SGX Nifty up 90 points; here’s what changed for market while you were sleeping

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SGX Nifty up 90 points; here's what changed for market while you were sleeping


US Fed’s assurance to keep its accommodative stance on the policy front could not lift Asian markets, thanks to concerns over rising inflation. But for domestic investors, easing of Brent crude prices could be something to cheer about.

Here’s breaking down the pre-market actions.

STATE OF THE MARKETS

SGX Nifty signals positive start
Nifty futures on the Singapore Exchange traded 92.50 points, or 0.63 per cent, higher at 14,806 in signs that Dalal Street was headed for a positive start on Wednesday.

Tech View: Nifty support at 14,600
Nifty50 topped the 14,850 level on Tuesday, before paring most of the gains. The index snapped a five-day losing streak, but continued to make lower highs for the fifth straight session. It also made a failed attempt to take out the 20-day moving average. Analysts said the 14,600 level may continue to support the index. Upside hurdles are now seen in the 14,850-14,900 zone, they said.

Asian stocks open lower on inflation fears

Asian equities opened lower on Wednesday on concerns about rising interest rates and rich equity valuations and following a downdraft in US and European overnight trading. In early Asia trade, Australia’s S&P/ASX 200 was down 0.5 per cent, South Korea’s KOSPI shed 0.4 per cent while Japan’s Nikkei 225 was down 0.9 per cent.

slips as US crude stocks rise

Oil prices fell in early trade on Wednesday after industry data showed US crude inventories unexpectedly rose last week as a deep freeze in the southern states curbed demand from refineries that were forced to shut. Crude stockpiles rose by 1 million barrels in the week to Feb. 19, the American Petroleum Institute (API) reported on Tuesday. Brent crude futures fell 38 cents, or 0.6 per cent, to $64.99 a barrel, erasing Tuesday’s 13 cents gain.

US stocks settled flat

US stocks bounced back after sharp early losses, to end Tuesday’s session largely stable following Federal Reserve Chair Jerome Powell pledging to keep interest rates low until inflation rises consistently. The benchmark Dow Jones Industrial Average dropped nearly 350 points in early trading, but recovered to close with a scant gain of less than 16 points at 31,537.35, while the broad-based S&P 500 edged up 0.1 percent to finish at 3,881.37.

Tata Consumer to replace GAIL in Nifty50

Nifty50 will remove energy major Gail from the stocks that comprise its weightage, NSE Indices said on Tuesday. The Index Maintenance Sub-Committee (IMSC) of NSE Indices decided to make the changes, as part of its periodic review. In Gail’s place, Tata Consumer Products will be included in the index from March 31, 2021.

FIIs sell Rs 1,569 crore worth stocks

Net-net, foreign portfolio investors (FPIs) were sellers of domestic stocks to the tune of Rs 1,569.04 crore, data available with NSE suggested. DIIs were net buyers to the tune of Rs 216.67 crore, data suggests.

MONEY MARKETS

Rupee: The rupee slipped from the day’s highest level but managed to eke out a marginal gain of 3 paise at 72.46 against the US dollar on Tuesday, tracking muted domestic equities and stronger greenback against key rivals.

10-year bonds: India 10-year bond yield fell 0.48 per cent to 6.17 after trading in 6.16-6.20 range.

Call rates: The overnight call money rate weighted average stood at 3.23 per cent, according to RBI data. It moved in a range of 1.9-3.50 per cent.

DATA/EVENTS TO WATCH

  • US MBA Mortgage Applications 19/Feb (05:30 pm)
  • BoE Monetary Policy Report Hearings (08:00 pm)
  • BoE Gov Bailey Testimony (08:00 pm)
  • US Fed Chair Powell Testimony (08:30 pm)
  • US New Home Sales MoM Jan (08:30 pm)

MACROS


Powell says loose money policy to stay… US Federal Reserve Chair Jerome Powell told Congress on Tuesday the economy remained “a long way” from employment and inflation goals and that interest rates would stay low and bond buying proceed apace until there was “substantial further progress”. Powell did not seem too fussed about the selloff that has driven the 10-year yield up by 40 basis points this year, telling lawmakers it was a statement on the market’s confidence in the pandemic recovery. He also said markets would get plenty of warning about any future policy adjustments.

