Finance - Stock Market Analysis

Index Trend & Conditions | 08:00 IST

• Major Resistance seen at 12,820—12,850 area for Nifty50

• For Friday, Nov 13, Support at 12,560 and 12,450 with Resistance at 12,768 and 12,822 for Nifty50

• Trends on SGX Nifty indicate a gap-down start for Nifty50 in India with a 104 points loss. The Nifty futures were trading at 12,643 on the Singaporean Exchange at 08:00 IST

• Contracts tied to S&P500 and Nasdaq futures trading in red in early Friday morning, a negative outlook of Asia-Pacific early morning trade, MSCI APAC ex-Japan up 0.25% on the day and a strengthening US dollar with dropping 10-Year Treasuries indicate a negative outlook for Nifty 50 India

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

India Markets

NIFTY 50	OPEN	HIGH	LOW	CLOSE
Thursday	12,702	12,741	12,624	11,690

Nifty opened with a gap-down on Thursday and was seen taking a breather, confirming pause on the day

Nifty50 lost 58 points or -0.46% on Thursday to close at 12,690

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

A close below 12,560 level on Nifty50 can see some partial profit booking and the next critical support lifeline is at 12,470

Nifty ended below the 12,700 level, forming an indecisive Doji and an Inside Bar on the daily chart

PSU Bank and Private Bank stocks were the worst performers in today’s session, while FMCG and Realty stocks were at the vanguard of the rally

Nifty P/E for Nov 11, 2020 is at 34.48, as recorded by NSE India

On the up side, crucial level or resistance is seen at 12,768 and 12,822 for Friday

While, on the downside, support is seen at 12,560 and 12,450 for Friday

The BSE Sensex index lost 236 points or -0.54% to 43,357 on Thursday

Bank Nifty opened positive and continued its upward movement towards 29,000 level, in spite of consolidation in some of the banking stocks

The index formed a small body candle on the daily scale, but has been making higher highs and lows from last eight sessions

Nifty futures closed positive at 12,764 level with 0.84% gain

India VIX dropped -6.41% from 22.03 to 20.62 level

Broader market indices outperformed on the day. The Midcap index advanced 0.60% while the Smallcap index added 1.16%

The overnight call money rate weighted average stood at 3.18% according to RBI data. It moved in a range of 1.80—3.50% as on Nov 11

Indian government unveiled a fresh set of measures on Thursday, amounting to ₹2.65 lakh crore ($35 billion) to battle the economic crisis, ahead of the Diwali festivities in the country

Sitharaman asserted that the government has committed a total of 15% of GDP in trying to revive the economy i.e. ₹29 lakh crore

> Rs 900 crore R&D grant for COVID-19 vaccine development, which will be given to The Department of Biotechnology

> Rs 65,000 crore fertilizer subsidy will be provided to farmers. Increased supply of fertilisers at subsidised rates will help 140 million farmers

> Rs 6,000 crore equity investment in debt platform of NIIF, which will help NIIF raise Rs 1.1 lakh crore by 2025 for financing infrastructure projects

> Additional outlay of Rs 10,000 crore for PM Garib Kalyan Yojana

> Rs 3,000 crore boost to be given for project exports through assistance given by India to developing countries under IDEAS Scheme

> Rs 10,200 crore additional budget stimulus to be provided for capital and industrial expenditure on defence equipment, industrial infrastructure and green energy

> Atmanirbhar Bharat Rozgar Yojana to incentivise the creation of new employment opportunities during the COVID-19 recovery phase

> The Emergency Credit Line Guarantee Scheme (ECLGS) for MSMEs, businesses, MUDRA borrowers and individuals (loans for business purposes), has been extended till March 31, 2021

> Credit guarantee support scheme for health care sector and 26 sectors stressed due to COVID-19

> Production Linked Incentive (PLI) worth Rs 1.46 lakh crore is being offered to 10 champion sectors. A total amount of nearly 1.5 lakh crore has been earmarked across sectors, for next five years

> The differential between circle rate and agreement value in real estate income tax had been increased to 20% to boost housing sales. Income tax relief for first-time buyers, developers, on houses up to Rs 2 crore till June 30, 2021

> Additional outlay of Rs 18,000 crore for PM Awaas Yojana Urban

“Indigo is in talks with Pratt & Whitney and CFM International, a joint venture of General Electric and France’s Safran, to provide engines to power about 150 new Airbus A320neo jets — the agreement could be worth about $10.7 billion, including service, repair, and maintenance.”

