Finance - Stock Market Forecast

Index Trends & Week Ahead

• The MSCI Asia Pacific Index rose 0.54% on Friday

• The MSCI Emerging Market Index advanced 0.73% on Friday

• Busy week for U.S. Economy – as the U.S. is releasing the second estimate of Q3 GDP, alongside personal income and outlays, and PCE price index. Other reports include initial jobless claims, the goods trade balance, durable goods orders, new home sales and the final University of Michigan consumer sentiment index for November. Also, the minutes from the last FOMC meeting are due Wednesday, with investors hoping they might provide some clarity on policymakers’ next move

• Key indicators of European economic activity on Monday will provide an early sign of how businesses and consumers are weathering a second round of restrictions. Economists expect the services sector to take the biggest hit. Also, final estimates of third-quarter GDP for some European countries will be released, including updated data for Germany and France

• In the U.K., flash Markit PMI numbers are expected to show the manufacturing sector stabilized in November following five consecutive months of expansion while the service sector fell back into contraction. Investors will also keep an eye on CBI distributive trades, Nationwide housing prices and car production

• Early November export data from South Korea due Monday will offer a gauge of whether the pickup in global trade is continuing despite the resurgence of the virus. Bank of Korea will be holding its monetary policy meeting on Thursday, but no changes are expected

• China to publish industrial profits

• Tokyo inflation figures for November are expected to show a further deepening of price falls in Japan’s capital when that data is released on Friday

• India to release its Q3 GDP report

• Other key data for the Asia-Pacific region include: Singapore Q3 final GDP, inflation and manufacturing production; Taiwan final Q3 GDP figures, unemployment and industrial output; Malaysia consumer prices; Thailand foreign trade and industrial production

India Markets

NIFTY 50	OPEN	HIGH	LOW	CLOSE
Friday	12,859	12,892	12,730	12,859

Nifty opened gap-up and closed in the green on Friday

Nifty added 87 points or 0.68% on Friday to close at 12,859; forming a small-bodied bullish candle on the daily scale and a spinning top on the weekly chart — suggesting a possible pause in the uptrend

Pharma and Energy stocks were the laggards on the day, while Telecom and Financial Services stocks were at the vanguard on the day’s rally

Nifty P/E for Nov 20, 2020 is standing at 35.36 as recorded by NSE India

On the upside, critical resistance is seen around 12,936; while on the downside, support is seen at 12,688 and 12,746 for Monday

The S&P BSE Sensex added 282 points or 0.65% to 43,882 on Friday

Bank Nifty added 332 points or 1.15% on Friday to close at 29,236. Level of 28,500 is acting as a good support level now, below which the next support is at 27,388

India VIX moved up 0.24% from 19.57 to 19.61 levels

Broader market indices outperformed their headline peers. Midcap index added 0.85% while Smallcap index advanced 1.07%. Nifty 500, the broadest index on NSE, added 0.79%

On the stocks front, shares of Apollo Hospitals climbed over 2% after the company announced a collaboration with Tata Medical and Diagnostics (TataMD) to introduce TataMD CHECK diagnostic test for Covid-19 in the country, which will provide faster results. Vodafone Idea shares climbed over 8% after the company received Rs 3,760 crore cash on completion of the Bharti Infratel and Indus Towers merger deal

The overnight call money rate weighted average stood at 3.15% according to RBI data. It moved in a range of 1.80 — 3.50% for Nov 19

The yield on the benchmark 10-year government bond was up at 5.928% while the rupee strengthened to 74.1160 against the U.S. dollar

On Thursday, Barclays lifted its fiscal 2022 growth forecast for the Indian economy to 8.5% from 7%

A panel set up by the RBI recommended on 20 Nov, 2020 that well-run large NBFCs with an asset size of Rs 50,000 crore and above may be considered for conversion into banks (after necessary amendments to the Banking Regulation Act, 1949) — subjected to completion of 10 years of operations and meeting due diligence criteria. The panel has also suggested raising the cap on the stake of private bank promoters to 26% from the current 15% in the long run (15 years)

Prime Minister Narendra Modi is keen to attract foreign investment to modernize India’s urban centers

“We are looking at a future where a major chunk of education, healthcare, shopping, may happen online. Our cities need to be ready for the convergence of the physical and digital worlds,” Modi said in his speech at the Bloomberg New Economy Forum on Tuesday
India plans to continue raising funds in areas including urban technology and transport, he added. The country will have to develop up to 800 million square meters each year till 2030 with more than 40% of population expected to live in cities.
Investments in urban infrastructure can help shore up Asia’s third-largest economy which has slipped into an unprecedented recession after its covid lockdown, according to a Reserve Bank of India report.

