Finance - Stock Market Forecast

Index Trend & Conditions – 07:30 a.m. I.S.T.

• Resistance for Nifty 50 is seen at 14,150. For Thursday, Dec 31, Support area is seen at 13,950 — 13,960 and 13,775

• Support levels for Bank Nifty is at 31,350 30,850 and 30,200, while Resistance is at 31,510 — 31,550 zone

• The MSCI Asia Pacific ex-Japan added 0.04%, and the MSCI Emerging Market index gained 0.17%

• Trends on SGX Nifty indicate a positive opening for Nifty 50 in India. The Nifty futures are trading 0.10% higher at 14,030 on the Singaporean Exchange at 07:30 a.m. I.S.T.

• Contracts tied to U.S. futures edged higher on Thursday’s session, with Nasdaq, S&P 500 and Dow Jones futures closing in green, alongside a battered U.S. Dollar eking out an advance to 89.95 with 10-Year Treasury Yield dipping to 0.918 and Gold futures unchanged at $1,898 on the previous day, bolstered by a sluggish dollar, indicate a muted outlook for Nifty 50 India with subdued volume

• Most global stock markets are closed Friday for New Year’s Day

India Markets

NIFTY 50	OPEN	HIGH	LOW	CLOSE
Thursday	13,970	14,024	13,936	13,981

Indian stocks finished flat on Thursday trade, finishing a pandemic-ravaged year in which the equity benchmarks battled economic uncertainties to come out stronger, thanks to vaccine optimism and a slew of liquidity support measures

Nifty 50 opened positive but closed on a flat note adding 0 points, or 0.00%, to 13,981, while the BSE Sensex advanced 5 points, or 0.01%, to 47,751

Realty and Media sectors contributed most to the index’s advance and jumped 1.23% and 0.98% respectively, while Nifty PSU Bank saw the steepest decline, dropping 0.49%

Private sector lenders were the top boost as HDFC Bank Ltd closed 0.27% higher and ICICI Bank Ltd added 1.1%

The gap between large-cap shares and their smaller peers was sharp. The BSE MidCap index gained 19.87% this year, while the BSE SmallCap index jumped 32.11%

Broader markets out-performed headline peers — Midcap 100 index added 0.49% ; Smallcap 250 index added 0.22% and Nifty 500 added 0.08%

Strategy based indices under-performed benchmark indices — Nifty Alpha 50 added 0.33% and Nifty Alpha Low Volatility 30 added 0.00%

Nifty P/E for Dec 31, 2020 stayed unchnaged at 38.45, and Nifty P/B steadied at 3.96, as recorded by NSE India. Indian equities market may seem overvalued due to high P/E, however the P/B value shows otherwise

Bank Nifty opened flat and continued its southward movement towards 31,088 level. The index formed a small bearish candle on the daily scale, but continued to form higher lows for the sixth session. The index dropped 39 points, or -0.12%, to 31,264

India VIX marginally fell -0.07% from 21.11 to 21.09 level

Rising volatility needs to cool down below the 20-19 zone to support the bullish market setup with a higher market base

Overnight Call Money rate weighted average stood at 3.25% as per RBI data. It moved in a range of 1.90 — 3.50% for Dec 30

Yield on the benchmark 10-year government bond declined to 5.89%, while rupee strengthened to 73.0600 against the U.S. dollar

On individual stocks front, BHEL said it has bagged orders worth Rs 3,200 crore for hydro projects in Andhra Pradesh and Telangana. Orders include electro-mechanical (E&M) works for a hydro electric project (HEP) in Andhra Pradesh and E&M (electrical and mechanical) works of pump-motor sets for Lift Irrigation Schemes (LIS) in Telangana

Shares of Jubilant Foodworks rose 4.34 per cent to Rs 2,798 after it said it will invest Rs 92 crore into Barbeque-Nation Hospitality (BNHL) for a 10.76 per cent equity stake

Shares of communications equipment firm Tejas Networks climbed 4.96 per cent to Rs 137.45 after it bagged an order worth $13 million (approx Rs 95 crore) from a telecommunications service provider in South East Asia for supply and installation of its broadband products