“We will have to see how the government balances the conditions of these PLI schemes, which have been attached for valid reasons to ensure that the production that takes place is competitive, with the overarching objective of promoting ease of doing business,” said trade expert Biswajit Dhar, Professor at Jawaharlal Nehru University’s Centre for Economic Studies and Planning

“The Union Cabinet approved the Production-Linked Incentive (PLI) scheme for 10 sectors on November 11. These are Advance Chemistry Cell (ACC) battery (Rs 18,100 crore); electronics and technology products (Rs 5,000 crore); automobiles and auto components (Rs 57,042 crore); pharmaceuticals and drugs (Rs 15,000 crore); telecom and networking products (Rs 12,195 crore); textiles products (Rs 10,683 crore); food products (Rs 10,900 crore); high efficiency solar PV modules (Rs 4,500 crore); white goods (Rs 6,238 crore) and speciality steel (Rs 6,322 crore)”

“Today’s stimulus package has focused well on the real estate sector which has significant multiplier impact on the economy due to its high employment generation capabilities. The increased outlay under PMAY (U) coupled with the increased gap vis-a-vis the circle rate of 20% would give significant boost to the real estate sales specially in the mid to low price brackets. – Piyush Bothra, co-founder & CFO Square Yards.”

America Markets

Wall Street closed deeply in the red on Thursday, as a rising number of US coronavirus cases raised concerns over the economic recovery heading into year-end

The Dow Jones lost 319 points or -1.1% to 29,079

The S&P 500 retreated 36 points or -1.0% to 3537

The Nasdaq dropped 77 points or -0.7% to 11,710

All major groups in the American equity benchmark retreated, led by declines in energy producers and banks

Today in derivatives market, Contracts tied to the S&P 500 have are down -0.32% while Nasdaq 100 futures also dropped -0.40%

On the coronavirus front, US recorded 152,255 new infections on Wednesday as the virus spreads across the nation, with the early epicenter of New York ordering measures to tamp down a fresh wave

On the economic front, applications for U.S. state unemployment benefits fell by the most in five weeks — signaling the gradual recovery in the labor market is continuing

Annual inflation rate in the US fell to 1.2% in October from 1.4% in the previous month and below market consensus of 1.3%. The rate remained well below February’s 2.3%, before the coronavirus pandemic hit

US posted a budget deficit of USD 284 billion in October 2020

“JPMorgan Asset Management is cutting its projections for cross-asset returns over the next decade and signaling more pain for 60/40 allocations that have long formed the bedrock of traditional portfolios.
Strategists at the firm reduced their estimate for global equities by 1.4 percentage point to 5.1% a year in the next decade, citing elevated valuations in U.S. large caps. They forecast negative inflation-adjusted returns across almost all sovereign bonds over the next 10 to 15 years, with yields remaining low even after rates normalize.”

“The U.S. economy could be in for a challenging few months as Covid-19 spreads — despite recent positive news about vaccine development, Federal Reserve Chairman Jerome Powell said.”

“US maintains its hostile form towards China’s manufacturers even under Joe Biden, underscoring a deep mistrust. US tariffs on billions of dollars worth of Chinese goods will be retained, as will strict restrictions on technology and investment. This is the emerging view of Chinese factory bosses when interviewed by Bloomberg News.
However, China’s exports expanded faster than expected in October, with shipments to the U.S. alone jumping 22.5%.”

