Index Trend & Conditions – 07:30 a.m. I.S.T.
• Major Resistance for Nifty 50 is at 15,250 15,322 and 15,425 zone. For Friday, Feb. 19, Support area is seen at 15,090 and 15,045
• Support levels for Bank Nifty is at 36,208; while Resistance zone is at 37,330 and 37,708 for Feb. 19
• The MSCI Asia Pacific ex-Japan is trading lower -0.37%, and the MSCI Emerging Market index is down -0.25%
• Trends on SGX Nifty look poised for a gap-down opening for Nifty 50 in India. The Nifty futures are trading 46 points, or -0.30% lower at 15,068 on the Singaporean Exchange at 07:30 a.m. I.S.T.
• U.S. equity futures fell in early morning trade with S&P 500, Dow Jones and Nasdaq futures trading in red; alongside a lower start in Asia-Pacific benchmarks gauges in early Friday trade; a negative MSCI Asia-Pacific ex-Japan index; U.S. Dollar paring overnight declines to 90.61 with 10-Yr Treasury Yields easing to 1.28% and Gold futures extending declines to $1,766, after falling to the lowest in almost eight months, indicate negative-to-stable outlook for Nifty 50 India
• Encouraging signs in the fight against the Covid-19 pandemic are emerging, with new global infections slowing sharply, according to data from Johns Hopkins University
India Markets
| NIFTY 50 | OPEN | HIGH | LOW | CLOSE |
|---|---|---|---|---|
| Thursday | 15,238 | 15,250 | 15,078 | 15,118 |
India’s equity benchmarks came under renewed selling pressure on Thursday trade
The blue-chip NSE Nifty 50 index dropped 90 points or -0.59% to 15,118 and the benchmark S&P BSE Sensex dropped 379 points or -0.73% at 51,324
Broader markets out-performed headline peers — Midcap 100 index added 0.47%; Smallcap 250 index added 0.86% and Nifty 500 dropped -0.25%
Nifty P/E for Feb 18 decreased from 41.49 to 41.26, and Nifty P/B dropped from 4.31 to 4.28, as recorded by NSE India
Bank Nifty opened positive, but failed to hold above 37,000 level and drifted towards 36,350. The rate-sensitive index widened losses as underperformance continued. The index has dropped 323 points, or -0.88%, to settle at 36,587
India VIX or Fear gauge India VIX moved up marginally by 0.20% from 21.50 to 21.54 level. It needs to cool down and hold below 21 level for a continuation in the ongoing momentum
Overnight Call Money rate weighted average stood at 3.22% as per RBI data. It moved in a range of 1.90 — 3.50% for Feb 17
Yield on the benchmark 10-year government bond increased to 6.23%, while the rupee strengthened to 72.6510 per U.S. dollar
Tussle between upward pressure on bond yields and the RBI trying to manage the borrowing program continues. Benchmark 10-year yield surged past 6% on Thursday, a level seen as a line in the sand for the RBI
Underwriters had to buy almost 70% of government debt put up for auction as a near-record debt-sale plan and concerns over fewer liquidity measures spook traders
Unlike other central banks, the RBI is seeking to tame borrowing costs without a quantitative easing program or yield-curve control even as Prime Minister Modi’s administration embarks on a spree of debt sales
Standard Chartered sees yields on the 10-year bond climbing to 6.60% by end-December, while Kotak Mahindra Bank sees it rising to as high as 6.75% in the fiscal year ending March 2022
“The RBI is trying to fight this battle to keep yields closer to 6%, but there is a humongous supply of bonds, with market filled to the brim,” said Vijay Sharma, EVP for fixed-income at PNB Gilts Ltd. “Unless the market has a view that the RBI will keep rates here or bring it down, only then will they will be gung-ho on bonds.”
