Trends on SGX Nifty indicate a gap-down opening for indices. Indian markets could open lower in line with negative Asian markets today and lower US markets on Friday, said Deepak Jasani, Head-Retail Research, HDFC Securities.
Last week, the Sensex lost 2,185.85 points or 3.57 percent, while the Nifty slumped 638.60 points or 3.49 per cent in tandem with a sell-off in global equities amid concerns over inflation and monetary policy tightening. ''Indices witnessed a four per cent cut last week, as FPI booked profits across large-caps and select high-quality mid-caps.
Mohit Nigam, Head - PMS, Hem Securities said, "Benchmark Indices are expected to open on a negative note as suggested by trends on SGX Nifty. US stock markets closed lower on Friday, NASDAQ fell (-)2.72 percent followed by plunge in Netflix. European Indices also closed lower on Friday. Asian markets were also trading lower in the early Monday trade with Hang Seng trading (-)1.12 percent, Nikkei trading (-)0.55 percent and Kospi trading (-)1.63 percent lower. The markets seems to be under pressure today mainly led by surging bond yields, FII selling and average Q3 results."
On the technical front 17,400 and 17800 are immediate support and resistance in Nifty 50. For Bank Nifty 37,000 and 38,000 are immediate support and resistance respectively, Nigam added.
Nifty declined for the fourth consecutive session on January 21 as global markets again came under selling pressure. At close, Nifty was down 0.79 percent or 139.8 points at 17617.
Nifty ended the week - down 3.5 percent - with the worst losses in about two months. Advance decline ratio fell sharply on Friday to much under 1:1. This suggests that the nervousness has spread to the broader markets.
The US Fed meet this week may not allow a sharp bounce early next week. 17,288-17,376 could be the next support while 17,747-17,798 could be the next resistance for the Nifty. Markets globally need to stabilise and overcome the rising rates fear to stem the FPI outflows and ensure a preBudget rally. Once the US Fed meet outcome is made public on Wednesday - US time, and in case it is not hawkish, we could see a bounce across the global markets.
Stocks to watch out for
Some stock specific actions due to Q3 earnings can be witnessed in Reliance Industries, JSW Steel, ICICI Bank, Yes Bank etc. Earning to watch today includes HDFC AMC, Axis Bank, SBI Cards, Deepak Nitrite, IEX etc.
Asians stocks slip in early trade
Asia-Pacific markets traded lower on Monday as investors looked ahead to the US. Federal Reserve’s monetary policy meeting this week.
MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.8 percent and Japan's Nikkei 0.6 percent, Reuters said. Chinese blue chips fell 0.4 percent, getting little traction from a recent easing in policy by Beijing. However, Wall Street futures bounced after last week's drubbing, with the S&P 500 futures up 0.7 percent and Nasdaq futures 0.8 percent.
US stocks end sharply lower on Friday
US equity gauges on Friday ended sharply lower, capping a withering week for investors highlighted by the biggest weekly slide for the S&P 500 and the technology-laden Nasdaq Composite since March 2020. For the week, the Nasdaq Composite logged a 7.6 percent drop, which is its worst such performance since March 20, 2020. The S&P 500 booked a 5.7 percent decline, also for its steepest such fall since March 2020, and the Dow logged a 4.6 percent weekly slide for the holiday-shortened week, its worst since October 30, 2020.
Nasdaq Composite booked its fourth straight weekly loss, after a sixth straight daily decline, marking its longest such losing streak since 2012. The Nasdaq Composite is down 11 percent so far in 2022 and poised for the worst start to a year since the 2008 financial crisis.
Conference Board’s December leading economic index rose 0.8 percent , in line with forecasts and signaling steady growth even as the spread of the omicron variant of the coronavirus nibbled at economic activity.
Bitcoin prices register sharp decline
Bitcoin prices fell sharply on Friday, while ether prices also dived, wiping off nearly $150 billion from the crypto market. Russia’s central bank proposed banning the use and mining of cryptos on Thursday.
Bitcoin fell about 15 percent and was trading around $36,000 late Friday, according to Coin Metrics. Ether, the second-largest cryptocurrency by market cap, dived about 20 percent to trade around $2,500. Rising rates have prompted investors to shed positions in riskier assets.
The yield on the US 10-year Treasury note fell Friday to end below 1.75 percent, but has soared this month, from 1.5 percent at the start of January.
Gold up
COMEX gold traded marginally higher near $1835/oz after last week’s rally. Gold trades higher supported by geopolitical tensions relating to Russia, increasing inflation concerns, rising virus cases, sell-off in equities and pick up in ETF buying, said Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities. However, weighing on price is higher bond yields and increased expectations of Fed’s monetary tightening. Gold has stalled near $1850/oz level and some correction is possible amid positioning ahead of Fed’s monetary policy meeting
Crude trades higher
NYMEX crude trades about 1 percent higher near $86/bbl after last week’s near 2 percent rise when it tested 2014 highs, said Ravindra Rao at Kotak Securities. Crude is supported by supply risks amid increased tensions relating to Russia and Middle-east. Drop in US crude oil rig count also lent some support. However, weighing on price is weakness in equity markets amid tightening expectations and forecasts of oversupplied market in coming months. Crude is off the highs but may continue to remain supported by geopolitical risks.
Oil prices up
Oil prices were rising again having climbed for five weeks in a row to a seven-year peak on expectations demand will stay strong and supplies limited, Reuters said.
Brent added 83 cents to $88.72 a barrel, while US crude rose 77 cents to $85.91.
Economy has 'bright spots, dark stains': Raghuram Rajan
The Indian economy has ''some bright spots and a number of very dark stains'' and the government should target its spending ''carefully',' so that there are no huge deficits, stated economist and former RBI Governor Raghuram Rajan.
Rajan stated that the government needs to do more to prevent a K-shaped recovery of the economy hit by the coronavirus pandemic.
A K-shaped recovery will reflect a situation where technology and large capital firms recover at a far faster rate than small businesses.
Results today
The following companies will release their Q3 results today:
Axis Bank, HDFC Asset Management Company, Apollo Pipes, Apollo Tricoat Tubes, Burger King India, Cera Sanitaryware, Chennai Petroleum Corporation, Craftsman Automation, Deepak Nitrite, Greenpanel Industries, GRM Overseas, Hindustan Fluorocarbons, Indian Energy Exchange, IIFL Securities, IndiaMART InterMESH, Kirloskar Ferrous Industries, Mahindra EPC Irrigation, Meghmani Finechem, Quick Heal Technologies, Music Broadcast, The Ramco Cements, Reliance Home Finance, SBI Cards and Payment Services, Shemaroo Entertainment, Shiva Cement, Shriram Transport Finance, Steel Strips Wheels, Sudarshan Chemical Industries, Supreme Industries, and Zensar Technologies.
Five stocks under F&O ban
Five stocks – BHEL, Escorts, Indiabulls Housing Finance, Vodafone Idea, and NALCO – are under the F&O ban for January 24.
(With additional inputs from Reuters and agencies)
