Finance - Stock Market Forecast

Index Trend & Conditions – 08:00 a.m. I.S.T.

• Resistance for Nifty 50 is at 13,730 zone. For Thursday, Dec 17, Support area is seen at 13,630 13,450 13,400 and 13,330

• Support levels for Bank Nifty is at 30,200 and 29,750 ; while Resistance is seen at 31,300 and 31,375

• The MSCI Asia Pacific ex-Japan added 0.18%, while the MSCI Emerging Market index added 0.14%

• Trends on SGX Nifty indicate a muted opening with cautiously optimistic outlook for Nifty 50 in India. The Nifty futures are trading -0.09% lower at 13,674 on the Singaporean Exchange at 08:00 a.m. I.S.T.

• Contracts tied to U.S. futures were little changed on the day, with Nasdaq, S&P 500 and Dow Jones futures trading in green, alongside a mixed Asia-Pacific early Thursday morning trade, a positive MSCI Asia-Pacific ex-Japan index, U.S. Dollar Index extending slump at 90.160 with 10-Year Treasury Yield edging higher to 0.931 and Gold futures steady at $1,862 on the day indicate a steady-to-positive outlook for Nifty 50 India

• Investors await the conclusion of the Fed’s two-day meeting on Wednesday

India Markets

NIFTY 50	OPEN	HIGH	LOW	CLOSE
Wednesday	13,663	13,692	13,606	13,682

India’s Nifty opened with a gap up at a new lifetime high on Wednesday trade, as investors assessed increasing prospects of U.S. stimulus measures, hopes of an effective vaccine and a conclusive Fed meeting to announce a positive policy

Nifty 50 added 115 points or 0.85% to 13,682, while the BSE Sensex added 403 points or 0.87% to 46,666

All 19 sector sub-indexes compiled by BSE Ltd. rose, led by a gauge of real estate companies

Broader markets out-performed their headline peers — Midcap 100 index added 1.15% ; Smallcap 250 index added 0.96% and Nifty 500 added 0.86%

Strategy based indices out-performed their benchmark indices — Nifty Alpha 50 added 1.01% and Nifty Alpha Low Volatility 30 added 0.83%

Nifty P/E for Dec 16, 2020 advanced to 37.63 from 37.31 in previous session, as recorded by NSE India

Bank Nifty remained below 31,000 level and has under-performed the benchmark Nifty. The index added 07 points or 0.02% to 30,698

India VIX declined -0.75% from 19.34 to 19.20 levels. Lower volatility would suggest the bulls are getting a grip on the market and any decline may trigger buying in the market

Overnight Call Money rate weighted average stood at 3.21% as per RBI data. It moved in a range of 1.90 — 3.50% for Dec 15. With excess cash in the banking system, estimated at ₹7 lakh crore or $95 billion, key overnight rates have plunged below the reverse repurchase rate that marks the lower bound of the central bank’s policy corridor. Lower shorter rates without a similar drop in long-term borrowing costs means a steeper yield curve, which can downsize growth and also cause a mismatch between assets and liabilities in the financial sector

The yield on the benchmark 10-year government bond was little changed at 5.947% while the rupee strengthened 0.10% to 73.5640 against the U.S. dollar

India’s retail price inflation eased to 6.93% YoY in November 2020, from an over six-year high of 7.61% in the previous month and compared with market expectations of 7.10%. Sill, inflation remained above the central bank’s 2-6% target range for an eight straight month.

Three state-run processors including Indian Oil Corp. see V-shaped recovery in the overall consumption of gasoline and liquefied petroleum gas, as many opt to drive their own cars over taking public transport and cook at home to avoid restaurants

India's oil-product demand rebounds even as Covid continues to spread

In the first-half of this month, Indian gasoline and LPG sales were 10% higher than the same time last year. The sale of diesel, the country’s most popular fuel, lagged year-ago figures by 5% while use of aviation fuel was halved

Strong automobile sales and an uptick in industrial and construction activity are also expected to lift demand, said Hindustan Petroleum Corp. Chairman Mukesh Kumar Surana

“The key important factor track now is liquidity, and as long as that’s supportive we are likely to see positive sentiment,” said Anita Gandhi, an investment advisor at Arihant Capital Markets Ltd. in Mumbai.

