Finance - Stock Market Forecast

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

• Resistance for Nifty 50 is seen at 14,195 and 14,260. For Tuesday, Jan 05, Support area is seen at 13,950 — 13,960 and 13,775

• Support levels for Bank Nifty is at 30,850 and 30,200 with Resistance at 31,375 31,500 and 32,400

• The MSCI Asia Pacific ex-Japan is trading lower at -0.19%, and the MSCI Emerging Market index is down -0.24%

• Trends on SGX Nifty indicate a gap-down opening for Nifty 50 in India. The Nifty futures are trading -0.78% lower at 14,066 on the Singaporean Exchange at 07:30 a.m. I.S.T.

• Contracts tied to U.S. futures pushed higher in early trade, with Nasdaq, S&P 500 and Dow Jones futures trading in green, alongside a mostly negative start to Asia-Pacific early Tuesday morning trade with shares rising in China, while edging lower at every major index, a negative MSCI Asia-Pacific ex-Japan index, U.S. Dollar Index slipped to 89.83 with 10-Year Treasury Yield climbing to 0.92 and Gold futures easing to $1,936 on the day indicate a negative-to-stable outlook for Nifty 50 India

• MSCI’s All-Country World Index, which tracks stocks across 49 countries, was down 0.5% after earlier hitting a record

India Markets

NIFTY 50	OPEN	HIGH	LOW	CLOSE
Monday	14,104	14,148	13,953	14,132

Indian stocks notched record closing highs on Monday trade, as investors saw the roll out of a vaccine aiding a business and economic recovery

The blue-chip NSE Nifty 50 index added 114 points, or 0.82%, to 14,132 and the benchmark S&P BSE Sensex climbed 307 points, or 0.64%, to 48,176

Among individual stocks, Jindal Steel and Power gained 6.5% after the company reported an increase in production and sales for December and the third quarter. Marico closed 2.7% higher after the beauty and wellness product maker said its India business saw double-digit volume growth in the third quarter, and that it was maintaining an optimistic outlook for the rest of the year

Tata Consultancy Services contributed the most, increasing 3.8%, while Oil and Natural Gas Corp. had the largest gain, rising 4%

Broader markets out-performed their headline peers — Midcap 100 index added 1.41% ; Smallcap 250 index added 1.31% and Nifty 500 added 1.01%

Strategy based indices out-performed benchmark indices — Nifty Alpha 50 added 1.14% and Nifty Alpha Low Volatility 30 added 1.05%

Nifty P/E for Jan 04, 2020 appreciated to 38.87 from 38.55, while Nifty P/B edged higher to 4.01 from 3.97, as recorded by NSE India

Bank Nifty opened positive, but failed to surpass the immediate hurdle at 31,500 level and slipped below the 31,000 mark in the initial hours of trade. It formed a Bearish Belt Hold sort of candle on the daily scale, which indicated the presence of a hurdle at higher levels. The index dropped 13 points, or -0.04%, to 31,212

India VIX moved up 2.40% to 20.03 from 19.56 levels

Volatility needs to sustain below 20 level to support the bullish market setup and fuel the bulls with a higher market base

Overnight Call Money rate weighted average stood at 2.76% as per RBI data. It moved in a range of 2.50 — 3.25% for Jan 02

Yield on the benchmark 10-year government bond increased to 5.92%, while rupee appreciated to 72.9860 against the U.S. dollar

India is expected to start a massive immunisation program within a week. Serum Institute of India, the local maker of the AstraZeneca/Oxford vaccine, intends to meet the nation’s demand first before exporting its vaccine

Separately, a private survey on Monday showed India’s factory sector activity strengthened in December, as manufacturers boosted production to meet rising demand

Sequoia Capital-backed Indigo Paints has received capital markets regulator Sebi’s approval to raise about Rs 1,000 crore through an IPO

Fiat Chrysler Automobiles (FCA) to invest $250 million to grow its presence in India with the launch of four new sport-utility vehicles (SUVs) under its Jeep brand over the next two years. FCA will produce and assemble the new SUVs at its car plant in western India, which it jointly owns with domestic automaker Tata Motors. FCA’s three-row SUV is expected to compete with Ford Motor’s Endeavour and Toyota Motor’s Fortuner SUVs

“This is a buy-on-dips market. We are retaining value in our portfolio and also booking profits where there is excessive exuberance,” said Kranthi Bathini, a strategist at Mumbai-based WealthMills Securities Ltd. “We are starting the year with a lot of optimism over the vaccine.”

“In spite of the market being heated up, foreign institutional investment flows continue, risk-on sentiment is prevailing and the money will keep pouring into markets like India,” said Aishvarya Dadheech, a fund manager at Ambit Asset Management in Mumbai. “It is a very liquid market.”

