Finance - Stock Market Forecast

Index Trend & Conditions – 08:10 a.m. I.S.T.

• Resistance for Nifty 50 is at 13,350 zone. For Wednesday, Dec 09, Support area is seen at 13,330 and 13,300

• Support area for Bank Nifty is at 30,200 and 30,000

• The MSCI Asia Pacific ex-Japan is up 0.57%, while the MSCI Emerging Market index is up 0.34%

• Trends on SGX Nifty indicate a gap-up opening with steady-to-positive outlook for Nifty 50 in India with a 48 points gain. The Nifty futures were trading at 13,462 on the Singaporean Exchange at 08:10 a.m. I.S.T.

• Contracts tied to U.S. futures ticked higher on the day with S&P500, Dow Jones and Nasdaq futures trading in green. An outperforming Asia-Pacific trade in early Wednesday morning, a positive MSCI Asia-Pacific ex-Japan index, a weakening U.S. Dollar Index at 90.890 with 10-Year Treasury Yield edging higher at 0.934 and Gold futures sliding on the day indicate a positive outlook for Nifty 50 India

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

India Markets

NIFTY 50	OPEN	HIGH	LOW	CLOSE
Tuesday	13,393	13,435	13,311	13,392

India stocks rose for the eighth consecutive day, as foreign inflows continued to sustain gains on Tuesday trade amid bets that Asia will be fastest-growing region as the world recovers from pandemic

Nifty 50 added 37 points or 0.28% to a fresh all-time high 13,392, while the BSE Sensex added 181 points or 0.40% to a new high of 45,608

The index formed an indecisive Doji on the daily chart, while making a made a higher high higher-low candle for the seventh session in a row

The rally witnessed wide profit booking in the broader market. Any pullback in the Dollar Index, DXY, has a potential to disrupt the rally

As per Economic Times analysts, RSI on the weekly time frame chart is overbought now, which could mean that the trend is losing momentum and there could be a correction around the corner

Broader markets under-performed their headline peers — Midcap 100 index added 0.05% ; Smallcap 250 index dropped -0.26% ; Nifty 500 added 0.17% ; Nifty Alpha 50 cut -0.11% and Nifty Alpha Low Volatility 30 droppped -0.23%

On Sectoral Indices front, PSU Bank and Realty stocks were at the vanguard of the rally, while Metal and Pharma stocks were the laggards on the day

Nifty P/E for Dec 08, 2020 is at 36.83, as recorded by NSE India

Bank Nifty closed above its resistance level of 30,200. The index also formed an indecisive Doji candle on the daily scale, adding 50 points or 0.17% to 30,262. Levels of 29,750 29,400 and 28,900 are good support levels. Resistance is at 30,200 zone

India VIX gained 3.29% from 18.0250 to 18.6175 levels. Higher volatility would suggest the bears are getting a grip on the market and any decline may trigger selling in the market

Overnight Call Money rate weighted average stood at 3.02% as per RBI data. It moved in a range of 1.90 — 3.40% for Dec 07

The yield on the benchmark 10-year Government Bonds fell to 5.921%, while the rupee strengthened to 73.6800 per U.S. dollar

Equity mutual funds in India were hit by their biggest-ever outflow in November, with net withdrawals reaching 129.2 billion rupees ($1.8 billion). That marked the fifth straight month of outflows and an almost five-fold jump over October’s withdrawals of about 27 billion rupees

Canara Bank has raised Rs 2,000 crores through QIP, while Indian Bank has raised Rs 1,048 crores via bonds

Ben Powell, BlackRock’s chief investment strategist for Asia Pacific is of the opinion that once vaccines are distributed, a combined pick-up in economic activity and persistent low rates would fuel a sustainable global cyclical recovery in the next 6 to 12 months in lagging markets that have suffered more from the pandemic, such as Indonesia and India

Tech pioneer Bill Gates praised India’s policies for financial innovation and inclusion, saying that India has built ambitious platforms for universal identification and digital payments, including the world’s largest biometric database and a system for sending rupees between any bank or smartphone app. These policies have have drastically reduced the cost and friction of distributing aid to the poor

“I think the nuance now is that the relative preference within Asia, at the margin, is shifting from North Asia – China, Korea and Taiwan – toward some of the economies that suffered more,” Ben Powell of BlackRock said. “We think there is more upside in those markets.”

“If people are going to study one country right now, other than China, I’d say they should look at India,” Bill Gates said at the Singapore Fintech Festival on Tuesday. “Things are really exploding there and innovation around that system is phenomenal.”

“The strong performance of equity markets in November seems to have encouraged more investors to book profits and move to short-term investments,” according to G. Pradeepkumar, chief executive officer at Union Asset Management Co. “There is a significant amount of money that can come back to the market in the event of any correction. The medium-to-long term potential remains strong.”

