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

• Resistance zone for Nifty 50 is at 14,820 and 14,950 for this week. For Monday, Mar. 22, Support area is seen around 14,650 14,513 and 14,450

• Support levels for Bank Nifty is around 33,600 and 32,650—700; while Resistance zone is at 34,707 and 35,100—200 for Mar. 22

• The MSCI Asia Pacific ex-Japan is trading higher 0.20%, and the MSCI Emerging Market index is up 0.12%

• Trends on SGX Nifty look poised to start the week cautiously for Nifty 50 in India. The Nifty futures are trading 51 points, or -0.35% lower at 14,696 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 in red, while Nasdaq futures fluctuated in green territory; alongside a lower start in Asia-Pacific benchmarks gauges in early Monday trade with equities falling in Japan and South Korea; a positive MSCI Asia-Pacific ex-Japan index; U.S. Dollar strengthening to 92.15 with 10-Yr Treasury Yields sliding to 1.69%, just shy of the highest levels in about 14-months and Gold futures slipping to $1,736 an ounce indicate a mixed and volatile outlook amid channel-wise resistance

• Current Bearish movers in India’s markets are — double top creation at 15,400 level for Nifty; Negative divergence on MACD indicator; Nifty breaking Day EMA of 3, 8, 21 and currently taking support from 50-day; Nifty P/E above 40 indicating high valuations; contraction in India’s Industrial Production in Jan-Feb; Rising crude oil prices; Souring sentiments from staggered lockdowns in Maharashtra and Reverse repo rate below 5 lakh crores indicating lower surplus liquidity

• BofA data showed on Friday, Mar. 19 that investors put a record $68.3 billion into equity funds in the week to Mar. 17, even as a spike in govt. bond yields sent the high-flying Nasdaq index reeling

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India Markets

India’s equity benchmarks pushed higher on Friday trade, snapping their five-session losing streak amid high volatility, as investor sentiment was soothed by a pullback in U.S. Treasury yields from 14-month highs

The blue-chip NSE Nifty 50 index added 186 points or 1.28% to 14,744 and the benchmark S&P BSE Sensex added 642 points or 1.30% to close at 49,858

Nifty ended up forming a ‘Piercing Line’ pattern on the daily chart and a ‘Hammer’ candle on the weekly chart. ‘Piercing Line is a bullish reversal pattern formed at the lows and signals reversals of short-term bottom. Meanwhile, the index has broken out of the falling channel on the hourly chart

Broader markets under-performed headline peers — Midcap 100 index added 1.22%; Smallcap 250 index added 0.44% and Nifty 500 added 1.15%

Nifty P/E for Mar 19 increased to 40.16 from 39.65 with Nifty P/B rising to 4.18 from 4.13, as recorded by NSE India

Bank Nifty opened with a gap down, but the bulls were able to show strength and pulled the index above the 34,000 mark. It formed a bullish candle on the daily scale after a series of weak sessions and has to now negate the formation of lower highs of last five sessions to trigger short covering. The index added 304 points, or 0.90%, to settle at 34,161

India VIX or the barometer of nervousness in the market, slipped marginally -0.46% from 20.08 to 19.98 levels

VIX needs to cool down below 20 level for the bullish grip to continue and smoothen the move in the market. A lower VIX with a rising Put-Call Ratio indicate that the bulls may get some stability after losing ground over the past few sessions

Overnight Call Money rate weighted average stood at 3.26% as per RBI data. It moved in a range of 1.90 — 3.50% for Mar 18

Under Liquidity Operations by RBI, Reverse Repo for the week (Mar 8 to Mar 14) stood below 5 lakh crores, marking lower surplus liquidity in the market compared to 7 lakh crores, 3-months earlier

Yield curve on the benchmark 10-year government bond steepened to 6.19%, highest level this fiscal, while the rupee strengthened to 72.4020 per U.S. dollar

Govt. raised Rs 33,000 crore in its scheduled weekly auction on Friday, with weighted average yields hitting the roof at 6.19. The green shoe option was exercised in case of two instruments, having a maturity of five years and 10 years

This take the total market borrowings so far in March to 90,233 crore rupees and the total amount raised so far this year to Rs 13.4 lakh crore rupees, which is 89% higher than the year-ago period and 96% of the revised target for the year

In Jan. 2021, RBI continued to remain net buyer of the U.S. dollar by purchasing $18.225 billion and selling $15.371 billion in the spot market, the RBI said in its monthly bulletin for March 2021. In Dec., RBI net purchased $3.991 billion from the spot market

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America Markets

Nasdaq ended higher on Friday trade, lifted by Facebook and energy shares, while the S&P 500 lost ground as U.S. Treasury yields took a break from a recent surge

The broad-based S&P 500 gained 8 points, or 0.22%, to 3,923

The Dow Jones Industrial Average, composed mostly of cyclical stocks, fell 130 points, or -0.4%, to 32,731

