Finance - Stock Market Forecast

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

• Midpoint Resistance for Nifty 50 is seen at 14,878. For Friday, Feb. 05, Support area will be at 14,750 14,645 and 14,530

• Support zone for Bank Nifty is at 34,170 and 33,800 with Resistance at 36,210 for Feb. 05

• The MSCI Asia Pacific ex-Japan is trading higher 0.78%, and the MSCI Emerging Market index is up 0.63%

• 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 78 points, or 0.53% higher at 14,974 on the Singaporean Exchange at 08:00 a.m. I.S.T.

• U.S. equity futures rose in early morning trade with Nasdaq, S&P 500 futures and Dow Jones futures trading in green; alongside a positive start to Asia-Pacific early Friday trade with stocks pushing higher in Japan, South Korea, China, Australia and Hong Kong; a positive MSCI Asia-Pacific ex-Japan index; U.S. Dollar heading for its best weekly gain in 3-months to 91.50 supported from a rise in 10-Year Treasury Yields at 1.13% and Gold futures steadying after Thursday’s decline at $1,797 on the day indicate a stable-to-positive outlook for Nifty 50 India

India Markets

NIFTY 50	OPEN	HIGH	LOW	CLOSE
Thursday	14,789	14,913	14,714	14,895

India’s equity benchmarks extended their post-Budget rally for the fourth-consecutive session on Thursday trade

The blue-chip NSE Nifty 50 index added 105 points, or 0.71%, to 14,895 and the benchmark S&P BSE Sensex added 358 points, or 0.71%, to 50,614

Broader markets out-performed headline peers — Midcap 100 index added 1.06%; Smallcap 250 index added 1.37% and Nifty 500 added 0.92%

Nifty P/E for Feb 04 2020 increased from 39.16 to 40.81, and Nifty P/B edged higher from 4.19 to 4.22, as recorded by NSE India

Bank Nifty opened negative, but managed to hold support at 34,250 level and the bullish momentum in all the banking stocks drove the index above the 35,400 mark. The index sustained well above its breakout range, adding 586 points, or 1.69%, to 35,344

India VIX or Fear gauge fell -2.62% from 23.74 to 23.12 levels. It needs to cool down and hold below 20 level for a continuation in the ongoing momentum

Overnight Call Money rate weighted average stood at 3.20% as per RBI data. It moved in a range of 1.90 — 3.55% for Feb 03

Yield on the benchmark 10-year government bond stayed elevated at 6.18%, as bonds tumbled due to high borrowing plans, while the rupee weakened to 72.9280 per U.S. dollar

America Markets

Whirlpool Manufacturing Plant in Cleveland, Tennessee

Wall Street’s main indexes rose for a 4th session on Thursday trade, as investors looked to corporate earnings and signs of progress on a pandemic-relief package after data suggested the labor market was stabilizing

The broad-based S&P 500 gained 41 points, or 1.09%, at 3,871

The Dow Jones Industrial Average, composed mostly of cyclical stocks, rose 332 points, or 1.08%, to 31,055

The tech-heavy Nasdaq Composite Index added 167 points, or 1.23%, at 13,777

U.S. equity futures rose in early Friday trade. S&P500 futures is up 0.14%; Dow Jones futures is up 0.18% and Nasdaq futures is up 0.20%

10-year U.S. Treasury yields steady at 1.14%, as investors positioned for a large pandemic relief package with dollar strengthening to 91.50

The Cboe Volatility Index, known as Wall Street’s “fear gauge,” fell -4.98% to 21.77 on Thursday

The Labor Department’s report showed 779K Americans filed new applications for unemployment benefits last week, lower than 812K in the prior week

The Commerce Department said that new orders for U.S. made goods or factory orders increased 1.1% in Dec. after surging 1.3% in Nov., pointing to continued strength in the manufacturing industry in the near term

Manufacturing, which accounts for 11.9% of the U.S. economy, has been driven by strong demand for goods such as electronics and furniture as 23.7% of the labor force works from home because of the COVID-19 pandemic

The Labor Department said that nonfarm productivity, which measures hourly output per worker, dropped at a -4.8% annualized rate in Dec. quarter. That was the deepest pace of contraction since the second quarter of 1981. Data for the third quarter was revised higher to show productivity growing at a 5.1% pace instead of the previously reported 4.6% rate. Productivity rose 2.6% in 2020 compared to 1.7% in 2019

Unit labor costs – the price of labor per single unit of output – rebounded at a 6.8% rate in the Dec. quarter after plunging at a -7.0% rate in the third quarter. Unit labor costs increased at a 5.2% rate from a year ago. They rose 4.3% in 2020 after gaining 1.9% in 2019

“The market is digesting earnings news and more importantly the focus is on what type of agreement can come out of Washington related to stimulus,” Robert Pavlik, senior portfolio manager at Dakota Wealth Management in New York said.

