Finance - Stock Market Forecast

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

• Resistance area for Nifty 50 is at 12,950 and 13,055. For Thursday, Nov 26, Support area is seen at 12,750 and 12,650

• Resistance area for Bank Nifty at 29,750 and 30,000, while Support area is at 28,900 and 28,270

• The MSCI Asia Pacific ex-Japan is up 0.27% in early Thursday trade, while the MSCI Emerging Market index is up 0.42%

• Trends on SGX Nifty indicate a gap-up opening with a positive outlook for Nifty 50 in India with a 115 points gain. The Nifty futures were trading at 12,978 on the Singaporean Exchange at 08:00 a.m. I.S.T.

• Contracts tied to S&P500, Dow Jones and Nasdaq futures trading in green in early Thursday morning, a mixed Asia-Pacific early morning trade, MSCI APAC ex-Japan up 0.27% on the day and a weakening U.S. dollar with climbing 10-Year Treasuries indicate a negative-to-stable outlook for Nifty 50 India

• The current mood in the market is bracing and non-committal

India Markets

NIFTY 50	OPEN	HIGH	LOW	CLOSE
Wednesday	13,130	13,145	12,833	12,858

Domestic equity market took a corrective beating on Wednesday trade after touching a new record high of 13,145 and closed the day with a deep cut of 23.6% retracement

Nifty 50 dropped 196 points or -1.51% to 12,858 and the BSE Sensex dropped 695 points or -1.56% to 43,828

As long as Nifty stays below 13,000 level, all up moves, if there are any, will stay vulnerable to sharp profit taking bouts

The index formed a Bearish Engulfing Candle on the daily scale

Broader markets also saw profit booking, falling in-line with their headline peers — Midcap 100 index dropped -1.65% ; Smallcap 250 index dropped -0.94% ; Nifty 500 dropped -1.48% ; Nifty Alpha 50 dropped -2.15% and Nifty Alpha Low Volatility 30 dropped -1.70%

Nifty P/E for Nov 24, 2020 fell to 35.36 as recorded by NSE India

Bank Nifty opened gap-up but failed to hold gains at higher levels dropping 540 points or -1.82% to close at 29,196. Levels of 28,900 and 28,270 to act as good support levels. Resistance area is at 29,700 — 30,000

India VIX moved up 9.83% from 21.05 to 23.12 levels

Overnight call money rate weighted average stood at 3.07% as per RBI data. It moved in a range of 1.90 — 3.40% for Nov 24

The yield on the benchmark 10-year government bond was up at 5.935% while the rupee strengthened to 73.74 against the U.S. dollar

Data due Friday will probably show GDP shrank -8.7% in the July-September period, following a record -24% decline in the three months ended June, pushing the economy into an unprecedented recession

The Markit India Services Purchasing Managers’ Index climbed to 54.1 in October, the highest since February’s 57.5, amid renewed increase in new work orders with business optimism also rising

Manufacturing activity continued to expand too, with the purchasing managers index rising to 58.9 — the highest reading since May 2010, from 54.6 in September

A three-month treasury bill was sold at a record low yield on Wednesday, while the market repo clocked a trade at 0.01%. Key borrowing costs like the weighted interbank call rate and collateralized money-market rates are way below the Reserve Bank of India’s benchmark in recent days, indicating investors such as mutual funds are accepting returns lower than what RBI’s deposit window would offer banks

Yields on treasury bills have plunged due to a liquidity glut

“The RBI’s dollar buying to prevent the rupee from appreciating has driven liquidity to a large excess,” said Arvind Chari, head of fixed income and alternatives at Quantum Advisors Pvt. “The RBI may have to act to suck out liquidity to maintain the sanctity of the reverse repo rate.”

“A December rate cut is virtually ruled out with inflation remaining well above the RBI’s target range,” said Teresa John, an economist at Nirmal Bang Equities Pvt.

“The market rally which was led by developments on vaccine and FPI inflows came to a halt today due to profit booking across sectors in the second half of the trading session. While western markets continued its positivity, we can expect profit booking to continue in our domestic market, in the short-term, as the liquidity driven rally can take a pause having reached all-time high on a monthly basis,” said Vinod Nair, Head of Research at Geojit Financial Services.

America Markets

U.S. stocks pulled back from records on Wednesday trade as investors cast a wary eye on a batch of data that suggest a possible slowdown in economic growth

The Dow Jones lost 174 points or 0.6% to 29,873 and the S&P 500 retreated 6 points or 0.2% to 3,630 ; while the Nasdaq gained 57 points or 0.5% to 12,094

The violent rotation out of tech shares and into cyclicals, sparked by promising vaccine news, reversed Wednesday. The tech-heavy Nasdaq indexes advanced, while small caps slumped

Today in the derivatives market, contracts tied to the Dow Jones is up 0.18%, S&P 500 is up 0.20% while Nasdaq 100 futures added 0.38%

Personal consumption expenditure price index in the U.S. was unchanged in October 2020, following a 0.2% gain in September

New home sales in the U.S. edged down 0.3% month-over-month to annual rate of 999 thousand in October of 2020

U.S. Personal income fell by 0.7% from a month earlier in October of 2020

The U.S. economy expanded by an annualized 33.1% in Q3 2020, in line with the advance estimate. It is the biggest expansion ever, following a record -31.4% plunge in Q2.

