Index Trend & Conditions – 07:15 a.m. I.S.T.
• Resistance zone for Nifty 50 is at 14,660 and 14,790. For Friday, Mar. 19, Support area is seen around 14,470
• Support levels for Bank Nifty is around 33,750—700; while Resistance zone is at 34,725 and 35,100—200 for Mar. 19
• The MSCI Asia Pacific ex-Japan is trading lower -0.71%, and the MSCI Emerging Market index is down -0.62%
• Trends on SGX Nifty look poised for a gap-down opening for Nifty 50 in India. The Nifty futures are trading 71 points, or -0.46% lower at 14,528 on the Singaporean Exchange at 07:15 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 lower start in Asia-Pacific benchmarks gauges in early Friday trade with equities falling in Japan, South Korea, Hong Kong, China and Australia; a negative MSCI Asia-Pacific ex-Japan index; U.S. Dollar strengthening to 91.91 with 10-Yr Treasury Yields peaking to 1.71% after investors’ re-evaluation of Fed’s projections for growth of 6.5% for 2021 and Gold futures slipping to $1,728 an ounce indicate a mixed and volatile outlook amid channel-wise resistance
• The current mood in the market is bracing and non-committal
• Inflation concerns are rattling investors once again, fueling a selloff in U.S. bonds and sending Nasdaq futures sharply lower — seems like an environment to favor value stocks over growth stocks
India Markets
| NIFTY 50 | OPEN | HIGH | LOW | CLOSE |
|---|---|---|---|---|
| Thursday | 14,946 | 14,956 | 14,696 | 14,557 |
India’s equity benchmarks dropped for the fifh straight session on Thursday trade, as selling pressure emerged at every bounce and the market turned weak
The blue-chip NSE Nifty 50 index fell 163 points or -1.11% to 14,557 and the benchmark S&P BSE Sensex dropped 585 points or -1.17% to close at 49,216
Broader markets under-performed headline peers — Midcap 100 index dropped -1.37%; Smallcap 250 index dropped -1.43% and Nifty 500 dropped -1.18%
Nifty P/E for Mar 18 declined to 39.65 from 40.10 with Nifty P/B staying dropping to 4.13 from 4.17, as recorded by NSE India
Bank Nifty opened positive, but banking stocks failed to hold and the index breached the 33,600 mark. The index dropped 370 points, or -1.09%, to settle at 33,856
India VIX or the barometer of nervousness in the market, fell -0.38% from 20.15 to 20.08 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 3.25% as per RBI data. It moved in a range of 2.10 — 3.50% for Mar 17
Yield curve on the benchmark 10-year government bond steepened to 6.40%, while the rupee eased to 72.5900 per U.S. dollar amid lack of triggers and geopolitical uncertainties
Gautam Adani’s group signed a $1.35 billion agreement with 12 global banks to fund the Indian company’s under-construction renewable energy projects – including Standard Chartered, Sumitomo Mitsui Banking and Barclays. The facility is to initially finance a 1.69 GW hybrid portfolio of solar and wind renewable projects to be setup in the Indian state of Rajasthan
SBI Funds Management Pvt. is deploying funds in the overnight repo markets, Rajeev Radhakrishnan, head of fixed income, said in an interview earlier this week. The $63 billion asset manager has also been reducing duration in its debt funds
Some money managers turned wary of taking big positions in fixed-income in recent weeks, amid speculation that vaccine progress could add to inflationary pressure. In India’s case, higher oil prices are a particular risk given the country relies heavily on imports. A record government borrowing program has also pushed up yields
America Markets
U.S. stocks fell on Thursday trade, as shares of technology companies and other high-growth stocks succumbed to another selloff in the government bond market
Investors re-evaluated the broader implications Fed’s median projections for growth of 6.5% for 2021 will have on pockets of the market, sparking another round of selling of government bonds
The broad-based S&P 500 knocked off 58 points, or -1.5%, to 3,915, a day after clinching a fresh record
The Dow Jones Industrial Average, composed mostly of cyclical stocks, gave up an earlier gain to close down 153 points, or -0.5%, to 32,862
The tech-heavy Nasdaq Composite Index cooled down 409 points, or -3%, to 13,116
U.S. equity futures opened higher in early Friday trade. S&P500 futures is up 0.25%; Dow Jones futures is up 0.24% and Nasdaq futures is up 0.17%
10-yr U.S. Treasury yields, which move inversely to the price, peaked to 1.72% with dollar strengthening to 91.91
The Cboe Volatility Index, known as Wall Street’s “fear gauge,” rose 12.22% to 21.58 on Thursday
Americans have amassed around $1.7 trillion in savings during Covid that could be unleashed in a surge of “revenge spending” in the months ahead. Meanwhile, McKinsey & Co. says the rebound in consumer demand from the Covid-19 crisis looks set to be fast but uneven, with those who were able to save money over the past year in a strong position to spend
The number of Americans filing new claims for unemployment benefits unexpectedly rose last week, but the labor market is regaining its footing as an acceleration in the pace of vaccinations leads to more businesses reopening
Retail sales fell 3% in Feb, data from the Commerce Department showed. Economists had expected a pullback — though a smaller one — after a jump in spending at the start of the year. Feb tends to be a quiet month for retail sales and severe weather wreaked havoc over parts of the country last month
Building permits in the U.S. tumbled -10.8% MoM to a seasonally adjusted annual rate of 1.682 million in Feb., down from the previous month’s 15-year high of 1.886 million and below market expectations of 1.75 million
Housing starts in the U.S. sank -10.3% MoM to an annualized rate of 1.421 million in Feb., the lowest reading in six months and well below forecasts of 1.56 million. Housing starts reached the highest rate in 14 years in Dec., as people moved away from the big cities due to the coronavirus pandemic
“Rising real rates have created a hostile environment for longer-duration growth factors,” Jonathan White, head of investment strategy at AXA IM Rosenberg Equities, wrote in a note. “Looking ahead we continue to believe the environment should favor value stocks over growth stocks.”
