Finance - Stock Market Forecast

Index Trend & Conditions – 07:00 a.m. I.S.T.

• Resistance for Nifty 50 is seen at 14,870. For Thursday, Jan 14, Support area will be at 14,430. Another “risky” Support level is seen at 14,500

• 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 lower at -0.09%, and the MSCI Emerging Market index is down -0.16%

• Trends on SGX Nifty looked poised for a muted start for Nifty 50 in India. The Nifty futures are trading 28 points, or 0.19% higher at 14,600 on the Singaporean Exchange at 07:30 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 Thursday trade with shares outperforming in Japan; a negative MSCI Asia-Pacific ex-Japan index; U.S. Dollar Index holding most of its advance at 90.289 with 10-Year Treasury Yield retreating to 1.07 following two strong bond auctions this week and Gold futures sliding to $1,847 on the day indicate a stable-to-positive outlook for Nifty 50 India

• FIIs have pumped in 200,000 crore rupees in Indian capital markets since April, but the Indian growth story is partly due to the TINA (There is No Alternative) factor

India Markets

NIFTY 50	OPEN	HIGH	LOW	CLOSE
Wednesday	14,639	14,653	14,435	14,564

India stocks opened on new highs on Wednesday trade, could not sustain at higher level and slipped

The blue-chip NSE Nifty 50 index added 1.4 points, or 0.01%, to 14,564 and the benchmark S&P BSE Sensex lost 25 points, or -0.05%, to 49,492

Broader markets under-performed their headline peers — Midcap 100 index dropped -0.60% ; Smallcap 250 index dropped -0.27% and Nifty 500 dropped -0.14%

Strategy based indices also out-performed benchmark indices — Nifty Alpha 50 dropped -0.83% and Nifty Alpha Low Volatility 30 dropped -0.55%

Nifty P/E for Jan 13, 2020 stayed unchanged at 39.94, and Nifty P/B remained at 4.13, as recorded by NSE India

Bank Nifty opened with a gap up and made an all-time high of 32,683 by surpassing the previous high of 32,613 level. It outperformed Nifty and formed a Doji candle on the daily scale. The index added 235 points, or 0.73%, to 32,574

India VIX rose 1.94% from 22.84 to 23.29 level

The recent increase in the volatility gauge is likely in anticipation of rise in sharp swings in the market ahead of the Budget

Options data suggested a wider trading range between 14,000 and 15,000 levels, as the immediate trading range stood between 14,300 and 14,800 levels

Overnight Call Money rate weighted average stood at 3.19% as per RBI data. It moved in a range of 1.90 — 3.50% for Jan 12

Yield on the benchmark 10-year government bond increased to 6.007%, while the rupee strengthened to 73.0740 per U.S. dollar

India’s Treasury bill yields rose at an auction after the central bank took the first step toward paring back on some of its pandemic relief measures. The 364-day bill was sold at a yield of 3.579%, compared to 3.4681% at the last auction. The lift in yields indicate RBI’s desire to raise short-term borrowing costs is working, as it sought to address a dysfunction in money-market pricing. Traders will now need reassurance from the central bank that the measures won’t ripple through and impact its support for the long-end of the bond market

Kotak AMC said that it sees a longer runway for cyclical sectors in the economy and is overweight on sectors like cement, private financial services companies, automobiles and industrials

Indian Railway Finance Corporation‘s initial public offer worth more than Rs 4,600 crore will come up this month, with a price band of Rs 25-26 per share

The government has set a target of raising Rs 2.1 lakh crore through divestment in current fiscal year. This includes Rs 1.20 lakh crore through stake sales of central public sector enterprises, and the remaining Rs 90,000 crore from financial institutions

Nifty Auto index clocked 0.9% in gains on optimism that the government may announce the long-awaited incentive-linked scrappage policy in the upcoming Union Budget

“Markets will react to the IT majors, Infosys and Wipro, results in early trade Thursday. With markets at a record high, we feel the prudent approach is to use dips to add quality names. And, we expect stock-specific volatility to remain high,” said Ajit Mishra, vice president of research at Religare Broking

“There is a high possibility of further re-rating of valuations for IT companies, the trend is likely to continue for a long time and yes, the Sensex at 50,000 points is easily possible,” said Vinod Nair, head of research at Geojit Financial Services

America Markets

Major U.S. stock indexes wobbled on Wednesday trade, swinging between small gains and losses for most of the session, as investors monitored the impeachment proceedings against President Trump in Washington