FDI equity inflow increased by 21% to USD 35.33 billion (April 2020 to October 2020) from USD 29.31 billion reported in the same period of previous financial year

Sectors which attracted maximum foreign inflows included computer software and hardware, services, trading, chemicals and automobile. India attracts maximum funds from Singapore, the U.S., Mauritius, the Netherlands, the U.K., France and Japan

“Even though valuations are getting high, the uptrend in the market should continue next year,” said Sanjeev Hota, head of research at Sharekhan Ltd. in Mumbai. “The earnings recovery cycle will start next year and there are some tailwinds from the macro side.”

America Markets

U.S.-based Autonomous delivery startup Nuro

U.S. stocks ended a tumultuous year with the Dow and S&P 500 at records on Thursday trade, amid thin trading as the three major U.S. equity indexes notched solid-to-spectacular yearly gains despite an economy upended by the COVID-19 virus as investors looked to a post-pandemic world

The Nasdaq Composite Index rose 18 points, or 0.14%, to 12,888

The S&P 500 gained 24 points, or 0.64%, to 3,756

The S&P 500 ended the year up more than 16%, leaving equities at rich valuations amid expectations that widespread vaccine distribution in 2021, central bank support and government aid will reignite economic growth and boost corporate profits

The Dow Jones Industrial Average added 196 points, or 0.65%, to 30,606

For the year, the S&P 500 gained about 16%, the Dow roughly 7% and the Nasdaq more than 43%, which marked the biggest yearly gain for the tech-heavy index since 2009

Tech and consumer discretionary were the best performing sectors on the year, while energy, a laggard for the past decade, was once again the weakest of the 11 major S&P sectors on the year en route to its worst yearly performance ever

Mega-cap companies such as Amazon and Apple helped lift the broad S&P 500 and the Nasdaq, as well as gains in names that have benefited from the “stay-at-home” environment, such as online retailer ETSY Inc and digital payment platform PayPal

Contracts tied to U.S. futures edged higher on Thursday’s session as U.S. stocks climbed to a record high on the year’s final trading day. S&P500 futures is up 0.66%, Dow Jones futures is up 0.64%, while Nasdaq futures is up 0.34%

U.S. Treasury yields dipped to 0.918% on the last trading day of the year, pulling the yield curve flatter, as thin volume exaggerated market moves

Initial jobless claims unexpectedly dropped for the second straight week, according to the Labor Department, but remain elevated, suggesting layoffs remain stubbornly high as the economy stumbles through a Covid-19 resurgence

“It’s a quiet day with little news and low volume – an ironic end to such a tumultuous year,” said David Carter, chief investment officer at Lenox Wealth Advisors in New York. “All eyes are on next year, which will be ‘show me’ time, with investors watching to see if actual fundamentals will be as strong as current stock prices are forecasting.”

“For broad indexes, this is a bullish year despite the craziness in the real world,” said Mike Zigmont, head of research and trading at Harvest Volatility Management. “It feels very much to me like investors have decided the world has changed forever, the coronavirus pandemic was the catalyst and now investors have decided who the winners are and who the losers are and are moving forward.”

Asia-Pacific Markets

Disinfecting at the Shanghai Stock Exchange

Most Asian stocks are closed for New Year’s Day holiday on Friday trade

China’s benchmark CSI 300 Index closed at a five-year high on Thursday as officials gave the green light to its first coronavirus vaccine for general public use and data showed a steady economic recovery

South Korea’s exports expanded at their fastest pace in 26 months in December, on robust chip demand and improved global demand, providing additional signals that the recovery is on track despite resurgences in the novel coronavirus. Exports in the final month of 2020 grew 12.6% year-on-year, the sharpest growth since October 2018 when it grew 22.5%

Overseas sales of semiconductors for South Korea surged 30% from a year earlier, marking the sharpest expansion since August 2018, towing the overall exports recovery. Other major items such as mobile devices, displays and computers also soared 39.8%, 28.0% and 14.7% year-on-year

