Index Trend & Conditions – 07:30 a.m. I.S.T.
• Resistance zone for Nifty 50 is at 14,878 14,938 and 15,037. For Wednesday, Mar. 31, Support area is seen around 14,540-507 14,307 and 14,264
• Support levels for Bank Nifty is around 33,568 and 32,322; while Resistance zone is at 33,872 and 34,150 for Mar. 31
• The MSCI Asia Pacific ex-Japan is trading higher 0.26%, and the MSCI Emerging Market index is up 0.01%
• Trends on SGX Nifty look poised for a gap-up opening for Nifty 50 in India. The Nifty futures are trading 05 points, or -0.02% lower at 14,921 on the Singaporean Exchange at 07:30 a.m. I.S.T.
• U.S. equity futures edged higher in early morning trade with S&P 500, Dow Jones and Nasdaq futures trading in green territory; alongside a mostly higher start in Asia-Pacific benchmarks gauges in early Wednesday trade with equities dipping in Japan and China while edging higher in Hong Kong, South Korea and Australia; a positive MSCI Asia-Pacific ex-Japan index; U.S. Dollar strengthening to 93.33 with 10-Yr Treasury Yields climbing to 1.72% 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 $1,681 an ounce indicate a negative 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
India Markets
India’s equity benchmarks opened with a gap-up on Tuesday trade, in line with positive global cues, and recovered last week’s entire decline
The blue-chip NSE Nifty 50 index added 337 points or 2.33% to 14,845 and the benchmark S&P BSE Sensex added 1,128 points or 2.30% to close at 50,136
Broader markets under-performed headline peers — Midcap 100 index added 1.70%; Smallcap 250 index added 1.28% and Nifty 500 added 1.97%
Nifty P/E for Mar. 30 increased to 40.43 from 39.51 with Nifty P/B rose to 4.21 from 4.11, as recorded by NSE India
Bank Nifty opened with a gap up, but moved in a range for most part of the session. The index added 556 points, or 1.67%, to settle at 33,875
India VIX or the barometer of nervousness in the market, moved down -0.80% from 20.65 to 20.48 levels
Overnight Call Money rate weighted average stood at 3.23% as per RBI data. It moved in a range of 1.90 — 3.50% for Mar 26
Under Liquidity Operations by RBI, Reverse Repo for the week (Mar 15 to Mar 21) stood below 5 lakh crores, marking lower surplus liquidity in the market
Yield curve on the benchmark 10-Yr government bond declined to 6.14%, while the rupee weakened to 73.4540 per U.S. dollar
India’s consumption demand and business activity looked steady in February, although chances of a strong recovery appeared doubtful after a sharp surge in virus cases and the increasing risk of renewed lockdowns. While central bank Governor Shaktikanta Das has said he doesn’t see any immediate threat to activity, economists see a bumpy road ahead given that the western Indian state of Maharashtra, which contributes 14.5% to the country’s overall GDP, is among the worst hit and accounts for the majority of cases
(A) Business Activity in India’s dominant services sector expanded at its quickest pace in a year in February, helped by an increase in new orders and optimism generated by a roll-out of vaccines. The IHS Markit India Services Purchasing Managers’ Index rose to 55.3 last month from 52.8 in January, with a reading above 50 signaling expansion. The manufacturing sector also expanded, lifting the Manufacturing Composite PMI index to 57.3 in February. As a result, input price inflation quickened, pushing the aggregate rate of cost inflation to an 88-month high — a wrinkle for the nation’s inflation-targeting monetary policy makers who meet early next month to decide on interest rates
(B) Exports were up 0.7% year-on-year last month, slower than the 6.2% rise seen in January. More importantly, imports rose 7% as non-oil and non-gold imports saw robust growth, mirroring domestic demand
Under (C) Consumer Activity, Passenger vehicle sales, a key indicator of demand, rose nearly 18% in February from a year ago, with two-wheelers and tractor sales leading the pack. Demand for loans picked up. Bank credit grew around 6.6% in February from a year earlier, faster than the 5.9% rise seen in late January, central bank data showed. Liquidity conditions were little changed. A pullback in surplus liquidity, as well as rising yields, pose a risk to loan demand
(D) Industrial Activity contracted 1.6% in January from a year earlier. Consumer non-durables, comprising essential goods, contracted 6.8% in January, while demand for white goods and mobile phones shrank 0.2%. Output at infrastructure industries, which makes up 40% of the industrial production index, rose 0.1% in January from a year ago, after a 1.3% contraction in December. Both data are published with a one-month lag
America Markets
Major U.S. stock indexes pulled back on Tuesday trade as investors sold government bonds along with shares of technology companies that had powered higher in a low-yield environment
