Finance - Stock Market Forecast

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

• Resistance for Nifty 50 is seen at 14,125 14,190 and 14,275. For Thursday, Jan 28, Support area is seen at 13,765 — 13,745

• Support levels for Bank Nifty are at 29,450 and 28,890 with Resistance at 30,750 — 30,870 and 31,535

• The MSCI Asia Pacific ex-Japan is trading lower -0.99%, and the MSCI Emerging Market index is down -0.59%

• Trends on SGX Nifty looked poised for a negative start for Nifty 50 in India. The Nifty futures are trading 35 points, or -0.25% lower at 13,944 on the Singaporean Exchange at 07:30 a.m. I.S.T.

• U.S. equity futures mostly dropped in early morning trade with Nasdaq and S&P 500 futures trading in red while Dow Jones futures was up 0.13%, alongside a negative start to Asia-Pacific early Thursday trade with stocks falling in Japan, Hong Kong, South Korea, China and Australia; a negative MSCI Asia-Pacific ex-Japan index; U.S. Dollar holding overnight advances at 90.66 with 10-Year Treasury Yield hovering just over at 1% and Gold futures retreating to $1,836 on the day indicate a negative-to-stable outlook for Nifty 50 India

India Markets

NIFTY 50	OPEN	HIGH	LOW	CLOSE
Wednesday	14,237	14,237	13,929	13,967

India’s equity benchmarks tumbled on Wednesday trade, forming a “Bearish Belt Hold” candle pattern on the day chart as massive selling by FPI/FIIs dented sentiments in the cash markets

The blue-chip NSE Nifty 50 index dropped 271 points, or -1.91%, to 13,967 and the benchmark S&P BSE Sensex fell 937 points, or -1.94%, to 47,409

Broader markets out-performed their headline peers — Midcap 100 index dropped -1.58% ; Smallcap 250 index dropped -0.22% and Nifty 500 dropped -1.68%

Strategy based indices under-performed benchmark indices — Nifty Alpha 50 dropped -0.49% and Nifty Alpha Low Volatility 30 dropped -0.89%

Nifty P/E for Jan 27, 2020 decreased to 37.52 from 38.42, and Nifty P/B edged lower to 3.96 from 4.04, as recorded by NSE India

Bank Nifty opened flat and tumbled sharply below 30,200 level by breaking its 50 DMA in the latter part of the day. Selling pressure was seen across all banking stocks and the index closed with a loss of around 900 points. The index formed a bearish candle on the day scale, dropping 913 points, or -2.93%, to 30,284

India VIX or Fear gauge moved up 4.96% from 23.24 to 24.39 levels

A surge in volatility due to selling pressure ahead of Union Budget 2021 could keep the market volatile with limited upside potential

Overnight Call Money rate weighted average stood at 3.25% as per RBI data. It moved in a range of 1.90 — 3.50% for Jan 25

Yield on the benchmark 10-year government bond increased to 5.95%, while the rupee depreciated to 73.0010 per U.S. dollar

India’s federal budget presentation is due on February 1

India is planning to spend 3 trillion rupees ($41 billion) on a new plan to revive regional electricity retailers to make the sector more attractive to foreign investors. The spending would focus on upgrading infrastructure and technology of the ailing utilities to make them more efficient and reduce financial losses. The plan could include some specific measures such as separating power feeder grids for farmers and residential users, and installation of prepaid smart meters to stop pilferage and encourage timely payment, they said. It also plans to replace overhead cables with special insulated wires to prevent theft

Reliance Group has signed a $15 million deal with Israeli company Breath of Health to distribute the firm’s Covid-19 breath testing system. BOH is said to have developed a breath test system that identifies Covid-19 at a success rate of over 95%

America Markets

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

U.S. stocks suffered their sharpest one-day losses since October on Wednesday trade, on disappointing earnings from tech giants and concerns about valuations

The broad-based S&P 500 dropped 98 points, or -2.6%, to 3,750

The Dow Jones Industrial Average, composed mostly of cyclical stocks, fell 633 points, or -2.1%, to 30,303, extending its losing streak to five sessions

Boeing dragged on the Dow by falling -3.97% on a $6.5 billion charge for its delayed 777X jetliner and crash-plagued 737 MAX

The tech-heavy Nasdaq Composite Index lost 355 points, or -2.6%, to 13,270

Among individual tech companies, Apple shares fell after a cautious outlook from executives. Tesla reported lower-than-expected profit and record revenue, mixed results that disappointed investors. Facebook warned of “significant uncertainty” in 2021.