“Corporate earnings post the dip are likely to stage a handsome growth trajectory,” analysts at ICICI Securities Ltd. in Mumbai said in a note. “For the calendar year 2021, we expect mid-caps and small-caps to gain relatively more than the large-caps.”

America Markets

U.S. stocks eased from their record highs to end deep in the red on Monday trade, the first trading day of the year, amid concern over Tuesday’s runoff elections for the two Senate seats in Georgia, which could determine whether Democrats have full control of Congress to push President-elect Joe Biden’s agenda

The S&P 500 lost 55 points, or 1.48%, to 3,700

Almost all S&P sectors dropped with real estate, utilities and industrials posting the sharpest percentage declines. Consumer discretionary and materials hit all-time highs in early trading

The Dow Jones Industrial Average fell 382 points, or 1.25%, to 30,223

The Dow was also dragged down by a near 3% fall in Boeing Co shares after Bernstein cut its rating to “underperform”, saying issues with MAX 787 could significantly hurt the U.S. planemaker’s free cash flow

The Nasdaq Composite Index dropped 190 points, or 1.47%, to 12,698

Contracts tied to U.S. futures mostly edged up in early Monday trade. S&P500 futures is up 0.26%, Dow Jones futures is up 0.16%, and Nasdaq futures is up 0.21%

U.S. Treasury yields surged to 0.92% on the day as stock indexes tumbled

U.S. manufacturing activity picked up at its briskest pace in more than six years in December, extending a recovery in the factory sector that has spurred the strongest pricing environment for goods producers since 2011. IHS Markit said its manufacturing PMI climbed to 57.1 in December from 56.7 in November. The index also improved from its preliminary – or “flash” – reading in mid-December of 56.5, with a reading above 50 signaling expansion in activity

U.S. construction spending rose to a record high in November, boosted by a robust housing market amid historically low mortgage rates. The Commerce Department said on Monday that construction spending increased 0.9% to $1.459 trillion, the highest level since 2002. Data for October was revised higher to show construction outlays accelerating 1.6% instead of 1.3% as previously reported

Minutes of the Federal Reserve’s Dec. 15-16 policy meeting are due on Wednesday and should offer more details on discussions about making the U.S. central bank’s forward policy guidance more explicit and the chance of a further increase in asset purchases this year

Friday brings the U.S. employment report for December

“Amid a significant deterioration in vendor performance, cost burdens and selling prices soared, as firms sought to partially pass on higher input prices,” IHS Markit said in a statement. “Output expectations moderated slightly, however, as the post-election spike eased and virus cases surged once again.”

“There is still really bad news on the virus, but the market is looking through that because of the vaccines,” said Fahad Kamal, chief investment officer at Kleinwort Hambros. “We are certainly positively tilted, given the expected economic recovery, historically low interest rates, a lot of fiscal spending and monetary policy to come: all of that positivity remains.”

Asia-Pacific Markets

Asian shares edged lower in early Tuesday trade, amid uncertainty about Senate runoffs in Georgia, which could have a big impact on incoming U.S. President Joe Biden’s economic policies

Japan’s Nikkei 225 dropped -0.32% to 27,179 and Topix 500 slipped -0.15% to 1,393

Japanese shares lost -0.47% after a media report that the government will curb business hours in Tokyo and surrounding cities from Thursday

South Korea’s Kospi dropped -0.27% to 2,935

In Hong Kong, Hang Seng dropped -0.72% to 27,289 while Hang Seng China Enterprises dropped -0.67% to 10,659

In China, CSI 300 added 0.11% to 5,274 and Shanghai Composite dropped -0.17% to 3,497

Australia’s S&P/ASX 200 dropped -0.45% to 6,654

Overall, MSCI Asia-Pacific, was up 0.64%

Paul Sandhu, head of multiasset quant solutions for the Asia-Pacific region at BNP Paribas Asset Management, said markets in Asia had largely picked up where they left off in 2020, as investors continue to favor riskier assets like equities in emerging markets such as China, South Korea and Taiwan. He said he expected Asia to be one of the most robust parts of global markets, due in part to its relative success in containing the coronavirus

“2021 starts with a bang with pivotal political and economic news for markets to digest. The undisputed highlight will be the result of the Senate seat run-off elections in Georgia,” James Knightley, chief international economist at ING, said.

