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 Tuesday, Mar. 16, Support area is seen around 14,760
• Support levels for Bank Nifty is around 34,725; while Resistance zone is at 35,700—850 36,470 and 36,580 for Mar. 16
• The MSCI Asia Pacific ex-Japan is trading higher 0.56%, and the MSCI Emerging Market index is up 0.46%
• Trends on SGX Nifty look poised for a strong positive opening for Nifty 50 in India. The Nifty futures are trading 37 points, or 0.25% higher at 14,987 on the Singaporean Exchange at 07:00 a.m. I.S.T.
• U.S. equity futures opened lower in early morning trade with S&P 500 and Dow Jones trading in red and Nasdaq futures in green territory; alongside a positive and steady opening in Asia-Pacific benchmarks gauges in early Tuesday trade with equities advancing in Japan, Korea and Australia; a positive MSCI Asia-Pacific ex-Japan index; U.S. Dollar continuing its rise to 91.84 with 10-Yr Treasury Yields pulling back to 1.59% from last week’s highs and Gold futures rising to $1,732 on the back of higher inflation expectations indicate a cautious and volatile outlook amid channel-wise resistance
• Investors remain preoccupied with rising long-term borrowing costs and their implications for reflation trades and the rotation in the stock market from growth to value shares
India Markets
| NIFTY 50 | OPEN | HIGH | LOW | CLOSE |
|---|---|---|---|---|
| Monday | 15,048 | 15,048 | 14,745 | 14,929 |
India’s equity benchmarks extended declines on Monday trade, due to rising cases and partial lockdowns in many parts of Maharashtra
The blue-chip NSE Nifty 50 index fell 101 points or -0.67% to 14,929 and the benchmark S&P BSE Sensex dropped 397 points or -0.78% to close at 50,395
Broader markets under-performed headline peers — Midcap 100 index dropped -0.68%; Smallcap 250 index added 0.74% and Nifty 500 dropped -0.67%
Nifty P/E for Mar 15 declined to 40.66 from 40.94 with Nifty P/B edging down to 4.23 from 4.26, as recorded by NSE India
Bank Nifty opened positive, but failed to hold above 35,500 level and drifted towards the 34,500 mark. However, a good recovery in the last hour of the session helped Nifty close above 35,200 level. The index dropped 314 points, or -0.88%, to settle at 35,182
India VIX or the barometer of nervousness in the market, fell 2.21% from 21.70 to 21.22 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 3.22% as per RBI data. It moved in a range of 1.90 — 3.50% for Mar 12
Yield curve on the benchmark 10-year government bond steepened to 6.40%, while the rupee strengthened to 72.5320 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
America Markets
U.S. stocks posted closing records on Monday trade, as investors believe the combination of factors such as a faster-than-expected vaccination drive and the additional $1.9 trillion in fiscal stimulus should help consumer spending—a powerful driver of overall economic growth—rebound, especially in the second half of the year
The broad-based S&P 500 added 25 points, or 0.6%, to a record close of 3,968; gaining for a fifth-straight session, led by utilities and real estate
The Dow Jones Industrial Average, composed mostly of cyclical stocks, rose 174 points, or 0.5%, to 32,953, posting its 14th record close of the year
The tech-heavy Nasdaq Composite Index climbed 139 points, or 1%, to 13,459
U.S. equity futures opened lower in early Tuesday trade. S&P500 futures is down -0.09%; Dow Jones futures is down -0.14% and Nasdaq futures is up 0.05%
10-yr U.S. Treasury yields, which move inversely to the price, edged lower to 1.59% with dollar strengthening to 91.84
The Cboe Volatility Index, known as Wall Street’s “fear gauge,” fell -3.19% to 20.03 on Monday
The New York Empire State Manufacturing Index jumped to 17.4 in Mar from 12.1 in Feb, beating market forecasts of 14.5. The reading pointed to the strongest growth in business activity in New York since Nov 2018. New orders increased modestly (9.1 vs 10.8), and shipments were up substantially (21.1 vs 4)
AstraZeneca shares were little changed after Germany, Italy and France suspended use of the company’s Covid-19 vaccine amid a growing health scare that’s creating yet another delay for the European Union’s inoculation campaign
The policy-setting Federal Open Market Committee (FOMC) led by Chair Jerome Powell convenes on Mar 16-17, with a policy statement and fresh economic projections due to be released at the end of the meeting
“U.S. equities have become a buy high, sell higher asset class on the heels of economic reopening optimism, vaccination progress and additional government stimulus,” said Terry Sandven, chief equity strategist for U.S. Bank Wealth Management. “We’re maintaining our glass half full orientation for equities and that’s a function of favorable fundamental sentiment and technical trends.”
