Finance - Stock Market Forecast

Index Trend & Conditions – 07:30 a.m. I.S.T.

• Major Resistance for Nifty 50 is seen at 13,550. For Tuesday, Dec 23, Support area is seen at 13,131 13,050 and 12,950

• Support levels for Bank Nifty is at 28,900 and 28,200 with Major Resistance seen at 30,200

• Closing on Wednesday, Dec 23, for domestic benchmark indices will be crucial to understand market’s consolidation and/or trend reversal levels

• The MSCI Asia Pacific ex-Japan added 0.28%, and the MSCI Emerging Market index added 0.09%

• Trends on SGX Nifty indicate a negative outlook for Nifty 50 in India. The Nifty futures are trading -0.30% lower at 13,443 on the Singaporean Exchange at 07:30 a.m. I.S.T.

• Contracts tied to U.S. futures declined on the day, with Nasdaq, S&P 500 and Dow Jones futures trading in red, alongside a positive Asia-Pacific early Wednesday morning trade, a positive MSCI Asia-Pacific ex-Japan index, U.S. Dollar Index gaining back some earlier weakness at 90.523 with 10-Year Treasury Yield edging lower at 0.911 and Gold futures rising at $1,866 on the day indicate a negative-to-stable outlook for Nifty 50 India

• The current mood in the market is bracing and non-committal with enormous global liquidity

India Markets

NIFTY 50	OPEN	HIGH	LOW	CLOSE
Tuesday	13,373	13,492	13,192	13,466

Indian stocks rebounded on Tuesday trade, after a sharp sell-off triggered by concerns about a new variant of coronavirus in the U.K.

Nifty 50 added 137 points, or 1.03%, to 13,466 while the BSE Sensex advanced 452 points, or 0.99%, to 46,006

All 19 sector sub-indexes compiled by BSE Ltd. advanced, with a gauge of IT stocks rising the most

Infosys was the biggest contributor to the index’s advance, rising 3.7% while Kotak Mahindra Bank posted the steepest fall, declining -0.9%, and was the biggest drag on the index

As per the exchange data, global funds sold net 3.24 billion rupees ($44 million) of cash equities on Monday, while domestic investors bought about 5 billion rupees. Foreign investors have pumped almost net $18 billion into India’s equities this quarter

Nifty formed an Inside Bar, as it traded inside the wider trading range of Monday’s session and formed a Hammer-ish candle, which shows the supports are intact and a short-term base could form in the market

Broader markets under-performed their headline peers — Midcap 100 index added 0.85% ; Smallcap 250 index added 0.94% and Nifty 500 added 1.02%

Strategy based indices majorly out-performed their benchmark indices — Nifty Alpha 50 added 1.26% and Nifty Alpha Low Volatility 30 added 1.95%

Nifty P/E for Dec 22, 2020 appreciated to 37.03 from 36.65 while Nifty P/B edged higher to 3.81 from 3.77, as recorded by NSE India

Bank Nifty opened positive and then slowly drifted towards the 29,000 mark. The index formed a Dragon Fly Doji on the daily scale after showing weakness in last two sessions, which indicates potential for an upmove if follow-up buying happens. The index added 169 points, or 0.58%, to 29,625

India VIX declined -5.20% to 21.98 from 23.19 levels.

A cooldown in volatility from higher levels has provided support for a decent bounceback move, and now it has to hold below 19 to help the bulls continue their grip on the market

Overnight Call Money rate weighted average stood at 3.24% as per RBI data. It moved in a range of 1.90 — 3.50% for Dec 21

Yield on the benchmark 10-year government bond appreciated to 5.995%, while rupee strengthened to 73.8520 against the U.S. dollar

Godrej Housing Finance, which launched its mortgage lending business last month, is to acquire 1,000 customers by March to test the sustainability of its systems and processes rather than aggressively expanding its asset book

“Godrej is entering an industry that was weakened by a credit crunch and slowing loan growth even before the pandemic took hold. Still, housing demand is rebounding as property prices ease and lending rates decline to the lowest in 16 years. In a country where owning a home is a symbol of security and defaulting on mortgage loans a taboo, most lenders are vying for this relatively safe retail segment. Aware of the stiff competition in India’s 21 trillion rupee ($284 billion) mortgage market, Godrej will use multiple pricing scales for customers instead of a few blanket parameters to decide lending rates,” Godrej Housing Finance CEO Manish Shah said

“Investors should stay away and not buy on dips,” said Umesh Mehta, head of research at Samco Securities Ltd. “A correction is due because the market has had a fantastic up-move this quarter amid toppish valuations.”

“The slump allowed investors who feel they have not participated in the rally to enter the market,” said Abhimanyu Sofat, head of research at IIFL Securities Ltd.

America Markets

U.S. equities turned lower on Tuesday trade, as optimism over a Covid-19 relief bill was tempered by the emergence of a new variant of the virus and a slew of lockdowns and travel curbs to contain it

The Nasdaq Composite Index ticked up 65 points, or 0.51%, to 12,807, a new all-time high

The S&P 500 fell 07 points, or -0.21%, to 3,687

The Dow Jones Industrial Average slipped 201 points, or -0.67%, to 30,0156, marking its largest one-day point and percentage decline in December

Contracts tied to U.S. futures declined in early Wednesday trade. S&P500 futures is down -0.45%, Dow Jones futures is down -0.41%, and Nasdaq futures is down -0.30%

The yield on 10-year U.S. Treasury note slid to 0.911% on the day

On the stocks front, Apple led the Nasdaq higher after a report that the company is planning to make a battery-powered self-driving car as soon as 2024, while Tesla fell for a second day

Consumer Confidence Index dropped to 88.6 in the first two weeks of December, from a revised 92.9 in November

