Finance - Stock Market Forecast

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

• Resistance for Nifty 50 is at 13,350 zone. For Tuesday, Dec 08, Support area is seen at 13,123 and 13,050

• Resistance for Bank Nifty is at 30,200 zone, while Support area is at 29,750 29,400 and 28,900

• The MSCI Asia Pacific ex-Japan is down -0.24%, while the MSCI Emerging Market index is down -0.26%

• Trends on SGX Nifty indicate a gap-up opening with negative outlook for Nifty 50 in India with a 06 points loss. The Nifty futures were trading at 13,414 on the Singaporean Exchange at 08:00 a.m. I.S.T.

• Contracts tied to U.S. futures looked set for cut on the day with S&P500, Dow Jones and Nasdaq futures trading in red. Most Asia-Pacific stocks trading in red in early Tuesday morning, a negative MSCI Asia-Pacific ex-Japan index, a strengthening U.S. Dollar Index at 90.900 with 10-Year Treasury Yield edging higher at 0.929 and Gold futures regaining its upside momentum on the day indicate a stable-to-negative outlook for Nifty 50 India

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

India Markets

NIFTY 50	OPEN	HIGH	LOW	CLOSE
Monday	13,264	13,366	13,241	13,355

India stocks rose as foreign inflows continued to sustain gains on Monday trade amid high hopes for a coronavirus vaccine

Nifty 50 added 97 points or 0.73% to a fresh all-time high 13,355, while the BSE Sensex added 347 points or 0.77% to a new high of 45,426

The index formed a bullish candle on the daily chart and made higher high and higher low for the sixth straight day

The rally has been powered mainly by FII flows due to severe weakness in the dollar. Any pullback in the Dollar Index, DXY, has a potential to disrupt the rally

Most broader markets out-performed their headline peers — Midcap 100 index added 1.14% ; Smallcap 250 index added 1.37% ; Nifty 500 added 0.83% ; Nifty Alpha 50 cut -0.17% and Nifty Alpha Low Volatility 30 added 0.59%

On Sectoral Indices front, FMCG, Pharma and PSU Bank stocks were at the vanguard of the rally, while Realty, Metal and Auto stocks were the laggards on the day

Nifty P/E for Dec 07, 2020 stayed above 36, as recorded by NSE India

Bank Nifty opened flattish but after a small dip it continued moving towards 30,350 level. The index formed a small Bullish candle on the daily scale. It added 159 points or 0.53% to 30,211. Levels of 29,750 29,400 and 28,900 to act as good support levels. Resistance area is at 30,200

India VIX fell 0.01% from 18.0275 to 18.0250 levels. Lower volatility suggests the bulls are holding a grip on the market and any decline may trigger buying in the market

Lower volatility is also adding directional bias to the market

Overnight Call Money rate weighted average stood at 2.92% as per RBI data. It moved in a range of 2.50 — 3.45% for Dec 05

The yield on the benchmark 10-year Government Bonds rose to 5.975%, while the rupee weakened to 73.8260 per U.S. dollar

Hindalco Industries Ltd. has revived a $947 million plan to make more value-added aluminum products as domestic demand is picking up in the building and construction and automotive sectors. The company will kick off its long-term downstream investment plan by setting up a 34,000-ton aluminum extrusion project in the western Indian town of Silvassa, with production expected to start in two years

India’s central bank left interest rates unchanged for a third straight meeting amid stubbornly high inflation and signs of an economic revival

“The momentum in foreign buying continues to drive the market higher, and there are no negative triggers to stall the rally,” said Umesh Mehta, head of research at Mumbai-based Samco Securities Ltd.

America Markets

Wall Street stocks were little changed on Monday trade, as coronavirus cases in the US continue to increase

The Dow Jones 149 points or -0.5% to 30,069 and the S&P 500 retreated 7 points or -0.2% to 3,692 ; while the Nasdaq added 56 points, or 0.5% to 12,520

Energy, Financial and Industrial shares led losses, while Technology companies outperformed, sending the Nasdaq 100 up for a ninth straight day

Contracts tied to U.S. futures dipped in early Tuesday trade. S&P500 futures is down -0.28%, Dow Jones futures is down -0.25% and Nasdaq futures is down -0.24%

Yield on the 10-year Treasury note is slightly under 1, at 0.928

Intel Corp., the world’s largest chipmaker, slid on news that Apple Inc. is planning a series of new Mac processors for introduction as early as 2021

Boeing Co. jumped after UBS Group AG recommended buying stocks of the planemaker

Home-rental giant Airbnb Inc. boosted the price range of its initial public offering, pushing its potential valuation to as much as $42 billion

Markets are increasingly expecting a stimulus deal to be done after last week’s disappointing jobless data

“Low interest rates, increased conversation about stimulus and a ‘flight-to-quality’ unwind with progress on the Covid vaccine should keep the U.S. dollar dropping, which should be a boost to equities,” said Malcolm Dorson, a New York-based money manager at Mirae Asset Global Investments.

“On a classic valuation metric, the market looks very expensive. But on a price-to-cash return basis, it actually doesn’t look that expensive,” Dennis DeBusschere, head of portfolio strategy at Evercore ISI, said.