“The food-price story and the inflation story are important on the issue of inequality, in terms of a shock that has very unequal effects,” said Carmen Reinhart, the chief economist at the World Bank, said in an interview, citing Turkey and Nigeria as countries at risk. “What you may see are a series of rate hikes in emerging markets trying to deal with the effects of the currency slide and trying to limit the upside on inflation.”
Asia-Pacific Markets
Asian benchmark stocks opened stronger and made modest gains in early Tuesday trade, after optimism about the economic recovery drove U.S. shares to a record
Equities advanced in Japan, South Korea and Australia
Japan’s Nikkei 225 added 0.19% to 29,824 and Topix 500 added 0.20% to 1,534
South Korea’s Kospi added 0.34% to 3,055
In Hong Kong, Hang Seng added 0.70% to 29,036 and Hang Seng China Enterprises added 1.23% to 11,281
In China, CSI 300 added 0.32% to 5,054 and Shanghai Composite added 0.43% to 3,437; weighed down by concerns about tightening liquidity
Australia’s S&P/ASX 200 added 0.67% to 6,818
China’s industrial production soared 35.1% YoY in Jan-Feb 2021, after a 7.3% rise in Dec and well above market consensus of a 30% jump, suggesting the world’s second-largest economy consolidated its recovery from last year’s massive slump with the output of mining, utilities, and manufacturing all accelerating sharply
Tencent Holdings shares fell a second day on concern regulators are now turning their sights to Pony Ma’s business empire, fueling a $62 billion wipe-out that one brokerage says obliterated most of the value of its online finance business
The internet giant’s payments and fintech business is worth between $105 billion to $120 billion, according to estimates by Bernstein analysts including Robin Zhu, who assigned a multiple of up to 8 times to the division’s trailing 12-month revenue of 100 billion yuan ($15 billion). That would imply the payments business is worth about $70 billion to $80 billion, with credit, wealth management and insurance accounting for the remaining $35 billion to $40 billion
Bank of Japan monetary policy decision and Governor Haruhiko Kuroda’s briefing is on Friday
“All else equal, we think it could be argued that Tencent’s fintech business is now valued at almost zero,” the Bernstein analysts wrote in a research report, citing Friday’s loss. “This is significant, as it implies any further declines from here would essentially imply a de-rating of the Tencent multiple.”
EU Markets
European equities fluctuated between small highs and lows on Monday trade, amid hopes for a global economic recovery helped by stronger-than-expected industrial production and retail sales data from China
On a more negative note, concerns over rising bond yields, coronavirus infections in Europe and vaccine rollout delays continued to weigh on sentiment
The pan-European Stoxx Europe 600 dropped -0.01% to 422 and Stoxx 50 dropped -0.25% to close at 3,823
Travel companies and automakers led the Stoxx 600 Index higher. Danone, the world’s largest yogurt maker, jumped as much as 5.8% after announcing it would replace its chairman
Germany’s DAX30 dropped -0.19% to 14,474
London’s blue-chip FTSE 100 dropped -0.47% to 6,729
France’s CAC40 dropped -0.34% to 6,026
Denmark’s OMX Copenhagen 20 added 1.04% to 1,449
Spain’s IBEX 35 added 0.16% to 8,658
Italy’s FTSE MIB added 0.31% to 24,187
Wholesale prices in Germany jumped 2.3% YoY in Feb, the highest increase since Dec 2018 and after a flat reading in Jan. Biggest upward impact came from wholesale of ores, metals and metal semi-finished products (15.3%) due to very high prices for ores, especially iron ores in international markets
Bank of England rate decision is on Thursday. BOE is expected to leave monetary policy unchanged
“There’s some big rotation going on, and what we’re seeing is really a lot of churn with regards to growth and value,” said Neil Wilson, chief market analyst at Markets.com. “The DAX’s record high or STOXX 600’s record high, just seems like value parts of the market maybe being under-appreciated.”
