Finance - Stock Market Forecast

Index Trend & Conditions | 08:40 I.S.T.

• Major Resistance seen at 12,820 — 12,900 area for Nifty50

• For Tuesday, Nov 17, Support at 12,470 and 12,660 with Resistance at 12,820 — 12,900 area for Nifty50

• Trends on SGX Nifty indicate a positive outlook for Nifty50 in India with a 45 points gain. The Nifty futures were trading at 12,879 on the Singaporean Exchange at 08:40 I.S.T.

• Contracts tied to S&P500, Dow Jones Industrial Average and Nasdaq futures trading in red in early Tuesday morning, a strong positive outlook of Asia-Pacific early morning trade, MSCI APAC ex-Japan up 1.43% on the day and a weakening US dollar with surging 10-Year Treasuries indicate a positive outlook for Nifty50 India

• The current mood in the market is bracing and non-committal

India Markets

NIFTY 50	OPEN	HIGH	LOW	CLOSE
Saturday	12,823	12,828	12,749	12,780

Benchmark indices recorded fresh highs during the once-a-year Muhurat Trading session on Saturday. An overnight rally in the US markets is seen to support the morale

Nifty had previously opened with a gap-down on Friday and was seen consolidating above 12,700 on the day

Nifty50 added 60 points or 0.47% on Saturday to close at 12,780 due to improving business sentiments and a festive spirit

Pharma and FMCG stocks were the weak performers in Saturay’s session, while Telecom and Energy stocks were at the vanguard of the rally

Nifty P/E for Nov 14, 2020 is at 34.73 as recorded by NSE India

On the up side, crucial level or resistance is seen at 12,820 — 12,900 area for Tuesday

While, on the downside, support is seen at 12,470 and 12,660 for Tuesday

The BSE Sensex index added 195 points or 0.45% to 43,637 on Saturday

Bank Nifty opened with a gap-up on Saturday, adding 128 points or 0.45% to close at 28.594. Failing to settle above levels of 28,500 could attract under-performance from a near-term perspective

India VIX dropped -2.91% from 19.70 to 19.13 level

Broader market indices outperformed their headline peers. Midcap index added 0.51% while Smallcap index advanced 0.92%. Nifty500, the broadest index on NSE, advanced 0.51%

The overnight call money rate weighted average stood at 3.18% according to RBI data. It moved in a range of 1.80 — 3.45% as on Nov 12

On the economic front, the food price inflation rate saw a double-digit growth of 11%, mainly due to rising vegetable prices at 23% — supply side issues are bringing pressure on food prices. Inflation may have an impact on the trajectory of interest rates, and RBI may have to continue to focus on liquidity provision rather than rate action.

Meanwhile, the industrial production in India improved further in October, indicating a gradual recovery. High growth, together with higher inflation makes it difficult for policy makers to ease policies further — RBI might not go for a rate cut in December, and wait till the inflation rate drops back to the comfortable level

On the coronavirus front, Serum Institute of India Ltd. is ramping up production of AstraZeneca’s shot awaiting U.K.’s own emergency license. SII has so far made 40 million doses of AstraZeneca’s vaccine in the past 2-months and aims to start manufacturing Novavax Inc.’s contender soon

“If final-stage trial data show AstraZeneca’s candidate gives effective protection from the virus, the Serum Institute of India Ltd. — which is partnered to produce at least one billion doses — may get emergency authorization from New Delhi by December, said Adar Poonawalla, chief executive officer of the family-owned firm based in the western city of Pune.
Poonawalla reiterated that it will take until 2024 to vaccinate the entire world and two years to see a real reduction in infections, due to affordability and manufacturing hurdles.”

“India recorded a trade deficit of -$8.78 billion in October 2020, below -$11.76 billion a year earlier. Exports fell -5.4% to $24.82 billion, following a 6% jump in September while imports dropped -11.56% to $33.6 billion, after a -19.6% plunge in September.”

“A rejig of the MSCI Emerging Markets Index made FPIs buy heavily into Indian equities, which further lifted the mood. A likely increase in India’s weightage in the emerging market index from December could be the driving factor of the sudden burst in fresh investment in private sector banks, which have otherwise been laggards in this entire rally from the March lows.”

“India’s fiscal deficit widened to INR 9.139 trillion in April-September 2020-21 from INR 6.515 trillion in the corresponding period of the previous fiscal year. That was equivalent to 114.8% of the government’s budget estimate for this financial year, much higher than 92.6%, a year earlier. Receipts plunged 32.5% to INR 5.65 trillion amid the crisis, while total expenditure edged down 0.6% to INR 14.79 trillion. Total receipts and total expenditure were 25.2% and 48.6%, respectively of FY21 estimates. Many economists see the deficit to cross 7.5% of GDP in the 2020/21 fiscal year, well above initial government estimates of 3.5% as the country battles a coronavirus economic contraction.”

“Annual consumer price inflation in India increased to 7.61% in October of 2020 from a downwardly revised 7.27% in September, above market expectations of 7.3%. It is the highest rate since May 2014, remaining above the central bank 2 percent-6 percent target range for the 7th straight month.”

