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

Wall Street ended sharply higher on Thursday, led by Tesla, Nvidia and other megacap growth stocks

FPJ Web DeskUpdated: Friday, June 03, 2022, 09:14 AM IST
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Asian stocks traded mixed Monday as investors assess the impact of China’s COVID policies on growth and the outlook for the world’s largest economies. /Representational image | AFP PHOTO / Yoshikazu TSUNO

The stock market indices are expected to open positive on June 3. Prashanth Tapse, Vice President (Research), Mehta Equities Ltd said, the Markets are expected to start on a firm note tracking solid gains in SGX Nifty and overnight recovery in the US markets. Nifty is building a ‘bullish double bottom pattern’ aided by Indi'a GDP numbers on expected lines, dovish US Fed, early arrival of monsoon, fresh stimulus in China, and easing curbs in the dragon nation. Nifty bulls’ probably will rip to its 200 - DMA 17269 mark, with immediate target seen at 16897. Stocks that are likely to gain ground Bajaj Finance, Tata Steel, Grasim and Reliance Industries.

Mohit Nigam, Head - PMS, Hem Securities said, Markets are looking to give a strong positive opening with gains of over a percent in Nifty50 as indicated by the SGX. Among the Asian markets all are positive on the back of the US market being positive after two days of losses. The positive indicators are also coming on the crude front with OPEC+ countries planning to increase production of 648,000 barrels per day from July and August - much required worldwide to tame inflation and help the world to take on faster growth.

The Nifty50 index options faced a fat finger trade yesterday with strike price 14,500 call selling for very low prices while index was trading at 16,500-16,600 levels. For the benchmark indices, 16,650 and 17,000 will act as support and resistance for Nifty50 today. While Bank Nifty would have support and resistance at 35,200 and 36,000, Nigam added.

On June 3, the Sensex was up 339.88 points or 0.61 percent at 55,721. Nifty was up 89.70 points or 0.54 percent at 16,612.45.

Stocks to watch out for

Among the stock specific news, Ultratech Cement planned capacity expansion of 22.6 MTPA with investments of closer to 13,000 crores in the brownfield and greenfield projects.

Bajaj Auto is facing huge inventory shortages due to chip crunch and vendor issues.

Aether industries will make its debut in the markets today after the 6.25x subscription of the 808 crore IPO.

US stocks close in green

Wall Street ended sharply higher on Thursday, led by Tesla, Nvidia and other megacap growth stocks in a choppy session ahead of a key jobs report due on Friday. Tesla, Nvidia and Meta Platforms each rose more than 4 percent fueling gains in the S&P 500 and Nasdaq. Amazon rallied 3.1 percent and Apple added 1.7 percent.

The S&P 500 is now down about 13% from its record high close in early January. The Dow Jones Industrial Average rose 1.33% to 33,248.28, the S&P 500 gained 1.84 percent to 4,176.82 and the Nasdaq Composite added 2.69 percent to 12,316.90.

Global stocks up

The MSCI world equity index, which tracks shares in 50 countries, was up 1.42 percent. The pan-European STOXX 600 index gained 0.57%. US Treasury yields pulled back from recent highs ahead of the closely watched employment report and what it could indicate about the possible trajectory of interest rates.

China stock, bond markets closed

China's stock and bond markets, foreign exchange and commodity futures markets will be closed for the Dragon Boat Festival on Friday, June 3, and market reports will not be published.

Markets in Hong Kong and Taiwan are also shut. Trade will resume on Monday, June 6.

Oil prices close higher

Oil prices settled higher after UScrude inventories fell more than expected amid high demand for fuel and OPEC+ agreed to boost crude output to compensate for a drop in Russian production. Brent futures rose 1.69 percent to $118.26 a barrel, while US West Texas Intermediate (WTI) crude rose 1.97 percent to $117.53.

Oil rose more than 1 percent on Thursday after US crude inventories fell more than expected amid high demand for fuel, shrugging off OPEC+'s agreement to boost crude output to compensate for a drop in Russian production. Prices were also supported by the European Union's sixth package of sanctions against Russia, which will include an immediate ban on new insurance contracts for ships carrying Russian oil and a six-months phase-out on existing contracts.

US crude oil and fuel stockpiles fell last week, as demand continued to outstrip supply, with commercial crude inventories drawing down even as more strategic reserves entered the market, government data showed. US crude oil stockpiles fell by 5.1 million barrels, compared with analysts' expectations in a Reuters poll for a 1.3 million-barrel drop.

Oil prices fell earlier on Thursday as Saudi Arabia and other OPEC+ states agreed to bring forward oil production rises to offset Russian output losses to ease surging oil prices and inflation. The OPEC+, agreed to raise output about 6,50,000 barrels per day in the next two months rather than the current 4,32,000 barrels per day.