Asia-Pacific Markets

Asian shares drifted in early Tuesday trade as swelling coronavirus infections across the U.S. weighed on risk assets overnight, with stocks gaining in Australia while retreating in Japan, South Korea, China and Hong Kong

Japan’s Nikkei 225 dropped -0.32% to 26,463, with Topix 500 dropping -0.10% to 1,366

South Korea’s Kospi dropped -0.84% to 2,722

In Hong Kong, Hang Seng dropped -0.55% to 26,358 while Hang Seng China Enterprises dropped -0.40% to 10,431

In China, CSI 300 added 0.30% to 5,039 and Shanghai Composite dropped -0.09% to 3,413

Australia’s S&P/ASX 200 added 0.33% to 6,697

Singapore’s Straits Times Index dropped -0.15% to 2,821

Overall, MSCI Asia-Pacific, is down -0.14%

Singapore Telecommunications Ltd., Singtel‘s shares soared 11%, the most since October 2008, after its consortium with Grab Holdings Inc. was awarded a license to run a digital full bank in Singapore. Digital full banks will be allowed to take deposits and provide banking services to both retail and corporate customers

China’s foreign exchange reserves rose by more than $50 billion, reaching $3.1785 trillion at the end of November to the highest since August 2016, likely boosted by the weaker dollar and a trade surplus at record highs

The yuan has already appreciated more than 6% against the dollar this year and is one of the best performers in Asia

Japan’s Prime Minister Yoshihide Suga is set to unveil his first stimulus package, $706 Billion on Tuesday amid an increase in virus cases. Japan’s stimulus package will include around 40 trillion yen in fiscal measures. Suga said Friday that a new fund worth around 2 trillion yen ($19.2 billion) to fund green technologies would also feature in the package, as well as support for digitalization. The prime minister has made the upgrading of digital infrastructure and a 2050 carbon emissions goal central parts of his policy platform

EU Markets

European equities closed mostly lower on Monday trade, as rising tension between the United States and China sapped some appetite for risky assets

The pan-European Stoxx Europe 600 dropped -0.13% to 393 and Stoxx 50 dropped -0.26% to close at 3,530

Germany’s DAX30 dropped -0.21% to 13,271

London’s FTSE 100 added 0.08% to close to 6,555

France’s CAC40 dropped -0.64% to 5,573

Denmark’s OMX Copenhagen 20 added 0.65% to 1,380

Italy’s FTSE MIB dropped -0.32% at 22,107

U.K. mid-cap stocks have been absorbing plenty of cash, partly driven by a rally in value stocks around the world. The Vanguard FTSE 250 ETF has taken in 240 million pounds ($319 million) in December alone. That puts the fund of British mid-cap stocks on pace for its best month in a year, and follows a 145 million pound inflow in November

FTSE 250 fund has added 240 million pounds this month alone

Thursday brings the European Central Bank policy decision and a press briefing from Christine Lagarde. Economists widely expect the central bank to increase and extend its pandemic bond-buying program

U.K.’s billionaire Mike Ashley is in talks about a takeover deal that could see Ashley’s Frasers Group operate Debenhams’ 124 stores under 12-month licenses and potentially save up to 12,000 jobs

Oil & Natural Gas Markets

Crude oil slipped in early Tuesday trade even on the back of rising buying interest from Asia

WTI Crude is trading lower at $45.45 per barrel

Brent Crude is trading lower at $48.420 per barrel

Natural Gas futures was steady at $2.433/MMBtu after falling more than 18% in the last 3 trading days

On MCX-India, Crude oil futures is up at 3,428 on Monday trade

On MCX-India, Natural gas futures is down at 180/MMBtu on Monday trade

“The oil market will see better days in 2021, it’s almost certain, but it still has to overcome a short-term hurdle for a couple of months until demand picks up, and this will constrain prices for the time being,” said Bjornar Tonhaugen, head of oil markets at Rystad Energy AS

Gold & Silver Markets (+ Copper Futures)

Gold regained its upside momentum, in early Tuesday trade

According to Bloomberg analysts, if 10-Year U.S. Treasury Yield rises to 1% and above due to reflation trade, then inflation breakevens and Gold prices will keep strengthening above $1,800, but if the yield rises to 1.5% then Gold prices will weaken from $1,800, closer to $1,700

U.S. Gold futures (Comex) strengthened to $1,865.40 an ounce

Silver futures (Comex) strengthened to $24.83 an ounce

Copper futures (Comex) unchanged at $3.5105 per pound

In India, Spot Gold weakened to INR 49,128 per 10 grams

India — NCDEX Agridex

Agricultural futures index tracking the performance of the 10 liquid commodities, was down -2.21% trading at 1,144.10 ; with top gains in Guar Gum and Turmeric futures, while Chana, Mustard Seed and Cotton Seed Oilcake futures led losses on Monday trade

Currency Markets

The U.S. dollar index, DXY was steady at 90.900 in early Tuesday trade, after falling for nearly 3% since Nov. 11

INR weakened with USD / INR at 73.9012

JPY strengthened with USD / JPY at 103.9600

CNY strengthened with USD / CNY at 6.5298

EUR strengthened with EUR / USD at 1.2137

EUR strengthened with EUR / GBP at 0.9048

The pound fell on concern that Brexit talks could collapse

“In the case of a no deal Brexit, we expect a profound GBP collapse — EUR/GBP above 0.95, possibly briefly touching parity — due to the fact that this outcome would come as a surprise and investors have not been pricing this in,” ING Groep NV strategists including Petr Krpata wrote in a note.

*3-Month LIBOR Rate*	*As on 07 Dec 2020*
US DOLLAR	0.23 per cent
Euro	– 0.55 per cent
British Pound	0.04 per cent
Swiss Franc	– 0.78 per cent
Japanese Yen	– 0.10 per cent