Indian bonds still big draw for FIIs… From Tokyo to Toronto, funds are ditching bonds every passing day. There’s just one striking exception: India. At global money hubs, rising yields are simultaneously pushing up borrowing costs and slashing debt returns, dimming the allure of carry trades. Among the major economies, India stands out for its ability to underpin secular growth, while promising stable returns on debt investments. India has received portfolio flows worth $6 billion since the beginning of the calendar year, ETIG data compiled from Bloomberg showed.

Higher PF outgo may dent pay hike… Salary increments across India Inc are likely to take a U-shaped recovery path, with projected average increments of 7.7% in 2021 and 8.6% in 2022. But the salary hikes may not translate into higher cash-in-hand for employees if organisations choose to pay more in provident fund contributions due to the new definition of wages proposed by the government, showed a study. While 88% of companies said they intend to increase pay in 2021, up from 75% last year, the latest Salary Increase Survey in India by Aon, a global professional services firm, projected a hike of 7.7% compared to 6.1% last year. Others, however, said the impact of the codes could be minimal, as most large companies in India pay 35-40% of the CTC as basic pay.

Crude price rise set to hurt India Inc… As oil prices strengthen, shares of several richly-valued companies in various sectors, for whom this commodity is a key raw material, face the risk of underperformance. Paints, plastics, packaging materials, cement consumer, oil marketing firms and chemicals among others will be most impacted by the increase in crude prices, while oil exploration companies such as ONGC and Oil India will be beneficiaries. The international benchmark Brent crude oil prices have risen by 28% since the beginning of the year from $51.22 to $65.74 per barrel on Tuesday on expectations of improvement in oil demand in 2021 and production cuts.

Oil price seen heading for $70… Leading brokerages such as Morgan Stanley and Goldman Sachs expect crude oil prices to touch $70-75 a barrel this year driven by lower expected inventories and higher marginal costs. These brokerages believe that the oil market has been undersupplied this year and oil prices will see a sharp uptick sooner or later. Goldman Sachs estimates Brent crude oil prices will touch $70 a barrel and reach $75 a barrel in the third quarter.

Amazon-ICICI Bank-Axis Bank NUE plan takes off… Amazon is set to partner ICICI Bank, Axis Bank and Visa to create a national payments network to capitalise on India’s fast-growing digital payment ecosystem that’s dominated by the National Payments Corp of India (NPCI), said people familiar with the matter. Fintech firms Pine Labs and BillDesk will also join the consortium to set up a ‘New Umbrella Entity’ (NUE) that will build a unified payments interface (UPI)-like settlement system for small and medium enterprises, merchants and consumers, said the people cited above.

India narrows trade deficit with China… India’s trade deficit with China narrowed last calendar year as exports rose 16.15% to $20.25 billion, led by iron and steel, aluminium and copper, while imports shrunk 10.87% to $66.78 billion. The country’s trade deficit with China fell to $45.91 billion from $56.95 billion in 2019, officials said. Shipments to China crossed $20 billion for the first time even as exports of mangoes, fish oil, grapes and tea declined.

Pre-expiry margins to tackle negative commodity price risk… Sebi has decided to impose pre-expiry margins on cash settled commodities that are susceptible to near-zero or negative pricing risk. A pre-expiry margin will kick in during the last five trading days prior to expiry date, wherein the margin will increase by 5% daily, Sebi said in a circular late evening on Tuesday. This was done after consultations with the clearing corporations of exchanges. Based on Sebi’s Risk Management Review Committee (RMRC), the circular will be effective from April1.

Crude oil may be headed for $70 mark…Fuel prices, which rose to fresh highs on Tuesday, are expected to continue their upward spiral with crude oil rising above $66 a barrel in the international market and no hint of tax cuts from the government. Wider vaccine roll out, falling Covid cases, increased economic activity and artificial supply restrictions by key producers are boosting oil prices that have risen two-thirds since October. Investment bank Goldman Sachs expects prices to rise to $70 by the second quarter of the year.





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