The broad-based S&P 500 ticked up 8 points, or 0.2%, to 3,809

Economically sensitive cyclical sectors such as materials and energy sectors weighed on the S&P, with rate-sensitive defensive sectors such as utilities and real estate rising

The Dow Jones Industrial Average, composed mostly of cyclical stocks, dropped 8 points, or less than 0.1%, to 31,060

The tech-heavy Nasdaq Composite Index rose 56 points, or 0.4%, to 13,128

Contracts tied to U.S. futures rose in early Thursday trade. S&P500 futures is up 0.30%, Dow Jones futures is up 0.26%, and Nasdaq futures is up 0.30%

10-year U.S. Treasury yields retreated to 1.07%, following two strong bond auctions this week

The Treasury Department is due to auction $24 billion in 30-year bonds on Wednesday, seen as tests of market sentiment. On Monday and Tuesday, it sold a record $58 billion in three-year notes and $38 billion in 10-year notes, respectively

The Cboe Volatility Index, known as Wall Street’s “fear gauge,” dropped -4.80% to 22.21 on Wednesday

U.S. consumer prices increased solidly in December amid a surge in the cost of gasoline, though underlying inflation remained tame. CPI advanced 1.4% year-over-year in December 2020 after increasing 1.2% in November 2020. An 8.4% jump in gasoline prices accounted for more than 60% of the rise in the CPI

U.S. posted a December budget deficit of $144 billion – a record for the month – due to far higher outlays with coronavirus relief spending and unemployment benefits, while revenues ticked slightly higher. Receipts for the month rose 3% from a year earlier to $346 billion, while outlays were up 40% to $490 billion. The cumulative U.S. deficit for the first three months of fiscal 2021, which started Oct. 1, reached $573 billion, up from $357 billion in the pre-pandemic year-earlier period

U.S. retail sales, industrial production, business inventories and consumer sentiment figures are due Friday

“Investors continue to focus on growing expectations for increased fiscal spending and promising economic prospects as the vaccine rolls out later this year,” said Ryan Nauman, market strategist at Informa Financial Intelligence’s Zephyr. “It’s all about resiliency here right now and equity markets continue to overlook and not be phased by all the chaos that’s out there.”

“This will be a great year for the economy and earnings, but just a good year for the stock market,” Bob Doll, chief equity strategist at Nuveen, said. “In other words, I think multiples are held back a bit because of modestly rising interest rates and inflation.”

Asia-Pacific Markets

Asian stocks mostly made trading gains in early Thursday trade, after a mixed session Wall Street buoyed by expectations of a U.S. stimulus package even as political events in Washington culminated in the impeachment of President Donald Trump

Stocks rose in Japan, Hong Kong and Australia while falling in China, Korea

Japan’s Nikkei 225 added 1.21% to 28,796 and Topix 500 added 0.59% to 1,459

South Korea’s Kospi dropped -0.04% to 3,147

In Hong Kong, Hang Seng added 0.25% to 28,303 while Hang Seng China Enterprises added 0.50% to 11,243

In China, CSI 300 dropped -0.26% to 5,564 and Shanghai Composite dropped -0.47% to 3,581

Australia’s S&P/ASX 200 added 0.37% to 6,711

Overall, MSCI Asia-Pacific, is up 0.27%

European businesses operating in China are facing rising costs and uncertainty as they grapple with economic decoupling between the U.S. and its Asian rival, , even as the European Union and Beijing agreed last month on an investment deal that could give companies better access to China’s market

Alibaba Group Holding and Tencent Holdings climbed in U.S. trading after Dow Jones reported the Chinese tech giants will be spared from a U.S. investment ban

“Decoupling trends are likely to worsen in the future, despite a potential improvement in U.S.-China relations in the coming months and a generally positive outlook for EU-China economic relations,” the chamber said in its report with the Mercator Institute for Chinese Studies, a European think-tank

EU Markets

European stocks inched up on Wednesday trade, as merger talks powered gains in French grocer Carrefour and Spain’s Telefonica, offsetting weakness in banking stocks on worries about extended lockdowns across the continent

The pan-European Stoxx Europe 600 added 0.17% to 407 and Stoxx 50 added 0.19% to close at 3,619

Banks fell the most as on fears that prolonged restrictions in Europe to control soaring coronavirus cases will further slow an economic recovery