“We see some more consolidation to correction for Gold due to the strength of the U.S. dollar. However, we feel that this is a buying opportunity. Medium-to-long-term outlook for Gold is bullish, as to emerge from the pandemic-induced crisis, the U.S. and Europe could launch fresh stimulus to support their economies.”

America Markets

Wall Street closed in the red on Friday

The Dow Jones lost 220 points or -0.8% to 29,263 and the S&P 500 shed 24 points or -0.7% to 3,558 ; while the Nasdaq fell 50 points or -0.4% to 11,855

The S&P 500 Index extended a weekly decline of -0.8% as traders weighed a conflict between the White House and Federal Reserve over emergency lending programs along with assurances that the government has plenty of room to help the economy

The small-cap Russell 2000 beat the tech-heavy Nasdaq 100 for a second week, even as hospitalizations climb and the future of Federal Reserve lending programs remains unclear.

Today in the derivatives market, contracts tied to the Dow Jones Industrial Average is down -0.86%, S&P 500 is down -0.77% while Nasdaq 100 futures dropped -0.21%

On the stocks front, Pfizer Inc. rose after filing for emergency approval of its Covid-19 vaccine, while Gilead Sciences Inc. fell after authorities advised against using its remdesivir drug to treat Covid-19

On the coronavirus front, California added 15,442 new cases, hitting a new high as the state’s nighttime curfew kicks in Saturday night

New York reported 5,972 cases, the 5th-straight day over 5,000 and the most since April

Regeneron Pharmaceuticals Inc. said in a statement on Saturday that its antibody therapy called REGN-COV2, had been authorized for the treatment of mild to moderate Covid-19 in adults and some children of at least 12 years of age. A similar antibody therapy made by Eli Lilly & Co. received emergency clearance from the FDA on Nov. 9, 2020

“This public spat between the Fed and the Treasury is not a very good sign for the markets,” said John Praveen, managing director at QMA. “It kind of casts a shadow on market confidence.”

“As hazy as the economic outlook is, investors are viewing this as an opportunity to buy the dip in sectors that have been battered by the pandemic, according to JPMorgan Asset Management.”
“That means that any sort of pullback in the market when you see bad news, it gets absorbed by this cash,” said Gabriela Santos, a global market strategist at the firm.
Nearly $1 trillion flooded into the money market funds from February to late May as the pandemic gripped markets, ballooning U.S. money-fund assets to a record $4.8 trillion. That pile has since shrunk to roughly $4.3 trillion — still well above pre-virus levels.
Of course, the tug-of-war between reopening optimism and a darkening coronavirus picture could quickly tilt in the bears’ favor.

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“The U.S. government stands to lose more than $400 billion from the federal student loan program. By comparison, private lenders lost $535 billion on subprime-mortgages during the 2008 financial crisis.
The effect this time would be different. The government, unlike private lenders, can borrow trillions of dollars at low rates to absorb the losses, without causing a panic. But taxpayers will end up paying a price because Congress will have to raise taxes, cut services or increase the deficit to cover the losses.”

Asia-Pacific Markets

Asian equities climbed on Friday

Japan’s Nikkei 225 dropped -0.42% to 25,527 on Friday

Topix 500 dropped -0.02% to 1,340 on Friday

South Korea’s Kospi added 0.24% to 2,553 on Friday

In Hong Kong, the Hang Seng Index added 0.36% to 26,451 on Friday

China’s CSI 300 Index added 0.31% at 4,943 on Friday

Hang Seng China Enterprises Index dropped -0.02% to 10,553 on Friday

Shanghai Composite Index added 0.44% at 3,377 on Friday

Australia’s S&P/ASX 200 dropped -0.12% to 6,539 on Friday

Singapore’s Straits Times Index added 1.30% to 2,813 on Friday

Overall, MSCI Asia-Pacific ex-Japan, is up 0.54%

On the stocks front in China, automobile stocks rallied on the State Council’s plan earlier this week to bolster domestic consumption, a move that would fall in line with the nation’s ambition to reduce carbon emissions with new-energy vehicles. Great Wall Motors, GAC Group and BYD Co all gained more than 5%

