Index Trend & Conditions – 07:30 a.m. I.S.T.
• Resistance zone for Nifty 50 is at 14,540 14,507 and 14,450. For Tuesday, Mar. 30, Support area is seen around 14,264
• Support levels for Bank Nifty is around 32,322; while Resistance zone is at 33,568 33,872 and 34,150 for Mar. 30
• The MSCI Asia Pacific ex-Japan is trading higher 0.12%, and the MSCI Emerging Market index is up 0.18%
• Trends on SGX Nifty look poised for a gap-up opening for Nifty 50 in India. The Nifty futures are trading 29 points, or 0.65% higher at 14,781 on the Singaporean Exchange at 07:30 a.m. I.S.T.
• U.S. equity futures dipped in early morning trade with S&P 500, Dow Jones and Nasdaq futures trading in red territory; alongside a higher start in Asia-Pacific benchmarks gauges in early Tuesday trade with equities dipping in Japan and edging higher in Hong Kong, South Korea and Australia; a positive MSCI Asia-Pacific ex-Japan index; U.S. Dollar strengthening to 92.92 with 10-Yr Treasury Yields climbing to 1.72% from 1.65% amid expectations that President Biden’s infrastructure initiative of $4 trillion could bolster economic growth and debt issuance and Gold futures witnessing continued upside pressure at $1,710 an ounce indicate a mixed and volatile outlook in Indian equity markets amid channel-wise resistance
• Indian equity markets are currently witnessing “Sell on Rise” due to climbing daily new Covid cases in India now close to 50,000 cases per day and strengthening U.S. dollar
• Shipping traffic through Egypt’s Suez Canal resumed on Monday after a giant container ship, Ever Given, which had been blocking the busy waterway for almost a week was refloated
India Markets
India’s equity market was closed on Monday due to holiday
Yield curve on the benchmark 10-Yr government bond declined to 6.12%, while the rupee weakened marginally to 72.7400 per U.S. dollar
Indian oil minister Dharmendra Pradhan described his Saudi counterpart’s advice to reduce oil stores to tackle high crude prices as “undiplomatic”. Pradhan has criticised OPEC and Saudi output cuts aimed at supporting prices and suggested India will have to look for energy alternatives to Gulf oil, its main source of crude. Pradhan has repeatedly called on the OPEC to ease supply curbs, which is aimed at supporting crude prices. Indian refiners are planning to cut imports from Saudi Arabia by about a quarter. HPCL-Mittal Energy Ltd has made India’s first purchase of Guyana’s oil called Liza for processing in April as it seeks to diversify crude sources. Alternately, Pradhan asserted that Iraq and UAE are very reliable partners
RBI is likely to continue with accommodative monetary policy stance at its next monetary policy review and wait for some more time before taking any action to spur growth, according to market experts. The RBI is slated to announce its first bi-monthly monetary policy of 2021-22 fiscal on April 7, 2021, after a three-day meeting of the Monetary Policy Committee (MPC) headed by the RBI Governor Shaktikanta Das. On Feb 5, after the last MPC meet, the central bank had kept the key interest rate (repo) unchanged citing inflationary concerns. The policy repo rate or short-term lending is currently at 4%, and the reverse repo rate is 3.35%. The RBI has been maintaining the status quo after May last year
India’s foreign exchange reserves rose $233 million to $582.271 billion in the week to March 19, the Reserve Bank of India (RBI) said on Friday. The overall reserves had risen $1.74 billion to $582.04 billion in the previous reporting week. The increase in the overall reserves during the reporting week was largely on account of a swelling of the foreign currency assets, which rose $157 million to $541.18 billion. Foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves. Value of the gold reserves increased for the second consecutive week, and was up $80 million to $34.63 billion. The special drawing rights (SDRs) with the International Monetary Fund (IMF) fell by $2 million to $1.5 billion. Reserve position with the IMF also declined by $1 million to $4.96 billion
America Markets
The S&P 500 retreated from a record on Monday trade, pressured by declines in shares of banks and technology stocks
The broad-based S&P 500 lost 3 points, or -0.1%, to 3,971, paring losses from earlier in the session
The Dow Jones Industrial Average, composed mostly of cyclical stocks, rose 98 points, or 0.3%, to 33,171, erasing losses after starting the trading session lower
The tech-heavy Nasdaq Composite Index fell 79 points, or -0.6%, to 13,059
Morgan Stanley dropped $2.10, or -2.6%, to $77.88, and Goldman Sachs fell $1.66, or -0.5%, to $325.73, as investors grew worried that more financial intermediaries may struggle to recoup money lent to this client
Outside the U.S., shares of Japanese bank Nomura plunged -16%. In Europe, Credit Suisse plummeted -14% and Deutsche Bank dropped -3.3%
U.S. equity futures dipped in early Tuesday trade. S&P500 futures is down -0.09%; Dow Jones futures is down -0.08% and Nasdaq futures is down -0.18%
10-Yr U.S. Treasury yields, which move inversely to the price, steepened to 1.72% in early Tuesday amid expectations that President Biden’s infrastructure initiative could bolster economic growth and debt issuance, with dollar strengthening to 92.92
The Cboe Volatility Index, known as Wall Street’s “fear gauge,” rose 9.97% to 20.74 on Monday
Longer-dated Treasury yields rose on Monday morning, steepening the yield curve, on investor expectations that U.S. President Joe Biden’s infrastructure initiative of around $4 trillion – to be announced Wednesday – could mean faster economic growth and a dramatic increase in Treasury bond issuance
That steepened the spread between the two- and 10-year yields, the most common measure of the yield curve to 155.3 basis points, the widest in a week. The yield curve steepens when economic expectations rise
The Federal Reserve last week raised its GDP estimate for 2021 to 6.5% from 4.2% and many economists expect still faster growth, which has spurred fears the economy could run too hot and force the Fed to raise interest rates
U.S. consumer spending fell by the most in 10 months in Feb, as a cold snap gripped many parts of the country and the boost from a second round of stimulus checks to middle- and lower-income households faded. Consumer spending, which accounts for more than 2/3 of U.S. economic activity, dropped -1.0% in Feb amid a broad decline in purchases of goods, following a 3.4% rebound in Jan
“The U.S. economy is much stronger and miles ahead in the immunization game compared to Europe’s and Japan’s, and this ultimately translates into the Fed normalizing policy years before the ECB or the BoJ,” said Marios Hadjikyriacos, a strategist at brokerage XM.
