Finance - Stock Market Forecast

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

• Resistance for Nifty 50 is at 13,630 — 13,730 zone. For Tuesday, Dec 15, Support area is seen at 13,450 13,400 and 13,330

• Support levels for Bank Nifty is at 30,200 and 29,750 ; while Resistance is seen at 31,300 and 31,375

• The MSCI Asia Pacific ex-Japan dropped -0.27%, while the MSCI Emerging Market index sank -0.20%

• Trends on SGX Nifty indicate a gap-down opening with negative outlook in the morning session and a stable outlook in the afternoon session, for Nifty 50 in India. The Nifty futures are trading 0.42% lower at 13,535 on the Singaporean Exchange at 08:00 a.m. I.S.T.

• Contracts tied to U.S. futures fell on the day, with Nasdaq futures trading in red while S&P 500 and Dow Jones gauge stayed in green, alongside a negative Asia-Pacific early Tuesday morning trade, a nega tive MSCI Asia-Pacific ex-Japan index, U.S. Dollar Index extending slump at 90.645 with 10-Year Treasury Yield edging lower at 0.888 and Gold futures steady at $1,832 on the day indicate a negative-to-stable outlook for Nifty 50 India

• Investors are tracking the deployment of the first Covid-19 vaccines in the U.S. and the continuation of talks over a $908 billion relief bill on Monday

India Markets

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NIFTY 50	OPEN	HIGH	LOW	CLOSE
Monday	13,571	13,597	13,472	13,558

Indian stocks rose on Monday trade, after strongest factory output expansion since February added to signs of a rebound

Nifty 50 added 44 points or 0.33% to 13,558, while the BSE Sensex added 154 points or 0.34% to 46,253

Sixteen of 19 sector sub-indexes compiled by BSE advanced, led by a gauge of capital goods companies

Oil, gas, and capital goods stocks climbed, with industry measures of the so-called cyclical shares leading gains among India’s sub-indexes

The index formed a small-bodied Doji candle on the daily scale, as buying emerges at lower levels

A Doji candle with long lower shadow indicates absence of momentum at the higher levels, but it also suggests that declines are being bought into

Most broader markets out-performed their headline peers — Midcap 100 index added 0.66% ; Smallcap 250 index added 0.81% ; Nifty 500 added 0.39% ; Nifty Alpha 50 added 0.01% and Nifty Alpha Low Volatility 30 added 0.71%

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

Nifty P/E for Dec 14, 2020 is at 37.28, as recorded by NSE India

Bank Nifty opened marginally higher and gradually extended its move towards 30,850 level in the initial hour of the session. The index formed a small-bodied candle on the daily scale, as buying emerged at lower zones, but hurdle are intact at higher levels. The index added 141 points or 0.46% to 30,745

India VIX appreciated 3.26% from 18.79 to 19.40 levels. Lower volatility would suggest the bulls are getting a grip on the market and any decline may trigger buying in the market

Overnight Call Money rate weighted average stood at 3.13% as per RBI data. It moved in a range of 1.90 — 3.50% for Dec 11

The yield on the benchmark 10-year government bond dropped by one basis point to 5.89%, while the rupee strengthened 0.1% to 73.5575 per U.S. dollar

Burger King India Ltd. more than doubled in its Mumbai trading debut from its initial public offering price

Two companies started marketing dollar notes — Adani International Container Terminal Pvt. and a unit of JSW Steel Ltd., while Vedanta Resources Ltd. sold dollar junk notes last week. Indian dollar notes have returned 1.1% so far this month, the most in Asia and topping an average 0.3% for the region

“The worst for India’s economy seems over,” said A.S. Thiyaga Rajan, a senior managing director in Singapore at Aquarius Investment Advisors Pte. “Rare offerings from Indian issuers in the recent past has created an appetite for dollar bonds from local companies.”

America Markets

Democrats and Republicans hung up on differences for $900 billion stimulus measure

Wall Street stocks opened higher on vaccine roll out optimism but pulled back on Monday trade, as the session progressed as investors fretted about the potential for further lockdown measures

The Nasdaq Composite Index, home to many of the U.S.’s biggest tech stocks, outperformed its peers. The benchmark ticked up 62 points, or 0.5%, to 12,440, bringing its gains for the year to 39%

The S&P 500 edged down 16 points, or -0.4%, to 3,647. The tech sector was the only of the index’s 11 groups to finish the day in the green

The Dow Jones Industrial Average slipped 184 points, or -0.6%, to 29861.55, reversing a morning gain of as much as 279 points. The S&P and Dow are up 13% and 4.6%, respectively, for the year