The tech-heavy Nasdaq Composite Index added 120 points, or 0.92%, to 13,236

For the week, the S&P 500 and Nasdaq fell -0.8%, while the Dow lost -0.5%

U.S. equity futures opened lower in early Monday trade. S&P500 futures is down -0.17%; Dow Jones futures is down -0.24% and Nasdaq futures is up 0.06%

10-yr U.S. Treasury yields, which move inversely to the price, slid to 1.69% from 1.72% in early Monday, with dollar strengthening to 92.15

The Cboe Volatility Index, known as Wall Street’s “fear gauge,” fell -2.92% to 20.95 on Friday

Fed announced that the temporary change to the supplementary leverage ratio for banks will expire as scheduled on March 31. The Fed exempted Treasurys and reserves from capital requirements a year ago in the midst of the market turmoil triggered by the initial pandemic-related economic shutdown. The exemption also in theory freed up capital that banks could use to make loans to businesses and households

Markets have been consumed by moves in U.S. bond yields, with investors still digesting the Fed’s meeting earlier this week. The central bank said it expects higher economic growth and inflation in the U.S. this year, although it repeated its pledge to keep its target interest rate near zero

“Clearly, the market is skeptical that the Fed will be able to keep interest rates at current levels for the next three years,” Diana Mousina, senior economist in the multi-asset group at AMP Capital Investors Ltd., said in a note. “We think that nominal bond yields can still shoot higher in the short-term towards 2% and above on inflation concerns. Markets are likely to worry that this move is permanent, rather than temporary.”

“Banks have had such a significant up move this year and this news has only acted as a catalyst for profit taking,” said Art Hogan, chief market strategist at National Securities in New York

“Ultimately, what we’re seeing now is a great deal of tension between market prices that embed several rate hikes before the end of 2023 and the Fed’s forecast that doesn’t expect lift-off until 2024,” said Ryan Swift, U.S. bond strategist at BCA Research in Montreal.

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Asia-Pacific Markets

Asian benchmark stocks started the week mostly lower in early Monday trade with investors fretting over bond yields and inflation as economic activity picks up

Equity benchmarks opened lower in Japan and South Korea, while climbing in Hong Kong, China and Australia

Japan’s Nikkei 225 fell -2.24% to 29,129 and Topix 500 dropped -1.46% to 1,541

South Korea’s Kospi dropped -0.54% to 3,023

In Hong Kong, Hang Seng added 0.25% to 29,057 and Hang Seng China Enterprises added 0.64% to 11,358

In China, CSI 300 added 1.27% to 5,070 and Shanghai Composite added 0.92% to 3,436

Australia’s S&P/ASX 200 added 0.38% to 6,733

The Turkish lira slumped as much as 15% in early Asian trading after President Recep Tayyip Erdogan removed the central-bank governor following a sharper-than-expected hike in interest rates

The Bank of Japan unveiled a set of carefully crafted policy tweaks aimed at giving itself more flexibility to keep up its long quest to revive inflation. At a press briefing, Governor Haruhiko Kuroda reiterated that the BOJ’s existing framework was the right one for the job of lifting prices in Japan and shouldn’t be written off because the 2% goal has yet to be reached.

While leaving its main policy rates unchanged, key short-term interest rate unchanged at -0.1%, BOJ said the band around its 10-year bond yield target was around 0.25% either side of zero. Policymakers removed their explicit guidance to buy ETF at an annual pace of roughly JPY 6 trillion, saying they would buy it when necessary and maintain a JPY 12 trillion ceiling for annual purchases. The BoJ also mentioned that it would allow long-term rates to move up and down by 0.25% from its target, instead of by 0.2%

Saudi Aramco plans to “expand and intensify” cooperation with China on research in areas including blue hydrogen and ammonia, synthetic fuels and carbon capture utilization and storage, according to Chief Executive Officer Amin Nasser

Economic data released last week by China’s National Bureau of Statistics showed industrial production, consumption, investment and home sales in Jan and Feb all jumping by more than 30% from the same period a year earlier. Industrial output in the Jan-Feb period rose 35.1% YoY while retail sales, a major gauge of China’s consumption, expanded 33.8% over that same time frame, exceeding economists’ expectations

“The BOJ is trying hard to strike a balance on a very tight rope between side effects and the need to continue easing,” said Tetsufumi Yamakawa, head of Japan economic research at Barclays PLC and a former BOJ official. “Even though its easing commitment is clear, by trying to reduce the side effects of stimulus, the BOJ clearly differs from the Fed and the ECB.”

