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Updated on: Monday, October 04, 2021, 09:04 AM IST

Market indices likely to open flat amid mixed global cues

Indian markets could open flat, despite mostly lower Asian markets today and sharply higher US markets on Friday./Representational image of stock market  | AFP PHOTO / Yoshikazu TSUNO

Indian markets could open flat, despite mostly lower Asian markets today and sharply higher US markets on Friday./Representational image of stock market | AFP PHOTO / Yoshikazu TSUNO

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Trends on SGX Nifty indicate a flat opening for the index in India with a 1 point gain. The Nifty futures were trading at 17,531 on the Singaporean Exchange around 07 AM.

Indian markets could open flat, despite mostly lower Asian markets today and sharply higher US markets on Friday, said Deepak Jasani, Head-Retail, HDFC Securities.

"The Nifty is expected to open flat to positive, up by 30 points at 17,560. Nifty has resistance in 17620-17650 range and support in 17,300-17,350 range. As long as Nifty is trading above 17,250, buy on dips with strict stop-loss can be used as a strategy. Any fall below 17,250 may cause a temporary trend reversal," Gaurav Udani, CEO & Founder, ThincRedBlu Securities.

Mohit Nigam, Head - PMS, Hem Securities said, "While the market would remain volatile in the near future, 17,650-17,750 level would be the key resistance level for traders while, 17,400-17,300 could act as good support for positional traders. Bears retained the charge at Dalal Street for the fourth straight day.

"The market closed with around half a percent loss on October 1, the first day of October series, as Banking & financials, FMCG, capital goods and technology stocks weighed down the market, but oil and gas, power, metals and auto stocks saw buying interest during the week. Foreign institutional investors were net sellers during the week.

"The market is likely to consolidate further in this week and will react according to the RBI commentary along with global cues including the movement in oil prices and US bond yields, and US jobs data. Oil prices jumped to nearly three-year high levels due to rising demand with the increasing travel and tourism activities globally.

"On technical front, the Nifty50 formed a Doji kind of pattern on the daily charts and saw bearish candle formation on the weekly scale indicating indecisiveness among the bulls and the bears, and nervousness in the market respectively," he added.

Nifty fell on October 1 for the fourth consecutive session in the backdrop of weak global cues. At close, Nifty was down 0.49 percent or 86 points at 17,532.

Nifty fell last week by 1.8 percent, after five weeks of gains. On daily charts, the Nifty has formed a doji like pattern after a downgap suggesting a possible halt to the fall temporarily. 17,355-17,452 could be an important support for the Nifty while 17,620 could act as a resistance. 17,792 on the upside seems difficult to breach in the near term. PSU as a theme may continue to do well while the erstwhile defensives - FMCG, Pharma and IT may underperform for a few sessions, added Jasani.

US stocks end sharply higher

US stocks ended sharply higher Friday after a batch of mixed economic data, kicking off October with gains although major indexes posted losses for the week. Initial optimism on Wall Street was pegged partly to news that Merck & Co. and partner Ridgeback Biotherapeutics, said their oral antiviral treatment for COVID-19 reduced the risk of hospitalization or death by 50 percent for patients with mild or moderate cases.

For the week, the Dow fell 1.4 percent, its biggest weekly decline since the week ending September 10. The S&P 500 lost 2.2 percent for the week, its largest percentage drop since the week ending February 26. The Nasdaq saw a 3.2 percent weekly drop, also its biggest decline since the week ended February 26.

The personal consumption expenditure price index climbed 0.4% in August. It was the sixth straight big increase. The rate of inflation in the 12 months ended in August edged up to 4.3 percent from 4.2 percent — the highest rate since 1991. The Institute for Supply Management manufacturing index for September also rose to 61.1 from 59.9 in the prior month.

The yield on the 10-year Treasury note fell about six basis points Friday to 1.464%, but still eked out a rise of less than one basis point for the week in a sixth straight weekly rise.

Consumer price inflation in the 19 countries sharing the euro accelerated to 3.4 percent year on year in September, from 3 percent a month earlier, the highest reading since the height of the global financial crisis in September 2008.