New orders for U.S. manufactured durable goods increased 1.3% month-over-month in October of 2020

The number of Americans filing for unemployment benefits increased to 778 thousand in the week ended November 21st, from the previous week’s revised level of 748 thousand and well above market expectations of 730 thousand

The U.S. merchandise-trade deficit widened in October as imports reached the highest in more than a year, outpacing a gain in the value of exports. Imports of consumer goods climbed 6.6% to $65 billion, the second-highest reading on record

Asia-Pacific Markets

Asian shares reversed an initial decline, helped by a rise in Japan in early Thursday trade

Japan’s Nikkei 225 added 0.59% to 26,451, while Topix 500 added 0.37% to 1,378

South Korea’s Kospi added 0.40% to 2,611

In Hong Kong, Hang Seng added 0.06% to 26,686 while Hang Seng China Enterprises added 0.58% to 10,619

In China, CSI 300 dropped -0.26% to 4,897 and Shanghai Composite dropped -0.15% to 3,357

Australia’s S&P/ASX 200 dropped -0.17% to 6,672

Singapore’s Straits Times Index dropped -0.54% to 2,854

Overall, MSCI Asia-Pacific ex-Japan, is up 0.27%

China’s President Xi Jinping broke his silence on Joe Biden’s election victory, sending the U.S. president-elect a message that he hopes to “manage differences” and focus on cooperation between the world’s two largest economies

South Korea’s central bank kept its key interest rate unchanged at 0.50%, as expected

“We believe the market rally can continue from here powered by all the positive vaccine news, more political clarity with a peaceful White House transition and with more stimulus to come,” Xi Qiao, managing director at UBS Global Wealth Management, said on Bloomberg TV. “We are already seeing a strong rotation into cyclical and reopening trades with the vaccine news and we expect this trend to continue”.

EU Markets

European stocks ended mixed in a volatile session on Wednesday trade

The pan-European Stoxx Europe 600 added 0.05% to 392

Stoxx 50 added 0.11% to close at 3,511

Germany’s DAX30 dropped -0.02% to 13,289

London’s FTSE 100 dropped -0.64% to close to 6,391

France’s CAC40 added 0.23% to 5,571

Denmark’s OMX Copenhagen 20 added 0.14% to 1,374

Luxembourg’s LuxX Index added 0.41% at 1,281

Sweden’s OMX Stockholm 30 dropped -0.31% at 1,932

Italy’s FTSE MIB added 0.74% at 22,309

Cyclicals such as mining and energy firms fell, offsetting advances in defensives including utility shares

European Central Bank said the industry will probably have to set aside more money to soak up losses when government pandemic support ends

U.K. Chancellor Rishi Sunak announced the government would borrow £394 billion this year, or 19% of GDP, to support the economy hit by the coronavirus crisis, which would be the highest level of borrowing in peacetime history. He added that the U.K. GDP is set to contract 11.3% in 2020, the most for the past 300 years, while output is seen returning to pre-pandemic levels only at the end of 2022

The Bank of England expanded its so-called quantitative easing program this month by 150 billion pounds to 895 billion pounds

“With every week that goes by, the chances of survival for closed businesses are thinning,” said Germain Simoneau, head of the finance committee of French small firm federation CPME. “We’ve never seen a crisis on this scale with systemic risks looming in the background.”

Oil & Natural Gas Markets

Oil held onto eight-month highs after a surprise decline in U.S. crude supplies added to optimism that breakthroughs on a Covid-19 vaccine and an impending rollout will kickstart a strong rebound in demand next year

WTI Crude is trading higher at $46.01 per barrel in early Thursday trade

Brent Crude is trading higher at $49.01 per barrel in early Thursday trade

Natural Gas futures is trading higher at $2.951/MMBtu in early Thursday trade

On MCX-India, Crude oil futures added 2.01% to 3,400 on Wednesday’s session

On MCX-India, Natural gas futures added 6.68% to 218/MMBtu on Wednesday’s session

Gold & Silver Markets (+ Copper Futures)

Gold halted its slide in early Thursday trade

Pfizer Inc.‘s positive announcement about the 95% efficacy rate of its Covid-19 vaccine together with reduction in political uncertainty in the U.S. after General Services Administration’s acknowledgment of Biden as the apparent winner of the presidential election, sparked a rotation into risk assets driving down gold

U.S. Gold futures (Comex) halted at $1,813.40 an ounce

U.S. Spot Gold halted at $1,810.55 an ounce

Silver futures (Comex) halted at $23.49 an ounce

Copper futures (Comex) strengthened to $3.3580 per pound — reaching the highest since 2014

In India, Spot Gold weakened to INR 47,715 per 10 grams

India — NCDEX Agridex

Agricultural futures index tracking the performance of the 10 liquid commodities, was up 0.52% trading at 1,194.65 ; with major demand in Cotton Seed Oilcake and Soy Bean futures on Wednesday trade

Currency Markets

The U.S. dollar index, DXY retreated to 92.018 in early Thursday trade amid an increase in risk appetite after U.S. General Services Administration acknowledged Joe Biden as the apparent winner of the presidential election

INR strengthened 0.12% with USD — INR at 73.9125

JPY strengthened 0.07% with USD — JPY at 104.3700

CNY strengthened 0.19% with USD — CNY at 6.5790

EUR strengthened 0.15% with EUR — USD at 1.1910

GBP strengthened 0.19% with GBP — USD at 1.3382

SEK strengthened 0.38% with USD — SEK at 8.5154

*3-Month LIBOR Rate*	*As on 25 Nov 2020*
US DOLLAR	0.21 per cent
Euro	– 0.54 per cent
British Pound	0.05 per cent
Swiss Franc	– 0.77 per cent
Japanese Yen	– 0.10 per cent