Finance - Stock Market Forecast

Index Trend & Conditions – 07:30 a.m. I.S.T.

• Major Resistance for Nifty 50 is at 15,250 15,322 and 15,425 zone. For Thursday, Feb. 18, Support area is seen at 15,090 and 15,045

• Support levels for Bank Nifty is at 36,400 and 36,208; while Resistance zone is at 37,330 and 37,708 for Feb. 18

• The MSCI Asia Pacific ex-Japan is trading lower -0.16%, and the MSCI Emerging Market index is down -0.08%

• Trends on SGX Nifty look poised for a positive opening for Nifty 50 in India. The Nifty futures are trading 43 points, or 0.27% higher at 15,240 on the Singaporean Exchange at 07:30 a.m. I.S.T.

• U.S. equity futures rose slightly in early morning trade with S&P 500 and Dow Jones trading in green and Nasdaq futures in red; alongside a lower start in Asia-Pacific benchmarks gauges in early Thursday trade; a negative MSCI Asia-Pacific ex-Japan index; U.S. Dollar easing to 90.89 after its first back-to-back gains in two weeks with 10-Yr Treasury Yields slipping to 1.26% from 1.33% amid stronger economic data and Gold futures rising to $1,780 with little firm direction, after falling to the lowest in almost eight months, indicate stable outlook for Nifty 50 India

• Citigroup Inc.’s Tobias Levkovich says that a 10% pullback in U.S. shares seems “very plausible” with markets balanced on a risk-reward basis

India Markets

NIFTY 50	OPEN	HIGH	LOW	CLOSE
Wednesday	15,279	15,314	15,170	15,208

India’s equity benchmarks eased on Wednesday trade, as it witnessed selling pressure

The blue-chip NSE Nifty 50 index dropped 100 points or -0.68% to 15,208 and the benchmark S&P BSE Sensex dropped 400 points or -0.77% at 51,703

Nifty 50 has closed below the support level of 15,250 and is likely to see more selling pressure with next support at 15,090

Broader markets out-performed headline peers — Midcap 100 index added 0.31%; Smallcap 250 index added 0.38% and Nifty 500 dropped -0.39%

Nifty P/E for Feb 17 decreased from 41.78 to 41.49, and Nifty P/B dropped from 4.34 to 4.31, as recorded by NSE India

Bank Nifty opened flat and moved down towards 36,750 level. Banking stocks are now taking a pause in the positive momentum, and thus, the rate-sensitive index fails to sustain at higher levels. The index has dropped 187 points, or -0.51%, to settle at 36,910

India VIX or Fear gauge slipped -1.26% from 21.78 to 21.50 levels. It needs to cool down and hold below 21 level for a continuation in the ongoing momentum

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 Feb 16

Yield on the benchmark 10-year government bond increased to 6.16%, while the rupee weakened to 72.8300 per U.S. dollar

Indian conglomerate Tata Group has reached an agreement to acquire a majority stake, 60% in grocery delivery startup BigBasket at a valuation between $1.8 billion to $2 billion. BigBasket has raised more than $750 million prior to the deal with Tata

America Markets

Soybeans are harvested from a field on Hodgen Farm in Roachdale, Indiana, U.S.

Wall Street’s main indexes dropped for a second day on Wednesday trade, as investors weighed signs of an improving economy against concerns about lofty stock valuations and rising inflation expectations

The broad-based S&P 500 slid, losing 1.26 points, or less than -0.1%, to close at 3,931

The Dow Jones Industrial Average, composed mostly of cyclical stocks, finished the day higher, rising 90 points, or 0.3%, to settle at 31,613

The tech-heavy Nasdaq Composite Index fell 82 points, or -0.6%, to 13,965, dragged down by heavy hitters including Apple and Netflix

U.S. equity futures rose in early Thursday trade. S&P500 futures is up 0.11%; Dow Jones futures is up 0.17% and Nasdaq futures is down -0.01%

10-yr U.S. Treasury yields, which move inversely to the price, slipped to 1.26% from a high of 1.33%, with dollar easing to 90.89

The Cboe Volatility Index, known as Wall Street’s “fear gauge,” rose 0.19% to 21.50 on Wednesday

Retail sales in the U.S. jumped 5.3% month-over-month in Jan 2021. It is the strongest gain since June, in a sign new stimulus checks helped to boost consumer spending. Biggest increases were seen in sales at electronics and appliance stores of 14.7%

