Index Trend & Conditions – 07:45 a.m. I.S.T.
• For Tuesday, Jan 12, Support area for Nifty 50 will be at 14,430 14,199 and 14,130
• Support levels for Bank Nifty are at 31,500 31,375 and 30,850 with Resistance at 32,400 and 32,613
• The MSCI Asia Pacific ex-Japan is trading higher at -0.16%, and the MSCI Emerging Market index is up -0.17%
• Trends on SGX Nifty indicate a lower opening for Nifty 50 in India. The Nifty futures are trading 18 points, or -0.12% lower at 14,477 on the Singaporean Exchange at 07:45 a.m. I.S.T.
• Contracts tied to U.S. futures rose in early trade, with Nasdaq, S&P 500 and Dow Jones futures trading in green, alongside a mostly positive start to Asia-Pacific early Tuesday trade with shares rising in China, dipping in South Korea and holding steady in Hong Kong and Japan; a negative MSCI Asia-Pacific ex-Japan index; U.S. Dollar Index edging higher into a fourth day of gains to 90.55 with 10-Year Treasury Yield climbing 1.15 and Gold futures holding steady $1,845 on the day indicate a stable-to-positive outlook for Nifty 50 India
• RBI Governor Shaktikanta Das cautioned about a widening disconnect between certain sections of the financial markets and the real economy, saying — “Stretched valuations of financial assets pose risks to financial stability. Banks and financial intermediaries need to be cognizant of these risks and spillovers in an interconnected financial system.”
India Markets
| NIFTY 50 | OPEN | HIGH | LOW | CLOSE |
|---|---|---|---|---|
| Monday | 14,474 | 14,498 | 14,383 | 14,484 |
India stocks advanced to new highs on Monday trade, as sentiment was boosted by a positive start to the quarterly earnings season and the commencement of vaccinations in the nation this week
The blue-chip NSE Nifty 50 index added 137 points, or 0.96%, to 14,484 and the benchmark S&P BSE Sensex added 486 points, or 1.00%, to 49,269
Nifty formed an indecisive Dragonfly Doji on the daily chart. Such a pattern is usually seen around potential turning points, which is hinting at a balance of power between the bulls and the bears at the top. However other analysts at Economic Times say that since index has closed beyond the channel resistance line, bulls are in control
Both gauges were boosted by technology companies earnings forecast and a jump in vehicle registrations fueling expectations of a strong quarter for carmakers
Among individual stocks, Tata Consultancy Services climbed 1.7% to a record high after Asia’s largest software outsourcing provider posted net income and sales that beat analysts’ estimates and forecast double digit growth next financial year. Infosys and Wipro both due to report results on Wednesday, each climbing more than 3%; HCL Technologies saw the steepest jump, rising 6.1%
Broader markets under-performed their headline peers — Midcap 100 index dropped -0.24% ; Smallcap 250 index dropped -0.08% and Nifty 500 added 0.68%
Strategy based indices also out-performed benchmark indices — Nifty Alpha 50 dropped -0.54% and Nifty Alpha Low Volatility 30 added 1.30%
Nifty P/E for Jan 11, 2020 increased to 39.72 from 39.45, while Nifty P/B edged higher to 4.10 from 4.07, as recorded by NSE India
Bank Nifty opened with a gap up, but could not sustain at higher levels and remained quite choppy with some selling pressure for most part of the session. It formed a bearish candle on the daily scale and negated the higher highs of last four sessions. The index dropped 85 points, or -0.27%, to 31,998
India VIX rose 8.44% from 20.64 to 22.38 level
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 3.18% as per RBI data. It moved in a range of 1.90 — 3.50% for Jan 08
Yield on the benchmark 10-year government bond increased to 5.92%, while the rupee weakened -0.2% to 73.3850 per U.S. dollar
India’s central bank warned that an expected doubling of bad loans and soaring financial markets in the nation’s weakened economy threaten financial stability — with non-performing asset ratio forecasted to rise to 13.5% by the end of September from 7.5% a year ago. If the number holds through the fiscal year ending March 2022, it would be the worst since 1999
The RBI expects banks’ capital ratios will erode to 14% in September from 15.6% in September 2020, the report showed. This may worsen to 12.5% in a very severe stress scenario, under which nine banks may fall short of meeting the minimum capital requirement of 9%
India’s benchmark stock index has followed its global peers in surging to fresh record highs while the government estimates GDP will fall -7.7% in the year through March 2021, the biggest contraction since 1952
Shares of Tata Motors jumped 11% in the session on market buzz that the company and Tesla may enter into a memorandum of understanding for the manufacturing and sale of electric vehicles in India
Inflation in India may finally be slowing, opening the door for the central bank to resume monetary easing and helping it push back against calls to shake up its policy framework. Consumer price index figures due Tuesday are expected to show a 5% increase in December from a year earlier, returning to the Reserve Bank of India’s target range of 2% to 6%. Prices rose quicker than 6% in 11 of the 12 prior readings, hampering the RBI’s ability to counter the pandemic-driven downturn
India expects to invest 4 trillion rupees ($54.5 billion) in clean coal projects, including coal gasification and coal-bed methane over the next decade as it seeks to tap domestic energy sources and curb imports — to achieving India’s ambition of becoming a $5 trillion economy by 2030
“Domestically, corporate funding has been cushioned by policy measures and the loan moratorium announced in the face of the pandemic, but stresses would be visible with a lag,” the Reserve Bank said on Monday. “This has implications for the banking sector as corporate and banking sector vulnerabilities are interlinked.”
