Finance - Stock Market Forecast

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

• Major Resistance for Nifty 50 is seen at 14,750. For Wednesday, Feb. 03, Support area will be at 14,530 and 14,435

• Support zone for Bank Nifty is at 33,727 for Feb. 03

• The MSCI Asia Pacific ex-Japan is trading higher 0.38%, and the MSCI Emerging Market index is up 0.23%

• Trends on SGX Nifty looked poised for a gap-up opening and a modestly firmer start for Nifty 50 in India. The Nifty futures are trading 101 points, or 0.11% higher at 14,756 on the Singaporean Exchange at 07:30 a.m. I.S.T.

• U.S. equity futures climbed in early morning trade with Nasdaq, S&P 500 futures and Dow Jones futures trading in green; alongside a mostly positive opening to Asia-Pacific early Wednesday trade with stocks rising in Japan, South Korea, Australia while fluctuating in China and falling in Hong Kong; a positive MSCI Asia-Pacific ex-Japan index; U.S. Dollar paring overnight gains to 91.01 with 10-Year Treasury Yield climbing to 1.11% and Gold futures paring declines at $1,840 on the day indicate a stable-to-positive outlook for Nifty 50 India

• Governments to urgently find a way of measuring economic growth that takes into account the price of damaging natural ecosystems, according to a report backed by the British government

• Wallstreetbets is hitting the point of diminishing value

India Markets

NIFTY 50	OPEN	HIGH	LOW	CLOSE
Tuesday	14,481	14,731	14,469	14,647

India’s equity benchmarks jumped on Tuesday trade, on the back of favourable global cues

The blue-chip NSE Nifty 50 index added 366 points, or 2.57%, to 14,647 and the benchmark S&P BSE Sensex fell 1,196 points, or 2.46%, to 49,797

Broader markets under-performed headline peers — Midcap 100 index added 2.38% ; Smallcap 250 index added 1.24% and Nifty 500 added 2.41%

Nifty P/E for Feb 02, 2020 increased from 38.26 to 38.79, and Nifty P/B edged higher from 4.05 to 4.15, as recorded by NSE India

Bank Nifty opened with a gap up and continued its positive momentum throughout the day. It registered a new all-time of 34,652. The index sustained well above its breakout range, adding 1,178 points, or 3.56%, to 34,267

India VIX or Fear gauge rose 0.10% from 23.32 to 23.34 levels

Overnight Call Money rate weighted average stood at 3.21% as per RBI data. It moved in a range of 1.90 — 3.55% for Feb 01

Yield on the benchmark 10-year government bond stayed elevated at 6.20%, as bonds tumbled due to high borrowing plans, while the rupee strengthened to 72.9688 per U.S. dollar

India’s RBI is under pressure to step in to keep yields in check after the government surprised bond markets with a bigger-than-expected borrowing plan. Governor Shaktikanta Das is expected to calm the bond traders when he meets to decide policy on Friday.

Central bank’s monetary authority practice what many call implicit yield control – to keep the benchmark 10-year yield around the 6% mark

Tata Advanced Systems Ltd. of Tata Group will showcase its capabilities in high-altitude twin aircraft for military use in a defense expo in Bengaluru this week, in a boost to Prime Minister Narendra Modi’s mission of supporting local defense capabilities and reducing dependence on costly imports

India’s (Markit) service PMIs are due on Wednesday

Reserve Bank of India’s decision on interest rates will be closely watched on Friday

“For a 5-trillion dollar economy, our manufacturing sector has to grow in double digits on a sustained basis. Our manufacturing companies need to become an integral part of global supply chains,” Finance Minister Nirmala Sitharaman said.

“Enhanced farm loans are expected to give a boost to the rural economy,” said Anand Ramanathan, a partner at Deloitte India. “This will not only help address issues related to low productivity in agriculture, but also have a ripple effect on other sectors such as agri-equipment manufacturers, agro-logistics and input providers.”