While Biden signed into law a stop-gap bill to keep the government running through December 3, lawmakers only succeeded in kicking the can down the road. This lack of resolution prompted rating agency Fitch to warn that the United States' 'AAA' credit rating could be at risk. Though the US has never defaulted on its debt obligations and has raised or suspended the debt limit 78 times since 1960, the possibility of a default could be catastrophic for the global economy. The 2011 standoff resulted in Standard & Poor downgrading the country’s credit rating for the first time from triple-A to AA-plus, sending the three major U.S. stock indexes tumbling in the days that followed.

The Congressional Budget Office estimated in July that it needs to be raised from $22 trillion to $28.5 trillion.

India's trade deficit surged in September as imports rebounded in line with a recovery in the broader economy. The trade deficit in September stood at $22.94 billion, compared to $13.9 billion in August. According to ICRA, the monthly deficit in September is at an all-time high. Imports soared to $56.38 billion, an increase of 84.75% over a year ago. Compared to September 2019, imports were higher by 49.58 percent. Exports rose to $33.44 billion, an increase of 21.35 percent over a year ago and 28.51% higher than September 2019.

Trading in shares of heavily indebted China Evergrande was suspended on Monday, days after some bondholders said the property developer at the centre of jitters over China's financial system had missed a second key bond interest payment.

Asian stocks decline in early trade

Shares in Asia-Pacific were mixed in Monday morning trade after Merck announced its new COVID oral antiviral treatment that cuts the risk of hospitalization or death.

In Japan, the Nikkei 225 shed 0.57 percent while the Topix index dipped 0.24 percent. Australian stocks jumped, with the S&P/ASX 200 up 1.14 percent.

Markets in China are closed for most of this week for holidays and are set to reopen on Friday. South Korean markets are also closed on Monday for a holiday.

Gold up

Gold was up on Monday morning in Asia, hitting a near two-week peak as the dollar weakened and offset bets that the US Federal Reserve could begin asset tapering soon.

Gold futures edged up 0.15 percent to $1,761 by 10:21 PM ET (2:21 AM GMT) after hitting $1,765.54, its highest level since September 23.

The dollar, which normally moves inversely to gold, inched down to its lowest level since September 29.

FPI net buyers for second month in row

Foreign portfolio investors (FPIs) were net buyers for the second month in a row in the Indian market with an investment of Rs 26,517 crore in September. As per depositories' data, FPIs pumped in Rs 13,154 crore into equities and Rs 13,363 crore in the debt segment during September 1-30.

The total net investment stood at Rs 26,517 crore. This comes after an investment of Rs 16,459 crore by FPIs in August.

LIC IPO by November

The country's largest insurer LIC is likely to file draft papers with Sebi by November for the largest IPO in country's history, a finance ministry official has said. "We target to bring the IPO within this fiscal and we have set stricttimelines. The DRHP would be filed by November," the official said.

DoT amends licence norms

The DoT has amended licence norms to rationalise the interest rate for delayed payment of licence fee, a move that is expected to ease financial burden on the telecom sector and promote ease of doing business.

The department will now charge 2 percent interest above the one-year marginal cost of lending rate (MCLR) of State Bank of India for delay in payment of licence fees or any other statutory dues and the interest will be compounded annually.

Sebi extends relaxations

Markets regulator Sebi on Friday extended relaxations for companies with regard to compliance with procedural norms on rights issues opening till March 31, 2022. As per Issue of Capital and Disclosure Requirements norms, an application for a rights issue shall be made only through the ASBA facility.

This relaxation has now been further extended and shall be applicable for rights issues opening up to March 31, 2022, Sebi said in a circular.

Trade deficit

India's merchandise trade deficit in September was $22.94 billion, preliminary data released by the government showed on Friday.

India's merchandise exports rose $33.44 billion for the month from $27.56 billion in the same period last year, while imports rose $56.38 billion in September from $30.52 billion last year.

Forex declines

The country’s foreign exchange reserves declined by $997 million to reach $638.646 billion in the week ended September 24, RBI data showed on Friday. The forex kitty had surged by $8.895 billion to a lifetime high of $642.453 billion in the week ended September 3, 2021.

During the reporting week ended September 24, 2021, the dip in reserves was on account of a fall in the foreign currency assets (FCAs), a major component of the overall reserves, as per weekly data by the Reserve Bank of India (RBI).

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Published on: Monday, October 04, 2021, 08:56 AM IST
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