Finance - Stock Market Forecast

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

• Resistance for Nifty 50 is seen at 15,045. For Monday, Feb. 08, Support area will be at 14,878 14,750 and 14,645

• Support zone for Bank Nifty is at 34,170 and 33,800 for Feb. 08

• The MSCI Asia Pacific ex-Japan is trading higher 0.46%, and the MSCI Emerging Market index is up 0.27%

• Trends on SGX Nifty look primed for a gap-up opening for Nifty 50 in India. The Nifty futures are trading 86 points, or 0.57% higher at 15,029 on the Singaporean Exchange at 07:30 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 Monday trade with stocks outperforming in Japan and rising in China, Australia and Hong Kong; a positive MSCI Asia-Pacific ex-Japan index; U.S. Dollar little changed at 91.09 with rising 10-Year Treasury Yields at 1.19% as U.S. lawmakers approved a budget outline for their $1.9 trillion COVID-19 relief package and Gold futures eking out a small gain to $1,814 on the day indicate a stable-to-positive outlook for Nifty 50 India

• Treasury Secretary Yellen said on Sunday that the U.S. can return to full employment in 2022 if it enacts a robust enough relief package

India Markets

NIFTY 50	OPEN	HIGH	LOW	CLOSE
Friday	14,952	15,014	14,864	14,924

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

The blue-chip NSE Nifty 50 index added 28 points, or 0.19%, to 14,924 and the benchmark S&P BSE Sensex added 117 points, or 0.23%, to 50,731

Broader markets under-performed headline peers — Midcap 100 index fell -1.09%; Smallcap 250 index added 0.24% and Nifty 500 dropped -0.05%

Nifty P/E for Feb 05 2020 increased from 40.81 to 41.46, and Nifty P/B edged higher from 4.22 to 4.23, as recorded by NSE India

Bank Nifty opened with a gap up and made a new lifetime high at 36,615 level, but could not sustain at higher levels. The index sustained well above its breakout range, adding 310 points, or 0.88%, to 35,654. The banking index has outperformed the broader market since the start of the series, and closed the week with around 17% gains.

India VIX or Fear gauge increased 1.27% from 23.12 to 23.41 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 3.18% as per RBI data. It moved in a range of 1.90 — 3.55% for Feb 04

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

RBI kept the benchmark repurchase rate unchanged at 4% on Friday and retained its easy monetary policy stance for as long as is necessary to support growth. The central bank also emphasized it was seeking to ensure ample liquidity to manage the govt’s near-record borrowing. It also committed to opening up room for more targeted market operations to ensure financial stability

RBI’s Friday’s measures include a gradual roll back of a previous 100 basis point cut in cash reserve ratio — the amount of deposits lenders must set aside as reserves — that was announced amid the pandemic. . The withdrawal of this broad swathe of cash from the banking system opens up room for the central bank to announce targeted cash injections

SBI reported net income of 51.96 billion rupees ($712 million) in Dec.-ended Q3. Credit grew by 6.7% in the year to Dec. 31 2020. The bank’s gross bad-loan ratio was 4.77% at the end of December, compared with 5.28% three months earlier

“Monetary policy will continue to complement the expansionary fiscal policy through FY22 given the size of the borrowing program,” said Shubhada Rao, founder at QuantEco Research in Mumbai. “A balancing act may be needed in the second half of the financial year as inflation is likely to creep up.”

“The economic revival is coming back with a vengeance,” SBI’s Chairman Dinesh Khara said in a post-earnings media call, adding “the lender expects credit growth to return to double digits.”

America Markets

Whirlpool Manufacturing Plant in Cleveland, Tennessee

Wall Street’s main indexes closed in the green on Friday trade even after a disappointing January jobs report

The broad-based S&P 500 gained 15 points or 0.4% to 3,887, a new record

The Dow Jones Industrial Average, composed mostly of cyclical stocks, added 92 points or 0.3% to 31,148

The tech-heavy Nasdaq Composite Index climbed 79 points or 0.6% to 13,856

U.S. equity futures rose in early Monday trade. S&P500 futures is up 0.44%; Dow Jones futures is up 0.34% and Nasdaq futures is up 0.58%

10-year U.S. Treasury yields rose to 1.18%, as investors positioned for a large pandemic relief package with dollar unchanged at 91.09

The Cboe Volatility Index, known as Wall Street’s “fear gauge,” fell -4.13% to 20.87 on Friday

The Labor Department said the U.S. employers added only 49K jobs in the first month of 2021 and the unemployment rate fell to 6.3%, while December’s losses were revised to 227K from the initial 140K, triggering concerns over the state of the economy

Employers barely added jobs in January — if it weren’t for temporary help services and state and local education, employment would have fallen for a second month in a row

The economy is still nearly 10 million jobs short of its pre-pandemic peak

At the current pace, it would take more than 2-years to reclaim those losses

Of the 10 million missing jobs relative to Feb 2020, 37% are from just 3-industries. And they all are directly impacted by the pandemic:

* food services & drinking places
* accommodation
* amusements, gambling, and recreation.

