Finance - Stock Market Forecast

Index Trend & Conditions – 07:15 a.m. I.S.T.

• Resistance for Nifty 50 is seen at 14,435 — 14,465 and 14,590. For Monday, Jan 25, Support area is seen at 14,270 14,190 and 14,125

• Support levels for Bank Nifty are at 30,870 — 30,750 and 30,275 with Resistance at 31,535 31,775 and 32,600

• The MSCI Asia Pacific ex-Japan is trading higher 0.38%, and the MSCI Emerging Market index is up 0.27%

• Trends on SGX Nifty looked poised for a gap-up opening for Nifty 50 in India. The Nifty futures are trading 115 points, or 0.80% higher at 14,470 on the Singaporean Exchange at 07:15 a.m. I.S.T.

• U.S. equity futures rose in early morning trade with Nasdaq, S&P 500 and Dow Jones futures trading in green, alongside a mostly positive start to Asia-Pacific early Monday trade with stocks witnessing pressure; a positive MSCI Asia-Pacific ex-Japan index; U.S. Dollar Index drifting higher to 90.268 with 10-Year Treasury Yield remaining steady and Gold futures sliding to $1,854 on the day indicate a stable-to-positive outlook for Nifty 50 India

India Markets

NIFTY 50	OPEN	HIGH	LOW	CLOSE
Friday	14,583	14,619	14,357	14,371

India’s equity benchmarks slipped for second day from record highs on Friday trade, owing to profit-booking

The blue-chip NSE Nifty 50 index dropped 218 points, or -1.50%, to 14,371 and the benchmark S&P BSE Sensex fell 746 points, or -1.50%, to 48,878

Broader markets mostly out-performed their headline peers — Midcap 100 index dropped -1.22% ; Smallcap 250 index dropped -0.69% and Nifty 500 dropped -1.34%

Strategy based indices also under-performed benchmark indices — Nifty Alpha 50 dropped -1.17% and Nifty Alpha Low Volatility 30 dropped -1.26%

Nifty P/E for Jan 21, 2020 decreased to 38.86 from 39.41, and Nifty P/B edged lower to 4.07 from 4.13, as recorded by NSE India

Bank Nifty opened positive and moved up towards 33,000 level in the first leg of the session, however the upward momentum collapsed post 1330 hours. The index dropped 1,019 points, or -3.17%, to 31,167

India VIX or Fear gauge gained 1.09% from 22.18 to 22.42 levels

Volatility needs to cool down below 20 level to commence a fresh leg of rally at record highs. However, volatility could be comparatively higher ahead of Budget 2021

Overnight Call Money rate weighted average stood at 3.18% as per RBI data. It moved in a range of 1.90 — 3.50% for Jan 21

Yield on the benchmark 10-year government bond decreased to 5.91%, while the rupee appreciated to 72.9760 per U.S. dollar

India’s federal budget presentation is due on February 1

RBI has proposed tighter regulations for large shadow lenders to prevent events such as the collapse of a major financier in 2018, the effects of which still linger in the nation’s financial system. The central bank suggests classifying so-called non-bank financial companies into four categories based on parameters including the size of assets, according to a discussion paper released Friday. It proposes imposing a 9% core capital requirement on the top tier – just like banks – and they will be allowed to take on only limited leverage

• All shadow banks are to classify credit as non-performing assets that are 90 days overdue, down from 180 days currently for the smallest non-bank financiers
• Middle layer non-bank lenders follow a board-approved policy on capital adequacy
• Upper layer shadow financiers follow exposure rules on big borrowers akin to that followed by banks
• Compulsory rotation of statutory auditors for shadow banks in medium and upper layer

RBI has rejected all bids for the 80 billion rupees ($1.1 billion) of 5.85% 2030 bonds it had sought to sell, according to a statement Friday. It also asked underwriters to pick up nearly all of the 110 billion rupees of the 5.15% 2025 bonds. In all, the central bank sold 209.2 billion rupees of bonds versus 270 billion rupees planned. The delay in announcing an open market purchase earlier in last week saw yields rise, after which RBI came in with a 100 billion rupee buy program and probably also bought debt in the secondary market

India will administer homegrown coronavirus vaccine Covaxin in seven more states from Monday as it seeks to inoculate 30 million healthcare workers across the country

“The emergence of a sharp selling pressure in a very short span of time (without showing reasonable upside bounce or non-consumption of sufficient trading days) hint that the market could be poised for deep correction from here. Long positions need to be cautious,” said Nagaraj Shetti of HDFC Securities

America Markets

https://images.wsj.net/im-289008?width=1260&size=1.5

U.S. stocks wobbled on Friday trade, but managed to post weekly gains after closing at all-time highs, as investors grew anxious that the virus will hamper growth for longer than expected and Democrats may struggle to get a nearly $2 trillion spending bill through Congress

Oil’s slump dragged energy companies lower

The broad-based S&P 500 lost 6 points, or -0.17%, to 3,846

Financial and technology stocks weighed the most on the S&P 500, with IBM and Intel posting -10% and -9% declines respectively after underwhelming earnings

