Index Trend & Conditions – 07:00 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 Monday, Mar. 15, Support area is seen at 14,938 and 14,760

• Support levels for Bank Nifty is at 35,080 and 34,725; while Resistance zone is at 35,700—850 36,470 and 36,580 for Mar. 15

• The MSCI Asia Pacific ex-Japan is trading higher 0.26%, and the MSCI Emerging Market index is up 0.23%

• Trends on SGX Nifty look poised for a 100 points gap-up opening for Nifty 50 in India. The Nifty futures are trading 116 points, or 0.77% higher at 15,143 on the Singaporean Exchange at 07:00 a.m. I.S.T.

• U.S. equity futures opened higher in early morning trade with S&P 500, Dow Jones and Nasdaq futures in green territory; alongside a positive and steady opening in Asia-Pacific benchmarks gauges in early Monday trade with equities advancing in Japan, while declining in China and fluctuating in South Korea and Australlia; a positive MSCI Asia-Pacific ex-Japan index; U.S. Dollar remaining lower at 91.62 with 10-Yr Treasury Yields hovering near a 13-month peak of 1.62% and Gold futures rising to $1,732 on the back of a weaker dollar indicate a stable-to-positive outlook amid channel-wise resistance

• BofA’s weekly flows report showed investors put $31.5 billion into equities, while taking $1.8 billion out of gold and $15.4 billion out of bonds. Bond yields spiked higher last week on inflation fears, while high-flying tech stocks sold off as investors rotated into cheaper value cyclical stocks

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India Markets

India’s equity benchmarks witnessed a corrective price action on Friday trade, due to sharp rise in Covid-19 cases and partial lockdowns in many parts of Maharashtra

The blue-chip NSE Nifty 50 index fell 143 points or -0.95% to 15,030 and the benchmark S&P BSE Sensex dropped 487 points or -0.95% to close at 50,792

Nifty formed a strong bearish candle – “Bearish Engulfing” on the daily chart and a “Gravestone Doji” candle on the weekly scale

Broader markets out-performed headline peers — Midcap 100 index dropped -0.43%; Smallcap 250 index added 0.35% and Nifty 500 dropped -0.77%

Nifty P/E for Mar 12 declined to 40.94 from 41.33 with Nifty P/B edging down to 4.26 from 4.30, as recorded by NSE India

Bank Nifty opened with a gap up, but failed to cross the 36,500 mark and drifted lower. It formed a bearish candle on the daily chart and a Doji on the weekly scale, which indicates sustained selling pressure seen at higher levels even after a recovery from the support levels. The index dropped 441 points, or -1.23%, to settle at 35,496

India VIX or the barometer of nervousness in the market, rose 4.63% from 20.74 to 21.70 levels

A cooldown in VIX below the 21-20 zone is needed for the bullish grip and a smoother move to continue in the market

Overnight Call Money rate weighted average stood at 3.24% as per RBI data. It moved in a range of 1.90 — 3.50% for Mar 10

Yield curve on the benchmark 10-year government bond steepened to 6.40%, while the rupee strengthened to 72.6800 per U.S. dollar

India’s foreign exchange reserves declined by $4 billion to $580 billion in the week ended Mar 5, according to RBI data. In the previous week ended Feb 26, the reserves rose by $689 million to $584 billion. It had touched a record high of $590 billion in the week ended Jan 29, 2021

• Foreign Currency Assets (FCA) dipped by $3 billion to $539 billion in the week ended Mar 5
• Gold Reserves declined by $1.2 billion to $34 billion in the reporting week
• Special Drawing Rights (SDRs) with the International Monetary Fund (IMF) fell by $11 million to $1.5 billion
• Reserve Position with the IMF declined by $36 million to $4.9 billion

Expressed in dollar terms, Foreign Currency Assets (FCA) includes the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves

