Positive start likely for indices in line with Asian bourses, positive US markets

Positive start likely for indices in line with Asian bourses, positive US markets

FPJ Web DeskUpdated: Monday, August 23, 2021, 09:15 AM IST
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The Nifty futures were trading at 16,677 on the Singaporean Exchange around 07:30 AM./ File | AFP PHOTO / FRED DUFOUR

Trends on SGX Nifty indicate a gap-up opening for the index in India with a 172 points gain. The Nifty futures were trading at 16,677 on the Singaporean Exchange around 07:30 AM. Wall Street rallied to close sharply higher at the close of a tumultuous week on waning concerns over whether the US Federal Reserve could begin tightening its dovish monetary policy sooner than expected.

The Dow Jones Industrial Average rose 222.15 points, or 0.64 percent, to 35,116.27, the S&P 500 gained 35.79 points, or 0.81 percent, to 4,441.59 and the Nasdaq Composite added 169.95 points, or 1.17 percent, to 14,711.73.

US stock indexes closed higher Friday, but still ended with losses for the week on fears over the spread of the coronavirus delta variant, the imminent tapering of Federal Reserve bond buying, and China’s restrictions on its economy.

Markets could open sharply higher

Indian markets could open sharply higher, in line with higher Asian markets today and positive US markets on Friday, said Deepak Jasani, Head-Retail Research, HDFC Securities. "Today will detail a road map aimed at raising money from the sale of state infrastructure assets over four years at a time an increased spending on COVID-relief measures, coupled with revenue weakened by pandemic restrictions, widened the fiscal deficit."

"Nifty is expected to open positive at 16,580, up by 170 points since Friday's close. It has strong support at 16,350 and 16,400 levels. It may face resistance at 1,6600 and 16,620 levels. New buying should be considered if Nifty closes above 16,650 with higher than average volumes," said Gaurav Udani, Founder & CEO, ThincRedBlu Securities.

Downtrend in the Indian equity markets accelerated on Aug 20 following global cues. The Nifty finally closed 0.71 percent or 118.3 points lower at 16450.50.

Mohit Nigam, Head - PMS, Hem Securities, said, Indian equity market looks like opening the week with a positive start as trends on SGX Nifty show an upside swing. After last week's rampant sell off globally, today's trade setup hints at a recovery as Asian markets have opened higher as investors try to take advantage of the corrected prices. Japan, South Korea and Australian markets edged higher while Dow Futures is also trading on the upside.

"On the domestic front, all eyes would be on the announcement of the National Monetization Pipeline (MNP) which will lay a roadmap over asset monetization programs of state infrastructure over a period of next 4 years. Aurobindo Pharma cancels the deal to buy 51 percent stake in Cronus Pharma Specialities, Spicejet introduces 14 new domestic flights, board of SRF to consider issue of bonus shares. As several more companies continue to apply to SEBI for listing, coming weeks shall continue to witness IPO frenzy. Nuvoco Vistas to list on bourses today. On the technical front, 16,300 and 16,750 are immediate support and resistance in Nifty 50."

Nifty snapped a two week winning streak and ended lower by 0.48 percent. In the process it formed a doji-like pattern on weekly charts suggesting indecision at higher levels. Global worries (Fed withdrawing stimulus, Delta Variant spread, Slowing global growth and China’s regulatory tightening) are impacting sentiments of investors in India. Bounce in markets abroad could result in upward correction even here. The broader market rally seems to be fizzling out though a small bounce in it cannot be ruled out. Nifty could remain in the 16540-16280 band for the better part of the coming week.

Asian stocks up

Asian share markets were trying to pick up the pieces on Monday following last week's thrashing as coronavirus concerns showed little sign of abating, while safe-haven flows benefited the dollar ahead of a key update on US monetary policy. Stocks rose early Monday as traders sought to take advantage of last week’s selloff while weighing risks from the delta virus strain and China’s regulatory curbs. Stocks edged higher after an advance in the S&P 500 and tech-heavy Nasdaq 100 at the end of last week.

Tech stocks lead among S&P500

Friday’s recovery was broad, with technology stocks among the leaders in the S&P 500 and even energy catching a bid after a withering week for the sector as oil prices slumped. Wall Street rallied to close sharply higher on Friday, closing a tumultuous week on easing concerns over whether the USFederal Reserve could begin tightening its dovish monetary policy sooner than expected.

