Gains were checked by selling by foreign investors who have supported the massive rally for the last 10 months. But rising dollar and US treasury yield have resulted in capital flight.
“The market is interestingly poised with possibilities of breakout on Feb 1 in response to Budget proposals. It is possible that the Budget may propose some one-time taxes to finance the huge expenditure to be incurred on vaccination and relief to the segments impacted by the pandemic. It is possible that the market may take this in its stride, given the positive of abundant liquidity and Fed’s assurance of continuation of the accommodative monetary policy,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
“The flow of excellent corporate results in Q3 will provide fundamental support to markets. However, if the Budget proposals are distinctly market-unfriendly ( a low probability outcome), there is a probability of a sharp correction.”
Factors driving markets
- US dollar rise: The dollar rose 0.2 per cent. The greenback has risen 0.8 per cent for the month helped by higher US Treasury yields, driving money out of emerging markets.
- Unemployment comes down: US jobless claims fell in the latest week, while fourth-quarter gross domestic product figures met expectations.
- IMF bats for stimulus: The International Monetary Fund urged that fiscal support should stay in place until an economic recovery is firmly underway even as global debt likely reached 98 per cent at the end of 2020. A $1.9-trillion US coronavirus stimulus deal proposed by President Joe Biden is yet to be passed.
How bluechips are doing
After opening in the green, benchmark indices pared some of the gains. At 10:03 am, BSE flagship Sensex was up 81 points or 0.17 per cent to 46,955. NSE benchmark Nifty followed and added 25 points or 0.18 per cent to 13,842.
“The markets have seen a brief bounce from the 13,700 which acted as a good support yesterday. We need to keep above this and thereafter get past 14,500 in order to resume the uptrend. If we fall below 13,700, we can slide to see lower levels; for starters 13,600 and thereafter 13,200,” said Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments.
In the 50-share pack Nifty, M&M was the biggest gainer, up 3.79 per cent. IndusInd Bank, Hero Moto, Tata Motors, Bajaj Finance, Grasim Industries, BPCL and Adani Ports were among other gainers.
Axis Bank was the top loser in the pack, down 1.82 per cent. Maruti Suzuki, HUL, NTPC, Titan, Cipla, Bharti Airtel and JSW Steel were other losers in the pack.
Broader markets
Broader market indices traded with gains outperforming their headline peers in morning trade. Nifty Smallcap advanced 0.54 per cent while Nifty Midcap climbed 0.88 per cent. Broadest index on NSE, Nifty 500 was up 0.32 per cent.
TVS Motor, Varun Beverages, RBL Bank, Tata Elxsi, RVNL and GNFC were among major gainers from the space while Vakrangee, Granules India, KEI Infra, M&M Financial Services, Navin Fluorine and Ipca Labs were under selling pressure.
Global markets
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.9, but is headed for a weekly loss of more than 3 per cent, the sharpest such fall since September.
Japan’s Nikkei was steady but tracking toward its first weekly loss of 2021, having fallen 1.5 per cent since last Friday. Safe-haven U.S. Treasuries sold off overnight and the U.S. dollar softened a fraction with a broader improvement in risk appetite, however S&P 500 futures fell 0.4 per cent in Asia trading.
What to expect:
- Economic survey: Investors will eye the annual report to gauge the economic policy of the government. The survey is typically presented a day before the Union Budget. But this year it is being brought earlier than usual because the day before Budget this time is a Sunday.
- Q3 earnings: A number of Nifty companies will present their quarterly numbers today including Tata Motors, Cipla, Dr Reddy’s Labs, etc.