“Markets ended lower amid excessive volatility, in continuation to the prevailing consolidation phase. Initially, the benchmark opened firm, tracking upbeat global cues however surge in bond yields impacted sentiment as the day progressed,” said Ajit Mishra, VP – Research, Religare Broking

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America Markets

U.S. stocks close mixed as Dow notches fifth straight record high on Friday trade, as investors bought shares that should benefit from a strong reopening of the U.S. economy, an outlook signaled by rising yields in the bond market

The broad-based S&P 500 gained 4 points, or 0.10%, to 3,943

The bank index jumped 1.83%, while financials and industrials clinched new record levels

The Dow Jones Industrial Average, composed mostly of cyclical stocks, rose 293 points, or 0.9%, to close at 32,778

The tech-heavy Nasdaq Composite Index dropped 78 points, or -0.59%, to end at 13,319

Nasdaq tumbled after rebounding more than 6% over the past three sessions as the rising bond yields revived inflation worries and dulled the appeal of high-growth technology shares

U.S. equity futures opened higher in early Monday trade. S&P500 futures is up 0.30%; Dow Jones futures is up 0.34% and Nasdaq futures is up 0.42%

10-yr U.S. Treasury yields, which move inversely to the price, hovers near a 13-month peak of 1.62% with dollar remaining lower at 91.62

The Cboe Volatility Index, known as Wall Street’s “fear gauge,” fell -5.57% to 20.69 on Friday

Investors purchased a net $15.3 billion worth of U.S. equity funds in the week to Mar 10, compared with just $944 million a week before, data from Refinitiv Lipper showed. The higher inflows into equities were also helped by tepid U.S. inflation data for Feb and a bigger-than-expected fall in weekly jobless claims. U.S. growth funds, which house most of the high-flying technology-related stocks, witnessed $4.7 billion worth of outflows, as the category was hit by higher U.S. bond yields

U.S. producer prices increased strongly in Feb, leading to the largest annual gain in nearly 2-1/2 years, but considerable slack in the labor market could make it harder for businesses to pass on the higher costs to consumers

Inflation is expected to accelerate in the coming months and exceed the Federal Reserve’s 2% target, a flexible average, by April. Part of the anticipated spike would be the result of price declines early in the pandemic washing out of the calculations. Many economists, including Fed Chair Jerome Powell, do not expect the strength in inflation will persist beyond the so-called base effects

The producer price index for final demand rose 2.8% YoY in Feb, with the costs of energy products and food surging. That followed a 1.3% jump in Jan, which was the biggest advance since Dec 2009

U.S. consumer price index rose 1.7% YoY in Feb, after climbing 1.4% in Jan

The Fed tracks the core personal consumption expenditures (PCE) price index for its inflation target, which has climbed to 1.5%

With the PPI and CPI data in hand, economists are estimating that the core PCE price index rose by as much as 0.18% in February. That would lift the annual increase in the core PCE price index to as high as 1.6%. The data is due to be released on Mar 26

“Supply-chain issues are temporarily putting upward pressure on producer prices along with higher energy prices,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania. “These pressures should begin to moderate. We expect growth in consumer prices to accelerate through the first half of this year, but this will be transitory.”

A jump in the 10-year benchmark to 2% could result in a 20% correction for the Nasdaq 100, warn strategists at Ned Davis Research. The concern is echoed over at Miller Tabak + Co., where chief market strategist Matt Maley said a low double-digit correction is not unlikely for the tech group. “Some froth needs to be taken off of the sector. There are signs showing it’s ripe for a pullback, and I don’t know if it’s a 10% correction or a 15% correction. But a decline of this magnitude can set the stage for a bigger advance down the road,” Maley said

“These are the generals that have lifted equity markets over the last year, so there is caution when these tech giants start to see some corrective price action,” said Matt Miskin, co-chief investment strategist at John Hancock Investment Management. “It’s going to be hard for them without a fundamental catalyst to make a strong comeback.”

