10-Year Govt Bond Yields
United States : 0.84%
Canada : 0.68%
Europe, Middle East & Africa : 10-Year Govt Bond Yields
Germany : -0.59%
United Kingdom : 0.28%
France : -0.35%
Italy : 0.59%
Spain : 0.05%
Netherlands : -0.51%
Asia Pacific : 10-Year Govt Bond Yields
India : 5.91%
Japan : 0.02%
Australia : 0.90%
Hong Kong : 0.53%
Singapore : 0.88%
South Korea : 1.67%
Fund Flows on NSE, BSE and MSEI — 27 Nov 2020
FII Net Buy Rs 7,712.98 Crore in Capital Market
DII Net Sell Rs (4,968.90) Crore in Capital Market
Where We’ve Been Reading —
- Bloomberg
- Trading Economics
- NSE Indices India
- NCDEX (National Commodity & Derivatives Exchange Ltd.)
- Morningstar India
- The Wall Street Journal
- The Washington Post
- Harvard Business Review
- Financial Times
- Business Standard
- The Economic Times
- Yahoo Finance
- FTSE Russell
- MSCI
- Statista