Contracts tied to U.S. futures climbed in early Tuesday trade. S&P500 futures is up 0.04%, Dow Jones futures is up 0.11% and Nasdaq futures is down -0.15%

Yield on the 10-year Treasury note declined to 0.891, providing a boost to non-interest-bearing gold

The Federal Reserve meets Tuesday and Wednesday, with markets widely expecting fresh guidance on its continued asset purchases

On stocks front, Pluralsight rose $1.21, or 6.4%, to $20.19 after private-equity firm Vista Equity Partners agreed to buy the educational-software maker

“In the U.S., it is all about fiscal policy,” said Justin Onuekwusi, head of retail multiasset funds at Legal & General Investment Management. “The markets have priced some of this in and believe it is going to happen.”

“The other thing that we’re watching closely is the sentiment from Americans on who will get vaccinated,” said Megan Horneman, director of portfolio strategy at Verdence Capital Advisors. “We’ve seen that improve over the past couple months where more Americans say that they will take the vaccine. The full distribution of this vaccine is very important for it to work for the long term.”

“There is huge pent-up investment demand across the entire institutional world,” Michael Strobaek, global chief investment officer at Credit Suisse Group AG, told Bloomberg TV. “We’re steering into year-end with still tons of liquidity on the sidelines. I would not be on the wrong side of that.”

Asia-Pacific Markets

A pharmacist labels syringes of COVID-19 vaccines

Most Asian stocks slipped in early Tuesday trade, after a mixed session on Wall Street, as investors assessed the likelihood for further virus-related economic restrictions and the prospects for a U.S. federal spending package

Improving business confidence helped Japanese shares rally to a more than two-year high earlier on Monday

Japan’s Nikkei 225 dropped -0.31% to 26,645, with Topix 500 cutting -0.44% to 1,383

South Korea’s Kospi dropped -0.39% to 2,750

In Hong Kong, Hang Seng dropped -0.68% to 26,214 while Hang Seng China Enterprises dropped -0.55% to 10,387

In China, CSI 300 dropped -0.27% to 4,921 and Shanghai Composite dropped -0.23% to 3,361

Australia’s S&P/ASX 200 dropped -0.23% to 6,644

Singapore’s Straits Times Index dropped -0.38% to 2,847

Overall, MSCI Asia-Pacific, is down -0.17%

Chinese regulators fined Alibaba Group Holding Ltd. and a Tencent Holdings Ltd.‘s unit 500,000 yuan ($76,500) each over failing to declare past acquisitions under the country’s anti-monopoly laws. Alibaba had failed to seek State Administration for Market Regulation’s approval before increasing its stake in department store chain Intime Retail Group Co. to 73.79% in 2017. Shares in Alibaba and Tencent extended losses and were down more than 2% on Monday afternoon

The Reserve Bank of Australia will extend its quantitative easing program by purchasing another A$100 billion ($75.4 billion) of government securities over a further six months when its current package ends. The driving forces behind the extension is — other central banks expanding their balance sheets and the local currency appreciating toward 80 U.S. cents. The RBA will also “be mindful of the direct cost to Australian governments of rising bond rates” which is expected to climb next year. The new program is likely to be split into A$70 billion in federal paper and A$30 billion in state and territory securities. In 2022, RBA is expected reduce the QE program to A$50 billion per six months — in two tranches — and gradually raise the rate for the three year bond target through the year, reaching 0.3% by year’s end

Bill Evans, chief economist at Westpac Banking Corp. said said that the RBA had initiated a longer-dated QE program in November, when it also lowered the cash rate and its three-year yield curve control target to 0.10% as it sought to push down borrowing costs and cap the currency. Yet, the Australian dollar has appreciated more than 5% since the November meeting on news of a Covid-19 vaccine and renewed strength in iron ore prices

He added that the RBA’s balance sheet is currently 16% of GDP , but could lift to near 30% with future QE and drawdowns of its bank lending facility. That compares with the U.S. (36%); Canada (24%); U.K. (not published since the second quarter of 2019 when it was 28%) and the European Central Bank (60%) at present, before allowing for future programs

Westpac recently lifted its forecast for Australia’s 2021 growth to 4%, resulting in unemployment being pulled down to 6% by the end of next year and 5.2% by end-2022. RBA is seeking unemployment below 6% in order to generate wage growth of 3–4%