“There’s always the concern the Fed will make a mistake — that’s always a worry,” said Gene Goldman, chief investment officer at Cetera Financial Group. “Everything is flashing inflation, but then the Fed is saying it’s going rise a little, but then it’s going to pull back.”
Asia-Pacific Markets
Asian benchmark stocks weakened after U.S. shares fell from a record in early Friday trade, after Treasury yields touched the highest levels in more than a year as the Federal Reserve’s tolerant stance on inflation unnerved investors
Equity benchmarks opened lower in Japan, South Korea and Australia
Japan’s Nikkei 225 fell -0.81% to 29,974 and Topix 500 dropped -0.50% to 1,553
South Korea’s Kospi dropped -1.00% to 3,034
In Hong Kong, Hang Seng dropped -0.81% to 29,168 and Hang Seng China Enterprises dropped -1.01% to 11,345
In China, CSI 300 dropped -0.33% to 5,141 and Shanghai Composite dropped -0.75% to 3,436
Australia’s S&P/ASX 200 dropped -0.09% to 6,739
Japan’s government bond yields rose on a Nikkei report that the Bank of Japan is considering widening the trading range around the 10-year target, which could spur concerns about policy tightening
Australia’s jobless rate tumbled in February as rising sentiment from a vaccine rollout combined with fiscal and monetary stimulus accelerated the economy’s recovery and returned employment to pre-pandemic levels – Unemployment in Feb dropped to 5.8% from a revised 6.3% in Jan
The Reserve Bank of Australia said last month it was extending its quantitative easing program by a further A$100 billion ($78 billion) and reiterated that it doesn’t expect to increase interest rates of 0.10% until 2024 to keep lower borrowing costs across the economy. That came on the heels of the government announcing tax cuts, incentives for firms to invest and hire and infrastructure projects to boost activity
RBA is also trying to keep a lid on a currency, which left unchecked could appreciate further and hurt exports and employment
Bank of Japan monetary policy decision and Governor Haruhiko Kuroda’s briefing is on Friday
EU Markets
European equities traded mostly higher on Thursday trade, boosted by lingering enthusiasm from the Fed’s outlook for stronger growth
Automakers and banks, which tend to outperform during cyclical upswings, were higher in Europe
The pan-European Stoxx Europe 600 added 0.42% to 426 and Stoxx 50 added 0.57% to close at 3,871
Germany’s DAX30 added 1.32% to 14,789
London’s blue-chip FTSE 100 added 0.25% to 6,779
France’s CAC40 added 0.13% to 6,062
Denmark’s OMX Copenhagen 20 added 0.21% to 1,440
Spain’s IBEX 35 added 0.29% to 8,624
Italy’s FTSE MIB added 0.08% to 24,281
The Bank of England voted unanimously to keep its benchmark interest rate on hold at a record low of 0.1% and to leave its bond-buying programme unchanged during its March 2021 meeting, saying the UK GDP was projected to recover strongly over 2021 towards pre-Covid levels and CPI inflation was expected to return towards the 2% target in the spring. Policymakers continued to envisage that the pace of government bond purchases could remain at around its current level, with flexibility to slow it later; but signaled that the central bank stood ready to increase the pace to ensure the effective transmission of monetary policy. The central bank also said it does not intend to tighten monetary policy at least until there is clear evidence that significant progress is being made in eliminating spare capacity and achieving the 2% inflation target sustainably
Hourly labor costs in the Euro Area advanced 3.0% YoY in Q4 2020, following an increase of 1.6% in the previous three-month period. Wages and salaries per hour worked grew by 3.5% and the non-wage component rose by 1.5%
ECB President Lagarde said that short-term inflation movement related to temporary factors of a transitory nature should not precipitate any particular move
CPI rate in the Euro Area was confirmed at 0.9% YoY in Feb, unchanged from the previous month’s 11-month high, boosted by increases in cost for services (1.2% vs 1.4% in Jan), non-energy industrial goods (1.0% vs 1.5%), and food, alcohol & tobacco (1.3% vs 1.5%). Meanwhile, the annual core inflation, which excludes volatile prices of energy, food, alcohol & tobacco and at which the ECB looks in its policy decisions, slowed to 1.1% in Feb., from 1.4% in Jan.