Germany’s DAX30 added 0.20% to 13,952

The German DAX was flat as Health Minister Jens Spahn said the country will not be able to lift all restrictions at the beginning of February

London’s blue-chip FTSE 100 dropped -0.13% to 6,745

France’s CAC40 added 0.21% to 5,662

Denmark’s OMX Copenhagen 20 added 0.70% to 1,463

Utilities were a drag after Danish offshore wind farm developer Orsted slumped -6.7% on warning a return to more normal wind speeds this year would hit operating earnings

Spain’s IBEX 35 added 0.26% to 8,367

Italy’s FTSE MIB added 0.41% to 22,738

Italian industrial output fell more than expected in November, suggesting the recovery petered out in the fourth quarter due to new curbs on business

Carrefour shares hit their highest level since August 2019 after Canadian convenience-store operator Alimentation Couche-Tard Inc said it had approached Europe’s biggest retailer to discuss a combination

Spanish telecom company Telefonica rose 7.9% after it agreed to sell its mobile phone masts in Europe and Latin America to U.S. based telecom infrastructure operator American Towers for 7.7 billion euros ($9.41 billion) in cash

“We’re not going to see restrictions being lifted anytime soon, so that’s adding to fears of a decline in economic activity,” said David Madden, analyst at CMC Markets. “The longer the economies are under lockdown the more likely we’re going to have loan defaults. So that’s impacting the banks.”

Oil & Natural Gas Markets

Crude-oil slipped in early Thursday trade

The combination of an industry report pointing to another decrease in U.S. crude stockpiles, Saudi Arabia’s output cuts and a weaker dollar were all driving the run up in energy prices

WTI Crude is trading lower at $52.81 per barrel

Brent Crude is trading lower at $55.93 per barrel

Natural Gas futures is trading lower at $2.750/MMBtu

On MCX-India, Crude oil futures dropped to 3,871 on Wednesday trade

On MCX-India, Natural gas futures dropped to 200/MMBtu on Wednesday 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 was slightly changed in early Thursday trade

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 lower at $1,847 an ounce

Silver futures (Comex) is trading lower at $25.28 an ounce

Copper futures (Comex) is trading higher at $3.6200 per pound

In India, Spot Gold ticked higher to INR 48,479 per 10 grams

India — NCDEX Agridex

Agricultural futures index tracking the performance of the 10 liquid commodities traded lower at 1,170.60 ; with top gains for Cotton Seed Oilcake futures and losses for Mustardseed futures on Wednesday trade

Currency Markets

The U.S. dollar index, DXY held most of its advance in early Thursday trade at 90.289

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 strengthened with USD / INR at 73.1500

JPY weakened with USD / JPY at 103.9200

CNY weakened with USD / CNY at 6.4683

EUR weakened with EUR / USD at 1.2157

GBP strengthened with EUR / GBP at 0.8919

GBP weakened with GBP / USD at 1.3630

*3-Month LIBOR Rate*	*As on 13 Jan 2021*
US DOLLAR	0.22 per cent
Euro	– 0.56 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 dropped -0.34% in early Thursday trade to $37,255 as of 07:30 a.m. I.S.T.

Bitcoin’s parabolic gains are attracting more regulatory scrutiny to cryptocurrencies — which the co-founder of a mining company says is positive for digital coins

Bitcoin bulls argue that this rally will end differently from 2017, when the digital coin tumbled, because the players then were mostly retail investors. More institutions and notable investors, from Paul Tudor Jones to Scott Minerd and Stan Druckenmiller, have either started allocating funds to Bitcoin or have said they’re open to doing so. Some forecasts for its long-term price range from $146,000 to $400,000

“There’s signs that retail investors are taking profit,” said Ryan Rabaglia, the global head of trading at OSL. “Heightened volatility is often correlated with an uptick in retail participation.”

Bond Markets

Americas : 10 – Year Govt Bond Yields

United States : 1.07%
Canada : 0.82%

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

Germany : -0.52%
United Kingdom : 0.31%
France : -0.31%
Italy : 0.60%
Netherlands : -0.47%

Asia Pacific : 10 – Year Govt Bond Yields

India : 6.00%
Japan : 0.01%
Australia : 1.10%
Hong Kong : 0.50%
Singapore : 0.94%
South Korea : 1.69%

Fund Flows on NSE, BSE and MSEI — 13 Jan 2021

FII/FPI Net Buy Rs 1,879.06 Crore in Capital Market

DII Net Sell Rs (2,370.17) Crore in Capital Market

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