Tuesday brings China industrial production and retail sales data for November

China has injected cash into its financial system by offering medium-term loans, in the latest effort to ensure banks have sufficient liquidity

EU Markets

U.K. Headquartered Arrival Electric Bus Aimed at Socially Distanced Travel

European equities climbed on Monday trade, after Brexit talks were extended past a Sunday deadline, raising hopes of a deal

The pan-European Stoxx Europe 600 added 0.46% to 391 and Stoxx 50 added 0.52% to close at 3,504

Germany’s DAX30 added 0.83% to 13,223

London’s FTSE 100 dropped -0.23% to close to 6,531

France’s CAC40 added 0.37% to 5,527

Denmark’s OMX Copenhagen 20 added 0.87% to 1,410

Italy’s FTSE MIB added 0.27% at 21,760

Policy decisions from the Bank of England and central banks in Switzerland and Indonesia are due Thursday

AstraZeneca Plc’s shares slumped to an eight-month low, -9.2% touching lowest level since April after it agreed to buy Alexion Pharmaceuticals Inc. for $39 billion in cash and stock. The stock has also been under pressure recently amid questions surrounding the efficacy of its Covid-19 vaccine

Europe is sharpening curbs on people and businesses to slow the rapid spread of the coronavirus. Germany is urging employers to close workplaces as it starts a hard lockdown on Wednesday. Italy and the Netherlands are among the countries expected to sharpen restrictions as well. In Sweden, an intensive care unit in the nation’s third-biggest city has been gripped by an outbreak of Covid-19 infecting more than 40% of the staff. The country is suffering from a shortage of specialist medical care and Stockholm’s ICU capacity usage hit 99% last week

Oil & Natural Gas Markets

Crude oil slipped in early Tuesday trade, after OPEC cut its demand forecast

Another tanker explosion in the Middle East has raised concerns over the region’s stability

WTI Crude is trading higher at $46.74 per barrel

Brent Crude is trading higher at $50.02 per barrel

Natural Gas futures is edging up $2.676/MMBtu

On MCX-India, Crude oil futures declined to 3,406 on Monday trade

On MCX-India, Natural gas futures ticked higher to 196/MMBtu on Monday trade

“A pullback was largely expected after Brent’s rally above $50 earlier in the week, with a key technical benchmark settling in overbought territory on Thursday,” said Bloomberg analysts

Commodities Markets

Gold steady in early Tuesday trade, as investors tracked the deployment of the first Covid-19 vaccines in the U.S. and the continuation of talks over a stimulus bill

“Even with a vaccine, at least another round of U.S. fiscal stimulus is needed, if not more – raising inflation expectations,” said Howie Lee, an economist at Oversea-Chinese Banking Corp., who is long gold through 2021. “Additionally, we expect dollar outflows in 2021, while rates are highly expected to stay low till 2023. Gold could trade above $2,000 from the second quarter onward as markets divert their attention toward excess liquidity in a world that is on its way to being inoculated.”

U.S. Gold futures (Comex) steady at $1,832.00 an ounce

Silver futures (Comex) steady at $24.00 an ounce

Copper futures (Comex) weakened to $3.5090 per pound

In India, Spot Gold weakened to INR 48,051 per 10 grams

Bullion is heading for the first quarterly loss since 2018 as progress on vaccines and signs of recovery dent demand for the haven even as leading central banks continue to offer support for economies

India — NCDEX Agridex

Agricultural futures index tracking the performance of the 10 liquid commodities, was down -0.06% trading at 1,145.10 ; with top gains in Barley and Guar Gum futures, while Coriander and Mustardseed futures led losses on Monday trade

Currency Markets

The U.S. dollar index, DXY extended slump in early Tuesday trade at 90.725

INR appreciated with USD / INR at 73.5712

JPY declined with USD / JPY at 104.0600

CNY declined with USD / CNY at 6.5500

EUR appreciated with EUR / USD at 1.2151

EUR declined with EUR / GBP at 0.9112

The pound climbed after Brexit talks were extended past a Sunday deadline. The pound, the most Brexit-sensitive asset, is already some 4% undervalued against the euro this year

“We will move on from Brexit soon,” said Mark Nash, head of fixed income alternatives at Jupiter Asset Management. “When the market is already priced for a bare-bones deal, then there’s not much further to go.”

*3-Month LIBOR Rate*	*As on 14 Dec 2020*
US DOLLAR	0.22 per cent
Euro	– 0.57 per cent
British Pound	0.04 per cent
Swiss Franc	– 0.79 per cent
Japanese Yen	– 0.10 per cent