America Markets

Wall Street stocks mostly closed in the green on Wednesday trade, as lawmakers neared a coronavirus relief deal and the Federal Reserve indicated most officials expect rates to remain near zero for years

The Nasdaq Composite Index advanced 63 points, or 0.5%, to 12,658, its 52nd record close of 2020

The S&P 500 rose 6 points, or 0.2%, to 3701, just shy of a record

The Dow Jones Industrial Average slipped 44 points, or 0.1%, to 30,154

Contracts tied to U.S. futures were little changed in early Thursday trade. S&P500 futures is up 0.05%, Dow Jones futures is up 0.08% and Nasdaq futures is up 0.09%

The yield on 10-year U.S. Treasury note initially rose after the FOMC meeting, to trade at about 0.94% but prices rallied as Chair Powell spoke and yields ended the session only slightly higher at 0.91%

New data Wednesday showed U.S. retail sales dropped -1.1% in November from the prior month, with restaurants, department stores and vehicle dealerships reporting sharp sales declines. The retail sales report was the latest indication the economic recovery may be slowing as coronavirus cases surge

Policy makers led by Chair Jerome Powell has voted to leave the target range for its federal funds rate unchanged at 0 to 0.25% and promised to maintain its massive asset purchase program intact, making bond purchases of at least $120 billion each month, in line with forecasts at the December FOMC meeting

The Fed’s quarterly projections showed some improvement compared with September —

• Gross domestic product: Down 2.4% in 2020 (prior estimate was 3.7% contraction); 4.2% growth in 2021

• Fourth-quarter unemployment rate: 5.0% in 2021 (prior estimate 5.5%), 4.2% in 2022

• PCE inflation: 1.8% in 2021 (prior estimate 1.7%), 1.9% in 2022

• Longer-run federal funds rate: 2.5%, unchanged from prior projection of 2.5%

Powell has repeatedly called on Congress to pass another round of fiscal stimulus to help the economy through the winter as the pandemic continues to rage. The unemployment rate stood at 6.7% in November, while inflation remains below 2%

“The Fed marked up growth in each of the next two years, marked down unemployment, and market up core inflation. Despite this, they don’t expect to move rates. Good for risk appetite. Buy stocks,” said Neil Dutta, head of U.S. economic research at Renaissance Macro Research.

“The FOMC expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the committee’s assessments of maximum employment and inflation has risen to 2% and is on track to moderately exceed 2% for some time,” policy makers said on Wednesday.

Asia-Pacific Markets

Asian stock markets were mixed in early Thursday trade with the Japanese and South Korean shares dipping while Australian stocks rose, as investors mulled speculation U.S. lawmakers are edging closer to a stimulus deal

Japan’s Nikkei 225 dropped -0.02% to 26,752, while Topix 500 added 0.12% to 1,388

South Korea’s Kospi dropped -0.99% to 2,744

In Hong Kong, Hang Seng dropped -0.05% to 26,448 while Hang Seng China Enterprises added 0.01% to 10,462

In China, CSI 300 added 0.03% to 4,954 and Shanghai Composite dropped -0.20% to 3,360

Australia’s S&P/ASX 200 advanced 0.78% to 6,730

Singapore’s Straits Times Index dropped -0.69% to 2,852

New Zealand bonds sank after better-than-expected economic-growth data

Overall, MSCI Asia-Pacific, is up 0.92%

New Zealand aims to begin vaccinating its entire population against Covid-19 in the second half of next year in its largest-ever immunization program, PM Jacinda Ardern said on Thursday. The government has secured two additional vaccines from pharmaceutical companies AstraZeneca and Novavax, and will have enough for all five million New Zealanders, and it will all be free to the public

EU Markets

U.K. Headquartered Arrival Electric Bus Aimed at Socially Distanced Travel

European equities climbed on Wednesday trade amid positive composite PMI numbers

The pan-European Stoxx Europe 600 added 0.64% to 396 and Stoxx 50 added 0.61% to close at 3,543

The December Composite Purchasing Managers Index for the euro area published by IHS Markit came in at 49.8, above market forecasts of 45.7, pointing to an expansion in the economy, boosted by German manufacturing and French services