America Markets
Wall Street’s main indexes dropped for a third day on Thursday trade
The broad-based S&P 500 declined 17 points, or -0.4%, to 3,913
The Dow Jones Industrial Average, composed mostly of cyclical stocks, fell 119 points, or -0.4%, to 31,493
The tech-heavy Nasdaq Composite Index lost 100 points, or -0.7%, to 13,865
U.S. equity futures fell in early Friday trade. S&P500 futures is down -0.40%; Dow Jones futures is down -0.30% and Nasdaq futures is down -0.50%
10-yr U.S. Treasury yields, which move inversely to the price, eased to 1.28%, retracing the highest levels in a year reached earlier this week, with dollar paring overnight declines to 90.61
The Cboe Volatility Index, known as Wall Street’s “fear gauge,” rose 4.60% to 22.50 on Thursday
The number of Americans filing for unemployment benefits rose to 861K in the week ended Feb 13th, from the previous week’s revised figure of 848K and compared to market expectations of 765K
The progressive policy focus early in U.S. President Joe Biden’s administration has come as something of a surprise after his centrist campaign. Meanwhile, his top economic adviser is seeking Taiwan’s help in resolving a global semiconductor shortage
The U.S. economy started 2021 with a bang as retail sales and factory output accelerated, setting the stage for what could be the best year of economic growth in nearly four decades
Friday will also see major economies, including the U.S., release preliminary February purchasing managers’ indexes (PMI)
“It’s quite possible that for a while interest rates could rise and yet stock prices could still rise some more because of the tailwinds from the fiscal stimulus, from folks who save money, and people wanting to get out,” said Tom Martin, senior portfolio manager at GLOBALT Investments. “So the tricky part is going to be figuring what level of interest rates will be supportive of stock prices either hanging in there and going higher or what level of inflation or interest rates will then start to become a worry for the market in terms of valuation.”
Asia-Pacific Markets
Asian benchmark stocks opened with declines in early Friday trade, as investors assess how rising borrowing costs could impact the equity rally
Japanese, Korean, Hong Kong, Chinese and Australian shares slipped
Japan’s Nikkei 225 dropped -0.81% to 29,992 and Topix 500 dropped -0.77% to 1,503
South Korea’s Kospi dropped -0.79% to 3,063
In Hong Kong, Hang Seng dropped -0.49% to 30,454 and Hang Seng China Enterprises dropped -0.38% to 11,994
In China, CSI 300 dropped -0.52% to 5,735 and Shanghai Composite dropped -0.16% to 3,670
Australia’s S&P/ASX 200 dropped 1.02% to 6,815
Hong Kong’s unemployment rate rose in Jan to the highest level in more than 16 years. The jobless rate rose to 7% in the November-to-January period from 6.6% previously, the highest since April 2004, according to a government report Thursday. The underemployment rate also increased, rising to 3.8%
Hong Kong has struggled under an extended recession over the past two years amid social unrest and the global pandemic, with the economy shrinking a record -6.1% in 2020
Retail consumption, a key pillar of the economy of Hong Kong, slumped first because of political demonstrations, and then continued to decline due to restrictive measures to contain the spread of the virus
China’s fourth-quarter current-account figures will be released on Friday. Net foreign exchange settlements data for January will be closely watched after the very strong spike in corporate conversion rates in December
EU Markets
European equities closed in the red for the third session on Thursday trade
The pan-European Stoxx Europe 600 dropped -0.70% to 411 and Stoxx 50 dropped -0.52% to close at 3,680
Germany’s DAX30 dropped -0.16% to 13,891
London’s blue-chip FTSE 100 dropped -1.40% to 6,617
France’s CAC40 dropped -0.65% to 5,728
Denmark’s OMX Copenhagen 20 dropped -1.32% to 1,489
Spain’s IBEX 35 dropped -0.78% to 8,059
Italy’s FTSE MIB dropped -1.02% to 22,943
