STATE OF THE MARKETS
SGX Nifty signals a negative start
Nifty futures on Singapore Exchange traded 19 points, or 0.12 per cent, higher at 15,355.50 signaling that Dalal Street was headed for a Positive start on Thursday.
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Tech View: Nifty50 on Wednesday took out its immediate resistance of 15,300 level. Analysts said a sustained rise above the 15,335 level could push the 50-pack index towards record-high levels.
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India VIX: The fear gauge gained 10.77 percentage points to 20.87 level on Wednesday over Tuesday’s close at 18.84.
Asian markets down in early trade
Asian share markets opened lower on Thursday in cautious trade after modest Wall Street rallies, as investors weighed the prospects for recovery in major economies. MSCI’s broadest index of Asia-Pacific shares outside Japan declined 0.46 per cent.
· Japan’s Nikkei dropped 0.78%
· Hong Kong’s Hang Seng fell 0.23%
· South Korea’s Kospi lost 0.57%
· Australia’s ASX 200 inched up 0.05%
· China’s Shanghai Composite declined 0.22%
Wall Street closes with modest gains
US equities eked out modest gains in overnight trade after a lackluster session that saw positive corporate news dueling with lingering concerns over the global recovery and US inflation.
· Dow Jones up 0.03% to 34,323.05.
· S&P500 index gained 0.19% to 4,195.99.
· Nasdaq Composite climbed 0.59% to 13,738.59.
Dollar turns upward
The dollar found support on Thursday from emerging views the Federal Reserve is slowly but surely edging towards a discussion about tightening monetary policy, and as traders await crucial U.S. inflation data this week.
· Dollar index gains 0.4% to 90.076.
· Euro fell 0.5% to trade at $1.2185.
· British pound dipped to $1.4150.
· Yen slipped to one week low of 109.20 per dollar.
· Yuan appreciates to 6.4062 against the greenback.
Q4 earnings today
Sun Pharma, Eicher Motors, Cadila Healthcare, Page Industries, Dixon Technologies, Alkyl Amines, Phoenix Mills, UCO Bank, Aegis Logistics, Solar Industries, HEG, Metropolis, Fine Organic, India Grid, and Wockhardt are among companies that will announce their March quarter results today.
DII sold equities worth Rs 439 cr
Net-net, foreign portfolio investors (FPIs) were buyers of domestic stocks to the tune of Rs 241.60 crore, data available with NSE suggested. DIIs were sellers to the tune of Rs 438.59 crore, data suggests.
MONEY MARKETS
Rupee: The currency and bond markets were closed on Wednesday on account of Buddha Purnima. The domestic currency appreciated 19 paise on Tuesday to end at 72.77 against the US dollar.
10-year bond: India’s 10-year bond yield was unchanged to 5.97 after trading in the 5.97 -5.99 range.
Call rates: The overnight call money rate weighted average stood at 3.21 per cent, according to RBI data. It moved in a range of 1.90-3.50 per cent.
Data/Events to Watch
· Q4 Earnings: Eicher Motors | Dixon | IRB | Page Ind | Sun Pharma | Wockhardt | Uco Bank
· China Industrial Profits (YTD) YoY April (07:00 am)
· UK Car Production YoY April (01:30 pm)
· US Durable Goods Orders MoM Aprl (06:00 pm)
· US Jobless Claims 4-week Average May/22 (06:00 pm)
· US GDP Price Index QoQ 2nd Est Q1 (06:00 pm)
· US Pending Home Sales MoM April (07:30 pm)
MACROS
CRR rollback lifts short-term rates
Interest rates at the short end of the yield curve are rising in India due to a reduction in surplus system liquidity as the freedom over impounded cash pools, given to banks at the peak of the crisis last year, is withdrawn in phases. “The liquidity surplus has reduced with the CRR rollback and likely rising government cash balances,” said a top banker. “This has put some pressure on short term rates.”
RBI firm with new auditing norms
The long shadow of IL&FS, DHFL and Yes Bank has reportedly prompted RBI to stay firm on its stand that financial businesses must comply with the latest auditing norms, which simultaneously seek to lift standards, decentralise the industry and prevent conflicts of interest involving the various revenue streams at consulting companies. The norms stipulate joint audits, a cap on the number of assignments for each firm, treatment of firms under the same network as one entity and restrictions on combining audit and non-audit work, with an aim to reduce potential conflict of interest.
Retail inflation may raise ugly head
Last year’s inflation data was dodgy and that could come back to haunt policymakers with upside pressure on consumer prices growing, rating company Crisil said. There’s a danger of retail inflation shooting past 5% again given the supply-side bottlenecks as well as a surge in commodity prices, especially metals, it said in a report. The CPI moderated to 4.3% in April from 5.5% in March — led by a high base of the previous year. CPI was 7.2% in April 2020.
CII pitches for fiscal support… Industry body Confederation of Indian Industry president Uday Kotak has pitched for immediate short-term fiscal measures such as cash transfers to protect those worst hit by the second wave of the pandemic, saying data coming out after May, particularly from rural India, could be worrisome. Kotak batted for a calibrated opening, with increased vaccinations, and said the situation should improve by October.
Gold tops Rs 49K and rising
Domestic gold prices crossed the Rs 49,000 per 10 gm mark on Wednesday as the dollar and US bond yields remained at low levels, making the yellow metal cheaper for holders of other currencies. Gold prices have been on an uptrend for a while now. After hitting a low of Rs 44,100 at the end of March, gold futures surged to a four-month high above Rs 49,000 per 10 gm, taking their gains to more than 11 per cent in two months. Analysts remain upbeat and believe the prices will rise further in the coming days.
Credit card spends slow down
Credit card spends in the country grew by only 7.8% in the year ended March 2021, down from a jump of 22.5% in FY20, a sign that discretionary spending continues to remain elusive. Individual banks indicated spend growth has fallen further in April and May. Banks said they will be on a wait and watch mode for this unsecured category of lending as they have already recorded stress on asset quality with higher impairment rates in the last two months.
