Index Trend & Conditions – 07:15 a.m. I.S.T.
• Resistance zone for Nifty 50 is at 15,090 15,166 15,260 15,321 and 15,425 for the week. For Tuesday, Mar. 09, Support area is seen at 14,870-850 and 14,760
• Support levels for Bank Nifty is at 35,080 and 34,737; while Resistance zone is at 35,700 36,470 and 36,580 for Mar. 09
• The MSCI Asia Pacific ex-Japan is trading lower -0.57%, and the MSCI Emerging Market index is down -0.65%
• Trends on SGX Nifty look poised for a gap-up opening for Nifty 50 in India. The Nifty futures are trading 66 points, or 0.44% higher at 15,050 on the Singaporean Exchange at 07:15 a.m. I.S.T.
• U.S. equity futures rose higher in early morning trade with S&P 500, Dow Jones and Nasdaq futures trading in green; alongside a muted opening in Asia-Pacific benchmarks gauges in early Tuesday trade with stocks rising modestly in Japan and Australia; a negative MSCI Asia-Pacific ex-Japan index; U.S. Dollar strengthening to 92.42 with 10-Yr Treasury Yields surging to 1.58% amid strong economy growth prospect and Gold futures plummeting to $1,683 as a selloff in U.S. govt bonds extended into a sixth week and sapped demand indicate cautious and volatile outlook for Nifty 50 India
• Investors have embraced the prospect for a surge in global economic growth as vaccine distribution improves and the U.S. heads toward passing a $1.9 trillion spending bill. The risks associated with rising Treasury yields remain an overhang amid fears that government aid programs could overheat economic growth
India Markets
| NIFTY 50 | OPEN | HIGH | LOW | CLOSE |
|---|---|---|---|---|
| Monday | 15,002 | 15,111 | 14,919 | 14,956 |
India’s equity benchmarks closed flat after much gyration on Monday trade, as rising crude oil prices and weak Asian markets kept traders on toes. Rising bond yields is also not helping the market
The blue-chip NSE Nifty 50 index added 18 points or 0.12% to 14,956 and the benchmark S&P BSE Sensex added 35 points or 0.07% at 50,441
Nifty50 remained highly volatile, as every decline got bought into, but at the same time follow-up buying was missing at higher levels. It is making longer upper shadows in last three sessions, with small and negligible candle bodies, which may be hinting at impending weakness
Broader markets out-performed headline peers — Midcap 100 index added 0.30%; Smallcap 250 index added 0.62% and Nifty 500 added 0.16%
Nifty P/E for Mar 08 is at 40.74 from 40.76, and Nifty P/B is at 4.24 from 4.23, as recorded by NSE India
Bank Nifty opened positive, but after a volatile start, it moved in a consolidative manner. The index formed a bearish candle on the daily scale and added 47 points, or 0.14%, to settle at 35,275
India VIX or the barometer of nervousness in the market, fell -3.46% from 25.56 to 24.67 levels
It cooled off slightly but still remained at elevated levels. VIX needs to cool down below the 21-20 zone for the bullish grip to continue
Overnight Call Money rate weighted average stood at 2.93% as per RBI data. It moved in a range of 2.55 — 3.40% for Mar 06
Yield curve on the benchmark 10-year government bond steepened to 6.39%, while the rupee weakened to 73.3250 per U.S. dollar
India’s forex reserves increased for the 2nd-consecutive week, touching $584.554 billion as of Feb. 26, up by $689 million
• Core currency assets – the largest component of the overall reserves – rose by $509 million to $542.615 billion
• Gold reserves increased by $172 million to $35.421 billion
• Special drawing rights (SDRs) with the International Monetary Fund (IMF) rose by $9 million to $1.517 billion
• Reserve position with the IMF declined marginally to $5.001 billion
“India’s markets are likely to be relatively immune to higher U.S. yields in the weeks ahead,” said Mitul Kotecha, chief EM Asia and Europe strategist at TD Securities Ltd. in Singapore. “India has been a key beneficiary of equity inflows into Asia and we do not see outflows persisting.”
