Finance - Stock Market Forecast

Index Trend & Conditions – 07:00 a.m. I.S.T.

• For Tuesday, Feb. 09, Support area for Nifty 50 will be at 15,115 15,045 and 14,878

• Resistance zone for Bank Nifty is at 36,208 and 36,615 for Feb. 09

• The MSCI Asia Pacific ex-Japan is trading higher 0.31%, and the MSCI Emerging Market index is up 0.30%

• Trends on SGX Nifty look primed for a 50-points gap-up opening for Nifty 50 in India. The Nifty futures are trading 30 points, or 0.18% higher at 15,170 on the Singaporean Exchange at 07:30 a.m. I.S.T.

• U.S. equity futures mixed in early morning trade with S&P 500 and Dow Jones futures trading in green while Nasdaq futures in red; alongside a mixed-momentum start to Asia-Pacific early Tuesday trade with stocks looking set for a breather; a positive MSCI Asia-Pacific ex-Japan index; U.S. Dollar languishing near its lowest in a week at 90.88 with falling 10-Yr Treasury Yields at 1.16% and Gold futures gaining upward momentum to $1,837 on the day indicate cautious outlook for Nifty 50 India

India Markets

NIFTY 50	OPEN	HIGH	LOW	CLOSE
Monday	15,064	15,159	15,041	15,115

India’s equity benchmarks ended higher for the sixth consecutive day on Monday trade, hitting fresh record highs supported by the auto, metal, infra and IT stocks

The blue-chip NSE Nifty 50 index added 191 points or 1.28% at 15,115 and the benchmark S&P BSE Sensex 617 points or 1.22% at 51,348

Except FMCG and PSU Bank, other sectoral indices ended in the green with Nifty Auto and Metal indices jumping 3% each

Broader markets out-performed headline peers — Midcap 100 index added 1.51%; Smallcap 250 index added 1.52% and Nifty 500 added 1.31%

Nifty P/E for Feb 05 2020 increased from 41.46 to 42.00, and Nifty P/B edged higher from 4.23 to 4.28, as recorded by NSE India

Bank Nifty opened with a gap up, but moved quite steadily during the session. It moved sideways and consolidated for most part of the day. The index is sustaining well above its breakout range, adding 329 points, or 0.92%, to 35,983

India VIX or Fear gauge increased 2.32% from 23.41 to 23.95 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 3.17% as per RBI data. It moved in a range of 2.50 — 3.55% for Feb 06

Yield on the benchmark 10-year government bond dropped slightly to 6.08%, while the rupee weakened to 72.9780 per U.S. dollar

The Reserve Bank of India will seek to buy more than 3 lakh crore rupees ($41 billion) of sovereign bonds in the next fiscal year to support the government’s borrowing plans. On Monday, RBI announced plans to buy 20,000 crore rupees of bonds through open-market operations (OMOs) on Feb. 10

“We believe the tug of war between the RBI’s motivation to support the bond market via OMOs, and fundamentals that call for gradual liquidity normalization, is set to intensify,” Nomura Holdings Inc. analysts including Sonal Varma wrote in a note

“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.”

America Markets

Wall Street’s main indexes joined a global rally in risk assets that saw crude surge and bonds decline on Monday trade, on rising prospects for a robust federal spending package and a slowdown in virus infection rates sparked a rally in risk assets

The broad-based S&P 500 rose 28 points, or 0.7%, to 3,915

The Dow Jones Industrial Average, composed mostly of cyclical stocks, added 237 points, or 0.8%, to close at 31,385, continuing its climb after the blue-chip index posted its biggest one-week advance since November

The tech-heavy Nasdaq Composite Index gained 131 points, or 0.9%, to close at 13,987

U.S. equity futures mixed in early Tuesday trade. S&P500 futures is up 0.08%; Dow Jones futures is up 0.06% and Nasdaq futures is down -0.03%

10-year U.S. Treasury yields dropped to 1.16% on the day, with dollar falling to 90.88

The Cboe Volatility Index, known as Wall Street’s “fear gauge,” rose 1.77% to 21.24 on Monday

Tesla has been summoned by the Chinese authorities in response to consumer complaints about quality issues with its electric vehicles

Some of China’s biggest state-owned banks have been instrumental in funding Tesla’s operations in the country, lending the company roughly $2.36 billion in 2019 and 2020 as it constructed, and then expanded, its Shanghai plant

Tesla recently recalled 36,126 Model S and Model X vehicles imported from the U.S. due to touch-screen problems. That followed the recall of 48,442 imported Model S and X cars in China in October over concerns about faulty suspension systems.

