Finance - Stock Market Forecast

Index Trend & Conditions – 08:00 a.m. I.S.T.

• Owing to history of volatility during budget presentation in India, we will be looking at Support & Resistance for Nifty 50 for Monday on a broader range

• Resistance for Nifty 50 is seen at 13,620 13,990 14,284 and 14,435. For Monday, Feb 01, Support area will be at 13,326 13,151 12,964 and 12,345

• Support levels for Bank Nifty are at 29,412 29,150 28,890 27,760 and 27,254 with Resistance at 30,870 31,565 31,805 32,400 and 32,700

• The MSCI Asia Pacific ex-Japan is trading higher 0.88%, and the MSCI Emerging Market index is up 0.83%

• Trends on SGX Nifty looked poised for a muted opening for Nifty 50 in India. The Nifty futures are trading 41 points, or -0.30% lower at 13,679 on the Singaporean Exchange at 08:00 a.m. I.S.T.

• U.S. equity futures declined in early morning trade with Nasdaq, S&P 500 futures and Dow Jones futures trading in red; alongside a positive start to Asia-Pacific early Monday trade with stocks rising in Japan, South Korea, Hong Kong, China and Australia; a positive MSCI Asia-Pacific ex-Japan index; U.S. Dollar sliding to 90.56 with 10-Year Treasury Yield paring declines to 1.07% and Gold futures climbing to $1,858 on the day indicate a stable-to-positive outlook for Nifty 50 India

• India’s federal budget will be announced today, Feb. 01, with a spending binge of 9.5% versus 6.6% last year, as the government tries to chart a way out of the pandemic-induced slump

• Talk of silver being the new target for the newly empowered retail aids the metal surge 5% to a six-month high on Monday

India Markets

NIFTY 50	OPEN	HIGH	LOW	CLOSE
Friday	13,810	13,898	13,713	13,634

India’s equity benchmarks extended their losing streak to the sixth-consecutive session on Friday trade

The blue-chip NSE Nifty 50 index dropped 182 points, or -1.32%, to 13,634 and the benchmark S&P BSE Sensex fell 588 points, or -1.26%, to 46,285

As long as Nifty remains below 13,750 level, every bounce could be sold into and the index may see weakness till around 13,500 and 13,130 levels

Broader markets witnessed less-intense selling pressure, out-performing headline peers — Midcap 100 index dropped -0.38% ; Smallcap 250 index dropped -0.33% and Nifty 500 dropped -1.22%

Strategy based indices under-performed benchmark indices — Nifty Alpha 50 dropped -1.51% and Nifty Alpha Low Volatility 30 dropped -2.54%

Nifty P/E for Jan 29, 2020 decreased from 36.96 to 36.57, and Nifty P/B edged lower from 3.92 to 3.86, as recorded by NSE India

Bank Nifty opened with a gap up and remained highly volatile throughout Friday. The index formed a bearish candle on daily scale, adding 207 points, or 0.68%, to 30,565

India VIX or Fear gauge rose 4.33% from 24.29 to 25.34 levels

A surge in volatility due to selling pressure ahead of Union Budget 2021 could keep the market volatile with limited upside potential

Overnight Call Money rate weighted average stood at 3.20% as per RBI data. It moved in a range of 1.90 — 3.50% for Jan 28

Yield on the benchmark 10-year government bond increased to 5.90%, while the rupee appreciated to 72.8700 per U.S. dollar

India’s federal budget presentation is due on February 1

India’s government sees the economy expanding 11% in the year starting April, helped by vaccine drives to tame the coronavirus outbreak and aided by low interest rates that will spur business activity. The rebound will follow an estimated -7.7% contraction in GDP in March 2021

India is most likely to miss its fiscal deficit target of 3.5% of GDP this year

ICICI Bank, one of India’s top corporate bond arrangers, expects spreads on the highest-rated local notes to widen further as the central bank begins to withdraw emergency liquidity

ICICI expects spread between corporate and government bonds to widen

Yields on shorter bonds surged earlier this month after the Reserve Bank of India said it would withdraw 2 trillion rupees ($27.4 billion) via a 14-day reverse repo auction on Jan. 15

Tata Group owned Jaguar Land Rover reported a 38% rise in quarterly profit as pent-up demand aided a recovery in markets led by China. Profit before tax rose to 439 million pounds ($602 million) in the three months ended Dec. 31. JLR expects to generate strong profit margins and positive free cash flow through March and expects to reduce net debt. JLR’s parent, Tata Motors, reported net income of 29.1 billion rupees ($399 million), more than doubling analysts’ average estimate. JLR, now led by former Renault SA chief Thierry Bollore, outlined plans to cut costs by 2.5 billion pounds last year

America Markets

U.S. Federal Reserve Chair Jerome Powell’s comments about a “highly uncertain” economic outlook appeared to prick the nascent asset bubble, with major US stock indexes dropping over 2 per cent by the close of trading on Friday