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Asia-Pacific Markets

Asian benchmark stocks made a steady start in early Monday trade, while U.S. bond yields hovered near a 13-month peak and ahead of the Federal Reserve policy meeting later this week

Equities advanced in Japan and Hong Kong but edged lower in China and fluctuated in South Korea and Australia

Japan’s Nikkei 225 added 0.33% to 29,814 and Topix 500 added 0.63% to 1,528

South Korea’s Kospi dropped -0.13% to 3,050

In Hong Kong, Hang Seng added 0.70% to 28,953 and Hang Seng China Enterprises added 0.68% to 11,250

In China, CSI 300 dropped -0.96% to 5,094 and Shanghai Composite dropped -0.48% to 3,436

Australia’s S&P/ASX 200 added 0.04% to 6,773

Australia’s bid to reach a free-trade deal with Europe just got a little harder, due to its refusal to set a hard target to reach net-zero carbon emissions

Japan’s wholesale prices fell at a slower pace in Feb for a third straight month, offering an encouraging sign a recent rebound in fuel costs and pick-up in domestic demand will ease deflationary pressures across the economy

• The corporate goods price index dropped -0.7% YoY in Feb, which measures the price companies charge each other for their goods and services, follows a -1.5% annual decrease in Jan
• Domestic final goods prices, which loosely track the consumer price index, fell -0.1% YoY in Feb, following a -0.8% drop in Jan

Car sales in China jumped 365% YoY to 1.455 million in Feb, the 11th straight month of increases, as the automobile industry’s recovered further from the coronavirus crisis. Sales of new energy vehicles (NEVs), which include battery-powered electric, plug-in hybrid and hydrogen fuel-cell vehicles surged 585% YoY to 110 thousand units

China is set to report roaring growth in economic activity in the first two months of the year, fueled by an export and industrial-led boom, with consumer spending slow to pick up

Data shows that China is the only major economy that’s powering out of the pandemic, propelled by rising debt and an export boom. The government is now looking to gradually pull back on its fiscal stimulus and rebalance growth so that it’s driven more by consumption

“As the recovery has been largely driven by the industrial recovery, I would focus on retail sales,” said Raymond Yeung, chief economist for Greater China at Australia and New Zealand Banking Group in Hong Kong. “Headline growth below 32% would be considered weak.”

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EU Markets

European equities finished lower on Friday trade, dragged by rising bond yields although major bourses were set for weekly gains as stimulus and vaccination programmes spurred hopes of a solid economic recovery

The pan-European Stoxx Europe 600 dropped -0.28% to 422 and Stoxx 50 dropped -0.32% to close at 3,833

Germany’s DAX30 dropped -0.46% to life high of 14,502

London’s blue-chip FTSE 100 added 0.36% to 6,761

France’s CAC40 added 0.21% to 6,046

Denmark’s OMX Copenhagen 20 dropped -1.15% to 1,434

Spain’s IBEX 35 added 0.60% to 8,644

Italy’s FTSE MIB dropped -0.03% to 24,113

Tame U.S. inflation data and signs from the European Central Bank that it was ready to accelerate money-printing to keep a lid on borrowing costs helped boost risk appetite this week

Dutch tech investor Prosus, which holds a third of Chinese tech giant Tencent Holdings, dropped 6.7% as China’s market regulator fined 12 companies, including Tencent, related to deals that demonstrated illegal monopolistic behavior

The U.K.’s decision to postpone border checks on goods coming from the European Union has delighted the country’s importers

The European Central Bank’s promise to “significantly” boost the pace of its bond purchases is threatening to turbo-charge a yield divergence with the U.S. that could drive money out of Europe, unless the Federal Reserve ramps up its commitment to ease policy at its own meeting next week

“It’s not quite the end to the week that investors had hoped,” said Russ Mould, investment director at AJ Bell. “However, markets are still ahead on the week and the recent sell-off in tech stocks looks like it has stabilised, which is important for investor sentiment.”