Quality issues don’t appear to have slowed Tesla’s sales momentum in China, however. The company sold 15,484 locally built Model 3 sedans and Model Y compact crossover vehicles in Jan. 2021, according to the China Passenger Car Association

EIA crude oil inventory report and U.S. consumer price index come on Wednesday

“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 looks set to take a breather in early Tuesday trade, as investors mull stimulus prospects and virus trends with stocks at record highs

Japan’s Nikkei 225 added 0.39% to 29,502 and Topix 500 dropped -0.02% to 1,497

South Korea’s Kospi added 0.94% to 3,120

In Hong Kong, Hang Seng added 0.13% to 29,354 while Hang Seng China Enterprises dropped -0.05% to 11,555

In China, CSI 300 added 0.18% to 5,574 and Shanghai Composite added 0.49% to 3,549

Australia’s S&P/ASX 200 dropped -0.50% to 6,846

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

EU Markets

European equities rose on Monday trade, led by economically sensitive cyclical sectors, as sentiment was lifted by hopes of a quicker recovery and multi-billion dollar deals in the region

The pan-European Stoxx Europe 600 added 0.22% to 408 and Stoxx 50 added 0.27% to close at 3,665

Germany’s DAX30 added 0.02% to 14,059

London’s blue-chip FTSE 100 added 0.53% to 6,523

France’s CAC40 added 0.47% to 5,686

Denmark’s OMX Copenhagen 20 dropped -0.50% to 1,467

Spain’s IBEX 35 added 0.05% to 8,219

Italy’s FTSE MIB added 1.48% to 23,425

Italian equities outperformed as Mario Draghi set about forming a new national government

Industrial production in Germany stalled in Dec., following an upwardly revised 1.5% rise in Nov. and compared to market forecasts of a 0.3% increase, amid new coronavirus lockdowns at home and other European countries

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

Sweden will set monetary policy on Wednesday while Bank of Russia’s policy decision is up on Friday

“We are underweight on European equities,” said BlackRock strategists. “The market has relatively high exposure to financials pressured by low rates. It also faces structural growth challenges, even given potential for catch-up growth in a vaccine-led revival.”

Oil & Natural Gas Markets

Crude-oil prices continued to increase in early Tuesday trade, buoyed by major oil producers’ commitment to output restraint

WTI Crude is trading higher at $58.34 per barrel

Brent Crude, the international benchmark for oil, is trading higher at $60.95 per barrel

Natural Gas futures is trading higher at $2.879/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 Tuesday trade, as marginal weakness in the dollar index and rising stimulus hope is keeping gold prices firm

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

U.S. Gold futures (Comex) is trading higher at $1,837 an ounce

Silver futures (Comex) is trading higher at $27.45 an ounce

Copper futures (Comex) is trading higher at $3.6700 per pound

SGX Iron-Ore futures is trading higher at $156.20 per tonne

In India, Spot Gold is trading at INR 47,872 per 10 grams

Currency Markets

U.S. dollar index, DXY languished near its lowest in a week at 90.88 in early Tuesday trade

Many analysts, though, see that massive fiscal spending coupled with continued ultra-easy Federal Reserve monetary policy dragging down the dollar in the longer term

INR weakened with USD / INR at 72.9280

JPY weakened with USD / JPY at 105.6400

CNY strengthened with USD / CNY at 6.4658

EUR weakened with EUR / USD at 1.2030

GBP weakened with EUR / GBP at 0.8789

GBP weakened with GBP / USD at 1.3688

“The bottom line is a large stimulus is highly likely to pass soon, exacerbating the widening in the U.S. current account deficit, and weighing on the USD,” Commonwealth Bank of Australia currency analyst Joseph Capurso said

*3-Month LIBOR Rate*	*As on 08 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 -0.37% in early Tuesday trade to $46,279 as of 07:00 a.m. I.S.T.

Tesla Inc. invested $1.5 billion in Bitcoin and signaled its intent to begin accepting the cryptocurrency as a form of payment

Bitcoin rose as much as 19% to an all-time high of $46,712 on the news

“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 : 1.16%
Canada : 1.01%

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

Germany : -0.42%
United Kingdom : 0.51%
France : -0.21%
Italy : 0.52%
Netherlands : -0.37%

Asia Pacific : 10 – Year Govt Bond Yields

India : 6.04%
Japan : 0.06%
Australia : 1.26%
Hong Kong : 0.71%
Singapore : 1.07%
South Korea : 1.78%

Fund Flows on NSE, BSE and MSEI — 08 Feb 2021

FII/FPI Net Buy Rs 1,876.60 Crore in Capital Market

DII Net Sell Rs (504.86) Crore in Capital Market

Where We’ve Been Reading —