Trends on SGX Nifty indicate a cautious opening for Indian stock market indices. Deepak Jasani said, "The Indian markets could open sharply flat to mildly higher in line with largely positive Asian markets today and despite negative US markets on Thursday."
Mohit Nigam, Head-PMS, Hem Securities said, "Benchmark Indices are expected to open on a cautious note as suggested by trends on SGX Nifty. American Market ended flat while European market closed negative on the previous trading day. There will be some cautiousness as India Ratings and Research said the Omicron variant spread will impact the January-March quarter GDP by 0.40 per cent and shave off 0.10 per cent from the FY22 growth, as many states resort to restrictions to limit infections.
"Traders will be concerned with report that India is aiming for a fiscal deficit of 6.3 percent to 6.5 percent of gross domestic product for the next financial year, a less ambitious target than previously planned as COVID-19 infections threaten the economic recovery. On technical front, Nifty's immediate support and resistance can be 17,500 and 18,000 respectively. While for Bank Nifty 36600 and 38000 may act as immediate support and resistance."
Nifty closed lower after a four day winning streak on Jan 06 pulled lower by weak global cues. At close Nifty was down 1.0 percent or 179.4 points at 17,745.9.
Nifty fell as expected after a strong four day upmove. However the advance decline ratio is still at 1:1 suggesting broad market strength amidst selling in index heavyweights. Local traders are accumulating mid and smallcap stocks ahead of the Union budget and Corporate results for Q3FY22. 17,828 will now be a resistance for the Nifty in the near term while 17,640 will be a support.
Stocks to watch out for
Banking stocks will be in focus as rating agency ICRA said the asset quality of the banking system, especially the restructured book, may face headwinds in the coming days as COVID-19 cases have started rising rapidly once again, said Nigam.
Sugar industry stocks will be in limelight as trade body AISTA demanded respective state governments to allow truck movement 24X7 to increase the pace of export with maximum quantities of exportable sugar getting lifted from Maharashtra and Karnataka putting pressure on logistics.
Asian stocks rally
Asian shares snapped two days of losses on Friday, climbing as investors waited to see whether US jobs data due later in the day would reinforce the need for faster US interest rate hikes. Investors continue to assess the impact of a potentially faster-than-expected policy tightening by the US Federal Reserve.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3 percent, boosted by a 1.2 percent gain in the Australian benchmark where bank stocks were to the fore, though Japan's Nikkei gave up early gains to slip 0.66 percent, Reuters said.
Nasdaq futures rose as much as 0.5 percent in earlier Asian trading before giving up some gains to trade 0.25 percent higher, and S&P 500 e-mini stock futures advanced 0.17 percent.
US stocks close lower
US stocks finished lower across the board Thursday, with the Nasdaq Composite giving up a modest bounce in the final minutes of trade as rising Treasury yields and a tech-led rout weighed on Wall Street.
The Institute for Supply Management said its US services index dropped to 62 percent last month from a record 69.1 percent in November. Data showed first-time jobless claims rose slightly last week to 207,000, but remained near a 52-week low. Claims rose from a revised 200,000 in the previous week.
The yield on the US 10-year Treasury was 1.733 percent on Thursday, rising about 24 basis points so far in the new year.
Omicron to hit India GDP, dent FY22 growth by 0.1%
The Omicron variant spread will impact the January-March quarter gross domestic product (GDP) by 0.40 percent and shave off 0.10 percent from the FY22 growth, as many states resort to restrictions to limit infections, India Ratings and Research said in a note.
The surge in cases seen over the last fortnight will have an adverse impact on the fourth-quarter GDP and the growth will come at 5.7 percent during the quarter, which is 0.40 per cent lower than the earlier estimate of 6.1 percent.
For the entire FY22, the GDP is expected to clock a growth rate of 9.3 percent, 0.10 per cent lower than what was estimated earlier, the rating agency said.
India aiming to trim fiscal deficit
India is aiming for a fiscal deficit of 6.3 percent to 6.5 percent of GDP for the next financial year, a less ambitious target than previously planned as COVID-19 infections threaten the economic recovery, three government officials said, Reuters report said. Finance Minister Nirmala Sitharaman is due to unveil the 2022/2023 federal budget on February. 1 and officials said the thinking was that sharp cuts in government expenditure could hurt growth prospects.
Stocks under F&O ban on NSE
RBL Bank is under the F&O ban today (January 7).
(With inputs from Reuters and agencies)
