Trends on SGX Nifty indicate a gap-down opening for Indian indices

Asian stocks fell the most in two weeks on Monday

FPJ Web DeskUpdated:Monday, April 25, 2022, 09:18 AM IST
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Indian markets could open sharply lower in line with negative Asian markets today and sharply lower US markets on Friday. /Representational image of stock market | AFP PHOTO / Yoshikazu TSUNO

Trends on SGX Nifty indicate a gap-down opening for Indian indices. Indian markets could open sharply lower in line with negative Asian markets today and sharply lower US markets on Friday, said Deepak Jasani, Head-Retail Research, HDFC Securities.

Nifty snapped a two-day winning streak on April 22, impacted by the hint by Fed Chair Powell about an imminent rate hike of 50 bps in June. At close Nifty was down 1.27 percent or 220.7 points at 17,171.9.

Equity markets in India remained torn between hopes for an early end to the geopolitical uncertainty and fears of faster monetary tightening and softer earnings announcements. Nifty has formed a doji on weekly charts after a fall suggesting possible halt to the downmove, unless the lows of 16,824 are breached. However the sharp fall in the US indices on Friday due to fears of rate rise and disappointment over corporate earnings could lead to a lower opening on Monday. Key support area of 16,824 will be closely watched/tracked to decide about the future course of the market, said Jasani.

Prashanth Tapse, Vice President (Research), Mehta Equities Ltd. said, Domestic benchmark indices are expected to see a sharp downfall in early Monday trades mirroring weakness in other Asian indices, with the trading theme revolving around Federal Reserve Chairman Jerome Powell’s statements. The Fed chairman is no longer counting on inflation coming back down and has reiterated plans to get interest rates “expeditiously” to neutral. Technically, a ‘much more severe’ selloff looms at Dalal Street which could take Nifty towards 16,807 and then at 16,597 mark.

Benchmark Indices are expected to open on a negative note as suggested by trends on SGX Nifty, said Mohit Nigam, Head - PMS, Hem Securities for Monday April 25. US markets fall by more than 2 percent on Friday while European markets also fell around 2 percent on Friday. Asian markets are trading in red in the early Monday trade with Nikkei trading around (-)1.58 percent lower, Hang Seng trading (-)2.3 percent lower and Taiwan trading (-) 2.34 percent lower. UBS cut India's 2022-23 economic growth forecast by 70 basis points to 7 percent on Friday.

Immediate support for Nifty can be 16,600 and 17,500 may act as resistance. For Bank Nifty 35,200 and 37,100 levels may act as immediate support and resistance respectively, Nigam added.

Asian equities decline

Asian equities and US Futures declined on Monday following Wall Street’s weak performance overnight and a spike in US Treasury yields and as strong tightening signals from the US Federal Reserve Chair Jerome Powell and European Central Bank undermined risk appetite.

Asian stocks fell the most in two weeks on Monday as concern about rapid US rate rises and slowing growth rattled investors, while the euro found support after Emmanuel Macron won a second term as French president. MSCI's broadest index of Asia-Pacific shares outside Japan slid 1.6 percent to a six-week low, and a nudge from authorities extended steep losses for the Chinese yuan.

Japan's Nikkei fell 1.9 percent. Hong Kong's Hang Seng fell 3 percent. S&P 500 futures dropped 0.8 percent while FTSE futures and European futures were off by more than 1 percent. Oil fell 2.7 percent. The euro was broadly steady at $1.0802, compared with broad dollar gains elsewhere, and it touched an almost two-month high against a struggling sterling.

US stocks fell sharply on Friday

US stocks fell sharply on Friday to suffer their biggest one-day drop since 2020, as investors continued to weigh hawkish comments on interest rates a day earlier by Federal Reserve Chairman Jerome Powell, as well as a fresh batch of corporate earnings that largely disappointed. The Dow suffered a 1.9 percent weekly decline, its fourth straight loss. The S&P 500 dropped 2.8 percent and the Nasdaq tumbled 3.8 percent for their third consecutive weekly drops.

The Cboe Volatility Index VIX, an options-based measure of expected volatility over the next 30 days, was up 19.5 percent at 27.1 on Friday, moving above its long-term average just below 20.

Meanwhile, traders of fed funds futures have priced in a 94 percent chance that the Federal Reserve will deliver a 75 basis point rate hike in June, up from 70 percent on Thursday and 28 percent a week ago, according to the CME FedWatch Tool.