Asia-Pacific Markets

Asian stocks followed their US counterparts lower Friday, experiencing a bit of exhaustion, as a resurgence in coronavirus cases added to concern that tougher restrictions may hamper the economic recovery without further stimulus

The Nikkei 225 dropped -1.03% to 25,256 in early Friday trade

Topix 500 dropped -1.59% to 1,316 in early Friday trade

South Korea’s Kospi dropped -0.24% to 2,469 in early Friday trade

In Hong Kong, the Hang Seng Index dropped -0.74% to 25,975 in early Friday trade

China’s CSI 300 Index dropped -1.53% at 4,833 in early Friday trade

Hang Seng China Enterprises Index dropped -1.19% to 10,453 in early Friday trade

Shanghai Composite Index dropped -0.11% at 3,338 in early Friday trade

Australia’s S&P/ASX 200 dropped -0.54% to 6,383 in early Friday trade

Singapore’s Straits Times Index added 0.03% to 2,713 in early Friday trade

Overall, MSCI’s broadest index of Asia-Pacific shares outside Japan, is up 0.25%

Trump signed an order prohibiting US investments in Chinese companies determined to be owned or controlled by the country’s military. Stocks including China Mobile Ltd. and China Telecom Corp. slid in the wake of the move

Singapore Airlines Ltd. plans to raise $630 million via the sale of convertible bonds as it seeks to increase liquidity amid a pandemic that’s wiped out travel demand — the funds would be used for operating cash flow, to service debt and for capital expenditure. HSBC Holdings will help to manage the note sale

Tencent Holdings pledged to work with Beijing and control an expansion into the fintech arena, to ensure it remains compliant as the government escalates oversight over the Chinese internet industry

Beijing on Tuesday proposed new laws intended to curb monopolistic practices and rein in the country’s giant internet industry, spooking investors and wiping $290 billion off the value of market leaders from Tencent to Alibaba Group in over two days

“U.K. Foreign Secretary Dominic Raab said Beijing’s new law barring any Hong Kong lawmakers who don’t recognize Chinese sovereignty undermines the territory’s “high degree of autonomy” protected in the Sino-British agreement. The U.K. summoned China’s ambassador to protest the disqualification of pro-democracy legislators in Hong Kong.”

“In Australia, the Melbourne Institute and Westpac Bank Consumer Sentiment Index for Australia increased 2.5% month-over-month to 107.7 points in November, following an 11.9% jump in the previous month. It was the highest reading since November of 2013, amid the ongoing success across the nation in containing the coronavirus outbreak.”

EU Markets

European stocks closed in the red on Thursday, snapping a three-day rally, after economic data showed the Eurozone industrial output unexpectedly declined in September

ECB President Christine Lagarde hinted at additional stimulus as soon as December as downside risks to the economy have increased and the impact of the pandemic is now likely to continue to weigh on economic activity well into 2021

The pan-European Stoxx 600 index dropped -1.61% to 381 on Thursday

Stoxx 50 dropped -1.13% to close at 3,428 on Thursday

Germany’s DAX30 lost -1.1% to 13,070 on Thursday

London’s FTSE 100 dropped -0.68% to close to 6,338 on Thursday

France’s CAC40 dropped -1.52% to 5,362 on Thursday

Denmark’s OMX Copenhagen 20 Index added 0.46% to 1,406 on Thursday

Luxembourg’s LuxX Index dropped -0.65% at 1,198 on Thursday

Sweden’s OMX Stockholm 30 Index dropped -0.55% at 1,892 on Thursday

Italy’s FTSE MIB Index dropped -0.83% at 20,817 on Thursday

“UK GDP expanded 15.5% in the 3-months to September 2020, partially recovering from a record contraction of -19.8% seen in the previous period and compared with market expectations of a 15.8% growth. This was the strongest pace of expansion in the economy since the series began in 1955. Household consumption increased 18.3% (vs -26.3% in Q2) driven by higher spending on restaurants and hotels and transport. Net external demand contributed negatively to the GDP as imports rose more than exports.”

“The number of infections in Italy crossed the 1 million mark on Wednesday, and worries about the collapse of the medical system mounted as 52% of the country’s hospital beds were occupied by Covid-19 patients, above the 40% warning threshold set by the Health Ministry.”

