Indian markets could open sharply lower in line with largely negative Asian markets today and lower US markets on Thursday, said Deepak Jasani, Head-Retail Research, HDFC Securities.
Key indices may retreat further in early trades amid gloomy world equity markets. Nifty is in a perfect ‘eye of the storm' of uncertainty amid negative impact of a prolonged Russia-Ukraine war on the global economy and inflation, said Prashanth Tapse, Vice President (Research), Mehta Equities Ltd.. The street fears stagflation in the near future because Russia’s invasion of Ukraine is obviously going to push inflation higher. Amidst this stagflation headwind, expect Nifty Auto index and Bank Nifty to underperform. We expect a waterfall of selling below Nifty’s 16,203 mark and below the same the immediate downside risk is at 15,901 mark, Tapse said.
Benchmark indices are expected to make a gap-down opening as suggested by trends on SGX Nifty, said Mohit Nigam, Head - PMS, Hem Securities for Friday March 4. Both European and US markets closed in red as no middle ground can be found to stop the tussle between Russia and Ukraine. The news of Russian attack on Europe's biggest nuclear power plant located in Ukraine has sent strong negative signals to the already jittery market. Investor’s sentiments are also weak due to rising prices of crude oil and natural gas. The corporate earnings can take a hit due to this as companies are already facing the pressure of rising input cost.
Short-term investors and traders should remain cautious as markets are showing extreme volatility. Long term investors should not be worried as these significant dips present a good opportunity to accumulate quality stocks, Nigam said.
On the technical front, the key resistance level for Nifty50 is 16,650 followed by 16,800 and on the downside 16,360 followed by 16,200 can act as strong support. Key resistance and support levels for bank nifty are 35,500 and 34,500 respectively.
Nifty fell for the second straight session on March 3 giving up the morning gains on fears of impact of rising commodity prices on inflation, currency, interest rates and corporate performance. At close, Nifty was down 0.65 percent or 107.9 points at 16,498.
Nifty formed a bearish engulfing pattern but this has occurred at the lows and hence its predictive power is limited. Advance decline ratio remains positive and the smallcap index has ended in the positive suggesting that the selloff by the FPIs is happening mostly in largecaps. 16,48-16,748 could be the band for the Nifty in the near term.
Asian markets decline
US stock-index futures tumbled late Thursday and Asian markets fell after reports that Europe’s largest nuclear power plant, in Ukraine, was on fire after Russian shelling, raising fears of an unprecedented nuclear disaster. Russian shells were falling directly on the Zaporizhzhia nuclear plant in the city of Enerhodar and had set fire to one of the facility’s six reactors. That reactor is under renovation and not operating, but there is nuclear fuel inside.
US stocks close lower
The Dow Jones Industrial Average and S&P 500 failed to hold earlier gains Thursday as investors monitored the effects of Russia’s invasion of Ukraine, and the second day of testimony from Fed Chair Jerome Powell.
Technology stocks dragged down the equity market ahead of Friday’s jobs report as traders weighed the economic impacts of the war in Ukraine. Traders awaited the government’s employment report, which is currently forecast to show the US added 423,000 jobs in February. Investors also looked to gauge how international sanctions designed to punish the Putin regime might directly impact US domestic monetary policy.
The US oil benchmark pulled back from a nearly 14-year high of $116.57 a barrel, after an Iranian journalist tweeted that a restored nuclear deal that would allow Iran to resume exports was near.
S&P Global cuts Russia's credit rating into junk territory
Ratings agency S&P Global on Thursday cut Russia's credit rating deeper into junk territory as fresh international sanctions triggered by its invasion of Ukraine, and the nation's own protective measures, ramped up default risk. S&P downgraded the sovereign rating to "CCC-minus" from "BB-plus" less than a week after dropping it from investment grade.
Rupee likely to trade higher
USDINR 29 March futures contract extended its gain and crossed its resistance level of 76.1000. On the daily technical chart a pair crossed its trend line resistance of 75.2500. MACD is showing positive divergence on the daily technical chart and RSI is also fetching above 60 levels. As per the daily technical chart, we observed that a pair crossed its trend line resistance and showing strength on the daily technical chart., said Rahul Kalantri, VP Commodities, Mehta Equities Ltd. "Looking at the technical set-up, we expect a pair could test its resistance levels of 76.3500-76.5500 in the upcoming sessions; support is placed at 75.5000".
The Indian Rupee is likely to trade slightly in a positive manner in the initial few trading hours on reports that Iran may reach an agreement to revive the nuclear deal, said Heena Naik- Research Analyst - Currency, Angel One Ltd. This shall allow Iran to export more oil. Crude prices are expected to move south post this news which may, in turn, benefit the local unit. However, any slight fall in USDINR could prompt the importers and banks to make opportunistic dollar buying as the geopolitical risks in Ukraine still persist.
On Thursday, Gold and silver gained amid safe haven demand continue to support both precious metals. Due to major risk aversion amid ongoing war between Russia-Ukraine and rising global energy and grains prices continue to fuel inflation. Investors are moving from riskier assets to safe haven assets once again.
Rahul Kalantri, VP Commodities, Mehta Equities Ltd. said, "We expect gold prices could test $1962 per troy ounce and silver could also test $25.80 per troy ounce levels". Gold has support at $1922-1908, while resistance at $1948-1962 per troy ounce. Silver has support at $24.88-24.50, while resistance is at $25.55-25.80 per troy ounce. In INR terms gold has support at Rs51,457–51,144, while resistance is at Rs 52,017–52,264. Silver has support at Rs 67,478- 67,051 while resistance is at Rs 68,553–69,201.
Crude prices volatile
Crude oil prices showed very high volatility on Thursday, WTI price tested $116 a barrel and Brent prices nearly test $120 a barrel before cooled off. Oil prices hit 14 year highs in the international markets.
Crude oil showed profit taking at higher levels on signs that high-stakes talk to revive a nuclear deal of the United States with Iran may conclude soon, said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.. If the deal happens than Iranian oil will return to the international markets and could cap gains.
"We expect crude oil prices to remain volatile in today’s session and if war intensified between Russia-Ukraine could continue to support oil prices. Crude oil is having support at $104.80–100.00 and resistance is at $110.80–116.00 in today’s session. In INR terms Crude oil has support at Rs 8,008-7,677; while resistance is at Rs 8,744–9,149," Kalantri said.
Vodafone Idea to raise up to Rs 14,500 cr from promoter entities
Debt-ridden telecom operator Vodafone Idea on Thursday said its board has approved raising of up to Rs 14,500 crore, including Rs 4,500 crore from promoter entities. An amount of Rs 10,000 crore would be raised by way of sale of equity or through debt instruments such as ADR, GDR and FCCBs.
In a regulatory filing, the company said the board has cleared issuance of up to 338.3 crore equity shares of face value of Rs 10 each at an issue price of Rs 13.30 per equity share for an aggregate consideration of up to Rs 4,500 crore.
LIC appoints Sunil Agrawal as CFO ahead of IPO
IPO-bound Life Insurance Corporation (LIC) has appointed Sunil Agrawal as its chief financial officer (CFO). Agrawal took charge on Wednesday, sources said. This is the first time that LIC has appointed an outsider as CFO.
Prior to this, LIC Executive Director Shubhangi Sanjay Soman was holding charge as CFO of the insurance behemoth.