“While the long term structure of the market continues to remain positive, it may face some hurdles in the near term due to concerns over the bond yields, commodity prices and risk of increase in inflation. Investors would also track India’s import/export data along with bank’s loans and deposit growth data for further cues,” said Siddhartha Khemka, Head – Retail Research, Motilal Oswal
America Markets
Wall Street’s technology stocks continued falling on Monday trade, pulling the Nasdaq Composite into correction territory, as a selloff in U.S. government bonds extended into a 6th-week and sapped demand for the once highflying shares
The broad-based S&P 500 lost 20 points, or -0.54%, to 3,821
The financial sector was the biggest boost in the S&P 500, hitting a record as higher market rates and a steeper yield curve helped banks. Industrials were right behind, also reaching a record high, while the materials sector neared an all-time peak
The Dow Jones Industrial Average, composed mostly of cyclical stocks, rose 306.14 points, or 0.97%, to 31,802
The tech-heavy Nasdaq Composite Index dropped 310 points, or -2.41%, to 12,609
Tech stocks are particularly sensitive to rising yields because their value rests heavily on earnings in the future, which are discounted more deeply when bond returns go up
U.S. equity futures rose higher in early Tuesday trade. S&P500 futures is up 0.35%; Dow Jones futures is up 0.31% and Nasdaq futures is up 0.45%
10-yr U.S. Treasury yields, which move inversely to the price, pushed higher to 1.58% with dollar jumping to 92.42
The Cboe Volatility Index, known as Wall Street’s “fear gauge,” rose 3.28% to 25.47 on Monday
U.S. consumers said they expect to spend substantially more on rent, gas and other essentials over the next year, a sign some people are expecting key costs to rise as the economy continues to heal from the crisis caused by the coronavirus pandemic, according to New York Fed survey. The New York Fed’s survey is based on a rotating panel of about 1,300 households
U.S. wholesale inventories increased solidly, 0.6% in Jan. YoY even as sales surged and it is taking wholesalers the shortest time in six years to clear shelves, a sign of strengthening demand that aligns with expectations for faster economic growth this year
The European Union and the U.S. agreed to suspend tariffs on billions of dollars of each other’s products, easing a 17-year transatlantic dispute over illegal aid to the world’s biggest aircraft makers
Economists have boosted forecasts for growth due to the passage of the stimulus bill, along with recent evidence that the economy is already picking up pace. GDP will clock a 5.5% gain this year — the best since 1984 — according to Bloomberg
“This is an ideal traders’ market with certain sectors and individual stocks performing better than the wider market, as investors pick and choose individual stocks that will perform better as the economy reopens,” said Anthony Denier, chief executive officer of trading platform Webull
“You will see a lot of volatility in markets,” Kim Stafford, Asia Pacific head at Pacific Investment Management Co., said. “We believe that confidence is improving, especially with vaccines coming online, so we will see an uptick in growth globally. There are a lot of reasons to be confident in the market, but a lot of this is also priced in.”