Asia-Pacific Markets

Asian benchmark stocks pushed higher in early Friday trade, after their U.S. peers climbed to a record on signs of a healing labor market and improving coronavirus trends

Japan’s Nikkei 225 added 1.34% to 28,720 and Topix 500 added 1.09% to 1,466

South Korea’s Kospi added 0.73% to 3,110

In Hong Kong, Hang Seng added 1.27% to 29,492 while Hang Seng China Enterprises added 0.88% to 11,664

In China, CSI 300 added 0.91% to 5,523 and Shanghai Composite added 0.97% to 3,536

Australia’s S&P/ASX 200 added 0.95% to 6,830

EU Markets

European equities rose for the fourth-session on Thursday trade, as investors were hopeful of a swifter global economic recovery, with German shares leading the advance among European Union members

The pan-European Stoxx Europe 600 added 0.64% to 407 and Stoxx 50 added 0.90% to close at 3,642

Germany’s DAX30 added 0.91% to 14,060

Germany’s ruling coalition parties on Wednesday agreed a batch of additional measures to support those hit hard financially by the COVID-19 pandemic

London’s blue-chip FTSE 100 fell -0.06% to 6,503

France’s CAC40 added 0.82% to 5,608

Denmark’s OMX Copenhagen 20 fell -0.76% to 1,468

Spain’s IBEX 35 added 1.37% to 8,122

Italy’s FTSE MIB added 1.65% to 22,900

The Bank of England asked banks to start preparing for negative interest rates, while saying that message shouldn’t be seen as a signal that the policy is imminent. The move raises the threat that the central bank will push borrowing costs below zero, turning the lending business on its head by charging depositors to store cash while giving money back to borrowers

The European Central Bank was the first major monetary authority to cut deposit interest rates below zero in June 2014 – now at a record low of -0.5% – a year after the euro zone exited a double-dip recession, when it was worried that a too-strong exchange rate was depressing inflation

BOE predicts the economy will contract in the Q1 after the U.K. stepped up restrictions to prevent the spread of the coronavirus. The central bank kept policy unchanged this month, paring its forecast for 2021 growth to 5% from 7.25% in November

BOE’s Monetary Policy Committee, led by Governor Andrew Bailey, kept the key interest rate at 0.1% and the total bond-purchase target at 895 billion pounds ($1.2 trillion). Keeping borrowing costs low helps the Treasury, Rishi Sunak to introduce new aid packages in his March 3 Budget

Most analysts are seeing the BOE benchmark remaining at or above the current level through the middle of 2023

Oil & Natural Gas Markets

Crude-oil prices rose in early Friday trade

Saudi Arabia kept oil pricing unchanged for its main market of Asia, $1 a barrel above the benchmark, defying expectations of a cut after a key OPEC+ committee expressed confidence that crude supply and demand are re-balancing

WTI Crude is trading higher at $56.71 per barrel

Brent Crude, the international benchmark for oil, is trading higher at $59.30 per barrel

Natural Gas futures is trading higher at $2.962/MMBtu

Commodities Markets

Gold futures steadied in early Friday trade, after coming under heavy selling pressure on Thursday, breaking below $1,800 for the first time in 2-months as the dollar strengthened and U.S. Treasury yields remained elevated

Positive U.S. economic data, along with a gradual rollout of vaccines and more government spending is boosting hopes for a robust economic recovery. Long-term appeal of Gold still remains high on the back of record-high debt levels

U.S. Gold futures (Comex) is trading lower at $1,797 an ounce

Silver futures (Comex) is trading lower at $26.12 an ounce

Copper futures (Comex) is trading at $3.5500 per pound

SGX Iron-Ore futures is trading higher at $155.45 per tonne

In India, Spot Gold is trading lower at INR 46,607 per 10 grams

Currency Markets

U.S. dollar index, DXY extended gains to 91.50 in early Friday trade, the highest on a closing basis since November 30th, amid a general pause in investors’ appetite for riskier currencies and expectations for the U.S. economy to outperform its peers

Still, the medium to long-term outlook remains bearish owing to the risks posed by record-high debt levels

INR weakened with USD / INR at 72.9280

JPY weakened with USD / JPY at 105.4300

CNY weakened with USD / CNY at 6.4718

EUR weakened with EUR / USD at 1.1977

GBP strengthened with EUR / GBP at 0.8767

GBP strengthened with GBP / USD at 1.3662

“The current bout of dollar strength could continue for several weeks,” Tohru Sasaki, J.P. Morgan’s head of Japan market research in Tokyo said, adding “but the picture is murkier thereafter as Europe and Asia catch up with immunizations and the Federal Reserve’s continued ultra-easy monetary policy caps a rise in long-term U.S. yields.”

*3-Month LIBOR Rate*	*As on 04 Feb 2021*
US DOLLAR	0.19 per cent
Euro	– 0.55 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 dropped -0.67% in early Friday trade to $36,749 as of 07:30 a.m. I.S.T.

“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 : 1.13%
Canada : 0.96%

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

Germany : -0.46%
United Kingdom : 0.44%
France : -0.24%
Italy : 0.55%
Netherlands : -0.40%

Asia Pacific : 10 – Year Govt Bond Yields

India : 6.18%
Japan : 0.05%
Australia : 1.22%
Hong Kong : 0.70%
Singapore : 1.07%
South Korea : 1.78%

Fund Flows on NSE, BSE and MSEI — 04 Feb 2021

FII/FPI Net Buy Rs 1,936.74 Crore in Capital Market

DII Net Sell Rs (768.55) Crore in Capital Market

Where We’ve Been Reading —