Trends on SGX Nifty indicate a gap-down opening for the broader index in India with a loss of 233 points. Indian markets could open sharply lower in line with negative Asian markets today and sharply negative US markets on Friday, said Deepak Jasani, Head-Retail Research, HDFC Securities.
Dalal Street could win only if Nifty is able to move above its biggest hurdles at 17807 mark, said Prashanth Tapse, Vice President (Research), Mehta Equities Ltd. On the downside, the biggest support is seen at 17221 mark. Below 17221 mark, downside risk seen at 16836 mark and then aggressive targets at December 2021 lows at 16410. Now, with inflation chatters going on, the street will brace for the CPI & WPI Inflation data to trickle in today.
On the domestic front, inflation data will be released this week while the tail-end of earning session will have an impact on some individual stocks, said Santosh Meena, Head of Research, Swastika Investmart Ltd.
Nifty fell on February 11 pulled down by weak global cues, thus snapping a three day upmove. At close the Nifty was down 1.31 percent or 231 points at 17374.8.
Fears of a faster rate rise by the US Fed and escalating tensions in the Russia Ukraine conflict.
Asian shares slip
Asian shares slipped on Monday as warnings Russia could invade Ukraine at any time sent oil prices to seven-year peaks, boosted bonds and belted the euro.
The United States on Sunday said Russia might create a surprise pretext for an attack.
Hong Kong’s medical capacity has become reportedly stretched following a recent spike in COVID infections. Daily infections have multiplied 13 times over the past two weeks, from about 100 cases at the start of February to over 1,300 on February 13.
US stocks close lower
US stocks closed sharply lower Friday as heightened concern that Russia may soon invade Ukraine sent oil prices spiking and investors to dump risky assets like equities. Investors also weighed a sharp drop in consumer sentiment and a pickup in near-term inflation expectations. All three major stock benchmarks saw a weekly decline, halting a two-week advance. For the week, the S&P 500 fell 1.8 percent and the Nasdaq shed 2.2 percent.
US stocks fell after the White House warned that Russia may soon invade Ukraine and as investors assessed a survey showing a slump in consumer sentiment on concerns about high inflation.
Crude up
West Texas Intermediate crude for March delivery rose $3.22, or 3.6 percent, to close at $93.10 a barrel on the New York Mercantile Exchange, leaving the US benchmark at the highest finish for a front-month contract since September 2014. Crude oil extended strong gains, turning positive for the week, after White House National Security Adviser Jake Sullivan told reporters that a Russian invasion of Ukraine could happen “any day now,’ including during the Winter Olympic Games under way in Beijing.
Crude had been buoyed earlier in the session after the International Energy Agency, in its monthly report, warned that signs of a shortfall in output by the Organization of the Petroleum Exporting Countries and its allies were worsening.
Prashanth Tapse, Vice President (Research), Mehta Equities Ltd said, "In dollar terms we expect crude oil prices to remain volatile this week amid volatility in the dollar index and Russia-Ukraine tensions. WTI could hold $88 a barrel and Brent could hold $90 barrel in the international markets. Crude oil is having support at $92.00–90.50 and resistance is at $95.50–96.80 in today’s session. In INR terms crude oil has support at Rs 6,782-6,644; while resistance is at Rs6,997–7,044."
Precious metals likely to remain positive this week
In dollar terms, both precious metals remain positive this week due to Russia-Ukraine tensions and strength in global oil prices, said Tapse. Gold is expected to test $1884 per troy ounce and silver could also test $24 per troy ounce levels. Gold has support at $1845-1834, while resistance at $1877-1892 per troy ounce. Silver has support at $23.30-23.10, while resistance is at $23.80-24.00 per troy ounce.
In INR terms gold has support at Rs48,793–48,473, while resistance is at Rs49,284–49,455. Silver has support at Rs62,324- 61,659 while resistance is at Rs63,357–63,725. Traders are suggested to trade in a range with a strict stop-loss.
Consumer sentiment declines in February
In economic data, the University of Michigan’s preliminary February gauge of consumer sentiment fell to 61.7, from January’s level of 67.2, the lowest reading since October of 2011. Economists were expecting a reading of 67. The University of Michigan survey also found expectations for inflation over the next year rose to 5 percent from January’s expectation of 4.9%, the highest level since July of 2008.
The yield on the 10-year Treasury note fell 7.7 basis points to 1.951 percent.
Economic activity up
Peru’s central bank raised its benchmark interest rate by 50 basis points. Data analyzed by BofA showed emerging market equity funds had enjoyed a seventh straight week of inflows, attracting $5.3 billion in the week to Wednesday.
Economic activity in Brazil rose 4.5 percent in 2021, a central bank index showed on Friday, in a rebound from the record contraction seen a year before.
Ratings agency Fitch on Friday downgraded Turkey's sovereign debt rating to "B+" from "BB-" saying the government's policies have increased risks from high inflation and weak foreign currency liquidity.
IIP slumps to 0.4% in December
India's industrial growth, as per the Index of Industrial Production (IIP), slumped to 0.4 percent in December 2021 from 1.3 percent the previous month. At 0.4 percent, IIP growth in the last month of 2021 is the slowest in 10 months. For April-December 2021, industrial output has clocked a growth of 15.2 percent as against a contraction of 13.3 percent in April-December 2020.
Fed will release minutes from last meeting
Among economic events this week, the Federal Reserve releases minutes from its last meeting on Wednesday. US PPI index for January is due Tuesday.
LIC files DRHP for IPO; govt to sell 5% stake
Life Insurance Corporation of India (LIC) has filed draft papers with the market regulator to sell 5 percebt of its shares to potentially raise nearly $8 billion, dwarfing the biggest IPO in Asia's third-largest economy by a considerable margin. The offering is crucial to the Narendra Modi-led government's efforts to meet its sharply trimmed divestment target for the current financial year and will provide a measure of the success of the government's pro-market policies.
India's largest insurer will be selling 316.25 million shares, according to the draft prospectus filed on Sunday, amounting to nearly 5 percent of the post-offer paid up share capital. The government could raise a little more than 600 billion Indian rupees ($7.97 billion) from the issuance rather than the initial plan for about 900 billion rupees, having trimmed the offering because of market conditions, a government source said to PTI.
The listing is likely to be completed by the end of March, the source added. The filing also stated an embedded value of 5.39 trillion Indian rupees ($71.56 billion). The embedded value is a measure of future cash flows in life insurance companies and a key financial gauge for insurers.
Results today
Coal India, Eicher Motors, Grasim Industries, SpiceJet, Adani Enterprises, Adani Wilmar, Rossari Biotech, AGS Transact Technologies, Apex Frozen Foods, Apollo Micro Systems, Balkrishna Industries, Bharat Dynamics, BGR Energy Systems, Dish TV India, Equitas Holdings, Future Retail, Gateway Distriparks, Graphite India, Greenply Industries, Ipca Labs, IRCON International, IVRCL, Jet Airways, KNR Constructions, Manappuram Finance, MEP Infrastructure, MTNL, Nagarjuna Fertilizers, Natco Pharma, NBCC (India), Panacea Biotec, PC Jeweller, PTC India, RailTel Corporation of India, Repco Home Finance, Sadbhav Engineering, Shriram Properties, Spandana Sphoorty Financial, Sterling and Wilson Renewable Energy, Vivimed Labs, and Zuari Global are among 989 companies to release quarterly earnings.
Stocks under F&O ban
Four stocks - BHEL, Punjab National Bank, SAIL and Tata Power Company - are under the F&O ban for February 14.