EU Markets

Freight lorries and heavy-goods vehicles parked at Manston Airport near Ramsgate England

European stocks ended the session lower on Thursday trade, as tighter coronavirus restrictions in the UK and higher U.S. tariffs on some EU products dampened optimism on Britain’s last day as a member of one of the world’s largest trading blocs

The pan-European Stoxx Europe 600 slipped -0.38% to 398 and Stoxx 50 declined -0.53% to close at 3,552

Germany’s DAX30 was closed for a holiday on New Year’s Eve

London’s FTSE 100 dropped -1.45% to 6,460

France’s CAC40 dropped -0.86% to 5,551

Denmark’s OMX Copenhagen 20 was closed for a holiday on New Year’s Eve

Italy’s FTSE MIB dropped -0.12% to 22,232

“We are open for business but we are attached to reciprocity, level playing field & values,” European Commission President Ursula von der Leyen said in a post on Twitter on Wednesday. “Today, the EU & China concluded in principle negotiations on an investment agreement.”

“We are going to keep getting this push-pull, vaccine versus virus, politics versus economics, for a while yet,” said Altaf Kassam, head of investment strategy for State Street Global Advisors in Europe. “November was a great month for markets and there was always going to be a pause for breath. December seems to be just that.”

Oil & Natural Gas Markets

Crude-oil prices was a little changed on Thursday trade, on hopes of rebounding demand

WTI Crude rose to $48.18 per barrel

Brent Crude edged higher to $51.70 per barrel

Natural Gas futures stayed unchanged at $2.430/MMBtu

On MCX-India, Crude oil futures jumped to 3,524 on Thursday trade

On MCX-India, Natural gas futures settled at 182/MMBtu on Thursday trade

“There are headwinds for upward price improvement as the market is readying for OPEC to go ahead and put more barrels – 500,000 barrels a day – on the market,” said John Kilduff, a partner at Again Capital LLC

Commodities Markets

Gold ticked higher on Thursday trade, bolstered by sluggish dollar

U.S. Gold futures (Comex) strengthened to $1,898 an ounce

Silver futures (Comex) strengthened to $26.37 an ounce

Copper futures (Comex) strengthened to $3.5210 per pound

In India, Spot Gold steadied at INR 49,560 per 10 grams

“The economy remains fragile and the post-pandemic recovery will be gradual at best,” Credit Suisse analyst Fahad Tariq said. “We think any near-term pullback in gold prices due to Covid-19 vaccine approvals and rollout is a good entry point.”

India — NCDEX Agridex

Agricultural futures index tracking the performance of the 10 liquid commodities was up, trading at 1,163.50 ; with major demand seen for Refined Soybean Oil and Soy Bean futures on Wednesday trade

Currency Markets

The U.S. dollar index, DXY rose on Thursday trade at 89.931, but was still on track for its worst year since 2017 as expectations for further fiscal aid and easy monetary policy from the U.S Federal Reserve prompted investors to shun the greenback

INR strengthened with USD / INR at 73.0360

JPY weakened with USD / JPY at 103.2800

CNY weakened with USD / CNY at 6.5272

EUR weakened with EUR / USD at 1.2220

A listless dollar had helped the euro stand firm at a 32-month high of $1.23

GBP strengthened with EUR / GBP at 0.8940

GBP strengthened with GBP / USD at 1.3670

Bitcoin vaulted above $29,000 to reach yet another record level on the last day of 2020, in a fitting end to a groundbreaking year for the world’s largest digital currency

“For now, Bitcoin’s big December rally also has at least one technical indicator flashing red, suggesting the coin is close to a top,” Ayyar, head of business development with crypto exchange Luno in Singapore said. “The digital asset is well into overbought territory according to its relative strength indicator.”

*3-Month LIBOR Rate*	*As on 31 Dec 2020*
U.S. DOLLAR	0.25 per cent
Euro	– 0.56 per cent
British Pound	0.02 per cent
Swiss Franc	– 0.79 per cent
Japanese Yen	– 0.09 per cent