U.S. stocks extended their slump on Friday trade, amid lingering concerns about havoc created by volatile retail trading

The broad-based S&P 500 added 36 points, or 1%, to 3,787

The Dow Jones Industrial Average, composed mostly of cyclical stocks, rose 300 points, or 1%, to 30,603

The tech-heavy Nasdaq Composite Index gained 66 points, or 0.5%, to 13,337

U.S. equity futures declined in early Monday trade. S&P500 futures is down -0.06%; Dow Jones futures is down -0.01% and Nasdaq futures is down -0.16%

10-year U.S. Treasury yields edged higher to 1.07% on the day as dollar slipped to 90.56

The Cboe Volatility Index, known as Wall Street’s “fear gauge,” fell -18.81% to 30.21 on Friday

Personal spending in the U.S. edged down 0.2% month-over-month in December of 2020, following an upwardly revised 0.7% drop in November and compared to market forecasts of a 0.4% fall

Robinhood Markets, the trading app that’s popular with investors behind this month’s wildest stock swings, has drawn down some of its bank credit lines – several hundred million dollars, to ensure it has enough cash to clear trades in order to comply with SEC net capital obligations and clearinghouse deposits to protect investors and the markets. The extreme volatility “generated substantial risk” for brokerages, resulting in the need for stricter requirements on those firms, according to the Depositary Trust & Clearing Corp

Johnson & Johnson’s one-shot vaccine generated strong protection against Covid-19 in a large, late-stage trial of 43,000 people, preventing 66% of moderate to severe cases of Covid-19, 85% of severe infections and 100% of hospitalizations and deaths. Anthony Fauci, the top U.S. infectious-disease official, has lauded the success report and said this can rapidly reshape a stumbling immunization campaign

The U.S. economy shrank by 3.5% in 2020 as per Commerce Department. Personal consumption rose 2.5%, missing estimates of 3.1% growth. Core PCE growth, which strips out food and energy, was 1.4%

U.S. Economy Size is more than $473 billion smaller than it was before the pandemic hit

Contracts to buy previously owned homes in the U.S. jumped 21.4% from a year earlier in December 2020, following an upwardly revised 16.6% rise in November, as interest rates remained at historically low levels and supply was near all-time lows

Asia-Pacific Markets

A worker works on a production line at a factory of a ship equipments manufacturer, in Nantong, Jiangsu province, China

Asian benchmark stocks edged up in early Monday trade, as some of the concerns over volatile retail trading receded and signs of an easing cash crunch in China aided sentiment

Japan’s Nikkei 225 added 0.87% to 27,905 and Topix 500 added 0.93% to 1,420

South Korea’s Kospi added 1.36% to 3,016

In Hong Kong, Hang Seng added 0.81% to 28,516 while Hang Seng China Enterprises added 0.97% to 11,318

In China, CSI 300 added 0.72% to 5,389 and Shanghai Composite dropped -0.08% to 3,480

Australia’s S&P/ASX 200 added 0.52% to 6,641

Hong Kong’s economy shrank by a record 6.1% in 2020, with the global pandemic dragging down output in a city already reeling from massive political upheaval. GDP fell -3% in the fourth quarter from a year earlier, resulting in a full-year decline of -6.1%, according to estimates from the Hong Kong Census and Statistics Department Friday. Consumption and tourism-related sectors were particularly hard-hit by the pandemic last year while financial market activity stayed robust. Revised fourth-quarter and full-year figures as well as growth forecasts for 2021 will be released with the upcoming budget on Feb. 24

China’s manufacturing Purchasing Manager’s Index (PMI) fell to 51.3 in January from 51.9 in December, showing factory activity growth at the slowest pace in five months. It remained above the 50-point mark that separates growth from contraction on a monthly basis

Taiwan’s economic growth outpaced that of China’s for the first time in 30 years, helped by its early control of the virus and stellar export performance – dominated by exports of consumer electronics and plastic goods. GDP expanded 2.98% last year, compared with China’s 2.3% rise. Exports contributed about 60% of GDP growth in 2020

China’s GDP will likely rebound to 8.4% in 2021, its fastest rate of growth since 2011, before slowing to 5.5% in 2022. Taiwan’s is forecast to grow 3.7%. China’s GDP grew 2.3% on year in 2020, making it the only major economy in the world to dodge a contraction in 2020

Singapore’s Prime Minister Lee Hsien Loong, while addressing the World Economic Forum, urged China to make adjustments in line with its larger stature. He said that China should reconsider its position so that its influence in the world is not only there because of its own power and energy, but also there because of legitimacy and acceptance by other countries

South Korea’s January export data will shed early light on whether recovering momentum in global trade has slowed at the start of the year as lockdowns limit activity in many major economies

Japan’s Prime Minister Yoshihide Suga is likely to decide on whether to extend a state of emergency

Reserve Bank of Australia’s Governor Philip Lowe is to announce a policy decision on Tuesday and release his quarterly Statement on Monetary Policy on Friday