“On one hand, we had the ECB that tried to talk down yields, but at the same time we had the final approval of the big Biden stimulus package that drove U.S. yields somewhat higher again,” said Bert Colijn, senior euro zone economist at ING.

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Oil & Natural Gas Markets

Crude-oil prices held onto gains in early Monday trade, with OPEC+ choosing to extend most of its supply cuts into April

Saudi Arabia has pledged to continue with an extra 1 million barrels per day voluntary output cut for a third month in April

Major banks had 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 at $66.02 per barrel

Brent Crude, the international benchmark for oil, is trading at $69.60 per barrel

Natural Gas futures is trading lower at $2.665/MMBtu

India, the world’s 3rd biggest oil importer and consumer, had repeatedly called on major oil producers to ease supply curbs and had pointed to Saudi Arabia’s voluntary cuts for contributing to a spike in global oil prices

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Commodities Markets

Gold futures fell in early Monday trade, but were on course to making higher highs higher lows, as easing U.S. Treasury yields and dollar lifted the metal’s appeal

Global money manager BlackRock warned that bullion is proving to be a less effective equity hedge against moves in stocks, as well as inflation. Gold has lost ground in 2021 as the recovery from the pandemic gained more traction and Treasury yields surged

Gold’s recent correlation with stocks and inflation has been positive to effectively zero, it is still demonstrating a strong, negative relationship with the dollar. For this reason, gold should probably still be thought of as a dollar hedge

U.S. Gold futures (Comex) is trading at $1,732 an ounce

Silver futures (Comex) is trading at $26.10 an ounce

Gold / Silver Ratio declined to $66.27

Copper futures (Comex) is trading higher at $4.1520 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 plunged to $164.00 per tonne

In India, Spot Gold is trading at INR 44,744 per 10 grams

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Currency Markets

U.S. dollar index, DXY remained lower at 91.62 in early Monday trade

INR strengthened with USD / INR at 72.6800

JPY weakened with USD / JPY at 109.0300

CNY weakened with USD / CNY at 6.5084

EUR weakened with EUR / USD at 1.1953

GBP weakened with EUR / GBP at 0.8588

GBP weakened with GBP / USD at 1.3924

3-Month LIBOR Rate	As on 12 Mar 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

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Bitcoin

Bitcoin / U.S. Dollar fell -3.50% in early Monday trade to $59,617 as of 06:45 a.m. I.S.T.

Bitcoin peaked $61,080 for the first time as the stimulus-fueled rally of the past year prompts investors to ignore signs of a speculative fervor

Bitcoin is up about 1,000% in the past year amid signs of increasing institutional interest as well as speculative demand. Advocates champion the cryptocurrency as a store of value akin to gold that can act as a hedge against inflation and a weaker dollar. Others argue that the rally is a giant stimulus-fueled bubble on track to burst like it did in the 2017-2018 boom-and-bust cycle

“Bitcoin’s resilience is proving to be the stuff of legend,” said Antoni Trenchev, managing partner and co-founder of Nexo in London, a crypto lender. “Every correction is an opportunity to reset and restart the move upwards.”

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Bond Markets

Americas : 10 – Year Govt Bond Yields

United States  :  1.62%    
Canada  :  1.58%

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

Germany  :  -0.31%
United Kingdom  :  0.82%
France  :   -0.07%
Italy : 0.62%
Netherlands  : -0.19%

Asia Pacific : 10 – Year Govt Bond Yields

India  :   6.40%
Japan  :  0.11%
Australia : 1.69%
Hong Kong : 1.23%
Singapore : 1.52%      
South Korea : 2.07%

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Fund Flows on NSE, BSE and MSEI — 12 Mar 2021

FII/FPI Net Sell Rs (942.60) Crore in Capital Market

DII Net Sell Rs (163.87) Crore in Capital Market

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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