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SGX Nifty down 50 points; here’s what changed for market while you were sleeping

Domestic equity benchmarks are likely to see a weak start to Wednesday’s trade after data showed CPI inflation in the US jumped in June, raising worries about a possible Fed move. Wall Street stocks closed lower, while most Asian markets traded lower in the early trade today. Domestic investors would be keenly awaiting the opening of Zomato IPO and Infosys earnings due later in the day.

Here’s breaking down the pre-market actions:

STATE OF THE MARKETS


SGX Nifty signals a negative start
Nifty futures on Singapore Exchange traded 53.5 points, or 0.34 per cent, lower at 15,781, signaling that Dalal Street was headed for a negative start on Wednesday.

  • Tech View: Nifty50 breached its immediate resistance at 15,750 level with ease on Tuesday. Analysts said the 15,900-15,915 zone would pose a key hurdle and the 15,650-632 range would act as immediate support going ahead.
  • India VIX: The fear gauge fell 2.84 per cent to 12.62 level on Tuesday over its close at 12.99 on Monday.

Asian markets open lower

Asian markets opened lower on Wednesday, tracking fall in US markets overnight, as investors weighed how a jump in US inflation data would affect monetary policy. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.32 per cent.

  • Japan’s Nikkei declined 0.15%
  • Korea’s Kospi dropped 0.21%
  • Australia’s ASX 200 fell0.26%
  • China’s Shanghai Composite fell 0.69%
  • Hong Kong’s Hang Seng shed 0.76%

Wall Street stocks settled lower
Major US stock indices closed lower on Tuesday after government data showed inflation continued to climb in June. Even though top Fed officials say the big price increases will be temporary, persistently high inflation could cause policymakers to back away from the massive stimulus policies that markets have come to love since the Covid-19 pandemic began.

  • Dow Jones fell 0.31% to 34,888.79
  • S&P 500 declined 0.35% to 4,369.21
  • Nasdaq shed 0.38% to 14,677.65

Dollar hits 3-month high
The US dollar touched a three-month high versus the euro and a one-week high versus the yen on Wednesday after heated US inflation spurred bets of faster monetary policy tightening than Federal Reserve officials have so far signalled.

  • Dollar index strengthens to 92.78
  • Euro slipped to $1.17
  • Pound down to $1.38
  • Yen at 110.70 per dollar
  • Yuan at 6.475 against the greenback

Zomato IPO opens today
Zomato’s Rs 9,375 crore IPO will open for subscription today. The online food delivery and restaurant discovery platform raised Rs 4,197 crore from 186 anchor investors on Tuesday ahead of IPO opening. The company informed the stock exchanges that it had allotted 55.22 crore equity shares to anchor investors for Rs 76 per equity share.

DIIs buy shares worth Rs 746 crore
Net-net, foreign portfolio investors (FPIs) turned buyers of domestic stocks to the tune of Rs 114 crore, data available with NSE suggested. DIIs, turned buyers to the tune of Rs 344 crore, data suggests.

Q1 earnings due today
Infosys, L&T Technologies, Hastun Agro Products, Craftsman Automation, Dodla Dairy and Tinplate Company of India are are among the companies that will announce quarterly earnings today.

MONEY MARKETS


Rupee:
The rupee strengthened by 9 paise to close at 74.49 against the US dollar on Tuesday, marking its third straight day of gains on foreign fund inflows and positive domestic equities.

10-year bond: India 10-year bond yield fell 1.88 per cent to 6.10 after trading in 6.100-6.107 range.

Call rates: The overnight call money rate (weighted average) stood at 3.20 per cent, according to RBI data. It moved in a range of 1.90-3.40 per cent.

DATA/EVENTS TO WATCH

  • Q1 Earnings: Infosys | 5Paisa | L&T Tech I Tinplate
  • India WPI Manufacturing YoY June (12:00 pm)
  • India WPI Fuel YoY June (12:00 pm)
  • India WPI Food YoY June (12:00 pm)
  • India WPI Inflation YoY June (12:00 pm)
  • Japan Industrial Production MoM Final May (10:00 am)
  • UK Inflation Rate YoY June (11:30 am)
  • UK Core Inflation Rate MoM June (11:30 am)
  • Euro Area Industrial Production YoY May (02:30 pm)
  • US Fed Chair Powell Testimony (09:30 pm)

MACROS


US CPI inflation climbs to 5.4% in June
The US Labor Department report showed the Consumer Price Index spiked 5.4 per cent, not seasonally adjusted, over the 12 months ended in June, its highest rate since August 2008. Even though top Fed officials say the big price increases will be temporary, persistently high inflation could cause policymakers to back away from the massive stimulus policies that markets have come to love since the Covid-19 pandemic began.

S&P again gives India lowest grade
Global ratings agency Standard & Poor’s (S&P) on Tuesday affirmed its rating for India’s long-term foreign currency and local currency sovereign credit at the lowest investment grade and retained the outlook as stable, saying the economy will recover following the resolution of the Covid-19 pandemic, and that the country’s strong external settings will act as a buffer against financial strains despite elevated government funding needs over the next 24 months. This is the 14th consecutive year when S&P has affirmed India’s rating at the lowest investment grade.

Fund managers see Fed taper in Aug-Sept
The latest survey of fund managers by Bank of America Securities shows majority of them expect the US Federal Reserve to signal tapering in August or September. “70% expect the Fed to signal taper in August or September. 39% of investors expect the Fed to signal tapering at Jackson Hole (meeting in August) while 31% of investors think September FOMC (Federal Open Market Committee meeting),” said Bank of America Securities.

Demand shifts to low-priced FMCG goods
Consumers are increasingly down-trading to lower priced or value products across FMCG electronics and apparel segments, signalling a possible squeeze on monthly household budgets as compared to a year ago. In rural areas, the share of bulk or high value packs fell 22% among packaged foods while low value packs accounted for 10% more during April-June quarter compared to a year ago, according to a study by sales automation firm Bizom

SAT pulls up Sebi over PNB Housing move
The Securities Appellate Tribunal (SAT) on Tuesday pulled up Sebi for trying to pre-empt the outcome of the PNB Housing Finance shareholders’ meeting on June 22. Questioning Sebi’s decision to halt an extraordinary general meeting of PNB Housing, the tribunal asked whether it was fair for the regulator to step in before the shareholders took a decision. Sebi had said the process was not consistent with the company’s articles of association and asked the firm to undertake a valuation exercise.

Middle class savings can go into G-sec
Middle-class savings can now go into directly buying government bonds after the central bank Monday allowed retail investors to buy into sovereign debt through dedicated accounts that wouldn’t attract costs. Ticket sizes for such investments could be as low as Rs 10,000. Before the year end, the final details of the retail account plans are expected to be made public, said a source familiar with the matter.

Govt takes a relook at labour code
The government is re-looking at the proposed rules under the four labour codes in an effort to allay some of the industry’s concerns. New labour minister Bhupendra Yadav has begun an exercise to review the proposed rules to see if any changes are needed, sources told ET. The minister is likely to consult industry bodies and trade unions soon.

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