For the week, the S&P 500 slid 0.6 percent, the Dow declined 1.1 percent, and the Nasdaq Composite lost 0.7 percent, , while the small-cap Russell 2000 index fell 2.5 percent. The energy sector fell 7.3 percent, last week, while financials were off 2.3 percent. US dollar reached a fresh nine-month high.

Dallas Federal Reserve President Rob Kaplan said he may reconsider his call for the central bank to quickly start to taper its monthly buying of $120 billion in Treasury and mortgage-backed securities if it looks like the spread of the coronavirus delta variant is slowing economic growth. The remarks from Kaplan, who is a “more hawkish” Fed official, may be contributing to the market’s rise Friday.

Oil prices decline

Brent oil was steady at the open of trading after capping the worst losing streak in more than three years amid dollar strength and economic strains from the latest COVID-19 comeback.

Oil prices closed out their biggest week of losses in more than nine months with another down day on Friday, as investors sold futures in anticipation of weakened fuel demand worldwide due to a surge in COVID-19 cases. The crude market has now posted seven consecutive days of losses.

STOXX 600 marks worst week

European shares edged higher on Friday as Marks & Spencer lifted retailers, but the benchmark STOXX 600 still marked its worst week since February on signs of slowing economic growth and rising COVID-19 cases.

Bad Bank

The Indian Banks' Association (IBA) has moved an application to the Reserve Bank of India (RBI) seeking licence to set up a Rs 6,000-crore National Asset Reconstruction Company Ltd (NARCL) or bad bank, according to sources. NARCL was incorporated last month in Mumbai following the registration with Registrar of Companies (RoC).

According to sources, the company after mobilising an initial capital of Rs 100 crore and fulfilling other legal formalities has approached the RBI seeking licence to undertake asset reconstruction business. The RBI in 2017, raised the capital requirement to Rs 100 crore from the earlier level of Rs 2 crore, keeping in mind the higher amount of cash required to buy bad loans.

IPOs now from insurance sector

Adding more fire to the already-frenzied IPO market, three insurance sector companies are entering the primary market with initial public offerings in coming months to mop up over Rs 10,000 crore.

These companies are — PB Fintech, which runs the insurance brokerage Policybazaar; standalone health insurer Star Health & Allied Insurance Company; and third-party administrator Medi Assist Healthcare Service. They have already filed their draft prospectus with markets regulator Sebi.

Investment through P-notes

Investments in the Indian capital markets through participatory notes (P-notes) rose to Rs 1.02 lakh crore till July-end, making it the highest level in last 40 months. According to SEBI data, the value of P-note investments in

Indian markets -- equity, debt and hybrid securities -- rose to Rs 1,01,798 crore at July-end from Rs 92,261 crore as of June 30, 2021.

FPI inflows

Foreign portfolio investors (FPI) have pumped in a net Rs 7,245 crore into the Indian capital markets in August so far amid positive sentiments due to an improving macroeconomic environment. The gradual increase in the amount of net inflows indicates that investors are slowly dropping their cautious stance and gaining higher conviction on the Indian markets, said Himanshu Srivastava, associate director - manager research, Morningstar India.

As per depositories data, Rs 5,001 crore was invested in equities and Rs 2,244 crore in the debt segment by overseas investors between August 2-20. This took the total net investment to Rs 7,245 crore.

Footwear brand Metro files for IPO

Footwear retailer Metro Brands has filed preliminary papers with capital markets regulator Sebi to raise funds through an initial share-sale. The initial public offering (IPO) comprises fresh issuance of equity shares worth Rs 250 crore and an offer-for-sale of 2,19,00,100 equity shares by selling shareholders, according to the draft red herring prospectus (DRHP).

The company will consider a pre-IPO placement aggregating up to Rs 10 crore. If such placement is completed, the fresh issue size will be reduced.

Forex decreases

India’s foreign exchange reserves decreased by $2.099 billion to stand at $619.365 billion for the week ended August 13 due to a fall in core currency assets and gold, RBI data showed on Friday. The forex kitty had increased by $889 million to a lifetime high of $621.464 billion in the previous reporting week.

F&O ban

Six stocks are under F&O ban today: Canara Bank, NALCO, NMDC, Punjab National Bank, Sun TV Network and Vedanta.

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