People’s Bank of China left its benchmark interest rates steady for the 7th-straight month at its November fixing, amid efforts to keep conditions accommodative to support the recovery

In Japan, Nikon Corp. plans to reduce about 2,000 employees, or 10% of its total workforce, due to a slump in its core camera business. Its business was also impacted by the performance of Intel Corp., one of Nikon’s key clients of semiconductor equipment. Nikon posted an operating loss of 26.1 billion yen ($251 million) for the 2nd-Quarter

Hong Kong will impose new social restrictions as local coronavirus cases spike. Health Secretary Sophia Chan said they will give a one-time HK$5,000 ($645) payment to anyone in the city who tests positive for Covid-19 to encourage people to take tests for the virus

EU Markets

European stock closed higher on Friday

Mining and energy firms led the gauge higher Friday

The pan-European Stoxx Europe 600 added 0.46% to 389 on Friday, posting its third week of gains — the best streak since July — amid a rotation into economically sensitive sectors

Stoxx 50 added 0.45% to close at 3,467 on Friday

Germany’s DAX30 added 0.39% to 13,137 on Friday

London’s FTSE 100 added 0.27% to close to 6,351 on Friday

France’s CAC40 added 0.39% to 5,495 on Friday

Denmark’s OMX Copenhagen 20 Index added 1.54% to 1,409 on Friday

Luxembourg’s LuxX Index added 0.41% at 1,232 on Friday

Sweden’s OMX Stockholm 30 Index added 0.56% at 1,928 on Friday

Italy’s FTSE MIB Index added 0.79% at 21,706 on Friday

On the Economy front, European Union leaders made no progress toward resolving a dispute to unlock a €1.8 trillion budget and pandemic recovery package; and talks between EU and UK over Brexit were suspended after one of the negotiators was tested positive for covid

Spain’s campaign to vaccinate its population against Covid-19 will begin in January and will be voluntary, El Confidencial reported, citing Health Minister Salvador Illa

Poland will allow shopping malls to reopen, while keeping restaurants, cinemas and schools closed as Prime Minister Mateusz Morawiecki asked for patience until a vaccine arrives

Germany added nearly 23,000 new coronavirus infections as of Saturday morning, lifting the total above 900,000. Germany is already in a partial lockdown that may be extended well into next month.

Oil & Natural Gas Markets

WTI crude futures gained 5% this week to settle at $42.2 per barrel on Friday

Brent crude futures gained about 5% this week to settle at $45 a barrel on Friday

Natural gas futures strengthened to $2.658/MMBtu on Friday

On MCX-India, Crude oil futures added 1.66% to 3,129 on Friday’s session

On MCX-India, Natural gas futures added 0.46% to 196/MMBtu on Friday’s session

Gold & Silver Markets (+ Copper Futures)

Spot gold dropped -0.8% this week to settle at $1,873 per ounce on Friday, booking a 2nd-week of losses

Silver dropped -1.95% this week to $24.15 an ounce on Friday

Copper futures strengthened 3.56% this week to $3.2910 per pound on Friday

In India, Spot Gold weakened -1.43% this week to INR 49,516 per 10 grams on Friday

India – NCDEX Agridex

Agricultural futures index tracking the performance of the 10 liquid commodities, was up 0.33% trading at 1,222.10 ; with major demand seen for Cotton Seed Oilcake and Chana futures on Friday

Currency Markets

The dollar index ended the week -0.4% (lower) at 92.4 on Friday

INR strengthened 0.17% with USD — INR at 74.1475

JPY weakened -0.12% with USD — JPY at 103.8600

CNY strengthened 0.32% with USD — CNY at 6.5630

EUR weakened -0.15% with EUR — USD at 1.1857

GBP strengthened 0.11% with GBP — USD at 1.3275

SEK weakened -0.28% with USD — SEK at 8.6212

*3-Month LIBOR Rate*	*As on 20 Nov 2020*
US DOLLAR	0.22 per cent
Euro	– 0.55 per cent
British Pound	0.05 per cent
Swiss Franc	– 0.77 per cent
Japanese Yen	– 0.10 per cent