Producer prices for final demand in the U.S. jumped 1.3% MoM in Jan 2021, following a 0.3% increase in Dec 2020 and easily beating market consensus of a 0.4% gain. It was the largest advance since the series began in December 2009, mainly due to a record 1.3% rise in cost of services. On a yearly basis, producer prices advanced 1.7% in Jan 2021, also beating forecasts of 0.9% gain

U.S. Nahb Housing Market Index edged up 1 point from the previous month to 84 in Feb 2021, beating market expectations of 83 despite rising building materials costs

The New York Federal Reserve’s Empire State manufacturing report released on Tuesday offered an upbeat economic picture, with a rise in its “prices paid index” stoking fear of faster inflation

Federal Reserve officials say the U.S. economy continues to be disrupted by the pandemic, with one regional central bank chief dismissing the threat that inflation could get out of hand

A proposal to gradually raise the U.S. minimum wage to $15 by 2025 has triggered a fierce lobbying battle on Capitol Hill

Friday will also see major economies, including the U.S., release preliminary February purchasing managers’ indexes (PMI)

“The move up in yields has been driven by increasing inflationary concerns amid a rise in energy prices along with the prospect of a big U.S. fiscal stimulus and the global recovery entering a more solid stage as vaccine roll out lead to the reopening of economies,” said Rodrigo Catril, senior FX strategist at National Australia Bank in Sydney

“It’s quite possible that for a while interest rates could rise and yet stock prices could still rise some more because of the tailwinds from the fiscal stimulus, from folks who save money, and people wanting to get out,” said Tom Martin, senior portfolio manager at GLOBALT Investments. “So the tricky part is going to be figuring what level of interest rates will be supportive of stock prices either hanging in there and going higher or what level of inflation or interest rates will then start to become a worry for the market in terms of valuation.”

Asia-Pacific Markets

Asian benchmark stocks opened lower in early Thursday trade and looked set for sideways trade, as lingering pandemic concerns pushed against stronger economic data, and with little firm direction from Wall Street

Chinese stocks jumped after reopening for the first time after the Lunar New Year break on Thursday, poised to close at a new record high

Japan’s Nikkei 225 added 0.12% to 30,327 and Topix 500 dropped -0.67% to 1,519

South Korea’s Kospi dropped -0.55% to 3,116

In Hong Kong, Hang Seng dropped -0.25% to 31,006 and Hang Seng China Enterprises dropped -0.17% to 12,209

In China, CSI 300 climbed 1.51% to 5,895 and Shanghai Composite advanced 1.32% to 3,703, after opening for the first time post the Lunar New Year break

Even though the Chinese equity benchmark is trading at its highest valuation in nearly 6-years, traders remain bullish about the market, driven by strong corporate earnings, ample cash in China’s financial system and low borrowing costs

Australia’s S&P/ASX 200 added 0.06% to 6,889

Amazon.com has acquired Selz, a Sydney-based e-commerce platform that helps small businesses create their own websites much the way Shopify Inc. does

The acquisition signals Amazon’s interest in letting small businesses use their own websites rather than trying to direct all their traffic to its marketplace, where merchants pay commissions on each sale as well as delivery fees. Shopify is popular among many online sellers because the Canadian company gives them more control over the customer experience

China’s fourth-quarter current-account figures will be released on Friday. Net foreign exchange settlements data for January will be closely watched after the very strong spike in corporate conversion rates in December

EU Markets

European equities retreated from near one-year highs on Wednesday trade, as concerns over a possible spike in inflation and rising bond yields prompted a pullback in risk-driven assets

The pan-European Stoxx Europe 600 dropped -0.74% to 414 and Stoxx 50 dropped -0.66% to close at 3,701

Germany’s DAX30 dropped -1.08% to 13,912

London’s blue-chip FTSE 100 dropped -0.56% to 6,710

France’s CAC40 dropped -0.36% to 5,765

Denmark’s OMX Copenhagen 20 dropped -0.15% to 1,509

Spain’s IBEX 35 dropped -0.40% to 8,121

Italy’s FTSE MIB dropped -1.16% to 23,168

Among individual companies, Swedish cloud computing services provider Sinch AB topped the STOXX 600 after it agreed to buy U.S. based communications company Inteliquent for $1.14 billion

