Index Trend & Conditions – 07:15 a.m. I.S.T.
• Resistance zone for Nifty 50 is at 14,880 and 14,950 for this week. For Wednesday, Mar. 24, Support area is seen around 14,650 14,513 and 14,450
• Support levels for Bank Nifty is around 33,568 33,350 and 32,650; while Resistance zone is at 34,150 34,707 and 35,100 for Mar. 24
• The MSCI Asia Pacific ex-Japan is trading lower -0.50%, and the MSCI Emerging Market index is down -0.46%
• Trends on SGX Nifty look poised to a muted start for Nifty 50 in India. The Nifty futures are trading 25 points, or -0.19% lower at 14,797 on the Singaporean Exchange at 07:15 a.m. I.S.T.
• U.S. equity futures opened higher in early morning trade with S&P 500, Dow Jones and Nasdaq futures trading in green territory; alongside a lower start in Asia-Pacific benchmarks gauges in early Wednesday trade with equities edging lower in Japan, South Korea, Hong Kong, China and Australia outperforming; a negative MSCI Asia-Pacific ex-Japan index; U.S. Dollar strengthening to 92.38 with 10-Yr Treasury Yields falling to 1.60% and Gold futures slipping to $1,728 an ounce indicate a mixed and volatile outlook amid channel-wise resistance
• Current Bearish movers in India’s markets are — double top creation at 15,400 level for Nifty; Negative divergence on MACD indicator; Nifty breaking Day EMA of 3, 8, 21 and currently taking support from 50-day; Nifty P/E above 40 indicating high valuations; contraction in India’s Industrial Production in Jan-Feb; Rising crude oil prices; Souring sentiments from staggered lockdowns in Maharashtra and Reverse repo rate below 5 lakh crores indicating lower surplus liquidity
India Markets
| NIFTY 50 | OPEN | HIGH | LOW | CLOSE |
|---|---|---|---|---|
| Tuesday | 14,768 | 14,878 | 14,707 | 14,814 |
India’s equity benchmarks closed on a strong footing on Tuesday trade, helped by gains in shares of banks and easing concerns over U.S. Treasury bond yields
Investors were also relieved that the hearing in the Supreme Court on loan moratorium did not yield any negative news for the banking sector in terms of extension of reporting bad loans as well as waiver of interest on loans
The blue-chip NSE Nifty 50 index added 78 points or 0.53% to 14,814 and the benchmark S&P BSE Sensex added 280 points or 0.56% to close at 50,051
Nifty 50 formed a small bullish candle on the daily chart and made higher lows for the second session, suggesting that support has shifted higher
Broader markets out-performed headline peers — Midcap 100 index added 0.87%; Smallcap 250 index added 0.69% and Nifty 500 added 0.64%
Nifty P/E for Mar. 23 rose to 40.35 from 40.14 with Nifty P/B increased to 4.20 from 4.18, as recorded by NSE India
Bank Nifty opened positive and continued to build on its strength for most part of the session. It touched a high of 34,360, which lies near its 50 DMA. The index dropped 580 points, or 1.73%, to settle at 34,184
India VIX or the barometer of nervousness in the market, rose 0.85% from 20.49 to 20.66 levels
VIX needs to cool down below 20 level for the bullish grip to continue and smoothen the move in the market
Overnight Call Money rate weighted average stood at 3.27% as per RBI data. It moved in a range of 1.90 — 3.50% for Mar 22
Under Liquidity Operations by RBI, Reverse Repo for the week (Mar 8 to Mar 14) stood below 5 lakh crores, marking lower surplus liquidity in the market compared to 7 lakh crores, 3-months earlier
Yield curve on the benchmark 10-Yr government bond declined by 4 bps to 6.14%, after govt decided to cancel a scheduled weekly auction of 200 billion rupees ($2.7 billion) of bonds, while the rupee weakened marginally to 72.5100 per U.S. dollar
Lenders and brokerages on Tuesday cheered the Supreme Court’s much-awaited verdict in the loan moratorium case, after the apex court left it to the Centre and RBI to decide on whether to extend the loan relief to borrowers
Shares of alcoholic beverage makers rose sharply after the Delhi government lowered the minimum drinking age in the union territory to 21 years from 25 years
Maruti to raise prices for the second time this year on the back of higher materials costs besides regulatory cost increase – steel, plastics, rubber, copper, precious metals like palladium, rhodium
Shares of cement companies rose after the Lok Sabha approved the Mines and Minerals (Development and Regulation) Bill as analysts believe that the bill could spur more merger and acquisitions in the sector
America Markets
U.S. stocks fell on Tuesday trade, as investors digested Fed Chair Powell and Treasury Secretary Yellen’s first joint hearing on the CARES Act before Congress to testify on Fed and Treasury pandemic policies
The broad-based S&P 500 ticked down 30 points, or -0.8%, to 3,910
The Dow Jones Industrial Average, composed mostly of cyclical stocks, fell 308 points, or -0.9%, to 32,423
The tech-heavy Nasdaq Composite Index fell 149 points, or -1.10%, to 13,227
U.S. equity futures opened higher in early Wednesday trade. S&P500 futures is up 0.06%; Dow Jones futures is up 0.02% and Nasdaq futures is up 0.46%