“Congenial liquidity and financing conditions have shored up the financial parameters of banks, but it is recognised that the available accounting numbers obscure a true recognition of stress,” Governor Shaktikanta Das wrote in the report. “It is in this context that banks must exploit the congenial financial conditions and the conducive policy environment to plan for capital augmentation and alterations in business models that address emerging challenges.”
“December quarter results look promising and have been boosted by a recovery in the economy,” said Deven Choksey, a strategist at KRChoksey Investment Managers Pvt. in Mumbai, “The start of the vaccination drive is positive for sentiment and is continuing globally.”
America Markets
Wall Street’s main indexes slipped from record levels on Monday trade, as investors locked in gains after a stellar vaccine and stimulus-fueled rally
The S&P 500 declined 25 points, or -0.7%, to 3,799
Nine of the 11 major S&P sectors were down in early trading with consumer discretionary being the biggest loser, weighed down by a 6% drop in Tesla Inc after a 11-day winning streak
The Dow Jones Industrial Average, composed mostly of cyclical stocks, shed 89 points, or -0.3% to 31,008
The tech-heavy Nasdaq Composite Index dropped 165 points, or about -1.3%, to 13,036
Contracts tied to U.S. futures rose in early Tuesday trade. S&P500 futures is up 0.13%, Dow Jones futures is up 0.13%, and Nasdaq futures is up 0.17%
U.S. Treasury yields were steady near all-time peaks at 1.150% on the day, in anticipation of a larger stimulus package
The Cboe Volatility Index, known as Wall Street’s “fear gauge,” rose 11.69% to 24.08 on Monday
U.S. consumer-price inflation figures are due Wednesday
U.S. retail sales, industrial production, business inventories and consumer sentiment figures are due Friday
“Keep in mind though, after big runs like we saw last week, it’s natural for the market to take a breather,” said Chris Larkin, managing director of trading and investing product at E*Trade Financial. “Traders looking for new opportunities may be wise to look beyond behemoth tech stocks.”
“Long-term bulls like us wondering if the stock markets are climbing the proverbial ‘wall of worry’ too fast for this early in a year with so many potential hurdles that might lie ahead,” John Stoltzfus, chief investment strategist at Oppenheimer & Co., wrote to clients.
Asia-Pacific Markets
Most Asian stocks opened higher in early Tuesday trade
Shares rose in China, dipped in South Korea and were steady in Hong Kong and Japan
Japan’s Nikkei 225 added 0.13% to 28,178 and Topix 500 dropped -0.11% to 1,441
South Korea’s Kospi dropped -0.24% to 3,140
In Hong Kong, Hang Seng added 0.30% to 27,988 while Hang Seng China Enterprises added 0.20% to 11,079
In China, CSI 300 added 0.20% to 5,451 and Shanghai Composite added 0.50% to 3,549
Australia’s S&P/ASX 200 added 0.13% to 6,704
Overall, MSCI Asia-Pacific, is down -0.46%
Chinese stocks fell the most in three weeks on Monday, led by consumer shares and commodity producers, amid concern valuations for the most popular stocks were stretched and as metal prices slumped. The gauge of consumer staples now trades at a heady 11 times price to book
China’s consumer prices rose in December while factory gate deflation eased, providing more evidence of the country’s economic recovery
“There is growing worry that there is a bubble in popular Chinese stocks,” said Wang Zhuo, a fund manager at Shanghai Zhuozhu Investment Management Co. “We have warned our clients about baijiu and other consumer staples.”