Oil & Natural Gas Markets
Crude-oil prices dropped in early Tuesday trade, with a strengthening dollar as prices struggled to break past recent highs
WTI crude’s nearest timespread flipped into a bearish contango structure, signaling oversupply
WTI Crude is trading at $64.87 per barrel
Brent Crude, the international benchmark for oil, is trading at $68.36 per barrel
Natural Gas futures is trading lower at $2.498/MMBtu
In China, industrial output surged in the first two months of the year, underscoring the strength of its V-shaped rebound and reinforcing expectations for increased energy demand. China processed more than 14 million barrels a day of crude in Jan and Feb, and refiners have kept consumption above that level every month since June. There are also bullish demand signs elsewhere, with U.S. air passenger numbers hitting a 12-month high on Fri, while road use is creeping up in parts of Europe
“We’ve had such a big runup in the past couple weeks, some pullback has to be expected,” said Michael Lynch, president of Strategic Energy & Economic Research. Meanwhile, “at these price levels, the Permian was expanding almost 1 million barrels a day per year before the pandemic, and OPEC+ won’t want to go back to that until there’s certainly much stronger demand growth.”
Commodities Markets
Gold futures edged higher in early Tuesday trade, on prospects of higher inflation following the approval of a $1.9 trillion U.S. stimulus bill, although elevated U.S. Treasury yields capped bullion’s gains ahead of a Fed Reserve meeting
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 $26.27 an ounce
Gold / Silver Ratio declined to $65.94
Copper futures (Comex) is trading higher at $4.1340 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 rose to $166.30 per tonne
In India, Spot Gold is trading at INR 44,744 per 10 grams
“A strong show of dovish intent by (Fed Chair) Powell and team could send Treasury yields lower and lift gold prices higher,” Howie Lee, an economist at OCBC Bank wrote in a note.
Currency Markets
U.S. dollar index, DXY fluctuated with small gains to 91.84 in early Tuesday trade, on the back of sharply higher inflation
INR strengthened with USD / INR at 72.5320
JPY weakened with USD / JPY at 109.2100
CNY strengthened with USD / CNY at 6.4998
EUR weakened with EUR / USD at 1.1921
GBP strengthened with EUR / GBP at 0.8587
GBP weakened with GBP / USD at 1.3882
“The Fed is not expected to tinker with its monetary policy but instead communicate via forecasts that the situation is under control and that markets are running way ahead of themselves,” SEB analysts said.
| 3-Month LIBOR Rate | As on 15 Mar 2021 |
| US DOLLAR | 0.18 per cent |
| Euro | – 0.55 per cent |
| British Pound | 0.08 per cent |
| Swiss Franc | – 0.76 per cent |
| Japanese Yen | – 0.09 per cent |
Bitcoin
Bitcoin / U.S. Dollar fell sharply -3.12% in early Tuesday trade to $53,876 as of 06:45 a.m. I.S.T., after hitting a record high of $61,781.83 over the weekend
Because some investors tend to see bitcoin as an hedge against inflation, analysts believe the rise of bitcoin has been helped by the prospects of a steep economic recovery
“Since the start of 2020, correlations between bitcoin and copper, equities and, in particular, breakeven inflation have increased,” William De Vijlder, BNP Paribas chief economist, wrote in a note looking at the drivers behind the surge of the cryotocurrency.
Bond Markets
Americas : 10 – Year Govt Bond Yields
United States : 1.59%
Canada : 1.56%
Europe, Middle East & Africa : 10 – Year Govt Bond Yields
Germany : -0.32%
United Kingdom : 0.82%
France : -0.07%
Italy : 0.61%
Netherlands : -0.19%
Asia Pacific : 10 – Year Govt Bond Yields
India : 6.40%
Japan : 0.10%
Australia : 1.78%
Hong Kong : 1.14%
Singapore : 1.54%
South Korea : 2.15%
Fund Flows on NSE, BSE and MSEI — 15 Mar 2021
FII/FPI Net Sell Rs (1,101.35) Crore in Capital Market
DII Net Sell Rs (749.71) 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
