Market

SGX Nifty down 80 points; here’s what changed for market while you were sleeping

A 3 lakh-plus Covid case count for a second day, concerns over the economic impact of lockdowns, weakness in the rupee and an overnight drop in US stocks are likely to hit sentiment on Dalal Street on Friday. Most Asian markets traded higher in early trade, and technical charts for the domestic indices are hinting at a recovery ahead.

Here’s breaking down the pre-market action:

STATE OF THE MARKETS

SGX Nifty signals negative start
Nifty futures on the Singapore Exchange traded 82 points, or 0.57 per cent, lower at 14,320 in signs that Dalal Street was headed for a negative start on Friday.

Tech View: Nifty forms Piercing Line pattern
Nifty50 closed above the 14,400 level on Thursday and formed a Reversal Piercing Line pattern on the daily chart. Analysts said the index recovered despite breaking below its crucial support at 14,250 level in the opening trade, which suggests it was a false breakout. They expect some further recovery in the coming days.

Asian markets rise in early trade
Asian markets were trading mostly higher in Friday’s trade. Hong Kong’s Hang Seng advanced 0.74; Korea’s Kospi edged 0.11 per cent higher while China’s Shanghai Composite index added 0.13 per cent. Bucking the trend, Japan’s Nikkei fell 0.71 per cent to 28,981.54.

US stocks settled lower

In overnight trade, the Dow Jones Industrial Average index fell 321.41 points, or 0.94 per cent, to 33,815.9, the S&P500 index lost 38.44 points, or 0.92 per cent, to 4,134.98 and the Nasdaq Composite index dropped 131.81 points, or 0.94 per cent, to 13,818.41.

Q4 earnings today

HCL Tech, M&M Financial, Indiabulls Real Estate, Shiva Cement, GNA Axles and Oriental Hotels are some of the companies which will announce their March quarter results today.

DIIs buy Rs 850 crore worth stocks

Net-net, foreign portfolio investors (FPIs) were sellers of domestic stocks to the tune of Rs 909.56 crore, data available with NSE suggested. DIIs were net buyers to the tune of Rs 849.98 crore, data suggests.

MONEY MARKETS

Rupee: The rupee weakened further by 6 paise to close at 74.94 against the US dollar on Thursday as a persistent rise in COVID-19 cases and enhanced restrictions imposed by states weighed on investor sentiment.

10-year bonds: India 10-year bond yield fell 0.40 per cent to 6.05 after trading in 6.04-6.06 range.

DATA/EVENTS TO WATCH

  • India Deposit Growth YoY April/09 (05:00 pm)
  • India Foreign Exchange Reserves 16/April (05:00 pm)
  • India Bank Loan Growth YoY April/09 (05:00 PM)
  • Japan Jibun Bank Manufacturing PMI Flash April (06:00 am)
  • UK Retail Sales MoM March (11:30 am)
  • UK Public Sector Net Borrowing March (11:30 am)
  • Euro Area Markit Manufacturing PMI Flash April (01:30 pm)
  • UK Markit/CIPS UK Services PMI Flash April (02:00 pm)
  • US Markit Manufacturing PMI Flash April (07:15 pm)
  • US Markit Services PMI Flash April (07:15 pm)
  • US New Home Sales MoM March (07:30 pm)
  • ECB President Lagarde Speech (08:00 pm)

MACROS

Biden set to unveil historic tax increase… President Joe Biden will roll out a plan to raise taxes on the wealthiest Americans, including the largest-ever increase in levies on investment gains, to fund about $1 trillion in childcare, universal pre-kindergarten education and paid leave for workers, sources familiar with the proposal told Reuters. The proposal calls for increasing the top marginal income tax rate to 39.6 per cent from 37 per cent, the sources said this week.

MPC debated efficacy of yield curve control… The resurgence of Covid virus dominated MPC deliberations with members worrying that economic recovery could stall leading to them suggesting that the RBI should dip into its arsenal to bring down long-term interest rates as forward guidance has failed to keep a lid on yields. A debate about the efficacy of the central bank’s guidance appears to be intensifying within the MPC with Governor Shaktikanta Das hesitant to commit himself on a time-bound guidance, while Prof Jayant Varma declaring it to be ineffective and calling for action by the central bank.

RBI curbs on bank dividends… RBI has curbed banks’ dividend paying ability for the financial year 2020-21, citing the economic cost of the second wave of Covid-19 pandemic. “Banks may pay dividend on equity shares from the profits for the financial year ended March 31, 2021, subject to the quantum of dividend being not more than 50% of the amount determined as per the dividend payout ratio prescribed,” the central bank said in a notification on Thursday.

India growth outlook robust… Fitch Ratings on Thursday affirmed its ‘BBB-’ sovereign rating of India, while saying that the recent surge in coronavirus cases posed increasing downside risks to the country’s fiscal 2022 GDP growth outlook. The current wave of the pandemic may delay India’s economic recovery, but is unlikely to derail it, Fitch said. S&P Global Ratings said the Indian economy is projected to grow at 11% in the current fiscal, but flagged the “substantial” impact of broader lockdowns on the economy.

Small biz delinquencies may rise… NBFCs and rating agencies have warned of delinquencies in the small and medium enterprises segment if the lockdown continues. Lenders said, unlike last year when they got additional credit lines and relief in the form of a moratorium, small businesses do not have enough cash to see them through a prolonged shutdown.

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