Finance - Stock Market Analysis

Index Trend & Conditions | 08:50 IST

• Resistance seen at 12,643—12,827 area for Nifty50

• For Wednesday, Nov 11, Support at 12,450 and 12,347 with Resistance at 12,643 and 12,827 for Nifty50

• Trends on SGX Nifty indicates a positive for Nifty50 in India with a 65 points gain. The Nifty futures were trading at 12,720 on the Singaporean Exchange at 08:50 IST

• Contracts tied to S&P500 and Nasdaq futures trading in the green in early Wednesday morning, a positive outlook of Asia-Pacific early morning trade, MSCI APAC ex-Japan up 0.02% on the day and a weakening US dollar with 10-Year Treasuries surging higher indicate a positive start for Nifty 50 India with a mixed bias

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

India Markets

NIFTY 50	OPEN	HIGH	LOW	CLOSE
Tuesday	12,556	12,643	12,475	12,631

Nifty opened with a gap-up on Tuesday for 4th-straight session and hit a fresh record high as it entered deeper into the overbought zone

Nifty50 added 170 points or 1.36% on Tuesday to close at 12,631

The index is strongly shadowing the US Dow Jones index, which has witnessed a strong resistance at 29,534 on Monday

Economic Times analysts say that the short-term rally has reached a mature stage and a minor correction cannot be ruled out

RSI has reached the extreme overbought territory on the shorter time frame and the index has also seen negative divergences, which confirms that the ongoing uptrend is reaching a matured stage and can undergo minor corrections

The index formed a bullish candle on the daily scale with a long lower shadow on the daily scale which indicates that bulls have a tight grip on the market

Pharma and IT stocks was the worst performers in today’s session, while Financial Services and Private Banks stocks were at the vanguard of the rally

On the up side, crucial level or resistance is seen at 12,643 and 12,827 for Wednesday

While, on the downside, support is seen at 12,450 and 12,347 for Wednesday

The BSE Sensex index gained 704 points or 1.68% to 42,597 on Tuesday

Bank Nifty opened with a gap-up and continued its positive momentum towards the 28,800 level as buying emerged in all the banking stocks

The index closed the session with a massive gain of 1,072 points

India VIX was up by 7.30% from 20.11 to 21.57 levels

Broader market indices down-performed on the day. The Midcap index advanced 0.28% while the smallcap index dropped -0.18%

The overnight call money rate weighted average stood at 3.20% according to RBI data. It moved in a range of 1.80—3.50% as on Nov 09

On the stocks front, shares of diagnostics companies in India slipped after hopes of a coronavirus vaccine emerged from a large pool trial of Pfizer Inc and BioNTech and is more than 90% effective

Bajaj Finance advanced 8.84% to Rs 4,208

“Morgan Stanley estimates that India will generate $200 billion in e-commerce sales by 2026. Ambani’s Jio started as a tiny player in the telecommunications space, but outpaced established rivals by undercutting them on price and capitalizing on regulatory changes — a cautionary tale for the American giants.
In India, the stakes are high for the American retailers. Jeff Bezos, Amazon’s hard-charging founder and chief executive officer, has pledged to invest $6.5 billion there. Walmart spent $16 billion in 2018 to acquire Indian portal Flipkart in its biggest ever deal, and has invested over $1 billion this year in the e-tailer and steadily plowed cash into its sister unit, payments service PhonePe.”

America Markets

Wall Street closed mixed on Tuesday, as investors continued to overweight industrials on vaccine expectations and rotate out of tech shares

The Dow Jones added 262 points or 0.90% to 29,420

The S&P 500 dropped 5 points or -0.14% to 3,545

The Nasdaq dropped 160 points or -1.37% to 11,553

Today in derivatives market, Contracts tied to the S&P 500 have are up 0.32% while Nasdaq 100 futures added 0.54%

On the stocks front, Amazon was down more than 2% as the company is facing an antitrust complaint from the European Union

American depositary receipts (ADR) of Alibaba Group Holding Ltd. tumbled after China tightened the scrutiny over internet behemoths

U.S. CPI data for October is due on Thursday

Pfizer and BioNTech have said they should be able to produce 1.3 billion doses of their shot — enough to vaccinate 650 million people — by the end of 2021.
Moderna Inc.’s vaccine uses the same experimental mRNA technology that Pfizer does.
Attention is now turning to the significant challenges ahead, especially in how to deploy mRNA vaccines given their unusual requirement for cold storage and transportation. They must be stored in deep-freezer conditions of -70 degrees celsius, facilities that even many major hospitals don’t have — not to mention developing countries where electricity is intermittent.