EU Markets

The Paternoster Square Column stands in an empty square outside the London Stock Exchange

European stocks traded in the green on Monday trade, the first trading day of the year, as a landmark Brexit trade deal and coronavirus vaccine drives across the continent bolstered expectations of a strong economic rebound

The pan-European Stoxx Europe 600 gained 1.62% to 402 and Stoxx 50 added 0.68% to close at 3,576

Economically sensitive mining and travel & leisure stocks jumping more than 3%

Germany’s DAX30 added 0.73% to 13,819 at all-time highs

London’s blue-chip FTSE 100 added 2.27% to 6,608 in its first day of trading with Britain outside the European Union’s orbit

While the hard-fought trade deal agreed late December set rules for industries such as fishing and agriculture, it did not cover Britain’s much larger finance sector, meaning automatic access to the EU’s financial markets came to an end on Dec. 31

France’s CAC40 added 0.97% to 5,605

Denmark’s OMX Copenhagen 20 added 1.48% to 1,486

Spain’s IBEX 35 added 0.61% to 8,122

Italy’s FTSE MIB added 0.87% to 22,425

The number of mortgage approvals for house purchases in the U.K. increased to 105 thousand in November, the highest level since August 2007 and well above market expectations of 82.5 thousand. The recent strength in approvals has almost fully offset the significant weakness earlier in the year. Meanwhile, consumer credit remained weak, with households making net repayments of £1.5 billion

In company news, shares in Ladbrokes owner Entain Plc jumped 26.2% despite saying an $11 billion bid proposal from U.S. casino operator MGM Resorts significantly undervalued its business

On the vaccine front, Britain on Monday became the first country to roll out the covid-19 shot developed by Oxford University and AstraZeneca

“Vaccines will inspire a global recovery, central banks will leave rates at zero even if inflation rises to fund exploding government deficits everywhere,” Jeffrey Halley, a senior market analyst at Oanda, said. “The search for yield in a zero percent world flooded with unlimited free money from the world’s central banks, means the K-shaped recovery, asset price inflation scenario seems a certainty.”

Oil & Natural Gas Markets

Crude-oil remained under pressure in early Tuesday trade after OPEC+ failed to decide whether to increase output in February and agreed to meet again on Tuesday

Oil prices have stabilized above $50 barrel in London despite OPEC’s pledge of extra supply, bolstered by vaccine developments and robust fuel use in Asia. Supply and demand should remain broadly balanced in the first half of the year, according to the Paris-based International Energy Agency

WTI Crude is trading higher at $47.70 per barrel

Brent Crude is trading higher at $51.10 per barrel

Natural Gas futures decreased to $2.594/MMBtu

On MCX-India, Crude oil futures fell to 3,494 on Monday trade

On MCX-India, Natural gas futures rose to 189/MMBtu on Monday trade

Commodities Markets

Gold held steady near its highest level in two-months in early Tuesday trade, on the back of a battered three-year low U.S. dollar

Looking ahead, there’s little consensus from Wall Street’s biggest names on bullion’s direction. Morgan Stanley sees gold and other precious metals coming under pressure as financial markets normalize and longer maturity bond yields rise. Meanwhile, HSBC sees gold climbing higher on continued uncertainty

U.S. Gold futures (Comex) is trading higher at $1,936 an ounce

Silver futures (Comex) is trading higher at $27.07 an ounce

Copper futures (Comex) is trading higher at $3.5690 per pound

In India, Spot Gold strengthened to INR 50,576 per 10 grams

“Gold’s main drivers – weaker U.S. dollar and low real interest rates – are likely to provide support even as vaccines are distributed around the world,” said Vasu Menon, executive director, investment strategy, at Singapore-based Oversea-Chinese Banking Corp. “With the lower-for-longer Fed, it is too early to throw in the towel on gold,” he said in an email

India — NCDEX Agridex

Agricultural futures index tracking the performance of the 10 liquid commodities was up 2.25%, trading at 1,200.65 ; with top gains for Mustardseed, Cotton Seed Oilcake, Chana and Soy Bean futures on Monday trade

Currency Markets

The U.S. dollar index, DXY fell toward an almost three-year low in early Tuesday trade at 89.83

INR strengthened with USD / INR at 73.0700

JPY strengthened with USD / JPY at 103.0400

CNY strengthened with USD / CNY at 6.4599

EUR strengthened with EUR / USD at 1.2284

GBP weakened with EUR / GBP at 0.9033

GBP weakened with GBP / USD at 1.3606

In cryptocurrencies, Bitcoin’s massive holiday rally — which saw the cryptocurrency rise more than $11,000 since Christmas Eve to trade above $34,000 yesterday — took a blow this morning. The digital token plunged more than $5,000 to trade near $28,000. The 17% decline is the biggest intraday retreat since March for the volatile asset

Bitcoin “will be on the road to $50,000 probably in the first quarter of 2021,” said Antoni Trenchev, managing partner and co-founder of Nexo in London, which bills itself as the world’s biggest crypto lender

*3-Month LIBOR Rate*	*As on 04 Jan 2021*
US DOLLAR	0.24 per cent
Euro	– 0.57 per cent
British Pound	0.03 per cent
Swiss Franc	– 0.76 per cent
Japanese Yen	– 0.08 per cent