On Friday afternoon, the House voted 219-209 to approve a budget resolution that will be used to facilitate passage of President Biden’s $1.9 trillion coronavirus relief proposal

“It’s very hard to get too pessimistic about downward revisions when you have three tailwinds at your back, namely the stimulus, the vaccinations and (declining coronavirus) cases, and earnings,” said Tom Hayes, chairman and managing member at hedge fund Great Hill Capital LLC in New York

“It may look good, but it ain’t. The January jobs report featured a promising 49k advance in nonfarm payrolls, but the headline gain masked a significant lift from seasonal factors, an important 159k downward revision to the November and December job gains and a decline in the labor force participation rate,” said Lydia Boussour, Senior Economist at Oxford Economics

Asia-Pacific Markets

Asian benchmark stocks hovered near record highs in early Monday trade, as investors monitored comments from Janet Yellen pushing a U.S. stimulus bill as well as an improvement in coronavirus trends

Equities outperformed in Japan

Japan’s Nikkei 225 added 2.03% to 29,364 and Topix 500 added 1.46% to 1,493

South Korea’s Kospi dropped -0.64% to 3,099

In Hong Kong, Hang Seng added 1.08% to 29,600 while Hang Seng China Enterprises added 0.95% to 11,674

In China, CSI 300 added 0.41% to 5,506 and Shanghai Composite added 0.14% to 3,499

Australia’s S&P/ASX 200 added 0.68% to 6,887

China’s foreign currency reserves fell slightly in January, official data showed on Sunday, likely due to valuation effects as the dollar posted a small gain against a basket of major currencies

China’s foreign exchange reserves, the largest in the world, fell to $3.211 trillion last month, compared with $3.217 trillion in December

The value of the gold reserves fell to $116.76 billion at the end of January from $118.25 billion at the end of December due to stronger dollar, as China held 62.64 million fine troy ounces of gold at the end of January, unchanged from December

EU Markets

European equities closed little changed at the end of an upbeat week on Friday trade, as sentiments cooled on the disappointing U.S. jobs data and declining German industrial orders

The pan-European Stoxx Europe 600 added 0.02% to 408 and Stoxx 50 added 0.37% to close at 3,655

Germany’s DAX30 dropped -0.03% to 14,056

German Economy Ministry data showed domestic industrial orders fell -0.9% in December, while orders from abroad decreased -2.6%

London’s blue-chip FTSE 100 fell -0.22% to 6,489

France’s CAC40 added 0.90% to 5,659

Denmark’s OMX Copenhagen 20 added 0.43% to 1,474

Spain’s IBEX 35 added 1.13% to 8,214

Italy’s FTSE MIB added 0.80% to 23,083

The U.K. will be publishing its preliminary estimate of fourth-quarter GDP growth, alongside business investment, trade balance, manufacturing and construction output

Market forecasts anticipate a 0.5% growth for the U.K. in the Oct.-Dec. period, avoiding falling back again into contraction territory despite restrictive measures imposed to curb the spread of Covid-19

Elsewhere in Europe, Germany will be releasing foreign trade data, wholesale prices and the final reading of inflation

Preliminary data indicated consumer prices in Europe’s largest economy, Germany, rose in January for the first time in 7-months

Also, central banks in Russia and Sweden will be deciding on monetary policy.

Oil & Natural Gas Markets

Crude-oil prices continued to increase in early Monday trade, supported by hopes of a quicker economic revival and supply curbs by the Organization of the Petroleum Exporting Countries (OPEC) and its producer allies

WTI Crude is trading higher at $57.43 per barrel

Brent Crude, the international benchmark for oil, is trading higher at $59.92 per barrel

Natural Gas futures is trading higher at $2.878/MMBtu

“Backwardation could encourage more money managers to bet on crude,” said Mark Hume, co-manager of BlackRock’s BGF World Energy fund adding, “When spot barrels of oil fetch a premium, funds earn a profit when futures approach expiration and they flip their position forward into cheaper later-dated contracts.”

Commodities Markets

Gold futures rose in early Monday trade, after coming under heavy selling pressure last week, breaking below $1,800 for the first time in 2-months and touching 1,785 as 10 Year U.S. Treasury yields remained elevated above 1.16%

Long-term appeal of Gold still remains high on the back of record-high debt levels

U.S. Gold futures (Comex) is trading higher at $1,814 an ounce

Silver futures (Comex) is trading higher at $27.00 an ounce

Copper futures (Comex) is trading higher at $3.6280 per pound

SGX Iron-Ore futures is trading higher at $156.15 per tonne

In India, Spot Gold is trading at INR 47,182 per 10 grams

Currency Markets

U.S. dollar index, DXY is little changed at 91.09 in early Monday trade

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 strengthened with USD / JPY at 105.3900

CNY strengthened with USD / CNY at 6.4658

EUR strengthened with EUR / USD at 1.2046

GBP weakened with EUR / GBP at 0.8770

GBP strengthened with GBP / USD at 1.3735

“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 05 Feb 2021*
US DOLLAR	0.20 per cent
Euro	– 0.56 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 -3.41% in early Monday trade to $37,898 as of 07:30 a.m. I.S.T.

The cryptocurrency rose more than 7% to $40,658 on Saturday, taking it closer to early January’s all-time high of almost $42,000

“Bitcoin, the largest cryptocurrency, is up about 24% this week. The token may be consolidating before heading toward $50,000, which would imply a market value of about $1 trillion,” said Mike McGlone, commodities strategist with Bloomberg Intelligence.

Bond Markets

Americas : 10 – Year Govt Bond Yields

United States : 1.18%
Canada : 1.00%

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

Germany : -0.45%
United Kingdom : 0.48%
France : -0.23%
Italy : 0.53%
Netherlands : -0.39%

Asia Pacific : 10 – Year Govt Bond Yields

India : 6.13%
Japan : 0.05%
Australia : 1.19%
Hong Kong : 0.68%
Singapore : 1.04%
South Korea : 1.78%

Fund Flows on NSE, BSE and MSEI — 05 Feb 2021

FII/FPI Net Buy Rs 1,461.71 Crore in Capital Market

DII Net Sell Rs (1,418.65) Crore in Capital Market

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