Even before Covid-19 came along to further skew the balance of trade, the US’s deficit with China had been increasing. Individual policies tend to dominate “trade narratives” but exchange rates also matter and Biden’s win has sent the dollar plummeting and the yuan surging. Trump’s 2016 win sparked a rally in the US dollar that never really went away, boosting the dollar further by roiling markets and creating safe-haven appetite and further lowering demand for American goods.
It’s early days of course, but so far the president-elect is already leveling the trade playing field with China without actually having to do anything to level the trade playing field with China.

“We expect a Biden administration to adopt a more predictable and multilateral economic and financial China strategy,” said Shaun Roache, Asia-Pacific chief economist at S&P Global Ratings. However, “the core economic issues at the heart of the tension, especially market access and industrial policies, are likely to remain intractable.”

Asia-Pacific Markets

Asia Pacific markets rallied again on Wednesday, as promising progress toward an effective coronavirus vaccine sparked hopes of a faster-than-expected global economic recovery

The development led to investors rotating out of market-leading tech stocks into economically sensitive cyclical ones

The Nikkei 225 added 1.74% to 25,338 in early Wednesday trade

Topix 500 added 1.39% to 1,335 in early Wednesday trade

South Korea’s Kospi added 1.06% to 2,478 in early Wednesday trade

In Hong Kong, the Hang Seng Index dropped -0.18% to 26,253 in early Wednesday trade

China’s CSI 300 Index dropped -0.47% at 4,930 in early Wednesday trade

Hang Seng China Enterprises Index dropped -0.47% to 10,536 in early Wednesday trade

Shanghai Composite Index dropped -0.23% at 3,352 in early Wednesday trade

Australia’s S&P/ASX 200 added 1.58% to 6,440 in early Wednesday trade

Singapore’s Straits Times Index dropped -0.93% to 2,679 in early Wednesday trade

Overall, MSCI’s broadest index of Asia-Pacific shares outside Japan, is up 0.02%

China unveiled regulations to root out monopolistic practices in the internet industry, seeking to curtail the growing influence of corporations like Alibaba and Tencent Holdings Ltd

Japan’s Prime Minister Yoshihide Suga reportedly instructed his ministers to compile a third extra budget for fiscal 2020, which will end in March, to finance a new stimulus to support the economy

In Australia, travel stocks saw a significant boost as progress on a vaccine could mean that borders reopen a little sooner than expected, with Qantas lifting 8.33%, Flight Centre added 9.26% and Webjet surging 13.55%

On the data front, National Australia Bank’s index of business confidence jumped to 5 in October from -4 in the previous month, posting the highest reading since May 2019

Final-stage trial of a frontrunner Chinese vaccine candidate, Sinovac Biotech Ltd., was halted in Brazil due to a serious adverse event, the first time that the Asian nation’s rapidly ascendant shots have met such a setback

In Asia, “we are hearing some fears coming from Japan and India that under Biden the U.S. could return to a multilateral and institutional approach” that China could manipulate to its advantage, said Bruno Macaes, Portugal’s former Europe minister and a non-resident senior fellow at the Hudson Institute.

“The flows data over the past few months suggest that investors’ purchases of Emerging Market assets have been heavily biased towards a handful of Asian countries,” said Nick Stadtmiller, a strategist at Medley Global Advisors in New York. “Asian economies are expected to grow faster than other emerging-market peers in the coming year, and that growth differential has been supportive of Asian markets.”

EU Markets

European stocks extended Monday’s rally to trade at new 8-month highs on Tuesday, amid optimism over Pfizer and BioNTech’s Covid-19 vaccine

Investors also await Brexit talks news

The pan-European Stoxx 600 index added 0.92% to 384 on Monday

Stoxx 50 added 1.02% to close at 3,442 on Tuesday

Germany’s DAX30 added 0.51% to 13,163 on Tuesday

London’s FTSE 100 added 1.79% to close to 6,296 on Tuesday

France’s CAC40 added 1.55% to 5,419 on Tuesday

Denmark’s OMX Copenhagen 20 Index dropped -0.98% to 1,377 on Tuesday

Luxembourg’s LuxX Index added 1.88% at 1,193 on Tuesday

Sweden’s OMX Stockholm 30 Index dropped -0.17% at 1,885 on Tuesday

Italy’s FTSE MIB Index added 0.49% at 20,851 on Tuesday

In UK, shares in Premier Foods jumped after it raised its full-year trading profit outlook and said it expects higher demand for its brands due to the recent government restrictions on eating out

European Parliament and the EU governments have reached a deal on the EU’s 2021-2027 budget and recovery package lifted traders’ sentiment

In Germany, Thyssenkrupp stocks jumped around 5% as the group is in talks with the German government over steel aid of more than €5 Billion

“Italy may need to spend as much as 10 billion euros ($11.8 billion) a month to aid businesses and workers hit by coronavirus restrictions.”