U.S. Home Sales declined in November after five monthly gains, with economists pointing to falling supplies of homes due to increased demand as the main driver for the sales decline

On other hand, U.S. economic recovery seems to be losing steam — initial claims for unemployment benefits increased in the first two weeks of December, number of private job openings slipped in early December and retail sales falling 1.1% in November month-over-month

Positively, the U.S. economy grew slightly stronger than previously estimated during the September-ended Q3, with GDP increasing at an annual rate of 33.4%, seasonally and inflation adjusted, versus the last estimate of 33.1%. The positive revision was spurred by higher-than-estimated consumer and business spending

“Consumers’ assessment of current conditions deteriorated sharply in December, as the resurgence of Covid-19 remains a drag on confidence,” said Lynn Franco, senior director of economic indicators at the Conference Board

“The agreed fiscal relief package will undoubtedly help mitigate some of the negatives but unfortunately, it won’t be able to fully offset the effects of people staying at home as many businesses face tighter restrictions or are even forced to close,” according to James Knightley, chief international economist at ING Groep

Asia-Pacific Markets

Asian stock markets pared gains in early Tuesday trade, after President Donald Trump signaled he may not sign the $900 billion bipartisan relief package, asking Congress to amend the aid legislation that was passed earlier this week

Japan’s Nikkei 225 added 0.23% to 26,497 and Topix 500 dropped -0.14% to 1,366

South Korea’s Kospi added 0.32% to 2,741

In Hong Kong, Hang Seng added 0.04% to 26,125 while Hang Seng China Enterprises added 0.21% to 10,406

In China, CSI 300 added 0.60% to 4,995 and Shanghai Composite added 0.31% to 3,367

Australia’s S&P/ASX 200 added 0.65% to 6,642

Overall, MSCI Asia-Pacific, is down -1.24%

EU Markets

European equities closed higher on Tuesday trade, setting the mood for recovery from their steepest slump in almost two months on Monday

The pan-European Stoxx Europe 600 added 1.22% to 389 and Stoxx 50 added 1.42% to close at 3,497

Germany’s DAX30 added 1.30% to 13,418

London’s FTSE 100 added 0.57% to close to 6,453

British Airways owner IAG SA surged more than 5% as travel shares bounced back

France’s CAC40 added 1.36% to 5,467

Denmark’s OMX Copenhagen 20 added 0.73% to 1,452

Italy’s FTSE MIB added 2.03% at 21,844

BioNTech CEO Ugur Sahin assured that his vaccine would work against the new variant and is being tested, with the possibility of making new inoculations against different strains within weeks

EU’s rejection on UK’s last ditch effort to get a breakthrough in post-Brexit trade deal negotiations on Tuesday morning with crisis at the country’s ports is piling pressure onto British assets as it nears a second recession

“The big unknown is to what degree could the new strain make the efficacy of the vaccine lower,” said Peter Garnry, head of equity strategy at Saxo Bank. “If it just turns out to be more infections, and it doesn’t have an effect on the vaccine, then the market will be less concerned.”

Oil & Natural Gas Markets

Crude oil slipped for a third day in early Wednesday trade, amid amid growing worries over the new restrictions imposed on travelers from the U.K. to other countries

“Oil is being driven by negative sentiment and fundamentals,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA. “New severe restrictions could impact mobility of people and goods between the U.K. and Europe.”

WTI Crude is trading lower at $46.89 per barrel

EIA crude oil inventory report is due Wednesday

Brent Crude is trading lower at $50.00 per barrel

Natural Gas futures appreciated to $2.795/MMBtu

On MCX-India, Crude oil futures declined to 3,481 on Monday trade

On MCX-India, Natural gas futures climbed to 206/MMBtu on Monday trade

“Dollar-denominated commodities across the board are getting pumped up,” said John Kilduff, a partner at Again Capital LLC. “It bodes well for demand, because it’s becoming so much cheaper for countries like India that have to do the currency translation. This is effectively a big price cut for foreign buyers of crude oil.”

Commodities Markets

Gold edged higher in early Wednesday trade

U.S. Gold futures (Comex) strengthened to $1,866.07 an ounce, the largest fall in more than a week

Silver futures (Comex) strengthened to $25.37 an ounce

Copper futures (Comex) slid to $3.5190 per pound, after making a seven year high last week

“Copper’s fierce ascent is really boosted by hopes on the U.S. stimulus talks,” TD Securities analyst Ryan McKay said. “The China recovery scenario, a weaker dollar and green-inspired reflation wave have also lifted copper, especially with the Chinese stockpiling impulse having been bigger than initially thought and more strategic in nature.”

In India, Spot Gold strengthened to INR 49,296 per 10 grams

India — NCDEX Agridex

Agricultural futures index tracking the performance of the 10 liquid commodities, was up trading at 1,141.55 ; with top gains in Mustard Seed and Cotton Seed Oilcake futures on Tuesday trade

Currency Markets

The U.S. dollar index, DXY strengthened in early Wednesday trade to 90.523

INR strengthened with USD / INR at 73.8520

JPY strengthened with USD / JPY at 103.6500

CNY strengthened with USD / CNY at 6.5429

EUR weakened with EUR / USD at 1.2172

The euro rose above $1.22 for the first time since 2018 in the wake of the better-than-expected numbers

GBP weakened with EUR / GBP at 0.9131

The pound slid as Britain and the E.U. rejected U.K.’s last-ditch effort to get a breakthrough on post-Brexit trade deal negotiations amid U.K.’s coronavirus situation worsening

GBP weakened with GBP / USD at 1.3330

*3-Month LIBOR Rate*	*As on 22 Dec 2020*
US DOLLAR	0.24 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