America Markets

U.S. Federal Reserve Chair Jerome Powell’s comments about a “highly uncertain” economic outlook appeared to prick the nascent asset bubble, with major US stock indexes dropping over 2 per cent by the close of trading on Friday

U.S. stocks rose on Tuesday trade, reflecting a steadier tone for markets this week despite fireworks in GameStop shares and silver futures

The broad-based S&P 500 rose 52 points, or 1.4%, to 3,826 a day after the broad stocks gauge posted its biggest one-day advance since November

Financial and retail companies lead gains

The Dow Jones Industrial Average, composed mostly of cyclical stocks, gained 475 points, or 1.6%, to 30,687

The tech-heavy Nasdaq Composite Index climbed 209 points, or 1.6%, to 13,612

U.S. equity futures rose in early Wednesday trade. S&P500 futures is up 0.35%; Dow Jones futures is up 0.21% and Nasdaq futures is up 0.45%

10-year U.S. Treasury yields edged higher to 1.11% on the day as dollar eased to 91.02 after overnight gains

The Cboe Volatility Index, known as Wall Street’s “fear gauge,” fell -15.48% to 25.56 on Tuesday

The U.S. Treasury slashed its estimated borrowing needs for the three months through March by more than analysts had anticipated

Quarterly earnings from Amazon.com and Alphabet were released after markets closed. Amazon.com for the first time reported more than $100 billion in quarterly revenue, fueled by a surge in online holiday shopping by people stuck at home. Google parent Alphabet also reported record quarterly revenue

Amazon CEO Jeff Bezos will step down from his post in the Q3 of 2021 and would be replaced by Andy Jassy, the head of the company’s cloud computing unit, AWS

Investors are closely following discussions around another round of coronavirus relief in Washington. A group of Senate Republicans on Monday outlined their roughly $618 billion offer, including a round of $1,000 direct checks for many adults. The proposal omits measures favored by many Democrats, such as aid for state and local governments and a plan to raise the federal minimum wage to $15 an hour

The U.S. January payrolls report is due on Friday, providing a first look at hiring in 2021

“There’s optimism brewing underneath,” said Megan Horneman, director of portfolio strategy at Verdence Capital Advisors. “The fact that markets have cooled down a bit with the retail-trading frenzy, that’s giving a little bit of optimism. Anytime there’s more stability to markets, there’s a breath of relief of all investors.”

Asia-Pacific Markets

A worker works on a production line at a factory of a ship equipments manufacturer, in Nantong, Jiangsu province, China

Asian benchmark stocks opened higher in early Wednesday trade extending a global rally amid a slew of corporate earnings and a crumbling of the retail trading frenzy that fueled swings in heavily shorted shares

Equities rose in Japan, Australia and South Korea while falling in Hong Kong and fluctuating in China

Japan’s Nikkei 225 added 0.66% to 28,547 and Topix 500 added 0.66% to 1,445

South Korea’s Kospi added 0.34% to 3,106

In Hong Kong, Hang Seng dropped -0.66% to 29,318 while Hang Seng China Enterprises dropped -0.47% to 11,551

In China, CSI 300 added 0.07% to 5,505 and Shanghai Composite dropped -0.64% to 3,511

Australia’s S&P/ASX 200 added 1.09% to 6,836

South Korea is due to report January foreign-exchange levels on Wednesday. The Korean won was the worst-performing Asian currency in January

China releases its forex levels on Feb. 7

Reserve Bank of Australia’s Governor Philip Lowe is to announce a policy decision on Tuesday and release his quarterly Statement on Monetary Policy on Friday

EU Markets

European equities rose on Tuesday trade, as investors were hopeful of a faster economic recovery, while technology shares gained after French IT consulting group Atos ended talks of a potential takeover of U.S. rival DXC Technology

The pan-European Stoxx Europe 600 added 1.35% to 404 and Stoxx 50 added 1.69% to close at 3,590

The European technology sector rose 1.3%

Germany’s DAX30 added 1.56% to 13,835

London’s blue-chip FTSE 100 added 0.78% to 6,516

France’s CAC40 added 1.86% to 5,563

Shares in Atos SE gained 2.8% after the firm said it has decided to discontinue talks about a potential $10 billion acquisition of DXC Technology Co.

Denmark’s OMX Copenhagen 20 added 1.52% to 1,465

Spain’s IBEX 35 added 1.89% to 7,945

Italy’s FTSE MIB added 1.01% to 22,046

Fresh data on Tuesday highlighted an economic gap between the eurozone and the U.S. and China that is likely to widen this year, as stubbornly high coronavirus infections, extensive virus restrictions and a painfully slow vaccine-rollout delay Europe’s recovery

The eurozone’s gross domestic product contracted by -0.7% in Dec. ended quarter, shrinking less than expected on a QoQ basis, resulting in an annual decline of -6.8% for the bloc in 2020, the EU’s statistics agency said on Tuesday. That compares with a 3.5% decline for the U.S. economy in 2020 and expansion of China’s economy by 2.3% for 2020

“The eurozone will be the last major economy to return to pre-pandemic levels and will suffer continued substantial output gaps for at least the next two years,” said Erik Nielsen, chief economist at UniCredit

“Markets are inclined to look through a difficult situation and climb higher on the combination of vaccines, fiscal stimulus and central banks sticking to their very accommodative monetary policies,” Russ Mould, investment director at AJ Bell, said.