10-Yr U.S. Treasury yields, which move inversely to the price, fell to 1.60% in early Wednesday ahead of this week’s offerings, which include a seven-year note – a maturity that fared poorly in last month’s auction, with dollar strengthening to 92.38
The Cboe Volatility Index, known as Wall Street’s “fear gauge,” rose 7.52% to 20.30 on Tuesday
Fed Chair Powell, in a joint appearance with Treasury Secretary Janet Yellen, reiterated in a congressional hearing that the central bank will continue providing support to the economy through loose-monetary policy. Powell also said he doesn’t expect the $1.9 trillion stimulus package will lead to an increase in inflation, but he emphasized that the central bank has tools to deal with rising price pressures if necessary
Treasury Secretary Janet Yellen said that the U.S. economy remains in crisis with “a huge problem of joblessness” following the loss of employment due to the pandemic. She added that once the economy was strong again, President Biden was likely to propose that we engage in long-term plans to address longstanding investment shortfall in infrastructure, investment to address climate risk, investments in people, R&D, manufacturing
Market sentiment has faltered on doubts about the progress of the global economic reopening, there’s risk around inflation and rising rates and the impact that will have on equities. Bonds have benefited from the central bank’s latest assurances of continued support
“I want to see more data confirming the strong recovery, because I do think we’ve gone about as far as we can go without starting to see the evidence,” said Tim Courtney, chief investment officer at Exencial Wealth Advisors. “The fourth quarter earnings were a good strong bit of evidence, but the market is going to want to start to back up these huge price moves we’ve seen with some real earnings and seeing some real growth.”
“When you consider how far we’ve come it is truly staggering,” said Chris Larkin, managing director of trading and investing product at E*Trade Financial. “The market today has some jitters as it considers what a return to normal means for easy money policies, fiscal support, and interest rates, but for any investor thinking we’re poised for a drop, it’s important to remember that the market is going through historically healthy growing pains and there is still a lot more recovery ahead of us.”
Asia-Pacific Markets
Asian stocks opened mostly weaker in early Wednesday trade, after setbacks to the recovery from the pandemic weighed on U.S. equities and oil, and drove haven trades into Treasuries and the dollar
MSCI Inc.’s index of Asia-Pacific stocks edged lower as shares opened down in Japan, South Korea, Hong Kong, China with Australia outperforming
Japan’s Nikkei 225 fell -1.50% to 28,559 and Topix 500 dropped -1.41% to 1,509
South Korea’s Kospi dropped -0.20% to 2,999
In Hong Kong, Hang Seng fell -1.01% to 28,220 and Hang Seng China Enterprises dropped -0.76% to 11,033
In China, CSI 300 added 0.25% to 5,021 and Shanghai Composite dropped -0.33% to 3,400
Australia’s S&P/ASX 200 added 0.55% to 6,782
The U.S. and its allies placed sanctions against Chinese officials over the treatment of the Uyghurs, a mainly Muslim ethnic group
The New Zealand dollar depreciated 1.9% against the U.S. dollar after the government put forward a plan to cool the housing market through changes to tax incentives. House prices have seen double-digit growth this past year, but these measures could slow the economy
EU Markets
European equities eased from a one-year peak on Tuesday trade, as a new wave of coronavirus infection and a fresh lockdown in Germany raised fears of a slow economic recovery from the pandemic
The pan-European Stoxx Europe 600 dropped -0.29% to 417 and Stoxx 50 dropped -0.18% to close at 3,827
Germany’s DAX30 added 0.03% to 14,662
Germany’s DAX was flat after Chancellor Angela Merkel decided to extend a lockdown until April 18 and called on citizens to stay at home for five days over the Easter holidays
London’s blue-chip FTSE 100 dropped -0.40% to 6,699
France’s CAC40 dropped -0.39% to 5,945
Denmark’s OMX Copenhagen 20 dropped -0.90% to 1,437
Spain’s IBEX 35 added 0.56% to 8,390
Italy’s FTSE MIB added 0.26% to 24,262
Sweden’s OMX Stockholm 30 dropped -0.30% to 2,168
Swedish truckmaker Volvo slumped -7.0% after it warned a shortage of semiconductors would have a substantial impact on production in the second quarter
The unemployment rate in the UK edged down to 5% in the three months to January, from 5.1% in the previous period and below market forecasts of 5.2%
Investors are also reassessing their expectations for a fast and widespread global recovery, which had led to rising bets earlier this year that companies sensitive to an economic recovery would benefit. Rising Covid-19 cases in Europe and recent extensions to lockdowns in Germany, France and Italy are also weighing on sentiment
“Now fears of another wave of the virus in mainland Europe have sparked worries that several countries in the region will have to reopen their economies later than anticipated,” said David Madden, market analyst at CMC Markets. “The mood isn’t awful, traders aren’t running for the hills, but there is a sense of fatigue that the restrictive climate will drag on a bit longer.”