Recent expectations of a rise in inflation have fanned concerns that central banks could start tightening monetary policy
About 2.6 million people in the U.K. expect to lose their jobs in the next 3-months, according to a survey that suggests long-lasting damage to the economy from the coronavirus
Oil & Natural Gas Markets
Crude-oil prices fell in early Friday trade, with U.S. refinery outages seen hurting demand
U.S. crude oil inventories fell by 7.258 million barrels in the week ended Feb 12th, a 4th-consecutive week of decline and compared to market forecasts of a 2.429 million drop, according to the EIA Petroleum Status Report
Spread for Brent has moved further into backwardation, reflecting the supply tightness. The April contract is now 87 cents a barrel more expensive than the May contract, from a gap of 29 cents at the start of last week
WTI Crude is trading lower at $59.28 per barrel
Brent Crude, the international benchmark for oil, is trading lower at $62.85 per barrel
Natural Gas futures increased to $3.049/MMBtu
Commodities Markets
Gold futures remained under pressure in early Friday trade, pressured by a combination of a stronger dollar and rising US Treasury yields
However, the inflationary risks posed by record-high debt levels should drive prices higher in the long-run
U.S. Gold futures (Comex) is trading lower at $1,766 an ounce
Silver futures (Comex) slipped to $26.70 an ounce
Gold / Silver Ratio has climbed down to $65.62
Copper futures (Comex) jumped to their highest since 2012 to $3.9220 per pound
Citigroup forecasts copper prices will rally to $5 per pound in six to 12 months on a better-than-expected recovery in demand, most notably outside China
SGX Iron-Ore futures advanced to $165.20 per tonne
In India, Spot Gold is trading at INR 45,807 per 10 grams
Currency Markets
U.S. dollar index, DXY nursed overnight declines to 90.61 in early Friday trade, after disappointing U.S. labour market data bruised optimism for the country’s speedy recovery
INR weakened with USD / INR at 72.6510
JPY strengthened with USD / JPY at 105.7200
CNY weakened with USD / CNY at 6.4878
EUR strengthened with EUR / USD at 1.2080
GBP strengthened with EUR / GBP at 0.8657
GBP weakened with GBP / USD at 1.3954
“I think the dollar’s downtrend is over. At the start of the year, speculators were betting on a fall in the dollar below 100 yen. They seem to have abandoned such a view now,” said Yukio Ishizuki, senior strategist at Daiwa Securities
| 3-Month LIBOR Rate | As on 18 Feb 2021 |
| US DOLLAR | 0.19 per cent |
| Euro | – 0.55 per cent |
| British Pound | 0.06 per cent |
| Swiss Franc | – 0.75 per cent |
| Japanese Yen | – 0.09 per cent |
Bitcoin
Bitcoin / U.S. Dollar dropped -0.65% in early Friday trade to $51,270 as of 07:30 a.m. I.S.T.
DoubleLine Capital chief and long-time gold bull Gundlach’s comments on the metal and considering Bitcoin to be a better trade is another sign the investment case for Bitcoin is winning over institutional money managers and possibly siphoning cash from the gold market
“I am a long term dollar bear and gold bull but have been neutral on both for over six months. Lots of liquid poured into a funnel creates a torrent. Bitcoin maybe The Stimulus Asset. Doesn’t look like gold is.” said DoubleLine Capital chief and long-time gold bull Jeffrey Gundlach
Bond Markets
Americas : 10 – Year Govt Bond Yields
United States : 1.28%
Canada : 1.14%
Europe, Middle East & Africa : 10 – Year Govt Bond Yields
Germany : -0.34%
United Kingdom : 0.62%
France : -0.08%
Italy : 0.65%
Netherlands : -0.21%
Asia Pacific : 10 – Year Govt Bond Yields
India : 6.21%
Japan : 0.09%
Australia : 1.36%
Hong Kong : 0.84%
Singapore : 1.17%
South Korea : 1.85%
Fund Flows on NSE, BSE and MSEI — 18 Feb 2021
FII/FPI Net Buy Rs 903.07 Crore in Capital Market
DII Net Sell Rs (1,217.34) Crore in Capital Market
Where We’ve Been Reading —
- Bloomberg
- The Wall Street Journal
- Reuters
- Trading Economics
- Seeking Alpha
- Axios
- Tech Crunch
- NSE Indices India
- Morningstar India
- The Star
- Harvard Business Review
- The Economic Times