Oil & Natural Gas Markets

Crude-oil edged higher in early Wednesday trade, buoyed by voluntary production cuts by OPEC and its allies

Last month’s pledge by Saudi Arabian Energy Minister Prince Abdulaziz bin Salman to slash production by a further 1 million barrels a day has buttressed global markets against the latest onslaught from the pandemic

WTI Crude is trading at $54.74 per barrel

Brent Crude is trading at $57.47 per barrel

Natural Gas futures is trading at $2.918/MMBtu

“The oil market continues to shake off any fears related to lockdown induced demand destruction as we see evidence that crude supply is shrinking at a faster rate than demand,” TD Securities commodities strategists including Bart Melek said in a note. “Crude oil markets remain in good shape to tighten in 2021, and the latest OPEC data suggest the cartel has been diligent in living up to their deal.”

“There’s a sense that normalcy will occur and it’s looking more certain,” boosting the outlook for oil demand, said Michael Lynch, president of Strategic Energy & Economic Research. Meanwhile, “the Saudi production cuts start today, and people are focused on falling inventories and how the market is tightening.”

Commodities Markets

Gold futures rose marginally in early Wednesday trade, after falling overnight, hurt by a stronger dollar

U.S. Gold futures (Comex) is trading lower at $1,840 an ounce

Silver futures (Comex) is trading at $27.06 an ounce, retracing from a eight-year high aided by Reddit crowd

Copper futures (Comex) is trading lower at $3.5280 per pound

SGX Iron-Ore futures is trading higher $150.05 per tonne

In India, Spot Gold is trading at INR 47,847 per 10 grams

“Silver’s retracement isn’t surprising, as any longer-term price upside due to social media-driven collaboration and conspiracy theories was always going to be unsustainable,” said Gavin Wendt, a senior resource analyst at MineLife Pty

Currency Markets

U.S. dollar index, DXY slipped to 91.02 in early Wednesday trade, after extending its upward momentum in overnight rally to 91.28 first rise above 91 since December

The long-term outlook remains bearish owing to the risks posed by record-high debt levels. Treasury Secretary Janet Yellen has backed a $1.9 trillion stimulus package unveiled by President Joe Biden, saying the benefits outweigh the costs of a higher debt burden

INR strengthened with USD / INR at 72.9688

JPY weakened with USD / JPY at 105.0900

CNY strengthened with USD / CNY at 6.4574

EUR weakened with EUR / USD at 1.2023

GBP strengthened with EUR / GBP at 0.8808

GBP weakened with GBP / USD at 1.3651

*3-Month LIBOR Rate*	*As on 02 Feb 2021*
US DOLLAR	0.20 per cent
Euro	– 0.54 per cent
British Pound	0.04 per cent
Swiss Franc	– 0.76 per cent
Japanese Yen	– 0.09 per cent

Bitcoin

Bitcoin / U.S. Dollar added 1.01% in early Wednesday trade to $35,900 as of 07:30 a.m. I.S.T.

Cryptocurrencies have been buffeted recently by volatile retail-investor demand shaped online by Twitter feeds and Reddit forums

“Bitcoin is really on the verge of getting broad acceptance by conventional finance people,” Elon Musk said in the social audio app Clubhouse, adding he’s “late to the party.”

Bond Markets

Americas : 10 – Year Govt Bond Yields

United States : 1.11%
Canada : 0.91%

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

Germany : -0.49%
United Kingdom : 0.35%
France : -0.26%
Italy : 0.65%
Netherlands : -0.42%

Asia Pacific : 10 – Year Govt Bond Yields

India : 6.20%
Japan : 0.04%
Australia : 1.15%
Hong Kong : 0.60%
Singapore : 1.03%
South Korea : 1.76%

Fund Flows on NSE, BSE and MSEI — 02 Feb 2021

FII/FPI Net Buy Rs 6,181.56 Crore in Capital Market

DII Net Sell Rs (2,035.20) Crore in Capital Market

Where We’ve Been Reading —