Finance - Stock Market Forecast

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

• Support for Nifty 50 is seen at 13,730 13,630 and 13,450 for Friday, Dec 18

• 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 dropped -0.08%, and the MSCI Emerging Market index dropped -0.01%

• Trends on SGX Nifty indicate a modest gap-up opening with positive outlook for Nifty 50 in India. The Nifty futures are trading 0.31% higher at 13,785 on the Singaporean Exchange at 07:00 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 modestly in red, alongside a mixed Asia-Pacific early Friday morning trade with modest gains in Japan and Korea, a negative MSCI Asia-Pacific ex-Japan index, U.S. Dollar Index extending its recent slide at 89.82 with 10-Year Treasury Yield steady 0.93 and Gold futures advancing to $1,889 on the day indicate a steady-to-positive outlook for Nifty 50 India

• The current mood in the market is bracing and non-committal with enormous global liquidity

India Markets

NIFTY 50	OPEN	HIGH	LOW	CLOSE
Thursday	13,713	13,773	13,673	13,740

India stocks climbed to another record high on Thursday trade, after their U.S. and Europe peers hit fresh peaks, boosted by signs that the economy is recovering

Nifty 50 added 58 points or 0.42% to 13,740, while the BSE Sensex added 223 points or 0.48% to 46,890

Eleven out of 19 sector sub-indexes compiled by BSE Ltd. fell, with a gauge of metal companies dropping the most

On the stocks front, HDFC was the biggest gainer and boost, adding 2.9%, while Hindustan Unilever was the biggest drag and lost -1.2%

Broader markets under-performed their headline peers — Midcap 100 index dropped -0.27% ; Smallcap 250 index dropped -0.03% and Nifty 500 added 0.23%

Strategy based indices majorly out-performed their benchmark indices — Nifty Alpha 50 added 0.62% and Nifty Alpha Low Volatility 30 dropped -0.09%

Nifty P/E for Dec 17, 2020 advanced to 37.79 from 37.63 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 149 points or 0.48% to 30,847

India VIX declined -0.22% from 19.20 to 19.16 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 3.20% as per RBI data. It moved in a range of 1.90 — 3.45% for Dec 16. 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

Yield on the benchmark 10-year government bond was little changed at 5.89%, while the rupee was also little changed at 73.5850 against the U.S. dollar

Billionaire and commodities tycoon Anil Agarwal of Vedanta fame is planning a $10 billion investment fund to help former government companies, through a partnership with London-based Centricus Asset Management Ltd. accelerate their transformation into private-sector firms with professional management, having recently expressed interest in acquiring India’s stake in $12 billion refiner Bharat Petroleum Corp.

Auto component maker Craftsman Automation has filed preliminary papers with SEBI to float an initial share-sale. Below is the Red Herring Prospectus attached —

Craftsman-Automation-Red-Herring-Prospectus-Dec-2020 Download

“The excess liquidity situation globally is expected to sustain for the medium term, which will continue to lend support to equities,” said Binod Modi, head of strategy at Reliance Securities Ltd. in Mumbai.

America Markets

U.S. stocks notched a solid gain on Thursday trade, to close at all-time highs, as lawmakers closed in on a deal to extend a new financial lifeline to businesses and individuals that could support the economy through the coronavirus pandemic’s deadliest phase

The Nasdaq Composite Index added 106 points, or 0.8%, to 12,764

The S&P 500 rose 21 points, or 0.6%, to 3,722

Nine of the 11 major S&P 500 sectors notched gains, with some of the biggest advances coming out of the health-care, technology and real-estate sectors

The Dow Jones Industrial Average rose 148 points, or 0.5%, to 30,303

Contracts tied to U.S. futures were little changed in early Friday trade. S&P500 futures is down -0.11%, Dow Jones and Nasdaq futures is down -0.13% each

The yield on 10-year U.S. Treasury note is at 0.93% on the day

Unemployment claims rose to 885,000 from 862,000 a week earlier, the U.S. Labor Department said Thursday

The Philadelphia Federal Reserve Manufacturing Index fell to 11.1 in December of 2020 from 26.3 in November and below market expectations of 20. It is the lowest reading in factory activity since May 2020

“Any stimulus is good stimulus at this point, especially when you’re coming through a rough patch,” Ms. Nicola, a portfolio manager at PineBridge Investments said. “This will provide a bit more of a boost to the recovery.”

“We are obviously getting very close to the time period when it gets quite tricky to get a deal over the line,” said Edward Park, chief investment officer at Brooks Macdonald. “Providing some stimulus here is definitely an incremental positive.”

