Trends on SGX Nifty indicate cautious opening for stock market indices

Trends on SGX Nifty indicate cautious opening for stock market indices

FPJ Web DeskUpdated: Tuesday, March 22, 2022, 09:09 AM IST
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Shares in Asia-Pacific mostly rose in Tuesday morning trade.,/ Representative image | AFP PHOTO / FRED DUFOUR

Trends on SGX Nifty indicate a cautious opening for the stock market indices. The Indian markets could open flat to mildly higher in line with largely positive Asian markets today and despite mildly negative US markets on Monday, said Deepak Jasai, Head-Retail Research, HDFC Securities.

Markets are likely to consolidate as the positive momentum is seen fading, and Nifty may most probably waver, said Prashanth Tapse, Vice President (Research), Mehta Equities Ltd. The bulls are likely to struggle for traction on the buy side. Also denting sentiments are the 10-year US Treasury bond yield which hit a 33-month high at 2.25%. Nifty faces its biggest hurdle at 17807 mark, with crude oil prices rising above $115 a barrel could once again make investors jittery

Indian markets opened higher on Monday (March 22) on positive global cues. Nifty did not hold its gain and witnessed profit booking towards the end of the session. Nifty lost more than 1 percent to close at 17,112.

Nifty formed an engulfing top after a rise on Monday. This could be a bearish reversal signal. Support could now come in at 16987 while resistance at 17287.

Asian stocks up

Shares in Asia-Pacific mostly rose in Tuesday morning trade.

US stocks fall on Monday

US stocks fell Monday after Federal Reserve Chairman Jerome Powell left the door open to the prospect of bigger rate hikes to bring down inflation, but equity benchmarks finished above session lows.

All three major stock indexes dropped and Treasurys aggressively sold off on Monday as Powell, speaking to the National Association for Business Economics, repeated that the central bank could deliver rate increases of larger than 25 basis points each at future meetings if policy makers deem it necessary in their fight to control inflation.

The Dow Jones Industrial Average fell 201.94 points, or 0.58 percent, to 34,552.99, the S&P 500 lost 1.94 points, or 0.04 percent to 4,461.18 and the Nasdaq Composite dropped 55.38 points, or 0.4 percent, to 13,838.46. Boeing shares fell by 3.6 percent after one of its 737 jets crashed in China, Reuters said.

The yield on the US 10-year Treasury note rose 16.9 basis points to 2.315 percent. That’s the highest level since May 24, 2019, and the largest one-day gain in two years.

Crude settles at $112.12

West Texas Intermediate crude for April delivery rose $7.42, or 7.1%, to settle at $112.12 a barrel on the New York Mercantile Exchange; the settlement was the highest for a front-month contract since March 8.

BofA's global fund manager survey last week had a bearish bias with cash levels-the highest since April 2020 and global growth expectations the lowest since the financial crisis of 2008.

Crude oil price surged for a fourth day, heading for the best run in a month and gained around 18 percentin last four days, on signs the European Union may be edging closer to a ban on Russian crude imports. Russia is one of the largest exporters of oil to the European Union and banning Russian oils could be havoc. However, EU allies Germany and Hungary is not agree for banning Russian oil imports. The European Union is schedule to meet on Thursday to discuss about sanctions of Russian oils. Despite rising productions from the United States and demand concerns due to rising coronavirus cases crude oil unable to show weakness in the international markets. Rahul Kalantri, VP Commodities, Mehta Equities Ltd said, crude oil prices are expected to remain firm, crude oil is having support at $104.5–101.20 and resistance is at $114.20–117.00. In INR terms Crude oil has support at Rs8,000-7,820; while resistance is at Rs8,550–8,680.

Indian banking sector improves with bad loans at record low

The health of the Indian banking sector has improved substantially with bad loans at a record low, provision coverage high, and capital well above regulatory requirements, said Reserve Bank of India's Governor Shaktikanta Das.

The gross non-performing assets ratio of the banking sector is at an all-time low of 6.5 percent, Das said, at an event organised by the Confederation of Indian Industry.

Bullion outlook

On Monday, Gold and silver started with mild gains on expectation of Russia-Ukraine war will continues for some more days. Precious metals also catch safe-haven demand after European Union said for banning Russian oils. Gold and silver also gets support from the weakness in the global equity markets due to Russia-Ukraine war and rising coronavirus cases. Higher commodity and energy prices continue to push inflation higher and cap gains on global economic growth.

Despite Federal Reserve Chair Jerome Powell’s more hawkish tone on monetary policy, saying it could use bigger-than-usual interest rate hikes if needed to do so, precious metals showing strength due to inflation and growth concerns, said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.. The benchmark 10-year bond yields in the United States crossed 2.30 percent marks and restricted gains of precious metals. Both precious metals will remain volatile in today’s session, Kalantri said. Gold has support at $1910-1895, while resistance at $1940-1952. Silver has support at $25.00-24.78, while resistance is at $25.48-25.65. In INR terms, gold has support at Rs 51,420–51,150, while resistance is at Rs 51,850–52,050. Silver has support at Rs 67,780- 67,450 while resistance is at Rs 68,800–69,180.

USD-INR

USDINR 29March futures contract showed strength and started new week on a positive note. On the daily technical chart a pair is trading near its resistance level of 76.30. A pair recovered from their lows last week and trading nears its resistance level of 76.30. Rahul Kalantri, VP Commodities, Mehta Equities Ltd. said, "Looking at the technical set-up, if a pair sustains above 76.30, it could show further strength towards 76.55-76.70 levels; else can touch its major support level i.e 75.95."

The rupee slumped 31 paise to close at 76.15 (provisional) against the US dollar on Monday as rising crude oil prices and a lacklustre trend in domestic equities weighed on investor sentiment. At the interbank foreign exchange market, the rupee opened at 76.08 against the American currency, then lost further ground to settle at 76.15, down 31 paise from the previous close.

World growth forecasts cut as inflation intensifies due to War

The outlook for global GDP growth has deteriorated significantly as inflation challenges intensify and Russia’s invasion of Ukraine threatens global energy supplies. Fitch Ratings’ March 2022 Global Economic Outlook sees world GDP growth reduced by 0.7pp in 2022 and sharp upward revisions to inflation forecasts. “Global inflation is back with a vengeance after an absence of at least two decades. This is starting to feel like an inflation regime change moment,” said Brian Coulton, Chief Economist, Fitch Ratings.

Stocks under F&O ban

Three stocks – Balrampur Chini Mills, Delta Corp, and Indiabulls Housing Finance – are under the F&O ban for March 22.

(With inputs from Reuters)

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