Oil & Natural Gas Markets
Crude-oil prices tumbled in early Wednesday trade, hit by concerns over new pandemic curbs and slow vaccine rollouts in Europe as well as a stronger dollar
WTI Crude is trading at $57.81 per barrel
Brent Crude, the international benchmark for oil, is trading at $60.92 per barrel
Natural Gas futures is trading lower at $2.507/MMBtu
The dollar’s rise is contributing to the oil sell-off. A stronger dollar makes oil more expensive for holders of other currencies
“The road to oil demand recovery appears to be full of obstacles as the world continues to fight the COVID-19 pandemic,” Bjornar Tonhaugen, head of oil markets at Rystad Energy. “Oil prices are declining again, proving that last week’s correction was not deep enough and that the market had been trading lately with an excessively bullish sentiment, overlooking the pandemic’s risk.”
Commodities Markets
Gold futures edged lower in early Wednesday trade, as a firmer dollar outweighed a dip in U.S. Treasury yields
Some investors view gold as a hedge against higher inflation that could follow stimulus measures, but higher Treasury yields have dulled some of the appeal of the non-yielding commodity
U.S. Gold futures (Comex) is trading at $1,728 an ounce
Silver futures (Comex) is trading at $25.15 an ounce
Gold / Silver Ratio rose to $68.71
Copper futures (Comex) rose to $4.0525 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 fell to $163.15 per tonne
In India, Spot Gold is trading at INR 45,144 per 10 grams
“Should investors see more runway to challenge the Fed’s outlook and push yields higher, that surge is likely to come at the expense of gold’s upside,” said FXTM market analyst Han Tan. “Gold has all to do to break out of its current downward trend, especially with the recovering dollar standing in its way. Spot gold has to first break above its 50-day simple moving average in order to send a favourable signal to bullion bulls.”
“Gold remains pressurized by higher U.S. bond yields, rebound in U.S. dollar and continuing ETF outflows. However, supporting price is Fed’s dovish monetary policy stance, mixed economic data from major economies, renewed virus concerns and increased tensions between US-China and US-Russia,” said Ravindra Rao – Head, Commodity Research – Kotak Securities
Currency Markets
U.S. dollar index, DXY strengthened to a two-week high of 92.38 in early Wednesday trade, as a shift in risk appetite has favored safe-haven flows, while the overall outperformance of the U.S. economy relative to the rest of the world supercharged this buying momentum
INR weakened with USD / INR at 72.5100
JPY strengthened with USD / JPY at 108.7000
CNY weakened with USD / CNY at 6.5162
EUR weakened with EUR / USD at 1.1854
GBP weakened with EUR / GBP at 0.8612
GBP weakened with GBP / USD at 1.3765
| 3-Month LIBOR Rate | As on 23 Mar 2021 |
| US DOLLAR | 0.20 per cent |
| Euro | – 0.55 per cent |
| British Pound | 0.08 per cent |
| Swiss Franc | – 0.75 per cent |
| Japanese Yen | – 0.08 per cent |
Bitcoin
Bitcoin / U.S. Dollar fell -0.12% in early Wednesday trade to $54,325 as of 07:00 a.m. I.S.T.
Bitcoin is seen by some as an appealing digital alternative to gold, or a potential refuge from inflation due to its limited supply
“Bitcoin is extremely sensitive to increased dollar demand,” BofA strategists said in a note on Wednesday. “We estimate a net inflow into Bitcoin of just $93 million would result in price appreciation of 1%, while the similar figure for gold would be closer to $2 billion or 20 times higher. In contrast, the same analysis for the 20-year-plus Treasuries shows that multibillion money flows do not have a significant impact on price, pointing to the much larger and stable nature of the U.S. Treasuries markets.”
Bond Markets
Americas : 10 – Year Govt Bond Yields
United States : 1.60%
Canada : 1.50%
Europe, Middle East & Africa : 10 – Year Govt Bond Yields
Germany : -0.34%
United Kingdom : 0.76%
France : -0.10%
Italy : 0.60%
Netherlands : -0.21%
Asia Pacific : 10 – Year Govt Bond Yields
India : 6.14%
Japan : 0.07%
Australia : 1.72%
Hong Kong : 1.11%
Singapore : 1.58%
South Korea : 2.05%
Fund Flows on NSE, BSE and MSEI — 23 Mar 2021
FII/FPI Net Sell Rs (108.24) Crore in Capital Market
DII Net Sell Rs (529.69) 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