EU Markets

European equities plummeted on Friday trade, recording their worst weekly performance since October, as covid mutations undercut optimism

Concerns around the potential economic damage from a new strain of the coronavirus in Europe and delays to vaccine rollouts have dented sentiment in the past few days

The pan-European Stoxx Europe 600 dropped -1.89% to 394 and Stoxx 50 dropped -2.13% to close at 3,481

Europe’s earnings season has been largely positive so far. Of the 8% of STOXX 600 companies that have reported, 78% have topped profit estimates, according to Refinitiv IBES data

Germany’s DAX30 dropped -1.71% to 13,432

London’s blue-chip FTSE 100 dropped -1.82% to 6,407

France’s CAC40 dropped -2.02% to 5,399

Denmark’s OMX Copenhagen 20 dropped -2.13% to 1,419

Spain’s IBEX 35 dropped -2.21% to 7,757

Italy’s FTSE MIB dropped -1.57% to 21,572

Oil & Natural Gas Markets

Crude-oil erased most of its gains alongside a broader market decline in early Monday trade, while investors assess factors surrounding the recovery in consumption

Crude’s rally has cooled in recent weeks amid reinstated lockdowns and spreading coronavirus variants. However, the oil futures curve remains strong, an indication of shrinking supplies

WTI Crude is trading at $52.29 per barrel

Brent Crude is trading at $55.14 per barrel

Natural Gas futures is trading at $2.627/MMBtu

On MCX-India, Crude oil futures declined to 3,820 on Friday trade

On MCX-India, Natural gas futures declined to 191/MMBtu on Friday trade

“There’s growing risk that demand will remain sub-par for longer than we had expected, or certainly hoped for,” said Bart Melek, head of global commodity strategy at TD Securities.

Commodities Markets

Gold futures rose in early Monday trade

U.S. Gold futures (Comex) is trading at $1,858 an ounce

Silver futures (Comex) climbed to $28.52 an ounce, bringing down the Gold/Silver “mint” ratio to 65.06

Silver surged as newly empowered retail investors turned speculative eyes to precious metals

Copper futures (Comex) is trading steady at $3.5650 per pound

SGX Iron-Ore futures is trading lower $155.25 per tonne

Iron ore futures became slightly bearish on Thursday, logging the biggest percentage loss in four weeks, as weak pre-holiday downstream steel consumption and a government call for less steel output this year weighed on the steelmaking raw material

In India, Spot Gold is trading at INR 48,153 per 10 grams

“While iron ore prices have been volatile lately due to several supply-side disruptions, they are likely to decline to about $125 a ton this year mainly because China is expected to buy less in 2021,” Seshagiri Rao, joint managing director at Mumbai-based JSW Steel Ltd. said.

Currency Markets

The U.S. dollar index, DXY climbed to 90.56 in early Monday trade

INR strengthened with USD / INR at 72.8700

JPY weakened with USD / JPY at 104.6800

CNY strengthened with USD / CNY at 6.4283

EUR strengthened with EUR / USD at 1.2136

GBP weakened with EUR / GBP at 0.8856

GBP weakened with GBP / USD at 1.3708

*3-Month LIBOR Rate*	*As on 29 Jan 2021*
US DOLLAR	0.21 per cent
Euro	– 0.54 per cent
British Pound	0.04 per cent
Swiss Franc	– 0.77 per cent
Japanese Yen	– 0.09 per cent

Bitcoin

Bitcoin / U.S. Dollar added 1.25% in early Monday trade to $33,584 as of 08:00 a.m. I.S.T.

Bitcoin investors need to be prepared to “lose all their money,” ECB’s Gabriel Makhlouf said, the latest warning from a central banker on the cryptocurrency

Bridgewater Associates founder Ray Dalio said Bitcoin is “one hell of an invention” and he’s considering cryptocurrencies as investments for new funds offering clients protection against the debasement of fiat money. Still, he said it was challenging to put a value on digital assets, and that there were risks like hacking and potential for government restrictions to control money supply

“If Bitcoin breaks below and then stays below the 50-day moving average, it should serve as confirmation that the move over the past four months was a speculative blow-off top,” said Michael O’Rourke, chief market strategist at JonesTrading.

Bond Markets

Americas : 10 – Year Govt Bond Yields

United States : 1.07%
Canada : 0.89%

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

Germany : -0.52%
United Kingdom : 0.32%
France : -0.28%
Italy : 0.64%
Netherlands : -0.46%

Asia Pacific : 10 – Year Govt Bond Yields

India : 5.90%
Japan : 0.04%
Australia : 1.13%
Hong Kong : 0.52%
Singapore : 0.97%
South Korea : 1.76%

Fund Flows on NSE, BSE and MSEI — 29 Jan 2021

FII/FPI Net Sell Rs (5,930.66) Crore in Capital Market

DII Net Buy Rs 2,443.20 Crore in Capital Market

Where We’ve Been Reading —