“The question remains whether the Fed can actually arrest the latest spike in U.S. Treasury yields, especially given that the improvement of U.S. fundamentals will continue,” said Valentin Marinov, head of research at Credit Agricole in London. “The renewed spike of yields should continue to support the dollar versus low-yielders like the euro, yen and the Swiss franc.”
Oil & Natural Gas Markets
Crude-oil prices slipped in early Friday trade, after U.S. crude stockpiles topped half a billion barrels and the International Energy Agency said global supplies are plentiful
The market for physical crude barrels in Asia is showing signs of weakness with muted buying from some in China leading to ample supply
WTI Crude is trading at $60.11 per barrel
Brent Crude, the international benchmark for oil, is trading at $63.45 per barrel
Natural Gas futures is trading lower at $2.484/MMBtu
“Short-term developments – stuttering vaccine rollouts and the build in U.S. oil inventories – are driving sentiment, but the longer-term oil outlook is still encouraging,” said PVM Oil Associates analyst Tamas Varga. “Yesterday’s U.S. Federal Reserve meeting provided a boost to equities. U.S. economic growth has been revised upwards while unemployment is expected to decline.”
Commodities Markets
Gold futures dropped in early Friday trade, as U.S. bond yields scale 14-month peak and a firmer dollar hammered its appeal
Some investors view gold as a hedge against higher inflation that could follow stimulus measures, but higher Treasury yields dull some of the appeal of the non-yielding commodity
U.S. Gold futures (Comex) is trading at $1,728 an ounce
Silver futures (Comex) is trading at $25.90 an ounce
Gold / Silver Ratio fell marginally to $66.68
Copper futures (Comex) is trading lower at $4.0750 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 $169.00 per tonne
In India, Spot Gold is trading at INR 44,909 per 10 grams
“Yesterday’s Powell comments on interest rates were very supportive for gold, but on the other side of the coin the fact that 10-year yields continue to rise has limited any upside in gold,” said Bob Haberkorn, senior market strategist at RJO Futures.
Currency Markets
U.S. dollar index, DXY climbed to 91.91 in early Friday trade, after initial jobless claims unexpectedly rose last week to the highest since mid-February
INR weakened with USD / INR at 72.5900
JPY weakened with USD / JPY at 108.9900
CNY weakened with USD / CNY at 6.5066
EUR weakened with EUR / USD at 1.1929
GBP strengthened with EUR / GBP at 0.8559
GBP weakened with GBP / USD at 1.3941
| 3-Month LIBOR Rate | As on 18 Mar 2021 |
| US DOLLAR | 0.19 per cent |
| Euro | – 0.55 per cent |
| British Pound | 0.08 per cent |
| Swiss Franc | – 0.76 per cent |
| Japanese Yen | – 0.08 per cent |
Bitcoin
Bitcoin / U.S. Dollar fell -1.12% in early Friday trade to $56,972 as of 07:00 a.m. I.S.T.
Bitcoin is seen by some as an appealing digital alternative to gold, or a potential refuge from inflation due to its limited supply
“Bitcoin is extremely sensitive to increased dollar demand,” the BofA strategists said in a note on Wednesday. “We estimate a net inflow into Bitcoin of just $93 million would result in price appreciation of 1%, while the similar figure for gold would be closer to $2 billion or 20 times higher. In contrast, the same analysis for the 20-year-plus Treasuries shows that multibillion money flows do not have a significant impact on price, pointing to the much larger and stable nature of the U.S. Treasuries markets.”
Bond Markets
Americas : 10 – Year Govt Bond Yields
United States : 1.71%
Canada : 1.64%
Europe, Middle East & Africa : 10 – Year Govt Bond Yields
Germany : -0.27%
United Kingdom : 0.87%
France : -0.02%
Italy : 0.68%
Netherlands : -0.14%
Asia Pacific : 10 – Year Govt Bond Yields
India : 6.40%
Japan : 0.10%
Australia : 1.78%
Hong Kong : 1.16%
Singapore : 1.57%
South Korea : 2.18%
Fund Flows on NSE, BSE and MSEI — 18 Mar 2021
FII/FPI Net Buy Rs 1,258.47 Crore in Capital Market
DII Net Sell Rs (1,116.17) 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