EU Markets
European stocks fell on Monday trade, after a strong rally last week took them to the highest level in more than 10 months, retreating as surging coronavirus cases across the continent and mainland China looked likely to dent a global economic recovery
The pan-European Stoxx Europe 600 dropped -0.44% to 406 and Stoxx 50 dropped -0.67% to close at 3,620
Germany’s DAX30 dropped -0.80% to 13,936
London’s blue-chip FTSE 100 dropped -1.09% to 6,798
France’s CAC40 dropped -0.78% to 5,662
Denmark’s OMX Copenhagen 20 dropped -0.57% to 1,476
Spain’s IBEX 35 dropped -0.60% to 8,357
Italy’s FTSE MIB dropped -0.32% to 22,722
Revolut Ltd., one of Europe’s largest startups, has asked U.K. regulators for a full banking license to fuel expansion beyond its fintech roots
At least 250,000 small companies in the U.K. are expected to close in 2021 unless the government provides more assistance, threatening a further blow to an economy heading for a double-dip recession. A German study says Britain is significantly less attractive as an international business location because of Brexit, but remains well positioned compared with other major economies
Denmark will most likely have to extend parts of its lockdown, which initially had been set to end in one week, because the U.K. variant of the virus is spreading fast, Prime Minister Mette Frederiksen said
Oil & Natural Gas Markets
Crude-oil slightly changed in early Tuesday trade, after four consecutive sessions of gains amid concerns over weak global fuel demand as a surge of virus infections hit China and Europe
Saudi Arabia pledged extra, voluntary oil output cuts of 1 million barrels per day (bpd) in February and March as part of a deal under which most OPEC+ producers will hold production steady during new lockdowns
WTI Crude is trading higher at $52.23 per barrel, the first retreat in a week
Brent Crude is trading higher at $55.62 per barrel
Natural Gas futures pared gains at $2.663/MMBtu
On MCX-India, Crude oil futures rose to 3,830 on Monday trade
On MCX-India, Natural gas futures slipped to 196/MMBtu on Monday trade
Analysts at Reuters say that oil prices could see a correction in the coming months if fuel demand remains constrained by the pandemic. Strict restrictions on travel and other activity around the world to contain a surge in virus cases are weighing on fuel sales, weakening the prospect of an energy demand recovery in the first half of 2021
Commodities Markets
Gold steady in early Tuesday trade, as real yields rose and the dollar strengthened, extending bullion’s biggest drop in two months
Gold’s initial advances were overturned by a surge in Treasury yields, which damped the appeal of the non-interest bearing asset. The outlook for more borrowing under the Biden administration drove rates higher, while a decline in inflation expectations caused real returns on Treasuries to rise, further hurting bullion’s appeal. The dollar’s recovery from its lowest level in almost three years is also putting pressure on gold
U.S. Gold futures (Comex) is trading higher at $1,845 an ounce
Silver futures (Comex) is trading higher at $25.08 an ounce
Copper futures (Comex) is trading higher at $3.5790 per pound
In India, Spot Gold weakened to INR 48,565 per 10 grams
India — NCDEX Agridex
Agricultural futures index tracking the performance of the 10 liquid commodities was down trading at 1,176.80 ; with top gains for Jeera futures and losses for Mustardseed futures on Monday trade
Currency Markets
The U.S. dollar index, DXY edging higher into a fourth day of gains in early Tuesday trade at 90.552
Morgan Stanley strategists have dropped their expectations of near-term weakening in the dollar amid a regime shift in U.S. rates propelled partly by prospects for meaningful fiscal expansion
INR weakened with USD / INR at 73.4880
JPY weakened with USD / JPY at 104.1700
CNY weakened with USD / CNY at 6.4814
EUR weakened with EUR / USD at 1.2167
GBP strengthened with EUR / GBP at 0.9006
GBP weakened with GBP / USD at 1.3511
| 3-Month LIBOR Rate | As on 11 Jan 2021 |
| US DOLLAR | 0.22 per cent |
| Euro | – 0.57 per cent |
| British Pound | 0.03 per cent |
| Swiss Franc | – 0.77 per cent |
| Japanese Yen | – 0.08 per cent |
Bitcoin
Bitcoin / U.S. Dollar slipped -3.01% in early Tuesday trade to $34,387 as of 07:30 a.m. I.S.T.
Bitcoin slid as much as 21% over Sunday and Monday in the biggest two-day slide since March
JP Morgan Chase & Co.’s strategists speculate that Bitcoin has the potential to reach $146,000 in the long term as it competes with gold as an asset class
“It’s to be determined whether this is the start of a larger correction, but we have now seen this parabola break so it might just be,” said Vijay Ayyar, head of business development with crypto exchange Luno in Singapore
Bond Markets
Americas : 10 – Year Govt Bond Yields
United States : 1.15%
Canada : 0.82%
Europe, Middle East & Africa : 10 – Year Govt Bond Yields
Germany : -0.50%
United Kingdom : 0.31%
France : -0.29%
Italy : 0.57%
Netherlands : -0.45%
Asia Pacific : 10 – Year Govt Bond Yields
India : 5.91%
Japan : 0.03%
Australia : 1.10%
Hong Kong : 0.50%
Singapore : 0.94%
South Korea : 1.69%
Fund Flows on NSE, BSE and MSEI — 11 Jan 2021
FII/FPI Net Buy Rs 3,138.90 Crore in Capital Market
DII Net Sell Rs (2,610.13) Crore in Capital Market
Where We’ve Been Reading —
- Bloomberg
- Trading Economics
- Reuters India
- Financial Times
- NSE Indices India
- NCDEX (National Commodity & Derivatives Exchange Ltd.)
- Morningstar India
- The Wall Street Journal
- Tech Crunch
- The Star
- The Washington Post
- Harvard Business Review
- Business Standard
- The Economic Times