Oil & Natural Gas Markets

WTI crude futures briefly cut some of its early gains, before rising more than 1% to trade around $41 a barrel on Thursday

Brent crude futures traded around $43.9 a barrel on Thursday afternoon, little-changed from the previous session

Natural gas futures traded unchanged at $2.980/MMBtu on Thursday

WTI Crude is trading lower at $40.23 per barrel in early Friday trade

Brent Crude is trading lower at $42.74 per barrel in early Friday trade

Natural Gas futures is trading lower at $2.957 per mmbtu in early Friday trade

On MCX-India, Crude oil futures dropped -0.03% to 3,123 on Thursday’s session

On MCX-India, Natural gas futures added 2.97% to 225 on Thursday’s session

“EIA showed crude oil inventories in the US rose by 4.278 million barrels last week, compared with market expectations of a 0.913 million barrels drop.
IEA said in its monthly report that oil demand is unlikely to get a significant boost from the roll-out of COVID-19 vaccines until well into 2021 while revised down its fuel demand outlook for 2020 by 400,000 bpd to a fall of 8.8 million bpd.”

Gold & Silver Markets (+ copper futures)

Spot gold rose to above $1,875 an ounce on Thursday. So far it is up near 23% as it is considered a hedge against inflation and currency devaluation

Outlook for 2021 and beyond remains bullish for the gold market, as it will take some time for a vaccine to be deployed and for the economy to recover

Silver traded little changed around $24.2 an ounce on Thursday. Silver is up near 34% so far this year

Copper futures unchanged at $3.1295 per pound on Thursday

US Gold futures (Comex) strengthened to $1,878.10 an ounce in early Friday trade

US Spot Gold strengthened to $1,878.69 an ounce in early Friday trade

Silver futures (Comex) strengthened to $24.31 an ounce in early Friday trade

Copper futures (Comex) unchanged at $313.10 per pound in early Friday trade

In India, Spot Gold strengthened to INR 50,129 per 10 grams in early Friday trade

India – NCDEX Agridex

Agricultural futures index tracking the performance of the 10 liquid commodities, was up 0.04% trading at 1,222.65 ; with major demand seen in Ref Soy Oil and Chana futures on Thursday

Currency Markets

The dollar index, DXY, traded around 93.0 against a basket of currencies on Thursday

INR weakened -0.37% with USD—INR at 74.6500

“The Indian rupee extended losses to touch 74.7 against the US dollar, after retail price data showed the country’s inflation rate rose in October to the highest level since May 2014 and remained well above the central bank 2% — 6% target range for a 7th straight month, lowering the chances of further interest rate cuts by the central bank.
Earlier in the session, the currency was already falling, weighed down by dollar purchases by large state-run banks, likely on behalf of the RBI to prevent a sharp appreciation in the local currency.”

JPY strengthened 0.30% with USD—JPY at 105.1100

CNY strengthened 0.27% with USD—CNY at 6.6130

“People’s Bank of China injected CNY 120 billion into financial system via 7-day reverse repos at an interest rate of 2.2% in a move intended to maintain ample liquidity in the banking system. With CNY 30 billion of reverse repos maturing on Thursday, the move led to a net liquidity injection of CNY 90 billion into the market.”

EUR strengthened 0.23% with EUR—USD at 1.1804

GBP weakened -0.84% with GBP—USD at 1.3111

SEK weakened -0.20% with USD—SEK at 8.6525

*3-Month LIBOR Rate*	*As on 12 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 10 basis points at 0.88%
Canada : Down 6 basis points at 0.71%

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

Germany : Down 3 basis points at -0.54%
United Kingdom : Down 6 basis points at 0.35%
France : Down 3 basis points at -0.30%
Italy : Down 5 basis points at 0.68%
Spain : Down 2 basis points at 0.13%
Netherlands : Down 3 basis points at -0.45%

Asia Pacific : 10-Year Govt Bond Yields

India : Up 1 basis point at 5.91%
Japan : Down 1 basis point at 0.02%
Australia : Down 8 basis points at 0.99%
Hong Kong : Unchanged at 0.44%
Singapore : Unchanged at 0.92%
South Korea : Down 2 basis point at 1.68%

Fund Flows on NSE, BSE and MSEI — Nov 12 2020 (source NSE)

FII Net Buy Rs 1,514.12 Crore in Cash Market
DII Net Sell Rs (2,239.43) Crore in Cash Market

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