“Because of the large fiscal deficits and rising federal debt, a narrative has emerged that the Federal Reserve will succumb to pressures to keep interest rates low to help service the debt and to maintain asset purchases to help finance the federal government,” said Christopher Waller, a member of the U.S. central bank’s board of governors. “My goal today is to definitively put that narrative to rest. It is simply wrong. Monetary policy has not and will not be conducted for these purposes.”
Asia-Pacific Markets
Asian stocks opened higher in early Tuesday trade, as investors shook off earlier worries about a hedge fund default that roiled global banking stocks overnight, while rekindled concerns about inflation pushed bond yields higher
Japan shares fell while shares edged higher in Australia and South Korea
Japan’s Nikkei 225 dropped -0.17 to 29,339 and Topix 500 dropped -1.22% to 1,530
South Korea’s Kospi added 0.76% to 3,059
In Hong Kong, Hang Seng added 0.39% to 28,448 and Hang Seng China Enterprises added 0.44% to 10,991
In China, CSI 300 added 0.20% to 5,056 and Shanghai Composite added 0.10% to 3,439
Australia’s S&P/ASX 200 dropped -0.41% to 6,771
Australia expects to log a record A$136 billion ($103.85 billion) from iron ore exports this financial year, as global steel-making recovers after a Covid-19 led downturn. Iron ore shipments are expected to rise from 900 million tonnes in 2020–21 to 1.1 billion tonnes by 2025–26
Japan’s Nomura Holdings Inc on Monday flagged a potential $2 billion loss at a U.S. subsidiary arising from transactions with a U.S. client, and separately said it would cancel a planned bond issuance due to a significant “event”
China’s rebalancing of its economy from investment-led growth to consumption is likely to slow in the coming five years as the population ages and the workforce shrinks, as per a government researcher, Xu Hongcai, deputy director of the China Association of Policy Science’s economic policy committee. Xu also warned China may face the risk of imported inflation as a stronger global economy pushes up commodity prices. A Bloomberg tracker of factory prices recorded its fastest increase in more than three years in March
Three of China’s largest lenders on Friday booked a jump in fourth-quarter net profit of well over 40%. Industrial and Commercial Bank of China (ICBC), Bank of Communications Co Ltd (BoCom) and China Construction Bank Corp (CCB) logged a jump in fourth-quarter net profit
Next week, Bank of Japan’s Tankan survey for the first quarter and China’s official manufacturing PMI for March may give investors an opportunity to gauge the health of the region’s economic recovery, with a faster economic recovery will support value stocks
“It’s very possible for the value rally to continue as the valuation disconnect between growth and value stocks remains large,” said Avo Ora, Pictet Asset Management’s co-head of emerging equities, who likes selected Chinese materials, Korean financials and Asia’s industrials shares. “For examples, a MSCI index of Asian financial shares trades at 10.5 times profit for the next 12 months, compared with 19 times for technology shares. While the gap has has narrowed, it’s still wider than its average in the past decade.”
“Consumption has already past the phase of rapid increase and will only rise slowly in the future,” Xu Hongcai, deputy director of the China Association of Policy Science’s economic policy committee said. “Economic growth still needs the support of investment. The government will need to guide more funds into investing in infrastructure and facilities that enhance elderly care and promote urbanization.”
