Finance - Stock Market Forecast

Index Trend & Conditions – 08:30 a.m. I.S.T.

• Resistance for Nifty 50 is at 13,630 — 13,730 zone. For Wednesday, Dec 16, 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 added 0.77%, while the MSCI Emerging Market index added 0.53%

• Trends on SGX Nifty indicate a gap-up opening with positive outlook in the morning session and a mixed outlook in the afternoon session, for Nifty 50 in India. The Nifty futures are trading 0.44% higher at 13,638 on the Singaporean Exchange at 08:30 a.m. I.S.T.

• Contracts tied to U.S. futures were little changed on the day, with Nasdaq futures trading in green while S&P 500 and Dow Jones gauge stayed in red, alongside a positive Asia-Pacific early Wednesday morning trade, a positive MSCI Asia-Pacific ex-Japan index, U.S. Dollar Index extending slump at 90.480 with 10-Year Treasury Yield edged higher to 0.906 from 0.891 and Gold futures strengthening at $1,857 on the day indicate a mixed outlook for Nifty 50 India

• Investors await the conclusion of the Fed’s two-day meeting on Wednesday

India Markets

NIFTY 50	OPEN	HIGH	LOW	CLOSE
Tuesday	13,547	13,589	13,447	13,567

India’s stock benchmarks erased early losses to remain little changed on Tuesday trade, as investors assessed a nascent economic recovery

Nifty 50 added 09 points or 0.07% to 13,567, while the BSE Sensex added 10 points or 0.02% to 46,263

Twelve of 19 sector sub-indexes compiled by BSE Ltd. rose, with a gauge of consumer durable companies gaining the most

Most broader markets out-performed their headline peers — Midcap 100 index added 0.47% ; Smallcap 250 index added 0.21% and Nifty 500 added 0.08%

Strategy based indices under-performed their benchmark indices — Nifty Alpha 50 added 0.22% and Nifty Alpha Low Volatility 30 dropped -0.18%

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

Nifty P/E for Dec 15, 2020 advanced to 37.31, as recorded by NSE India

Bank Nifty remained below 31,000 level and has under-performed the benchmark Nifty. The index declined 55 points or -0.18% to 30,691

India VIX declined -0.30% from 19.40 to 19.34 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 3.15% as per RBI data. It moved in a range of 1.90 — 3.50% for Dec 14

The yield on the benchmark 10-year government bond was little changed at 5.89% while the rupee weakened 0.1% to 73.6400 against the U.S. dollar

Foreign investors have poured around $50 billion into Indian stocks and stakes in companies this year, the most since 2012, boosting rupee liquidity in a banking system that’s already flush with cash from the RBI’s stimulus measures. Signs that the economy is crawling back from a collapse in activity have stirred optimism

Inflation slowed more than expected in November, a report showed after markets closed on Monday. Trade data due later today to provide insights as to whether lockdowns abroad are continuing to hamper demand for Indian exports

India’s trade deficit was revised slightly lower to $9.87 billion in November 2020 compared to an initial estimate of $9.96 billion. Exports were down -8.74% to $23.52 billion while imports fell -13.32% to $33.39 billion

“We don’t see potential for material gains from here as the best case scenario is factored into the current valuations,” said Amit Khurana, head of research at Dolat Capital Market Ltd. in Mumbai. “The market is now more at the top of our range.”

America Markets

Wall Street stocks closed deeply in the green on Tuesday trade, as new stimulus hopes and vaccine optimism outweighed fears of new year-end restrictions

The Nasdaq Composite Index, jumped 155 points, or 1.2%, to 12,595 — a new all-time-high that marks the index’s 51st record close of the year

The S&P 500 rose 47 points, or 1.3%, to 3,694, snapping a four-session losing streak, the index’s longest stretch of losses since late September

The Dow Jones Industrial Average gained 337 points, or 1.1%, to 30,199

Contracts tied to U.S. futures were little changed in early Tuesday trade. S&P500 futures is down -0.01%, Dow Jones futures is down -0.06% and Nasdaq futures is up 0.18%

The yield on 10-year U.S. Treasury note rose to 0.91%, from 0.891% on Monday, as investors awaited the conclusion of the Fed’s two-day meeting on Wednesday

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

In corporate news, shares of Apple Inc. climbed after Nikkei Asia reported that the company plans to produce up to 96 million iPhones in the first half of next year, a nearly 30% year-over-year jump. Shares of the iPhone maker rallied $6, or 5%, to $127

The Food and Drug Administration said Tuesday that Moderna’s Covid-19 shot is “highly effective,” suggesting it could soon be added to the arsenal against the pandemic

“The market is having to deal with a lot of headwinds,” said Mr. Redha, a portfolio manager at PineBridge Investments. “Both on the virus itself, the risk of tighter and tighter lockdowns, and uncertainty around any kind of additional stimulus in the U.S.”

“The U.S. does need some more fiscal stimulus to see it through these winter months,” said Lyn Graham-Taylor, senior rates strategist at Rabobank. “Treasury yields are likely to jump if U.S. lawmakers do pass a significant stimulus package, lifting growth, inflation prospects and the supply of bonds.”