Annual inflation rate in the U.K. edged up to 0.7% in Jan 2021 from 0.6% in Dec 2020, slightly above market forecasts of 0.6%, as the country was under a coronavirus lockdown. Furniture and household goods (12% vs -0.7%) had the largest upward contributions. On a monthly basis, consumer prices fell -0.2%, less than forecasts of -0.4% slump

Construction output in the Euro Area contracted 2.3% from a year earlier in Dec 2020, a fourth consecutive month of decline. On a monthly basis, construction output fell -3.7%, compared to a 2.3% advance in November

“Whether the low-rate regime lasts will depend not only on monetary policy but on the perceived safety of government bonds. Markets may eventually demand a higher premium for government bonds, even if central banks are more tolerant of higher inflation,” analysts at Blackrock Investment Institute said

Oil & Natural Gas Markets

Crude-oil prices reversed earlier sluggishness in early Thursday trade, as Saudi Arabia plans to reverse recent big production cuts when oil producers meet on March 4th amid a recovery in prices but the OPEC+ alliance is expected to maintain curbs

Prices are also driven by an Arctic blast in the U.S., and backwardation

WTI Crude is trading higher at $61.86 per barrel

Brent Crude, the international benchmark for oil, is trading higher at $65.16 per barrel

Natural Gas futures increased to $3.241/MMBtu

Commodities Markets

Gold futures came under renewed selling pressure in early Thursday trade, as the dollar strengthened and U.S. Treasury yields remained elevated

However, the inflationary risks posed by record-high debt levels should drive prices higher in the long-run

U.S. Gold futures (Comex) is trading lower at $1,780 an ounce

Silver futures (Comex) is trading higher at $27.28 an ounce

Gold / Silver Ratio has climbed down to $65.18

Copper futures (Comex) jumped to their highest since 2012 to $3.8740 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 $164.00 per tonne

In India, Spot Gold is trading at INR 46,171 per 10 grams

Currency Markets

U.S. dollar index, DXY eased to 90.89 in early Thursday trade, after its first back-to-back gains in two weeks as upbeat data bolstered expectations for the U.S. to recover from the pandemic faster than most of its peers

INR weakened with USD / INR at 72.8300

JPY weakened with USD / JPY at 105.8400

CNY weakened with USD / CNY at 6.4582

EUR weakened with EUR / USD at 1.2035

GBP strengthened with EUR / GBP at 0.8694

GBP weakened with GBP / USD at 1.3844

“I think the dollar’s downtrend is over. At the start of the year, speculators were betting on a fall in the dollar below 100 yen. They seem to have abandoned such a view now,” said Yukio Ishizuki, senior strategist at Daiwa Securities

*3-Month LIBOR Rate*	*As on 17 Feb 2021*
US DOLLAR	0.19 per cent
Euro	– 0.55 per cent
British Pound	0.05 per cent
Swiss Franc	– 0.75 per cent
Japanese Yen	– 0.08 per cent

Bitcoin

Bitcoin / U.S. Dollar added 0.02% in early Thursday trade to $52,159 as of 07:30 a.m. I.S.T.

MasterCard suggested some cryptocurrencies could soon be used to transact on its network, following a similar move by PayPal last year

MicroStrategy boosted its convertible debt sale to buy Bitcoin by nearly half and cut the coupon to 0%, making it virtually a straight bet on the price of world’s largest cryptocurrency. The enterprise software company began buying crypto last summer using corporate cash, before issuing debt in December to amplify its bet past $1 billion. That stake has since tripled, as Bitcoin rallied 350% since it announced its first purchase on Aug. 11. MicroStrategy shares have surged over 600% since

“There are a number of reasons why Bitcoin is soaring, but what stands out most is the trend that MicroStrategy started and Tesla popularised: moving institutional balance sheets into Bitcoin to hedge against inflation,” said Nicholas Pelecanos, head of trading at NEM

Bond Markets

Americas : 10 – Year Govt Bond Yields

United States : 1.26%
Canada : 1.10%

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

Germany : -0.37%
United Kingdom : 0.57%
France : -0.13%
Italy : 0.58%
Netherlands : -0.24%

Asia Pacific : 10 – Year Govt Bond Yields

India : 6.16%
Japan : 0.09%
Australia : 1.40%
Hong Kong : 0.86%
Singapore : 1.17%
South Korea : 1.86%

Fund Flows on NSE, BSE and MSEI — 17 Feb 2021

FII/FPI Net Buy Rs 1,008.20 Crore in Capital Market

DII Net Sell Rs (1,283.38) Crore in Capital Market

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