U.S. equity futures mostly dropped in early Thursday trade. S&P500 futures is down -0.02%; Dow Jones futures is up 0.12% and Nasdaq futures is down -0.13%

10-year U.S. Treasury yields slightly changed at 1.02% on the day as dollar held overnight advances at 90.66

The Cboe Volatility Index, known as Wall Street’s “fear gauge,” climbed 61.64% to 37.21 on Wednesday, hitting its highest since Jan. 4, the day before the Georgia runoffs

The Federal Reserve on Wednesday left its key overnight interest rate near zero and made no change to its monthly bond-purchase program of $120 billion, as it watches the effects of a Covid-19 vaccine rollout on business activity and hiring. The Fed has renewed its pledge to keep borrowing costs low until its goals of lower unemployment and 2% inflation are achieved

New orders for U.S. manufactured durable goods edged up 0.2% month-over-month in December 2020, following an upwardly revised 1.2% rise in the previous month, and well below forecasts of a 0.9% rise

Mortgage applications in the United States declined -4.1% in the week ended January 22nd, following a -1.9% drop in the previous week

U.S. personal income, spending and pending home sales are to come on Friday

“The pace of the recovery in economic activity and employment has moderated in recent months, with weakness concentrated in the sectors most adversely affected by the pandemic”, the U.S. central bank said in the statement, which was released at the end of its latest two-day meeting. “The ongoing public health crisis continues to weigh on economic activity, employment, and inflation, and poses considerable risks to the economic outlook.”

“What’s working in the market’s favor is the overall trend of economic growth is still robust and that’s likely to translate to positive earnings,” said Shoqat Bunglawala, head of multiasset solutions, international, at Goldman Sachs Asset Management. “There’s an expectation that there’s going to be more robust growth driven by pent up demand in the second half of the year.”

Asia-Pacific Markets

Asian benchmark stocks skidded in early Thursday trade, after U.S. stocks suffered their biggest one-day percentage drop in three months on Wednesday

Stocks fell in Japan, South Korea, China, Hong Kong and Australia

Japan’s Nikkei 225 dropped -1.01% to 28,351 and Topix 500 dropped -0.97% to 1,434

South Korea’s Kospi dropped -0.87% to 3,096

In Hong Kong, Hang Seng dropped -0.81% to 29,050 while Hang Seng China Enterprises dropped -0.75% to 11,560

In China, CSI 300 dropped -1.37% to 5,453 and Shanghai Composite dropped -0.81% to 3,544

Australia’s S&P/ASX 200 dropped -2.26% to 6,627

Overall, MSCI Asia-Pacific, is down -0.67%

Japan has raised concerns about British proposals to invite Australia, India and South Korea to a meeting of Group of Seven foreign ministers and have them sign up to a joint charter with the G-7 forum in Cornwall in June 2021. The idea of expanding the G-7 was floated by Trump last year, which includes seven democracies the U.S., the U.K., Japan, France, Germany, Italy and Canada. On security concerns, the U.K. set out six potential areas of focus for the summit: China, Russia and its neighborhood, Iran, the eastern Mediterranean, the Horn of Africa and the Indo-Pacific

SoftBank plans on selling more bonds in 2021 after announcing its first issuance in more than a year

Chinese President Xi Jinping has said Hong Kong should be governed by “patriots” in comments that come just weeks after more than 50 opposition politicians and activists were arrested using the city’s new Beijing-drafted national security law

EU Markets

European equities declined the most in five weeks on Wednesday trade, as the European Union and AstraZeneca Plc disagreed over vaccine delivery delays and Germany cut its 2021 economic growth forecast to 3% from 4.4%

Talk of further interest rate cuts by the European Central Bank hit banking stocks and the euro

The pan-European Stoxx Europe 600 dropped -1.38% to 400 and Stoxx 50 dropped -1.43% to close at 3,541

Germany’s DAX30 dropped -1.78% to 13,625

London’s blue-chip FTSE 100 dropped -1.23% to 6,572

France’s CAC40 dropped -1.17% to 5,459

Denmark’s OMX Copenhagen 20 dropped -2.25% to 1,441

Spain’s IBEX 35 dropped -1.54% to 7,842

Italy’s FTSE MIB dropped -1.57% to 21,641

The GfK Consumer Climate Indicator in Germany dropped to an eight-month low of -15.6 heading into February 2021, from a revised -7.5 in the prior month and far below market consensus of -7.9, as sentiment was hit by extension the hard lockdown measures to curb the rapid spread of coronavirus