The US oil benchmark fell $1.72, or 1.7 percent, to settle at $102.07 a barrel on the New York Mercantile Exchange, falling 4.1percent for the week. Gold fell $13.90, or 0.7 percent, to settle at $1,934.30 an ounce, leaving a 2.1 percent weekly fall.

FPIs pull out $17.5 bn

Investors pulled $17.5 billion out of global equities over the past week, making for the biggest weekly outflow so far this year. Investors also pulled $8.7 billion out of bonds and $55.4 billion from cash, pouring $900 million into gold. That was before Friday’s (22-04-21) stock-market rout.

Investors poured $19.8 billion into hedge funds in the first quarter, the biggest inflow of money since the second quarter of 2015, lured by gains some funds are posting amid volatile markets, according to data provider HFR.

ICICI Bank Q4 profit surges by 59% to Rs 7,019 cr

ICICI Bank on Saturday reported a 59 percent jump in standalone net profit to Rs 7,019 crore for the fourth quarter of FY2021-22. The bank had earned a profit of Rs 4,403 crore in the corresponding January-March quarter of the last year.

The total income of the bank rose to Rs 27,412 crore in the January-March period from Rs 23,953 crore in the year-ago quarter,ICICI Bank said in a regulatory filing.

Mcap of 8 of top-10 most valued firms tumble Rs 2.21 lakh cr

Eight of the top-10 most valued firms together lost Rs 2,21,555.61 crore from their market valuation last week in-line with the weak trend in the broader market, with Infosys and HDFC Bank suffering the biggest hit.

The 30-share benchmark index, Sensex, lost 1,141.78 points or 1.95 per cent last week. From the top-10 pack, only Reliance Industries and Adani Green Energy emerged as the gainers.

The market valuation of Infosys tumbled Rs 68,548.8 crore to Rs 6,67,062.55 crore. The market capitalisation (mcap) of HDFC Bank dived Rs 60,536.97 crore to reach Rs 7,51,801.60 crore.

Bullion outlook

Gold fell on Friday and was set for its biggest weekly decline since mid-March as signs of faster policy tightening by the Federal Reserve lifted Treasury yields and the dollar. Speaking at an IMF meeting, Powell said that “Inflation is much higher now and our policy rate is still more accommodative than it was then so it is appropriate, in my view, to be moving a little bit more quickly.”

After his comments the dollar index crossed two year highs and 10-year bond yields are also trading at three year highs.The dollar index crossed 101 marks and pushed precious metals lower.

However, higher global inflation prospects and slower economic growth outlook due to Russia-Ukraine crisis and higher inflation is supporting precious metals at lower levels.

Rahul Kalantri, VP Commodities, Mehta Equities Ltd. said, "We expect some more weakness in bullion price in today’s session. Gold has support at $1917-1905, while resistance at $1940-1948. Silver has support at $23.80-23.62, while resistance is at $24.34-24.55. In INR terms gold has support at Rs51,920–51,770, while resistance is at Rs52,420–52,550. Silver has support at Rs66,050- 65,710 while resistance is at Rs66,890–67,270".

Crude oil extends losses

Last week, Crude oil lost nearly 5 percent on demand concerns. Oil prices extended losses on Monday amid persistent worries that prolonged COVID-19 lockdowns in Shanghai and potential US rate hikes would dent global economic growth and fuel demand. Natural gas fell hastened by a larger-than-expected weekly storage build.

However, banning Russian oil by European Union and decline in crude oil inventories in the United States supported oil prices at lower levels. IMF revised down global growth due to Russia-Ukraine crisis and Federal Reserve Chairman also gave signal for aggressive rate hikes last week.

The dollar index crossed two year highs and hit 101 marks. Strength in the dollar also pushed oil prices lower.

Rahul Kalantri, VP Commodities, Mehta Equities Ltd., said, "We expect crude oil prices may show some more pressure in today’s session. Crude oil is having support at $97.20-$95.40 and resistance is at $103.10–105.00, In INR terms crude oil has support at Rs7,650-7,520; while resistance is at Rs7,920–8,050".

USDINR

USDINR 27 April futures contract showed very high volatility last week and slipped again. On the weekly technical chart a pair is trading above its resistance level of 76.15. We observed that a pair is showing positive momentum on the technical chart and if it continues to sustain above 76.15 could test 76.70-76.85 levels again; 76.06 acts as major support on daily closing basis. Rahul Kalantri, VP Commodities, Mehta Equities Ltd. said, We suggest buying in the pair above 76.35 with a stop loss below 76.06 on a daily closing basis for the targets of 76.70-76.85.

(With inputs from Reuters)

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