The broad-based S&P 500 fell 12 points, or -0.3%, to 3,958
The Dow Jones Industrial Average, composed mostly of cyclical stocks, dropped 104 points, or -0.3%, to 33,066
The tech-heavy Nasdaq Composite Index slipped 14 points, or -0.1%, to 13,045
U.S. equity futures edged higher in early Wednesday trade. S&P500 futures is up 0.16%; Dow Jones futures is up 0.17% and Nasdaq futures is up 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 93.33
The Cboe Volatility Index, known as Wall Street’s “fear gauge,” fell -5.45% to 19.61 on Tuesday
President Joe Biden will unveil the framework for a major infrastructure-and-jobs program on Wednesday in Pittsburgh, and later in the week offer the first glimpse of his 2022 budget
U.S. consumer confidence raced in March to its highest level since the start of the Covid-19 pandemic, supporting views that economic growth will accelerate in the coming months, driven by more fiscal stimulus and an improving public health situation. The survey from the Conference Board on Tuesday also showed consumers were fairly upbeat about the labor market, with a measure of household employment rebounding after declining in February. The Conference Board’s consumer confidence index jumped 19.3 points to a reading of 109.7 this month
A separate report on Tuesday showed the S&P CoreLogic Case-Shiller 20-metro-area house price index soared 11.1% in January from a year ago, the fastest in 15 years, after increasing 10.2% in December
U.S. government is due to publish its closely-watched employment report for March on Friday
“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.
“Consumers finally are fully on board with the pending expansion,” said Robert Frick, corporate economist with Navy Federal Credit Union in Vienna, Virginia. “What remains to be seen is how quickly services industries such as travel and leisure will open up, allowing venues for consumers to release their pent-up demand.”
Asia-Pacific Markets
Asian stocks mostly opened higher in early Wednesday trade, the last trading day of the quarter, as investors await more details on the next leg of U.S. stimulus spending and monitor upward pressure on bond yields
South Korean, Hong Kong and Australian shares rose while equity gauges dragged in Japan and China
Japan’s Nikkei 225 dropped -0.79% to 29,199 and Topix 500 dropped -0.37% to 1,532
South Korea’s Kospi added 0.45% to 3,083
In Hong Kong, Hang Seng added 0.41% to 28,689 and Hang Seng China Enterprises added 0.52% to 11,080
In China, CSI 300 dropped -0.59% to 5,063 and Shanghai Composite dropped -0.76% to 3,428
Australia’s S&P/ASX 200 climbed 1.67% to 6,850
Japan’s jobless rate was steady at 2.9% in February, while the availability of jobs declined from the previous month
Japanese retail sales lost 1.5% in February from a year earlier, government data showed on Tuesday, a smaller fall than the median market forecast for a 2.8% drop, falling for a third straight month in February, as households kept a lid on expenditure amid the coronavirus emergency, underscoring the fragile nature of the economy’s recovery from last year’s slump
Index provider FTSE Russell has given its final approval for Chinese sovereign bonds to be included in its flagship bond index from later this year, setting the stage for billions of dollars of inflows into the world’s second-largest economy. Chinese government bonds (CGBs) will be added to the FTSE World Government Bond Index (WGBI) over three years from the end of October. HSBC said that with roughly $2.5 trillion tracking the WGBI, some $130 billion in inflows could be expected, given China’s eventual 5.25% weighting – about $3.6 billion a month. Benchmark 10-year CGBs yielded 3.202% on Tuesday, compared with a 1.7419% U.S. 10-year yield. FTSE Russell also said India and Saudi Arabia were being considered for potential inclusion
Australia’s economic output has rebounded to close pre-pandemic levels, but the country’s slow pace in delivering Covid shots could temper the rebound
“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 headed toward record highs on Tuesday trade on hopes of a vaccine-driven recovery as investors looked past the fallout of U.S. hedge fund Archegos’ default, which slammed banking stocks on Monday
The pan-European Stoxx Europe 600 added 0.57% to 425 and Stoxx 50 added 1.12% to 3,926
Germany’s DAX30 added 1.29% to 15,008, boosted by automakers and a 2.0% rise in Deutsche Bank
London’s blue-chip FTSE 100 added 0.53% to 6,772
France’s CAC40 added 1.21% to 6,088
Denmark’s OMX Copenhagen 20 added 0.07% to 1,455
Spain’s IBEX 35 added 1.21% to 8,595
Italy’s FTSE MIB added 0.12% to 24,421
Sweden’s OMX Stockholm 30 added 1.06% to 2,205