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EU Markets

European equities slid on Friday trade, after France imposed fresh regional lockdowns to curb the spread of the coronavirus, amid concern over the pace of vaccination campaigns in some countries, while bank stocks led sectoral declines

The pan-European Stoxx Europe 600 dropped -2.11% to 418 and Stoxx 50 dropped -0.79% to close at 3,837

Automakers fell -1.6% after a strong run, ending with the sector’s best weekly performance since early February. The banks index tumbled 2.3%, posting the biggest declines among European sectors on Friday

Germany’s DAX30 dropped -1.05% to 14,621

London’s blue-chip FTSE 100 dropped -1.05% to 6,708

France’s CAC40 dropped -1.07% to 5,998

Denmark’s OMX Copenhagen 20 added 0.02% to 1,440

Spain’s IBEX 35 dropped -1.53% to 8,493

Italy’s FTSE MIB dropped -0.66% to 24,199

Sweden’s OMX Stockholm 30 dropped -0.50% to 2,169

U.K. government borrowing totaled 19.1 billion pounds ($26.6 billion) in Feb, reflecting the cost of supporting the economy through a third lockdown to fight the coronavirus. The shortfall left the budget deficit for the first 11 months of the fiscal year at 278.8 billion pounds, almost six times the amount borrowed in the same period a year earlier. Net debt climbed to 97.5% of GDP, near the highest since the early 1960s. Spending in February surged 25%, boosted by pay subsidies for furloughed workers totaling 3.8 billion pounds. The combined cost of the furlough program and pay support for self employed workers now amounts to almost 77 billion pounds

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

“We have had such a strong period of news-flow and catalysts on the positive end that now that a lot of those have largely been put into the market, we are now a little bit more susceptible to negative news causing big drawdowns,” said Mark Hackett, chief of investment research at Nationwide

“The new lockdown will have a significant impact on economic activity and further deteriorate France’s economic outlook for the first part of 2021,” said Charlotte de Montpellier, economist, France and Switzerland, at ING. “The current slow pace of the vaccination campaign leaves little hope for a full lifting of the restrictions after the end of the 4-week lockdown.”

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Oil & Natural Gas Markets

Crude-oil prices fell in early Monday trade

Oil prices gained after falling 7% in Thursday, when a new wave of coronavirus infections across Europe dampened expectations of any imminent recovery in fuel demand

WTI Crude is trading at $60.62 per barrel

Brent Crude, the international benchmark for oil, is trading at $63.68 per barrel

Natural Gas futures is trading lower at $2.549/MMBtu

The dollar’s rise has also contributed to the oil sell-off. A stronger dollar makes oil more expensive for holders of other currencies

“A best-case scenario for demand recovery had been priced into this market. Everyone was celebrating the vaccine rollout and reduced restrictions,” said John Kilduff, partner at Again Capital LLC in New York. “Now in Europe, its gone off the rails almost completely. Lockdowns in Poland and Italy strike at the heart of this whole demand recovery narrative and thesis that pumped up prices.”

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Commodities Markets

Gold futures slipped in early Monday trade, on the back of strengthening dollar

Gold had scored secondly weekly gains on Friday, as U.S. Treasury Yields dipped and dollar eased off session highs

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 $1,736 an ounce

Silver futures (Comex) is trading at $25.78 an ounce

Gold / Silver Ratio rose to $67.31

Copper futures (Comex) is trading lower at $4.0920 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 fell to $165.60 per tonne

In India, Spot Gold is trading at INR 45,144 per 10 grams

“On the technical front, in the near term gold faces resistance around the $1,765/oz level,” said Standard Chartered analyst Suki Cooper.

“The expected growth prospects, continuation of the relatively low interest rate environment does bring about some fears of inflation, which is gold supportive,” said David Meger, director of metals trading at High Ridge Futures.

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Currency Markets

U.S. dollar index, DXY extended upside momentum to 92.15 in early Monday trade, after the Federal Reserve announced it will let the leverage ratio for big banks expire Mar 31, with Treasury yields briefly spiking after the announcement before trading around 14-month highs

INR weakened with USD / INR at 72.5900

JPY strengthened with USD / JPY at 108.8800

CNY weakened with USD / CNY at 6.5090

EUR weakened with EUR / USD at 1.1904

GBP weakened with EUR / GBP at 0.8583

GBP weakened with GBP / USD at 1.3872

3-Month LIBOR Rate	As on 19 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

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Bitcoin

Bitcoin / U.S. Dollar fell -1.27% in early Monday trade to $56,635 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,” 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.”

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Bond Markets

Americas : 10 – Year Govt Bond Yields

United States  :  1.69%    
Canada  :  1.59%

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

Germany  :  -0.30%
United Kingdom  :  0.83%
France  :   -0.05%
Italy : 0.66%
Netherlands  : -0.16%

Asia Pacific : 10 – Year Govt Bond Yields

India  :   6.19%
Japan  :  0.10%
Australia : 1.80%
Hong Kong : 1.13%
Singapore : 1.57%      
South Korea : 2.12%

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Fund Flows on NSE, BSE and MSEI — 19 Mar 2021

FII/FPI Net Buy Rs 1,418.43 Crore in Capital Market

DII Net Buy Rs 559.62 Crore in Capital Market

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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