US dollar falls

The US dollar eased across the board, ceding some of the ground gained in recent sessions as firmer risk sentiment prompted investors to reach for higher-yielding currencies. The dollar index fell 0.78 percent, with the euro up 0.94 percent to $1.0746.

The dollar index witnessed very high volatility and plunged again after disappointing US ADP non-farm employment data. The dollar index settled on a weaker note at 101.765 with a loss of 0.78 percent on Thursday. The USD-INR 28 June futures contract settled on a slightly positive note at 77.77 with a gain of 0.05 percent on Thursday. The dollar index plunged again on Thursday after disappointing U.S. ADP non-farm employment data. The US ADP job data missed the expectations and pushed the dollar index lower.

The dollar index also slipped amid gains in the riskier currencies. Australian dollar advanced 1.17 percent, New Zealand dollar also gained 1.20 percent, the Canadian dollar rose 0.6 percent after Bank of Canada raised interest rates and Swiss Franc gained 0.5 percent against the U.S. dollar on Thursday.

Rahul Kalantri, VP Commodities, Mehta Equities Ltd. said, We expect the dollar index to remain volatile in today’s session ahead of the US job report and could hold its support level of 101.20 on a closing basis. On the other hand, the rupee traded sideways on Thursday. Despite weakness in the dollar index and gains in domestic equity markets a rupee unable to shows strength.

However, rebound in the domestic equity markets and weakness in the dollar could support the rupee at lower levels. We expect the rupee to remain volatile to stronger in today’s session and could touch 77.55, 77.40 level in today’s session, Kalantri added.

Gold prices up

Gold prices rose over 1 percent, supported by a dip in the dollar and the US private payrolls data. Spot gold added 1.3 percent to $1,868.59 an ounce, while US gold futures gained 1.38 percent to $1,868.70 an ounce.

At domestic bourses, gold and silver prices were up in evening session on Thursday, supported by a drop in the US dollar index. The near-term chart postures are improving for both metals, and that’s also inviting more technically oriented traders to the long sides. In international gold was up by 1 percent at $1,873.50 while silver was up by 1.24 percent at $22.34 an ounce. Domestic markets were also settled on a positive note. Gold August futures contract settled at Rs 51,269 up by 0.79 percent and silver July futures contract settled at Rs 62,336 up by 1.23 percent.

Gold and silver gained after disappointing US ADP non-farm employment data released on Thursday. ADP said that 1,28,000 jobs were created in the month of May 2022, against expected job growth of 3,28,000 and April month's job growth of 4,28,000. The US ADP job data missed the expectations and supported both precious metals. The dollar index also plunged after disappointing ADP non-farm data and slipped below 102 marks once again.

Rahul Kalantri, VP Commodities, Mehta Equities Ltd. said, We expect both precious metals to remain volatile in today’s session ahead of the USjob reports and continue to hold its important support levels. Gold has support at $1855-1844, while resistance is at $1882-1891. Silver has support at $22.05-21.80, while resistance is at $22.62-22.78. In INR terms gold has support at Rs 51,970–51,810, while resistance is at Rs52,440–52,550. Silver has support at Rs61,880-61,450, while resistance is at Rs 62,880–63,210.

Policy tightening to pressure fiscal numbers

As the country's fiscal policy is moving in sync with the monetary policy amid the runaway inflation, the tightening measures along with rising subsidies imply that the consolidated fiscal deficit may remain elevated at 10.2 per cent of GDP in FY'23, down 20 bps from FY'22 according to a report.

As per the report, the central deficit is expected to be at 6.7 per cent and states' at 3.5 per cent in the current fiscal. The government has pegged the combined fiscal shortfall at 9.8 per cent of which the central deficit is seen at 6.4 per cent (down from 6.7 per cent in FY2'2) and states' at 3.4 per cent for FY'23.

Exports rise 15.46% to $37.3 billion in May

Merchandise export rose by 15.46 per cent to $37.3 billion in May 2022 as compared to $32.30 billion in the same month last year, the government data showed on Thursday. India's merchandise imports in May 2022 surged by 56.14 per cent to $60.62 billion as compared to $38.83 billion in May 2021. The trade deficit in May 2022 surged to $23.33 billion.

India's merchandise export in April-May 2022-23 rose to USD 77.08 billion, posting an increase of 22.26 per cent over $63.05 billion in the corresponding period of the previous year, according to data released by the Ministry of Commerce and Industry. India's merchandise imports in April-May 2022-23 stood at $120.81 billion with an increase of 42.35 per cent over $84.87 billion in April -May 2021-22.

(With inputs from Reuters, Agencies)

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