Economically sensitive cyclical sectors such as autos, banks and travel & leisure have been the top performers this quarter as investors snapped up the cheap stocks on hopes that re-opening of economies will spur growth in the sectors. Defensive sectors such as utilities and healthcare fell, while rising yields weighed on highly valued technology stocks
Italy’s budget deficit is likely to be close to 10% of GDP for a second year as successive lockdowns force the country to boost spending
The European Central Bank must be cautious when it shifts away from its emergency stimulus even if the economy rebounds from the pandemic as predicted, according to outgoing policy maker Vitas Vasiliauskas. The Governing Council member and head of Lithuania’s central bank, who steps down from those roles next month, said in an interview that even after inflation is back to its pre-pandemic trajectory, policy makers will need to keep quantitative easing in place for quite a while. Their 1.85 trillion-euro ($2.2 trillion) pandemic emergency purchase program is set to run for at least another year, while an older QE plan set up in 2015 is open-ended – tied only to progress in returning euro-area inflation sustainably toward 2%
The ECB is currently accelerating its bond purchases to push back against higher borrowing costs, reflecting a widening divergence between the euro-area and U.S. economies. The American recovery is powered by a rapid pace of inoculations and massive fiscal support, while the euro zone is bogged down in extended restrictions because of a botched vaccine rollout. Central banks across the region bought an average of 20 billion euros worth of debt a week over the past two weeks to keep financing conditions for governments, companies and households favorable
The institution’s staff predicted this month that the 19-nation economy would shrink in the first quarter before growing at least 1.3% in the subsequent three periods. They see a full-year of expansion of 4%, though that’s not enough to recoup last year’s contraction of 6.6%
“Though Archegos uncertainties are still hanging over the markets, European investors felt settled enough to push the region’s indices higher,” Connor Campbell, a financial analyst at SpreadEx, said.
Oil & Natural Gas Markets
Crude-oil prices fell in early Wednesday trade, as the Suez Canal reopened to traffic, while focus turned to an OPEC+ meeting this week that analysts expect will approve an extension to supply curbs amid disappointing demand prospects
WTI Crude is trading at $60.66 per barrel
Brent Crude, the international benchmark for oil, is trading at $64.32 per barrel
Natural Gas futures rose to $2.624/MMBtu
Commodities Markets
Gold futures shed nearly 2% in early Wednesday trade, as a firm dollar and rising U.S. Treasury 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 $1,680 an ounce
Silver futures (Comex) is trading at $23.83 an ounce
Gold / Silver Ratio rose marginally to $70.29
Copper futures (Comex) rose to $3.9775 per pound
SGX Iron-Ore futures fell to $161.50 per tonne
In India, Spot Gold is trading at INR 44,078 per 10 grams
“From a technical point of view, the (gold) price is playing with the key level of $1,700. A crucial support is placed at $1,670, a recent low, while the overall scenario for gold remains moderately bearish,” ActivTrades chief analyst Carlo Alberto De Casa said.
Currency Markets
U.S. dollar index, DXY climbed to a one-year high to 93.33 in early Wednesday trade, boosted by the spike in Treasury yields to a new 14-month high of 1.78% on Tuesday on the back of further fiscal stimulus support prospects for a stronger economic recovery, which could lead to a spike in inflation and debt levels
INR weakened with USD / INR at 73.4540
JPY weakened with USD / JPY at 110.2500
CNY weakened with USD / CNY at 6.5718
EUR weakened with EUR / USD at 1.1719
GBP strengthened with EUR / GBP at 0.8542
GBP weakened with GBP / USD at 1.3719
“In a week when the market is feeling so optimistic about the forthcoming payrolls release, it seems very likely that the greenback will find strong support,” Rabobank currency strategist Jane Foley said. “However, the market is in danger of pricing in too much inflation risk, meaning we see scope for the USD to soften in the months ahead.”
| 3-Month LIBOR Rate | As on 30 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 added 0.30% in early Wednesday trade to $58,923 as of 07:15 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 : -0.29%
United Kingdom : 0.82%
France : -0.05%
Italy : 0.68%
Netherlands : -0.15%
Asia Pacific : 10 – Year Govt Bond Yields
India : 6.14%
Japan : 0.08%
Australia : 1.77%
Hong Kong : 1.20%
Singapore : 1.72%
South Korea : 2.08%
Fund Flows on NSE, BSE and MSEI — 30 Mar 2021
FII/FPI Net Buy Rs 769.47 Crore in Capital Market
DII Net Buy Rs 2,181.01 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