Asia-Pacific Markets

Asian stock markets were mixed with modest advances in early Friday trade as U.S. lawmakers continued to wrangle over a federal-spending deal in Washington

Shares were little changed in Japan and South Korea, and slipped in Australia

Japan’s Nikkei 225 added 0.01% to 26,805, while Topix 500 added 0.14% to 1,394

South Korea’s Kospi added 0.14% to 2,774

In Hong Kong, Hang Seng dropped -0.18% to 26,632 while Hang Seng China Enterprises added 0.08% to 10,555

In China, CSI 300 added 1.28% to 5,017 and Shanghai Composite dropped -0.08% to 3,402

Australia’s S&P/ASX 200 dropped -0.59% to 6,717

Singapore’s Straits Times Index added 0.02% to 2,858

Overall, MSCI Asia-Pacific, is up 0.76%

Japan’s consumer prices declined 0.9% in November year-on-year after falling 0.4% in the previous month, as the pandemic continued to drag consumption heavily. The decline was sharper than expected and was the sharpest since April of 2010. Prices were mainly dragged by utilities (-5.4% vs -2.9% in October), food (-0.2% vs 1.1%) and education (-2.2% vs -2.1%)

Japan’s deflation sharpest in 10 years

EU Markets

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

European equities buoyed on Thursday trade boosted by signs of progress in post-Brexit trade deal negotiations and the prospect of a fiscal stimulus agreement in the U.S.

Investors welcomed news that the European Parliament has approved the €1.8 trillion EU budget and coronavirus recovery package

The pan-European Stoxx Europe 600 added 0.53% to 398 and Stoxx 50 added 0.63% to close at 3,565

Stoxx Europe 600 was led by shares in economically sensitive commodity producers and retailers alongside media companies

Among European stocks, shares in WPP rose almost 5% after the advertising giant said sales are recovering faster than expected from the coronavirus shock

Germany’s DAX30 added 0.76% to 13,667

London’s FTSE 100 dropped -0.01% to close to 6,570

Bank of England left interest rates at record low of 0.1% and kept the size of its bond-buying program at £875 billion, saying it will do whatever it takes to achieve the 2% inflation target, in a way that helps to sustain growth and employment, as policymakers took a wait-and-see approach amid uncertainty surrounding a post-Brexit trade deal and concerns over the coronavirus situation

The Central Bank said that restrictions designed to quell coronavirus will weigh on the U.K. economy this quarter and in the first three months of 2021

France’s CAC40 added 0.40% to 5,569

Denmark’s OMX Copenhagen 20 added 0.15% to 1,432

Italy’s FTSE MIB added 0.46% at 22,087

The U.K.’s Gfk Consumer Confidence improved to -26 in December from -33 in previous month and compared to consensus of -31, as the new Pfizer vaccine in its application in the U.K. nudged sentiment

Oil & Natural Gas Markets

Crude oil held gains in early Friday trade, in the wake of a surprise decline in U.S. crude inventories

“Stimulus is a big driver for oil gains,” said Gary Cunningham, a director at Stamford, Connecticut-based Tradition Energy. “As we see more stimulus money coming through Congress, it brings more certainty to U.S. economic conditions improving and folks getting back to more free spending.”

WTI Crude is trading higher at $48.35 per barrel

Brent Crude is trading higher at $51.48 per barrel

Natural Gas futures is strengthened to $2.661/MMBtu

On MCX-India, Crude oil futures appreciated to 3,547 on Thursday trade

On MCX-India, Natural gas futures steady at 194/MMBtu on Thursday trade

“Dollar-denominated commodities across the board are getting pumped up,” said John Kilduff, a partner at Again Capital LLC. “It bodes well for demand, because it’s becoming so much cheaper for countries like India that have to do the currency translation. This is effectively a big price cut for foreign buyers of crude oil.”

Commodities Markets

Gold advanced in early Friday trade, as weakening dollar gave a boost to commodity markets

“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 $1,889.40 an ounce

Silver futures (Comex) strengthened to $26.11 an ounce

Copper futures (Comex) advanced to $3.6015 per pound

In India, Spot Gold strengthened to INR 49,614 per 10 grams

India — NCDEX Agridex

Agricultural futures index tracking the performance of the 10 liquid commodities, was down -1.23% trading at 1,150.20 ; with top gains in Guar Gum and Mustardseed futures, while Jeera and Cotton Seed Oilcake futures led losses on Thursday trade

Currency Markets

The U.S. dollar index, DXY extended its recent slide in early Friday trade at 89.822

INR appreciated with USD / INR at 73.5875

JPY declined with USD / JPY at 103.2000

CNY declined with USD / CNY at 6.5336

EUR declined with EUR / USD at 1.2257

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

EUR appreciated with EUR / GBP at 0.9036

Bitcoin breached $23,000 for the first time

“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 17 Dec 2020*
US DOLLAR	0.23 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