Asia-Pacific Markets
Asian benchmark stocks opened muted in early Tuesday trade after a rotation out of growth stocks drove the Nasdaq 100 Index into a technical correction
Equities rose modestly in Japan and Australia and ticked lower in South Korea, Hong Kong and China
Japan’s Nikkei 225 dropped -0.07% to 28,717 and Topix 500 added 0.89% to 1,487
South Korea’s Kospi dropped -1.69% to 2,945
In Hong Kong, Hang Seng dropped -0.11% to 28,492 and Hang Seng China Enterprises dropped -0.41% to 10,967
In China, CSI 300 dropped -0.27% to 5,066 and Shanghai Composite dropped -0.58% to 3,400
Australia’s S&P/ASX 200 added 0.98% to 6,805
Japan’s economy expanded at a slower-than-initially-reported pace in Oct-Dec, advancing a downwardly revised 2.8% following a 5.3% growth in the previous Jul-Sep period. Capital expenditure rose by 4.3% on quarter, slightly higher than 4.1% expected by consensus
China’s main stock benchmark entered a correction on Monday on concerns about liquidity conditions and valuations in some of the recently favored stocks. The CSI 300 Index fell 3.5%, piercing through its 100-day moving average and putting losses from its recent February 10 peak to 13%
China reported a trade surplus of $103.25 billion in Jan-Feb period, rebounding sharply from a $7.21 billion deficit in the same period YoY, and easily beating market consensus of a $60 billion surplus
• Exports jumped 60.6% YoY in dollar terms in the Jan-Feb period to $468.87 billion, far above market estimates of a 38.9% rise. Exports of refined oil rose by 1.9% YoY to 10.96 million ton, while those of steel jumped 29.9% to 10.14 million ton
• Imports climbed 22.2% YoY in the same period, to $365.62 billion, beating market consensus of a 15% increase, boosted by improving domestic demand and higher commodity prices. Arrivals grew in terms of volume for iron ore (2.8%), steel (17.4%), unwrought copper and copper materials (4.7%), natural gas (17.4%), crude oil (4.1%), the primary form of plastics (8%), mechanical and electrical products (25.4%), and meat (27.6%). Imports soared from the U.S. (66.3%), Japan (26%), South Korea (21.7%), Taiwan (41.2%), and the EU (32.3%)
China’s foreign exchange reserves declined to $3.205 trillion in Feb from $3.211 trillion MoM and compared with market expectations of $3.2 trillion, reflecting valuation effects. Meanwhile, the value of the gold reserves fell to $109.18 billion from $116.76 billion in Jan
EU Markets
European equities climbed on Monday trade, lifted by shares of banks and automakers, as investors continued to move into economy-linked sectors on hopes of a solid economic rebound from the coronavirus downturn
The pan-European Stoxx Europe 600 added 2.31% to 417 and Stoxx 50 added 2.55% to close at 3,763
Germany’s DAX30 added 3.31% to 14,380
London’s blue-chip FTSE 100 added 1.34% to 6,719
France’s CAC40 added 2.08% to 5,903
Denmark’s OMX Copenhagen 20 added 1.37% to 1,384
Spain’s IBEX 35 added 1.90% to 8,444
Italy’s FTSE MIB added 3.12% to 23,681
Industrial output numbers from Germany and Spain came in weaker-than-expected. Industrial production in Germany sank -2.5% month-over-month in Jan, compared to forecasts of a 0.2% gain. In Jan, production went down for capital goods (-0.8%) and consumer goods (-3%). Year-on-year, industrial output fell -3.9%
European Central Bank officials will set policy this week against a backdrop of investors betting on a global upturn even as the euro zone remains mired in pandemic lockdowns and painfully slow vaccinations. Investors will be watching Monday’s bond-buying data to see if the ECB ramped up purchases last week
Oil & Natural Gas Markets
Crude-oil prices reverses gains after crossing the key $70 level in early Tuesday trade as the dollar strengthened to 92.39. OPEC+’s decision to keep supply limited is pushing the prices higher
Major banks upgraded price forecasts. Goldman Sachs raised its Brent forecasts by $5 a barrel and now sees the global crude benchmark at $80 in Q3. JPMorgan increased its Brent projection by $2 to $3 a barrel and Australia & New Zealand Banking Group Ltd. boosted its 3-month target to $70. Citigroup said crude could top $70 before the end of March
WTI Crude is trading higher at $65.21 per barrel
Brent Crude, the international benchmark for oil, is trading higher at $68.50 per barrel
Natural Gas futures is trading lower at $2.697/MMBtu
“A much stronger U.S. dollar is likely adding pressure to oil prices,” said Ryan Fitzmaurice, commodities strategist at Rabobank. “The recent trend higher in the dominant currency is becoming increasingly difficult to ignore.”