EU Markets
European equities edged closer to a record high on Monday trade on optimism over a global economic recovery, while Credit Suisse tumbled following a warning of “significant” losses from exiting positions after a U.S.-based hedge fund defaulted on margin calls
The pan-European Stoxx Europe 600 added 0.26% to 423 and Stoxx 50 added 0.42% to 3,882
Germany’s DAX30 added 0.47% to 14,817
London’s blue-chip FTSE 100 fell -0.07% to 6,736
France’s CAC40 added 0.45% to 6,015
Denmark’s OMX Copenhagen 20 added 1.02% to 1,454
Spain’s IBEX 35 fell -0.07% to 8,492
Italy’s FTSE MIB added 0.72% to 24,393
Sweden’s OMX Stockholm 30 fell -0.75% to 2,182
ECB chief economist Philip Lane said that the European Central Bank must remain a key stabilizer of the euro zone economy as the bloc is at risk of suffering longer-term damage from its pandemic-induced double-dip recession. A sustained period of low activity reduces labour productivity, weakens corporate balance sheets and saps confidence, leading to a potential downward spiral
“There is a clear risk of self-fulfilling adverse dynamics taking hold, through which uncertain economic prospects induce households, firms and governments to hold back on expenditure plans, leading to a decline in overall demand that validates the loss in confidence about the future,” ECB chief economist Philip Lane said. “To counter these risk factors, it is essential that the ECB acts as a stabilising force and boosts confidence by committing to the preservation of favourable financing conditions.”
Oil & Natural Gas Markets
Crude-oil prices fell in early Tuesday trade, as a container ship that has blocked the Suez Canal for nearly a week was refloated and traffic in the waterway resumed, while fuel demand in Europe remained weak amid renewed lockdowns to curb a new wave of coronavirus infections
WTI Crude is trading at $61.72 per barrel
Brent Crude, the international benchmark for oil, is trading at $65.12 per barrel
Natural Gas futures rose to $2.645/MMBtu
Commodities Markets
Gold futures slipped in early Tuesday trade, as a firm dollar and rising U.S. Trasury yields dimmed the safe haven metal’s appeal, also pressured by bets for a swift economic recovery in the U.S.
Gold unlikely to rise above $1,700 – $1,750 range in the near-term, until growth and inflation likely stalls with investors favoring assets and commodities that track higher inflation
U.S. Gold futures (Comex) is trading at $1,711 an ounce
Silver futures (Comex) is trading at $24.64 an ounce
Gold / Silver Ratio rose marginally to $69.40
Copper futures (Comex) rose to $4.0215 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 $166.70 per tonne
In India, Spot Gold is trading at INR 44,496 per 10 grams
“While there will be higher inflation in the U.S., it is important to keep in mind that this is first a reflection of the strong growth backdrop and, second, unlikely to last,” Carsten Menke, an analyst at Julius Baer Group Ltd., wrote in a note. “It is not the kind of inflation that will lift safe-haven demand and lead to lastingly higher gold and silver prices.”
Currency Markets
U.S. dollar index, DXY strengthened and remained near four-month peak of 92.92 in early Tuesday trade, on continued optimism about the U.S. economy and on concerns about the potential fallout of a hedge fund’s default on margin calls
INR weakened with USD / INR at 72.7400
JPY weakened with USD / JPY at 109.7700
CNY weakened with USD / CNY at 6.5702
EUR weakened with EUR / USD at 1.1762
GBP strengthened with EUR / GBP at 0.8540
GBP weakened with GBP / USD at 1.3769
“Focus today is on how U.S. equities perform, especially given the hedge fund default that came out last week,” said Simon Harvey, senior FX market analyst at Monex Europe in London.
| 3-Month LIBOR Rate | As on 29 Mar 2021 |
| US DOLLAR | 0.19 per cent |
| Euro | – 0.55 per cent |
| British Pound | 0.09 per cent |
| Swiss Franc | – 0.76 per cent |
| Japanese Yen | – 0.08 per cent |
Bitcoin
Bitcoin / U.S. Dollar declined -1.18% in early Tuesday trade to $57,247 as of 07:30 a.m. I.S.T.
Visa Inc said that it will allow the use of the cryptocurrency USD Coin to settle transactions on its payment network. The USD Coin (USDC) is a stablecoin cryptocurrency whose value is pegged directly to the U.S. dollar. Visa’s move comes as major finance firms including BNY Mellon, BlackRock and Mastercard have embraced some digital coins. Visa’s latest step, which will use the ethereum blockchain, strips out the need to convert digital coin into traditional money in order for the transaction to be settled, to avoid adding cost and complexity for businesses
“We see increasing demand from consumers across the world to be able to access, hold and use digital currencies and we’re seeing demand from our clients to be able to build products that provide that access for consumers,” Cuy Sheffield, head of crypto at Visa, said.
Bond Markets
Americas : 10 – Year Govt Bond Yields
United States : 1.72%
Canada : 1.50%
Europe, Middle East & Africa : 10 – Year Govt Bond Yields
Germany : -0.32%
United Kingdom : 0.78%
France : -0.08%
Italy : 0.64%
Netherlands : -0.19%
Asia Pacific : 10 – Year Govt Bond Yields
India : 6.12%
Japan : 0.06%
Australia : 1.68%
Hong Kong : 1.12%
Singapore : 1.66%
South Korea : 1.98%
Fund Flows on NSE, BSE and MSEI — 29 Mar 2021
Indian equity markets were shut on Monday due to holiday
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