“The Indian rupee touched 74.7 against the US dollar, before cutting some of the losses to trade around 74.6, after retail price data showed the country’s inflation rate rose in October to the highest level since May 2014. The currency was already under pressure, weighed down by dollar purchases by large state-run banks, likely on behalf of the RBI to prevent a sharp appreciation in the local currency.”

America Markets

Wall Street closed deeply in the green with the Dow Jones hitting a fresh high

US stock futures rose on Monday on positive study results from another potential Covid-19 vaccine from Moderna, suggesting 94.5% efficacy

The Dow Jones jumped 472 points or 1.6% to 29,951

The S&P 500 gained 42 points or 1.2% to 3,627

The Nadsaq added 95 points or 0.8% to 11,924

Today in the derivatives market, contracts tied to the Dow Jones Industrial Average is down -0.27%, S&P 500 is down -0.37% while Nasdaq 100 futures dropped -0.01%

On the stocks front, shares of Disney and Cisco rose after both companies booked quarterly results that beat consensus

New Mexico’s governor is ordering the shutdown of non-essential businesses, as there is dramatic escalating strain on hospitals and health care providers across the state

US posted a budget deficit of USD 284 billion in October 2020

Futures prices for soybeans, corn and hard red winter wheat — the kind used for baking bread — have risen by about a third since a rally began August 10. Soft red winter wheat, found in animal feed and processed foods, is up about 20%. Dry weather, China’s push to fatten its pigs and the lockdown—induced baking bonanza are lifting prices for US row crops amid doubt on demand

“Ray Dalio is betting on Chinese assets saying Bridgewater’s portfolio needs to have a significant portion of that. He said that the rapid development of the Chinese capital markets, the opening up of the markets to foreign investors, the relative attractiveness of them, and the underweightedness of global investors in them, makes it a relatively competitive place to move one’s capital especially when the U.S. dollar as a reserve currency is becoming more challenging.”

“Health experts say having a vaccine is just one front in a two-front battle against Covid-19. The other is effective treatments for those who are already sick with the disease.”

“Moderna said its experimental coronavirus vaccine was 94.5% effective at protecting people from Covid-19 in an early look at pivotal study results, the second vaccine to hit a key milestone.”

Asia-Pacific Markets

Asian stock markets were mostly higher on Tuesday following the record gains overnight on Wall Street

Sentiments are high due to — (a) promising developments toward a coronavirus vaccine raising hopes of a faster-than-expected economic recovery (b) signing of a major trade deal that includes China, Japan, South Korea and 12 other countries

Japan’s Nikkei 225 rose 0.03% to log a fresh 29-year high of 25,913 in early Tuesday trade

Topix 500 dropped -0.17% to 1,340 in early Tuesday trade

South Korea’s Kospi dropped -0.06% to 2,541 in early Tuesday trade

In Hong Kong, the Hang Seng Index added 0.17% to 26,426 in early Tuesday trade

China’s CSI 300 Index dropped -0.43% at 4,882 in early Tuesday trade

Hang Seng China Enterprises Index dropped -0.04% to 10,574 in early Tuesday trade

Shanghai Composite Index dropped -0.40% at 3,333 in early Tuesday trade

Australia’s S&P/ASX 200 added 0.27% to 6,501 in early Tuesday trade

Singapore’s Straits Times Index added 0.86% to 2,771 in early Tuesday trade

Overall, MSCI’s broadest index of Asia-Pacific shares outside Japan, is up 1.43%

Hong Kong is considering tighter social distancing restrictions at restaurants and bars by lowering the number of patrons per table amid rising Covid-19 cases in the past week, according to HK01

HSBC is starting a new digital wealth planning and insurance unit in China called Pinnacle, which will hire between 2,000 and 3,000 employees in the next four years. Pinnacle has obtained a fintech license in China, a first for a foreign financial institution in the country

The Japanese economy advanced 5% on September-ended quarter of 2020, partially recovering from a record slump of -8.2% in the previous period and beating market consensus of 4.4%. On an annualized basis, the economy grew at a record 21.4% in Q3, after a record plunge of -28.8% in Q2

The recent default cases in China’s huge corporate-bond market has rattled Chinese credit market and investors’ confidence in state-owned enterprises. Huachen Automotive Group Holdings Co. failed to repay a 1-billion-yuan bond. Yongcheng Coal & Electricity Holding Group failed to repay a maturing short-term bond worth 1-billion-yuan, or $151 million.

“Fifteen Asia-Pacific nations including China, Japan, South Korea, Australia, Singapore, Indonesia and New Zealand on Sunday signed the world’s largest regional free-trade agreement — RCEP, encompassing nearly a third of the world’s population of 2.2 billion and a combined GDP of $26.2 trillion.”

“China’s Industrial output, which has led the nation’s economic recovery in recent months, rose 6.9% in October from a year earlier, on par with September’s pace and higher than market expectations for a 6.5% increase, according to data released Monday by the National Bureau of Statistics.
Morgan Stanley economists expect private consumption in China to emerge as a key growth driver next year, as the job-market recovery continues and as Chinese households release more of their savings.”