Commodities Markets
Gold futures retreated to a fresh 9-month low in early Tuesday trade, amid a strengthening dollar and a surge in global economic growth prospect
Gold has gone from being a favored reflation bet to its worst 1st quarter in almost four decades. The change of fortune comes as higher yields dent the appeal of bullion, which offers no interest. Gold has slumped 10% in 2021. While inflation expectations are rising, which some investors say should support gold, that’s being overshadowed for now by the effects of rising yields
U.S. Gold futures (Comex) is trading lower at $1,683 an ounce
Silver futures (Comex) is trading lower at $25.17 an ounce
Gold / Silver Ratio rose to $66.84
Copper futures (Comex) steadied at $4.0690 per pound
Citigroup forecasts copper prices will rally to $5 per pound in six to 12 months on a better-than-expected recovery in demand, most notably outside China
SGX Iron-Ore futures is trading lower at $171.35 per tonne
In India, Spot Gold is trading at INR 43,971 per 10 grams
“Although inflation is becoming a theme, gold is struggling,” Robert Jan van Der Mark, a portfolio manager at Aegon NV who sold his gold holdings in late November. “The recent move in U.S. yields was also mainly driven by real yields moving up, not really by break-even inflation. That’s not helping gold prices.”
Currency Markets
U.S. dollar index, DXY strengthened to 92.42 in early Tuesday trade, the strongest level in nearly 3-months, amid rising Treasury yields and prospects of a swift economic recovery
INR weakened with USD / INR at 73.3250
JPY weakened with USD / JPY at 108.92100
CNY weakened with USD / CNY at 6.5261
EUR weakened with EUR / USD at 1.1855
GBP strengthened with EUR / GBP at 0.8575
GBP weakened with GBP / USD at 1.3825
“If we continue to see yields rise, that’s going to be very dollar positive and there’s nothing really getting in the way,” said Edward Moya, senior market analyst at OANDA in New York
| 3-Month LIBOR Rate | As on 08 Feb 2021 |
| US DOLLAR | 0.18 per cent |
| Euro | – 0.55 per cent |
| British Pound | 0.08 per cent |
| Swiss Franc | – 0.75 per cent |
| Japanese Yen | – 0.09 per cent |
Bitcoin
Bitcoin / U.S. Dollar rose 1.72% in early Tuesday trade to $53,321 as of 07:15 a.m. I.S.T.
China’s push for virtual yuan, flags risk of upheaval for Bitcoin as the nation is expected to be among first to issue digital currency. It is assumed that this rollout could roil cryptocurrency markets if Chinese officials tighten regulations at the same time, sucking up liquidity from the market, which could eventually drive panic selling, according to Phillip Gillespie, chief executive of crypto market maker and liquidity provider B2C2 Japan, which mainly works with institutional investors.
Bitcoin surged 5-fold in the past year and hit a record above $58,000 last month before dropping back about $10,000. The rally has split opinion, with some arguing a new asset class is emerging and others seeing pure gambling by retail investors and speculative pros in the Wild West of finance
Bond Markets
Americas : 10 – Year Govt Bond Yields
United States : 1.58%
Canada : 1.52%
Europe, Middle East & Africa : 10 – Year Govt Bond Yields
Germany : -0.28%
United Kingdom : 0.75%
France : -0.03%
Italy : 0.75%
Netherlands : -0.16%
Asia Pacific : 10 – Year Govt Bond Yields
India : 6.35%
Japan : 0.11%
Australia : 1.76%
Hong Kong : 1.19%
Singapore : 1.55%
South Korea : 1.99%
Fund Flows on NSE, BSE and MSEI — 08 Mar 2021
FII/FPI Net Sell Rs (1,494.49) Crore in Capital Market
DII Net Buy Rs 483.62 Crore in Capital Market
Where We’ve Been Reading —
- Bloomberg
- The Wall Street Journal
- Reuters
- Trading Economics
- Seeking Alpha
- Axios
- Tech Crunch
- NSE Indices India
- Morningstar India
- The Star
- Harvard Business Review
- The Economic Times