The Dow Jones Industrial Average, composed mostly of cyclical stocks, fell 123 points, or -0.4%, to 31,052

The tech-heavy Nasdaq Composite Index added 11 points, or 0.08%, to 13,542

U.S. equity futures increased in early Monday trade. S&P500 futures is up 0.33%; Dow Jones futures is up 0.24% and Nasdaq futures is up 0.57%

10-year U.S. Treasury yields were little changed at 1.09% on the day as dollar drifted higher to 90.26

The Cboe Volatility Index, known as Wall Street’s “fear gauge,” rose 2.77% to 21.91 on Friday

Federal Reserve policy makers will hold their first meeting of 2021 this week, to evaluate the impact of the fiscal shift on the economic outlook amid rising Treasury yields and a stock market pushing to new record highs

The IHS Markit Manufacturing PMI for the U.S. jumped to 59.1 in January of 2021 from 58.3 in December and well above market forecasts of 56.5. The reading pointed to a record expansion in factory activity, preliminary estimates showed

Bank of America strategists warned the “extreme rally” on Wall Street that has pushed stocks to record highs, fueled by strong U.S. policy stimulus, is forming a bubble in asset prices. The strategists predict a market correction and for positioning to peak in the first quarter, with the BofA Bull & Bear Indicator closing in on a “sell signal.” BofA expects the Fed balance sheet to reach 42% of U.S gross domestic product this year, while predicting the country’s budget deficit will hit 33% of GDP

President Biden is expected to fulfill a campaign pledge Monday by detailing his “Buy American” plan, an initiative that will be watched closely by other countries mindful of another of his promises — to mend fences with trading partners

In Latin America’s largest economy, minutes of the Brazilian central bank’s Jan. 19-20 meeting data this week to show multiple inflation readings, the current account, unemployment, government debt and budget balances.

On the virus front, U.S. neared 25 million total infections, which would be about 8% of the country’s total population

“The virus numbers are not good right now obviously around the world, especially in the U.S. and in Europe, and we’re also getting a little bit more question about how much of the stimulus is actually feasible and what’s the timeline,” Scott Ladner, chief investment officer at Horizon Investments, said by phone. “Those two things are putting just a damper on the enthusiasm that has existed since November.”

“Recent news flow on the pandemic has not been favorable,” said Jean-Francois Paren, global head of market research at Credit Agricole. “After the post-election wave of optimism from the U.S., markets have been left facing the reality of vaccine delivery and new lockdown measures, and the perspective of a double-dip in Europe.”

Asia-Pacific Markets

Asian benchmark stocks looked under pressure as they inched higher in early Monday trade, with rising Covid-19 cases and doubts over the ability of vaccine makers to supply the promised doses on time souring risk appetite

Japan’s Nikkei 225 added 0.43% to 28,751 and Topix 500 added 0.15% to 1,448

South Korea’s Kospi added 1.27% to 3,178

In Hong Kong, Hang Seng added 0.85% to 29,706 while Hang Seng China Enterprises added 0.82% to 11,760

In China, CSI 300 added 0.09% to 5,569 and Shanghai Composite dropped -0.05% to 3,605

Australia’s S&P/ASX 200 added 0.39% to 6,827

Overall, MSCI Asia-Pacific, is down -0.69%

South Korea releases GDP figures on Tuesday that are expected to show the economy escaping much of the scarring that has hit other countries during the pandemic

Hong Kong and Taiwan to release GDP data on Friday

Meanwhile in Japan, a clutch of data at the end of the week will show how the economy was holding up before it entered its renewed state of emergency

China overtook the U.S. as the world’s top destination for new foreign direct investment last year, as the Covid-19 pandemic amplifies an eastward shift in the center of gravity of the global economy. New investments by overseas businesses into the U.S., which for decades held the No. 1 spot, fell -49% in 2020, the United Nations Conference on Trade and Development said. China, long ranked No. 2, saw direct investments by foreign companies climb 4%. Foreign direct investment captures things like foreign companies’ building new factories or expanding existing operations in a country or their acquisitions of local companies. In the West, the European Union suffered a 71% drop. Germany, which has fared better on both counts, saw a 61% drop

“The pandemic seems to continue to expand into a second wave in China, with infections rising by the day and reaching again different regions such as Shanghai,” said Rystad Energy oil markets analyst Louise Dickson

EU Markets

European equities fell for the second-straight week on Friday trade, as a gauge of private-sector activity in the euro region fell deeper into contraction and Germany cut its forecast for economic growth

Travel and leisure stocks fell -2.5%, leading declines among sectors amid concerns over fresh travel restrictions in Europe. Other economically sensitive sectors like banks, oil & gas and mining shed more than -1%

The pan-European Stoxx Europe 600 dropped -0.66% to 407 and Stoxx 50 also dropped -0.44% to close at 3,602