European earnings have come in largely positive, with analysts projecting a 24% drop in fourth-quarter profit for companies listed on the STOXX 600, slightly better than a 26% drop forecast a week ago, as per Refnitiv IBES data

“The numbers that are coming out show economic activity in Europe is falling back and underperforming other parts of the world,” said David Miller, investment director at Quilter Cheviot. “So far, investors are prepared to look through the current difficulties on the basis that second half will be better.”

Oil & Natural Gas Markets

Crude-oil bounced back in early Thursday trade, after EIA data showed US crude oil inventories fell by 9.91 million barrels in the week ended January 22nd, the biggest decline in six months

Supporting prices are the voluntary production cuts by Iraq, as part of OPEC’s strategy to keep crude futures elevated

WTI Crude is trading at $52.71 per barrel

Brent Crude is trading at $55.62 per barrel

Natural Gas futures is trading higher at $2.687/MMBtu

On MCX-India, Crude oil futures is steady at 3,893 on Thursday trade

On MCX-India, Natural gas futures rose to 199/MMBtu on Thursday trade

“The physical market appears to be absorbing any material demand softness from lockdowns in stride, for now,” RBC analysts wrote in the report. “However, the physical market is far from tight and additional barrels are not being bid in size, even as the Saudi cut propagates to the consumer base for next month.”

Commodities Markets

Gold futures retreated in early Thursday trade

U.S. Gold futures (Comex) is trading lower at $1,836 an ounce

Silver futures (Comex) is trading lower at $25.09 an ounce

Copper futures (Comex) is trading lower at $3.5490 per pound

SGX Iron-Ore futures is trading at $169.25 per tonne

In India, Spot Gold is trading at INR 48,158 per 10 grams

“While iron ore prices have been volatile lately due to several supply-side disruptions, they are likely to decline to about $125 a ton this year mainly because China is expected to buy less in 2021,” Seshagiri Rao, joint managing director at Mumbai-based JSW Steel Ltd. said.

Currency Markets

The U.S. dollar index, DXY held its overnight advances at 90.66 in early Thursday trade,

INR weakened with USD / INR at 73.0010

JPY weakened with USD / JPY at 104.0500

CNY strengthened with USD / CNY at 6.4652

EUR weakened with EUR / USD at 1.2089

Euro extended losses after an ECB official said the central bank has the necessary tools to act on Euro strength and could cut the deposit rate further to keep inflation target

GBP strengthened with EUR / GBP at 0.8826

GBP weakened with GBP / USD at 1.3698

*3-Month LIBOR Rate*	*As on 27 Jan 2021*
US DOLLAR	0.21 per cent
Euro	– 0.55 per cent
British Pound	0.03 per cent
Swiss Franc	– 0.76 per cent
Japanese Yen	– 0.07 per cent

Bitcoin

Bitcoin / U.S. Dollar rose 2.17% in early Thursday trade to $31,100 as of 07:30 a.m. I.S.T.

The world’s largest cryptocurrency has been trending downward since peaking around $42,000 earlier this month. The coin fell as much as 5.7% Tuesday, dropping below $31,000, and testing its 50-day moving average

“If Bitcoin breaks below and then stays below the 50-day moving average, it should serve as confirmation that the move over the past four months was a speculative blow-off top,” said Michael O’Rourke, chief market strategist at JonesTrading.

Bond Markets

Americas : 10 – Year Govt Bond Yields

United States : 1.02%
Canada : 0.80%

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

Germany : -0.56%
United Kingdom : 0.26%
France : -0.32%
Italy : 0.64%
Netherlands : -0.49%

Asia Pacific : 10 – Year Govt Bond Yields

India : 5.95%
Japan : 0.02%
Australia : 1.09%
Hong Kong : 0.50%
Singapore : 0.98%
South Korea : 1.76%

Fund Flows on NSE, BSE and MSEI — 27 Jan 2021

FII/FPI Net Sell Rs (1,688.22) Crore in Capital Market

DII Net Sell Rs (3.38) Crore in Capital Market

Where We’ve Been Reading —