America Markets

Wall Street stocks closed at an all-time high on Tuesday trade, as Treasury Secretary Steven Mnuchin presented a new $916 billion Covid-19 relief proposal to House Speaker Nancy Pelosi

The Dow Jones 104 points or 0.35% to 30,173 and the S&P 500 added 10 points or 0.28% to 3,702 ; while the Nasdaq added 63 points, or 0.50% to 12,582 advancing for a 10th straight day, the longest rally in about a year

U.S.’s weekly Cboe ratio of volume traded in puts versus calls fell to the lowest since July 2000 last week, signalling extreme positioning to the upside, as investors look beyond short-term uncertainty toward a continuing global recovery in 2021

Contracts tied to U.S. futures ticked higher in early Wednesday trade. S&P500 futures is up 0.28%, Dow Jones futures is up 0.25% and Nasdaq futures is up 0.24%

Yield on the 10-year Treasury note weakened to 0.908

On stocks front, Pfizer Inc. climbed after U.S. regulators gave early indications they may grant emergency-use authorization to its vaccine. Tesla Inc. slumped on plans to raise as much as $5 billion, with the electric-car maker tapping capital markets for a third time this year

Asia-Pacific Markets

Asian equities climbed after a fresh record for their U.S. counterparts in early Wednesday trade as hopes for a stimulus deal tempered concern about a surge in coronavirus cases

Japan’s Nikkei 225 added 1.03% to 26,740, with Topix 500 adding 0.70% to 1,375

South Korea’s Kospi added 1.33% to 2,736

In Hong Kong, Hang Seng added 1.21% to 26,619 while Hang Seng China Enterprises added 1.30% to 10,546

In China, CSI 300 dropped -0.11% to 5,004 and Shanghai Composite added 0.04% to 3,411

Australia’s S&P/ASX 200 added 0.71% to 6,735

Singapore’s Straits Times Index added 0.35% to 2,835

Overall, MSCI Asia-Pacific, is down -0.07%

Thailand’s cabinet approved a new phase of fiscal stimulus program to boost consumer spending worth 22.5 billion baht ($748 million). The program is expected to help support low income groups

China’s foreign exchange reserves rose by more than $50 billion, reaching $3.1785 trillion at the end of November to the highest since August 2016, likely boosted by the weaker dollar and a trade surplus at record highs

Chinese consumer prices unexpectedly declined by 0.5% YoY in November 2020, after a 0.5% rise in October and compared with market consensus of a flat reading. This was the first deflation since October 2009 as food prices dropped for the first time in nearly three years

EU Markets

European stock markets cut losses and ended little changed on Tuesday trade

Investors continued to follow Brexit negotiations and U.S. fiscal stimulus while awaiting an ECB policy meeting next Thursday, with policymakers expected to unleash additional monetary stimulus

The pan-European Stoxx Europe 600 added 0.18% to 393 and Stoxx 50 dropped -0.12% to close at 3,526

Germany’s DAX30 added 0.06% to 13,278

London’s FTSE 100 added 0.05% to close to 6,558

Britain became the first country to start administering the Covid-19 vaccine to its population, kicking off the western world’s coronavirus immunization campaign using shots from Pfizer and BioNTech

France’s CAC40 dropped -0.23% to 5,560

Denmark’s OMX Copenhagen 20 added 0.95% to 1,393

Italy’s FTSE MIB dropped -0.24% at 22,053

Thursday brings the European Central Bank policy decision and a press briefing from Christine Lagarde. Economists widely expect the central bank to increase and extend its pandemic bond-buying program

Oil & Natural Gas Markets

Crude oil retreated for a third day in early Wednesday trade even on the back of rising buying interest from Asia

WTI Crude is trading lower at $45.44 per barrel

Brent Crude is trading lower at $48.68 per barrel

Natural Gas futures was steady at $2.433/MMBtu after falling more than 18% in the last sessions

On MCX-India, Crude oil futures is down at 3,371 on Tuesday trade

On MCX-India, Natural gas futures is down at 179/MMBtu on Tuesday trade

“The oil market will see better days in 2021, it’s almost certain, but it still has to overcome a short-term hurdle for a couple of months until demand picks up, and this will constrain prices for the time being,” said Bjornar Tonhaugen, head of oil markets at Rystad Energy AS

Gold & Silver Markets (+ Copper Futures)

Gold was steady in early Wednesday trade, after extending its upward momentum in last two sessions

According to Bloomberg analysts, if 10-Year U.S. Treasury Yield rises to 1% and above due to reflation trade, then inflation breakevens and Gold prices will keep strengthening above $1,800, but if the yield rises to 1.5% then Gold prices will weaken from $1,800, closer to $1,700

U.S. Gold futures (Comex) strengthened to $1,867.28 an ounce

Silver futures (Comex) strengthened to $24.62 an ounce

Copper futures (Comex) weakened to $3.4950 per pound

In India, Spot Gold weakened to INR 49,282 per 10 grams

India — NCDEX Agridex

Agricultural futures index tracking the performance of the 10 liquid commodities, was down -0.20% trading at 1,143.45 ; with top gains in Turmeric and Guar Seed futures, while Cotton Seed Oilcake and Coriander futures led losses on Tuesday trade

Currency Markets

The U.S. dollar index, DXY was little changed at 90.890 in early Wednesday trade, after falling for nearly 3% since Nov. 11

INR strengthened with USD / INR at 73.5287

JPY weakened with USD / JPY at 104.1500

CNY weakened with USD / CNY at 6.5332

EUR strengthened with EUR / USD at 1.2111

EUR strengthened with EUR / GBP at 0.9077

The pound fell on concern that Brexit talks could collapse

“In the case of a no deal Brexit, we expect a profound GBP collapse — EUR/GBP above 0.95, possibly briefly touching parity — due to the fact that this outcome would come as a surprise and investors have not been pricing this in,” ING Groep NV strategists including Petr Krpata wrote in a note.

*3-Month LIBOR Rate*	*As on 08 Dec 2020*
US DOLLAR	0.23 per cent
Euro	– 0.55 per cent
British Pound	0.04 per cent
Swiss Franc	– 0.79 per cent
Japanese Yen	– 0.10 per cent