Asia-Pacific Markets

Asian stock markets were mostly higher in early Wednesday trade, following the positive cues from Wall Street as prospects of additional stimulus in the United States boosted risk sentiment, after falling the most in two weeks in recent sessions

Japan’s Nikkei 225 added 0.22% to 26,749, while Topix 500 added 0.35% to 1,387

South Korea’s Kospi added 0.38% to 2,768

In Hong Kong, Hang Seng added 0.69% to 26,391 while Hang Seng China Enterprises added 0.63% to 10,462

In China, CSI 300 dropped -0.07% to 4,941 and Shanghai Composite dropped -0.09% to 3,364

Australia’s S&P/ASX 200 advanced 1.20% to 6,710

Singapore’s Straits Times Index added 0.34% to 2,866

Overall, MSCI Asia-Pacific, is down -0.22%

Flash data showed that the au Jibun Bank Japan Services PMI fell to a three month low of 47.2 in December 2020 from a final 47.8 in the prior month. The au Jibun Bank Japan Manufacturing PMI rose to 49.7 in December 2020, highest reading since May 2019, from a final 49.0 a month earlier

The IHS Markit Manufacturing PMI in Australia rose to 56 in December 2020 from 55.8 in November – sixth straight month of expansion. The IHS Markit Australia Services PMI increased to 57.4 in December 2020 from 55.1 in November

The unemployment rate in South Korea edged down to 4.1% in November 2020 from 4.2% in the previous month and compared to 3.6% YoY. The labour force participation rate increased to 62.7% from 62.4%, and the employment rate remained at 60.2%

China’s economic recovery continued apace in November, data from the National Bureau of Statistics showed, putting the world’s second-largest economy on a stronger footing as it approaches the end of a tumultuous year. Industrial output rose 7% from a year earlier, faster than economists were expecting

Chinese clothing giant, Shandong Ruyi Technology Group Co. has defaulted on two domestic bonds in 24 hours, in the latest sign of financial stress among the country’s weaker private companies. The luxury clothing firm’s debt failures are shifting investors’ attention back to risks in China’s private sector following a spate of bond defaults by several high-profile state-linked firms since last month

EU Markets

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

European equities were steady and lacked direction on Tuesday trade, as investors digested fresh coronavirus-induced restrictions across the continent

Germany and the Netherlands will enter a new lockdown this week, while Italy’s government is considering a partial lockdown from December 24 to at least January 2. In addition, the UK government imposed on Monday tighter Covid-19 measures on London

The pan-European Stoxx Europe 600 added 0.13% to 392 and Stoxx 50 added 0.50% to close at 3,521

Gains for auto makers and car-part manufacturers offset losses for health-care stocks, utilities and retailers including Sweden’s H&M Hennes & Mauritz

Germany’s DAX30 added 0.96% to 13,349

Shares in Volkswagen rose almost 5% after the German car maker’s top shareholders and union leaders backed Chief Executive Herbert Diess’s strategy to refocus on electric vehicles

London’s FTSE 100 dropped -0.45% to close to 6,502

France’s CAC40 added 0.26% to 5,542

Denmark’s OMX Copenhagen 20 dropped -0.93% to 1,397

Italy’s FTSE MIB added 0.44% at 21,856

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

The unemployment rate in the U.K. increased to 4.9% in the three months to October 2020, compared to 4.8% in the previous period and below forecasts of 5.1%

Oil & Natural Gas Markets

Crude oil rose from a nine-month high in early Wednesday trade, even as the International Energy Agency cautioned that a market glut will last another year

Positive data from China, which processed a record amount of oil on a daily basis last month as fuel consumption recovered, is aiding the rally

WTI Crude is trading higher at $47.40 per barrel

Brent Crude is trading higher at $50.60 per barrel

Natural Gas futures is weakened to $2.628/MMBtu

On MCX-India, Crude oil futures appreciated to 3,491 on Tuesday trade

On MCX-India, Natural gas futures declined to 193/MMBtu on Tuesday trade

“Fundamentals point to a setback, considering new mobility restrictions in Japan, U.S., Europe, South Korea,” said Giovanni Staunovo, commodity analyst at UBS Group AG. “On the other hand, long-term oriented investors look still to rotate into cyclical commodities such as oil.”

Commodities Markets

Gold advanced in early Wednesday trade, as investors anticipated fresh guidance on monetary policy impacting asset purchases from the Federal Reserve

Fresh anti-virus curbs being rolled out in major economies including Germany and the U.K. extending support to the metal’s upside momentum

“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 $1,857.00 an ounce

Silver futures (Comex) steady at $24.40 an ounce

Copper futures (Comex) weakened to $3.5240 per pound

In India, Spot Gold weakened to INR 48,614 per 10 grams

India — NCDEX Agridex

Agricultural futures index tracking the performance of the 10 liquid commodities, was up 0.74% trading at 1,151.10 ; with top gains in Soy Bean and Guar Gum futures, while Jeera and Coriander futures led losses on Tuesday trade

Currency Markets

The U.S. dollar index, DXY extended slump in early Wednesday trade at 90.475

INR declined with USD / INR at 73.6400

JPY appreciated with USD / JPY at 103.8200

CNY appreciated with USD / CNY at 6.5427

EUR appreciated with EUR / USD at 1.2151

EUR declined with EUR / GBP at 0.9075

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

*3-Month LIBOR Rate*	*As on 15 Dec 2020*
US DOLLAR	0.22 per cent
Euro	– 0.57 per cent
British Pound	0.03 per cent
Swiss Franc	– 0.79 per cent
Japanese Yen	– 0.10 per cent