EU Markets

European stocks extended early gains on vaccine news on Monday

The pan-European Stoxx Europe 600 rose 1.4% on Monday, led by shares in banks and other sectors hard hit by the pandemic, such as oil and travel

Stoxx 50 added 1.21% to close at 3,474 on Monday

Germany’s DAX30 added 0.98% to 13,202 on Monday

London’s FTSE 100 added 1.69% to close to 6,423 on Monday

France’s CAC40 added 1.75% to 5,475 on Monday

Denmark’s OMX Copenhagen 20 Index dropped -0.59% to 1,391 on Monday

Luxembourg’s LuxX Index added 4.11% at 1,258 on Monday

Sweden’s OMX Stockholm 30 Index added 1.07% at 1,917 on Monday

Italy’s FTSE MIB Index added 2.02% at 21,325 on Monday

U.K. bakery chain Greggs to cut more than 800 jobs amid virus lockdown

“Germany’s government will likely take on less additional debt this year than was last budgeted despite increased spending to support the economy during the pandemic.”
“We will probably not exhaust the planned new debt of 217 billion euros ($257 billion) for 2020,” Finance Ministry official Werner Gatzer said

“On the economic data front, a secondary estimate showed the Eurozone economy grew by 12.6% in the three months to September.”

Oil & Natural Gas Markets

WTI crude futures extended early gains rising more than 4% to trade around $41.8 a barrel on Monday

Brent crude futures extended early gains rising nearly 4% to trade around $44.5 a barrel on Monday

Natural gas futures fell -8.67% to $2.761/MMBtu on Monday

WTI Crude is trading higher at $41.60 per barrel in early Tuesday trade

Brent Crude is trading higher at $44.15 per barrel in early Tuesday trade

Natural Gas futures is trading lower at $2.684 per mmbtu in early Tuesday trade

On MCX-India, Crude oil futures added 3.36% to 3,105 on Monday’s session

On MCX-India, Natural gas futures dropped -9.50% to 205 on Monday’s session

Gold & Silver Markets (+ copper futures)

Spot gold fell more than -0.5% to $1,876 an ounce on Monday

Outlook for 2021 and beyond remains bullish for the gold market, as it will take some time for a vaccine to be deployed and for the economy to recover

Silver reversed trend and fell near 1% to $24.4 an ounce on Monday

Copper futures strengthened to $3.2270 per pound on Monday

US Gold futures (Comex) strengthened to $1,889.60 an ounce in early Tuesday trade

US Spot Gold strengthened to $1,891.35 an ounce in early Tuesday trade

Silver futures (Comex) strengthened to $24.88 an ounce in early Tuesday trade

Copper futures (Comex) strengthened to $323.90 per pound in early Tuesday trade

In India, Spot Gold strengthened to INR 50,228 per 10 grams in early Tuesday trade

India – NCDEX Agridex

Agricultural futures index tracking the performance of the 10 liquid commodities, was up 0.31% trading at 1,225.80 ; with major demand seen in Ref Soy Oil and Soy Bean futures on Friday

Currency Markets

The dollar index, DXY, depreciated for a third day to 92.6 on Monday

INR strengthened 0.06% with USD — INR at 74.6025

“The Indian rupee extended losses to touch 74.7 against the US dollar, after retail price data showed the country’s inflation rate rose in October to the highest level since May 2014 and remained well above the central bank 2% — 6% target range for a 7th straight month, lowering the chances of further interest rate cuts by the central bank.
Earlier in the session, the currency was already falling, weighed down by dollar purchases by large state-run banks, likely on behalf of the RBI to prevent a sharp appreciation in the local currency.”

JPY strengthened 0.07% with USD — JPY at 104.5600

CNY strengthened 0.33% with USD — CNY at 6.5848

EUR strengthened 0.08% with EUR — USD at 1.1844

GBP strengthened 0.07% with GBP — USD at 1.3198

SEK strengthened 0.72% with USD—SEK at 8.6291

*3-Month LIBOR Rate*	*As on 13 Nov 2020*
US DOLLAR	0.22 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

Americas : 10-Year Govt Bond Yields

United States : Up 1 basis point at 0.90%
Canada : Up 1 basis points at 0.73%

Europe, Middle East & Africa : 10-Year Govt Bond Yields

Germany : Down 1 basis point at -0.55%
United Kingdom : Up 1 basis point at 0.35%
France : Down 2 basis points at -0.31%
Italy : Down 1 basis point at 0.65%
Spain : Down 1 basis point at 0.10%
Netherlands : Unchanged at -0.46%

Asia Pacific : 10-Year Govt Bond Yields

India : Unchanged at 5.88%
Japan : Unchanged at 0.01%
Australia : Up 1 basis point at 0.89%
Hong Kong : Down 9 basis points at 0.47%
Singapore : Up 1 basis point at 0.93%
South Korea : Unchanged at 1.64%

Fund Flows on NSE, BSE and MSEI — Nov 14 2020 (source NSE)

FII Net Sell Rs (78.53) Crore in Cash Market
DII Net Sell Rs (20.27) Crore in Cash Market

Where We’ve Been Reading —