Germany’s DAX30 dropped -0.24% to 13,873

London’s blue-chip FTSE 100 dropped -0.30% to 6,695

France’s CAC40 dropped -0.56% to 5,559

Denmark’s OMX Copenhagen 20 dropped -0.20% to 1,482

Spain’s IBEX 35 dropped -1.06% to 8,036

Italy’s FTSE MIB dropped -1.52% to 22,088

IHS Markit’s flash composite Purchasing Mangers’ Index (PMI) for the euro zone fell further below the 50 mark separating growth from contraction, hitting 47.5 in January from December’s 49.1

A European Central Bank survey showed the euro zone economy is likely to rebound this year – but at a slower pace than expected only a few months ago – before making up the lost ground in 2022

Data from France and Spain will likely confirm their economies ended 2020 with another contraction later this week. Germany, which will also publish GDP data. The ECB expects the euro zone’s economy to shrink in the 4th-quarter, putting the region on the verge of its second recession in a year

On the virus front, U.K.’s health minister warned that coronavirus vaccines may be less effective against new variants of the disease. France may go into another lockdown within days to halt the spread of a potentially deadlier strain that emerged in Britain last year

“The new variant I really worry about is the one that’s out there but hasn’t been spotted,” he said, adding that the U.K. is offering its genome-sequencing capability to other countries to help them identify new strains. There are 77 known cases of the South African variant in Britain, and at least 9 cases of the Brazilian variant. There is early evidence that the lockdown is starting to bring cases down but we are a long, long, long way from being low-enough,” said Matt Hancock, Secretary of State for Health and Social Care.

Oil & Natural Gas Markets

Crude-oil is steady in early Monday trade, as weaker economic data in Japan and Europe pointed to the long road ahead for a consumption recovery

JPMorgan Chase & Co. cut demand estimates for China as lockdowns spread, while the U.K. suffered its worst day of the pandemic on Wednesday

WTI Crude is trading at $52.21 per barrel

Brent Crude is trading at $55.30 per barrel

Natural Gas futures is steady at $2.455/MMBtu

On MCX-India, Crude oil futures fell to 3,835 on Friday trade

On MCX-India, Natural gas futures fell to 179/MMBtu on Friday trade

Commodities Markets

Gold dropped earlier gains in early Monday trade, as the dollar drifted higher

U.S. Gold futures (Comex) is trading lower at $1,854 an ounce

Silver futures (Comex) is trading lower at $25.51 an ounce

Copper futures (Comex) is trading higher at $3.6245 per pound

SGX Iron-Ore futures is trading higher at $169.51 per tonne

In India, Spot Gold rose to INR 48,357 per 10 grams

Currency Markets

The U.S. dollar index, DXY drifted higher to 90.268 in early Monday trade after three straight days of losses, as bleak non-U.S. economic data gave global equity markets reason to pause after another week of record highs

INR strengthened with USD / INR at 72.9760

JPY weakened with USD / JPY at 103.8100

CNY weakened with USD / CNY at 6.4819

EUR strengthened with EUR / USD at 1.2170

GBP weakened with EUR / GBP at 0.8896

GBP weakened with GBP / USD at 1.3664

The British pound weakened after Johnson said the U.K.’s third lockdown could last into the summer

“Optimism gave way to renewed worry Friday as (coronavirus) infection rates rose in China and data across Europe offered evidence of the containment measures undermining recoveries,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington

*3-Month LIBOR Rate*	*As on 22 Jan 2021*
US DOLLAR	0.22 per cent
Euro	– 0.55 per cent
British Pound	0.03 per cent
Swiss Franc	– 0.77 per cent
Japanese Yen	– 0.07 per cent

Bitcoin

Bitcoin / U.S. Dollar rose 1.03% in early Monday trade to $32,673 as of 07:00 a.m. I.S.T.

Bitcoin tumbled as much as -11% in the New York Thursday morning, sliding below $31,000

Despite the selloff, Wall Street hasn’t lost interest in the new asset class. On Wednesday, BlackRock Inc. filed paperwork to add Bitcoin futures as an eligible investment in two funds, the first time the money manager is offering clients exposure to cryptocurrency

“Bitcoin has already achieved the fastest-ever price appreciation of any must-have asset,” wrote JPMorgan Chase & Co. strategists John Normand and Federico Manicardi in a report on Thursday. “Current prices are so far above production costs that mean-reversion lower in returns is a recurring concern.”

Bond Markets

Americas : 10 – Year Govt Bond Yields

United States : 1.09%
Canada : 0.86%

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

Germany : -0.50%
United Kingdom : 0.33%
France : -0.28%
Italy : 0.65%
Netherlands : -0.44%

Asia Pacific : 10 – Year Govt Bond Yields

India : 5.91%
Japan : 0.01%
Australia : 1.06%
Hong Kong : 0.48%
Singapore : 1.01%
South Korea : 1.70%

Fund Flows on NSE, BSE and MSEI — 22 Jan 2021

FII/FPI Net Sell Rs (635.69) Crore in Capital Market

DII Net Sell Rs (1,290.35) Crore in Capital Market

Where We’ve Been Reading —