Germany’s DAX30 added 1.52% to 13,565

London’s FTSE 100 added 0.88% to close to 6,570

PMI numbers for the U.K. showed the country returned to growth in December as stockpiling boosted manufacturers. The IHS Markit UK Manufacturing PMI increased to 57.3 in December from 55.6 in November, well above forecasts of 55.9, pointing to the strongest expansion in factory activity since November 2017

France’s CAC40 added 0.26% to 5,547

Denmark’s OMX Copenhagen 20 added 1.77% to 1,430

Italy’s FTSE MIB added 0.23% at 21,986

Negotiations continued over a post-Brexit trade deal between the U.K. and the European Union with signs of cautious optimism from both sides that agreement can be reached

Oil & Natural Gas Markets

Crude oil gained in early Thursday trade, on a surprise decline in U.S. crude inventories, but gains were limited with increased gasoline and diesel supplies underscoring weaker fuel demand

Offshore U.S. crudes are also benefiting. Mars, a medium-sour regional benchmark, reached $1.20 a barrel over New York futures, the biggest premium since September. Light Louisiana Sweet crude hit a $2 premium last week, the widest since August

WTI Crude is trading higher at $47.82 per barrel

Brent Crude is trading higher at $51.12 per barrel

Natural Gas futures is strengthened to $2.680/MMBtu

On MCX-India, Crude oil futures appreciated to 3,520 on Wednesday trade

On MCX-India, Natural gas futures declined to 193/MMBtu on Wednesday trade

“The bounce-back in exports and significant decline in imports is driving the draw,” said Rob Thummel, a portfolio manager at Tortoise, a firm that manages roughly $8 billion in energy-related assets. Still, “lack of mobility will impact gasoline demand.”

Commodities Markets

Gold advanced in early Thursday trade

“Even with a vaccine, at least another round of U.S. fiscal stimulus is needed, if not more – raising inflation expectations,” said Howie Lee, an economist at Oversea-Chinese Banking Corp., who is long gold through 2021. “Additionally, we expect dollar outflows in 2021, while rates are highly expected to stay low till 2023. Gold could trade above $2,000 from the second quarter onward as markets divert their attention toward excess liquidity in a world that is on its way to being inoculated.”

U.S. Gold futures (Comex) strengthened to $1,864.00 an ounce

Silver futures (Comex) strengthened to $25.32 an ounce

Copper futures (Comex) steady at $3.5640 per pound

In India, Spot Gold strengthened to INR 49,150 per 10 grams

India — NCDEX Agridex

Agricultural futures index tracking the performance of the 10 liquid commodities, was up 1.17% trading at 1,164.60 ; with top gains in Cotton Seed Oilcake and Ref Soybean oil futures, while Dhaniya and Jeera futures led losses on Wednesday trade

Currency Markets

The U.S. dollar index, DXY extended slump in early Thursday trade at 90.247

INR appreciated with USD / INR at 73.5887

JPY appreciated with USD / JPY at 103.3200

CNY declined with USD / CNY at 6.5358

EUR appreciated with EUR / USD at 1.2204

The euro rose above $1.22 for the first time since 2018 in the wake of the better-than-expected numbers.

EUR declined with EUR / GBP at 0.9020

The pound is climbing after Brexit talks were extended past a Sunday deadline. The pound, the most Brexit-sensitive asset, is already some 4% undervalued against the euro this year

Bitcoin has surpassed $21,000 for the first time. Scott Minerd, Guggenheim Global chief investment officer, prices Bitcoin’s fair value at $400,000 and says that his interest in Bitcoin is tied to Federal Reserve monetary policy

“Bitcoin’s scarcity combined with rampant money printing by the Federal Reserve mean the digital token should eventually climb to about $400,000,” Scott Minerd said on Wednesday as Bitcoin breached $20,000 for the first time. “It’s based on the scarcity and relative valuation such as things like gold as a percentage of GDP. So you know, Bitcoin actually has a lot of the attributes of gold and at the same time has an unusual value in terms of transactions.”

*3-Month LIBOR Rate*	*As on 16 Dec 2020*
US DOLLAR	0.22 per cent
Euro	– 0.57 per cent
British Pound	0.04 per cent
Swiss Franc	– 0.79 per cent
Japanese Yen	– 0.10 per cent