Trends on SGX Nifty indicate a negative opening for the broader index in India.
Indian markets could open lower in line with negative Asian markets today and volatile US markets on Monday, said Deepak Jasani, Head-Retail Research, HDFC Securities.
Prashant Tapse, Vice President (Research) at Mehta Equities Ltd, said, "There is a bright chance that Nifty’s slide could deepen to 16,401 mark and then aggressive targets seen at 15,911. The catalysts to the downside risks are the geopolitical tension brewing and US President Biden mulling troop deployment near the Ukraine border in the wake of Russia's military aggression, looming Federal Reserve decision and oil prices hovering near 7-year highs. So, on the downside, the benchmark Nifty needs to hold above 16,401 mark for any meaningful recovery. We will spy with one big eye if bulls can regroup near 16,410 mark."
Mohit Nigam, Head-PMS, Hem Securities said, "Benchmark Indices are expected to open on a negative note as suggested by trends on SGX Nifty, amid weakness across the global market. The US markets ended higher on Monday with bargain hunters pushing the indexes into positive territory by closing bell. Asian markets are trading in red on Tuesday amid nervousness among investors about the situation in Ukraine and ahead of the outcome of the Fed's scheduled policy review. Heavy selling by foreign institutional investors (FIIs) is likely to weigh on the markets.
"On the technical front 16,800 and 17,500 are immediate support and resistance in Nifty 50. For Bank Nifty 36,300 and 38,000 are immediate support and resistance respectively," Nigam added.
Nifty fell sharply for the fifth consecutive session on Jan 24, falling more than the other global markets. At close, Nifty was down 2.66% or 468 points at 17149. In the process Nifty became the worst performing index in the Asian region.
Nifty came under intense selling pressure on January 24 due to Fund outflows from FPIs ahead of the monetary withdrawal by global Central Banks and rate hikes, rising crude oil prices whose outlook has worsened following the Russia Ukraine standoff and the forthcoming Union Budget followed by state election outcome. Advance decline ratio at 167/1948 on the NSE was the worst since March 23, 2020. Though the Nifty has not closed at the intra day low, not many would attempt to do bottom fishing on Tuesday ahead of the holiday on January 26 and the US Fed meet outcome. Nifty could remain in the 16,955-17,298 band in the near-term, Jasani added.
Stocks to watch out for
Agriculture industry related stocks will be in focus as the Union Food Ministry said the Center has procured 606.19 lakh tonnes of paddy in the ongoing 2021-22 marketing season so far, with maximum quantities being purchased from Punjab, said Nigam.
There will be some reaction in textile industry stocks as ICRA ratings in its report stated that Indian cotton spinners are likely to report double-digit revenue growth and all-time high profits in 2021-22, mainly driven by high demand and realizations. It added that while the growth is primarily being led by all-time high realizations, which have sustained for much of the year, volumes are also estimated to be better than the pre-COVID levels.
Axis Bank will be in focus as the company has posted consolidated net profit for the December quarter zoomed nearly three-folds to Rs 3,973 crore.
Asian stocks decline
Asian stocks declined Tuesday after breathtaking volatility on Wall Street stoked by concerns over Federal Reserve policy tightening and geopolitical tension. Japan's Nikkei index touched a five-month low on Tuesday, weighed down by investor caution over the situation in Ukraine and a potential faster-than-expected US rate hike ahead of the Federal Reserve policy meeting due later in the day, Reuters said.
US stocks do a U-turn
The Dow industrials staged their first-ever 1,000-point-plus intraday U-turn to result in a gain, while other notable benchmarks also rallied in the final minutes of trading and reversed a sharp selloff.
The Dow ended up 0.29 percent, while the S&P 500 gained 0.28 percent and the Nasdaq Composite added 0.63 percent. The MSCI world equity index, which tracks shares in 45 nations, was down 0.78 percent.
The Nasdaq Composite Index just finished in positive territory, up 0.6 percent in a whipsaw session, after being down by as much as 4.9 percent at Monday’s nadir, with that turnaround marking the largest comeback to end in positive territory since October 10, 2008. There was no specific catalyst for the intraday turnaround, but it came as parts of the market saw so-called oversold conditions. Volume on US exchanges was 18.42 billion shares, compared with the 10.95 billion average over the last 20 trading days.
The US market was being driven lower earlier in the day by fundamental deterioration in corporate earnings; investor fear over Fed policies and geopolitical tensions; and investor sentiment starting to crack as technical levels breakdown for equity benchmarks.
Treasury notes
The yield on the 10-year Treasury note fell 1.2 basis points to 1.735 percent. The rate is down 9.8 basis points over the last two trading days, the largest two-day decline since November 29, 2021. Bitcoin has recouped some losses after it slumped Monday to as low as $32,983, as investors expect the Federal Reserve’s meeting, which will be held on Tuesday and Wednesday, to set the tone for a shift away from its easy-monetary policy started during the pandemic. The cryptocurrency was trading at around $36,344, about 47 percent lower from its all-time high of $68,991 in November.
US Fed MP meeting
The US Federal Reserve is due to convene its two-day monetary policy meeting on Tuesday, and market participants will be parsing its concluding statement and Chairman Jerome Powell's subsequent Q&A session for clues as to the central bank's timeline for hiking key interest rates to combat inflation.
"I think investors are over-assuming a very hawkish stance by the Fed," said Sam Stovall, chief investment strategist of CFRA Research in New York. "Granted, inflation is high and is likely to get higher before it starts to decline. Specifically we see the headline CPI topping at 7.3 percent for both January and February, but then coming down to 3.5 percent by year-end."
Singapore Central Bank to tighten monetary policy
Singapore’s central bank said on Tuesday it was tightening its monetary policy settings, in an out-of-cycle move, as inflation risks rise. The MAS said it would raise slightly the rate of appreciation of its policy band. The width of the policy band and the level at which it is centered will be unchanged.
Australian core inflation jumps to 7.5 year high
Australian core inflation accelerated to its fastest annual pace since 2014 in the December quarter as fuel and housing costs led broad-based price pressures, a shock that will stoke market speculation of an early hike in interest rates, Reuters said.
Data from the Australian Bureau of Statistics out on Tuesday showed the headline consumer price index (CPI) rose 1.3 percent in the fourth quarter and 3.5 percent for the year, above forecasts.
Oil prices fall 2%
Oil prices fell about 2 percent on Monday, hit by investor concerns over the possibility of quicker than expected interest-rate hikes by the US Federal Reserve that took down risk markets such as equities while the dollar rallied, Reuters said.
Brent crude fell $1.62, or 1.8 percent, to $86.27 a barrel, while US West Texas Intermediate (WTI) crude settled down $1.83, or 2.2 percent, to $83.31. Both benchmarks rose for a fifth week in a row last week, gaining about 2 percnt to reach their highest since October 2014.
Oil prices are up more than 10 percent this year on the concerns over tightening supplies and OPEC+ now struggling to hit a targeted monthly output increase of 400,000 barrels per day.
(With additional inputs from Reuters, agencies)