“The unemployment rate in the UK increased to 4.8% in the three months to September, higher than 4.5% in the previous period and 3.9% a year earlier. It is the highest jobless rate since the last quarter of 2016.”

Oil & Natural Gas Markets

Oil rose on Tuesday on optimism that a potential coronavirus vaccine will boost demand, offsetting immediate concerns over growing virus lockdowns

WTI crude futures were up more than 2% to trade around $41.1 a barrel on Tuesday

Brent crude futures were up more than 2% to trade around $43.2 a barrel on Tuesday

Supporting prices further were comments from Saudi Arabia’s energy minister, who said that OPEC+ could tweak their supply cut pact if demand slumps before the vaccine is available

Natural gas futures added 3.52% to $2.974/MMBtu on Tuesday

WTI Crude is trading higher at $41.85 per barrel in early Wednesday trade

Brent Crude is trading higher at $44.06 per barrel in early Wednesday trade

Natural Gas futures is trading higher at $2.962 per mmbtu in early Wednesday trade

On MCX-India, Crude oil futures added 1.9% to 3,058 on Tuesday’s session

On MCX-India, Natural gas futures added 3.34% to 220 on Tuesday’s session

“Libya boosted oil production to more than 1 million barrels a day, a milestone for the North African country after civil war all but shut its energy industry. Libya aims to pump 1.3 million barrels a day by the beginning of 2021.”

Gold & Silver Markets (+ copper futures)

Gold was up more than 1% to $1885 an ounce on Tuesday, after sinking near 4.5% in the previous session as focus returns to monetary policy

Silver was slightly higher at $24.2 an ounce on Tuesday

Copper futures is steady at $3.1520 per pound on Tuesday; supported by growing demand from top consumer China and a decline in production in Chile

US Gold futures (Comex) strengthened to $1,880.30 an ounce in early Wednesday trade

US Spot Gold strengthened to $1,882.36 an ounce in early Wednesday trade

Silver futures (Comex) weakened to $24.45 an ounce in early Wednesday trade

Copper futures (Comex) stayed unchanged at $315.60 per pound in early Wednesday trade

In India, Spot Gold strengthened to INR 49,865 per 10 grams in early Wednesday trade

India – NCDEX Agridex

Agricultural futures index tracking the performance of the 10 liquid commodities, was down -0.37% trading at 1,203.50 ; with major demand seen in Guar Gum and Guar Seed futures on Tuesday

Currency Markets

The dollar index, DXY, was slightly higher at 93 on Tuesday

A weaker dollar signals higher risk appetite and is seen as a positive for growth in Asia’s emerging economies, many of which rely on imports priced in the greenback. Stronger local currencies also help bolster national balance sheets and borrowers from sovereigns to corporates benefit from lower repayments on dollar-denominated debt.
“Faced with a softening dollar, US investors typically seek growth and earnings opportunities abroad in general, and in Asia in particular,” said John Woods, chief investment officer for Asia Pacific with Credit Suisse Group AG. “The economic recovery is gaining traction, and corporate earnings are responding positively. Asia is setting itself up for an improved and constructive start to 2021.”

INR weakened -0.05% with USD—INR at 74.1788

JPY strengthened 0.06% with USD—JPY at 105.2900

CNY strengthened 0.20% with USD—CNY at 6.6164

EUR weakened -0.05% with EUR—USD at 1.1807

GBP strengthened 0.63% with GBP—USD at 1.3249

SEK strengthened 0.09% with USD—SEK at 8.6213

*3-Month LIBOR Rate*	*As on 10 Nov 2020*
US DOLLAR	0.21 per cent
Euro	– 0.54 per cent
British Pound	0.04 per cent
Swiss Franc	– 0.77 per cent
Japanese Yen	– 0.10 per cent

Bond Markets

Americas : 10-Year Govt Bond Yields

United States : Up 3 basis points at 0.95%
Canada : Up 3 basis points at 0.77%

Europe, Middle East & Africa : 10-Year Govt Bond Yields

Germany : Up 3 basis points at -0.49%
United Kingdom : Up 3 basis point at 0.40%
France : Up 2 basis point at -0.24%
Italy : Up 1 basis point at 0.76%
Spain : Unchanged at 0.18%
Netherlands : Up 2 basis points at -0.40%

Asia Pacific : 10-Year Govt Bond Yields

India : Up 4 basis point at 5.92%
Japan : Up 3 basis point at 0.04%
Australia : Up 15 basis points at 0.92%
Hong Kong : Down 4 basis points at 0.37%
Singapore : Up 7 basis points at 0.85%
South Korea : Up 6 basis point at 1.64%

Fund Flows on NSE, BSE and MSEI — Nov 10 2020 (source NSE)

FII Net Buy Rs 5,627.32 Crore in Cash Market
DII Net Sell Rs (2,309.19) Crore in Cash Market

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