Market

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

Friday’s rebound in US stock and Asian markets’ reaction to a slew of Chinese economic readings such as April industrial production and retail sales will shape the direction of the domestic market on Monday. Back home, the news of a drop in weekly Covid cases is positive. Markets will also watch the monthly WPI inflation data scheduled for release later in the day.

Here’s breaking down the pre-market actions:

STATE OF THE MARKETS

SGX Nifty signals positive start
Nifty futures on the Singapore Exchange traded 88.5 points, or 0.60 per cent, higher at 14,798.50 signaling that Dalal Street was headed for a positive start on Monday.

Tech View: Nifty may trade in a broad range
Nifty50 on Friday formed a Hammer-like candle on the daily chart and a small bearish candle on the weekly scale. During the session, the NSE barometer broke below the 20-day exponential moving average (EMA), before buying emerged near the 100-day simple moving average (SMA), whose value is placed at 14,576 level. The index is likely to stay in a broad range between 14,400 and 14,890 levels next week, said analysts, who believe the chances of a recovery from here on are good.

Asian markets mixed in early trade
Asian shares edged cautiously higher catching the tailwind from a bounce on Wall Street and ahead of expected upbeat readings on the Chinese economy. MSCI’s broadest index of Asia-Pacific shares outside Japan gained 1.17 per cent. Hang Seng jumped over 1 per cent, Australia’s ASX 200 gained 0.55 per cent. Shanghai Composite inched up marginally but Seoul’s Kospi opened in the red. Japan’s Nikkei was down 0.5 per cent.

prices edge lower on demand woes

Oil prices edged lower on Monday as the recovery of a major US pipeline network eased concerns over supply and a new wave of Covid-19 restrictions in Asia fuelled fears of lower demand. Brent crude oil futures were down 8 cents, or 0.1 per cent, at $68.63 a barrel, and WTI crude was down 7 cents, or 0.1 per cent, at $65.30.

US stock settled higher on Friday

Wall Street equities posted a solid rebound Friday, despite lackluster economic data including disappointing retail sales. The good news on mask requirements offered more hope for the economic reopening and helped drive gains in travel shares. The S&P 500 gained 1.49 per cent to 4,173.85. The Dow Jones Industrial Average rose 1.06 per cent to 34,382.13. Tech heavy Nasdaq climbed 2.32 per cent to 13,429.98.

Q4 earnings today

Bharti Airtel, Gland Pharma, Colgate Palmolive, Federal Bank, Wabco India, Subex, Indo Count Industries, Sun Pharma Advanced Research Company, Orient Cements, 3I Infotech, Shakti Pumps, Rane Brake Lining and Butterfly Gandhimathi Appliances are among companies that will announce their March quarter results today.

FPIs sell Rs 2,608 cr worth shares

Net-net, foreign portfolio investors (FPIs) turned seller of domestic stocks to the tune of Rs 2,607.85 crore, data available with NSE suggested. DIIs turned buyers to the tune of Rs 613.26 crore, data suggests. So far in May, FPIs have pulled out a net investment of Rs 6,427 crore from the equities.

MONEY MARKETS

Rupee: The Indian rupee strengthened by 13 paise to settle at a near seven-week high of 73.29 against the US dollar on Friday, tracking weaker American currency in the overseas market.

10-year bonds: India 10-year bond yield declined 0.40 per cent to 5.98 after trading in 5.98 -6.04 range.

DATA/EVENTS TO WATCH

  • India WPI Food YoY April (12:00 pm)
  • India WPI Manufacturing YoY April (12:00 pm)
  • India WPI Inflation YoY April (12:00 pm)
  • China House Price Index YoY April (07:00 am)
  • China Industrial Production YoY April (07:30 am)
  • China Unemployment Rate April (07:30 am)
  • US NAHB Housing Market Index May (07:30 pm)

MACROS

Covid cloud over India’s rating… India’s investment grade sovereign rating could face pressure due to rising headwinds against growth as the country battles the second Covid wave, which may exacerbate the country’s high debt and fiscal stress and increase financial sector risks, global rating agencies said. However, growth-enhancing structural reforms and addressing infrastructure gaps could bolster the rating outlook.

India Inc busy cutting debt… India Inc is using improved cash flows to cut debt for better ratings and equity valuations. This is despite widespread disruptions to business due to the Covid-19 pandemic. Data compiled by ET show that 78 of 134 companies — excluding banks and finance firms — in the NSE 500 that have reported results so far reduced debt in the previous fiscal year. Consequently, the aggregate debt of the 134 companies has fallen by Rs 2 lakh crore (down 18%) in FY21 compared to an increase of 14% (higher by Rs 1.38 lakh crore) for the same set of companies in FY20.

RBI says no to IBC suspension… RBI has shot down suggestions of a fresh suspension of the Insolvency & Bankruptcy Code due to the second wave of Covid, while making it clear that banks can still restructure distressed but viable loans, ensuring that their balance sheets remain transparent. In initial discussions with the government, RBI has indicated a freeze will not help anyone in the long run as it will only show lower levels of NPA.

Cairn eyes SCI, AI assets… British oil major Cairn Energy has identified $70 billion of overseas Indian assets for potential seizure to collect $1.7 billion due from the government. If successful, the move will put India in league with Pakistan and Venezuela, which faced similar enforcement action over failure to pay arbitration awards. The assets identified range from Air India’s aircraft to vessels belonging to the Shipping Corporation of India, and properties owned by state-owned banks to oil & gas cargoes of PSUs.

PSU banks on alert against Cairn attachment bid… Top Indian public sector banks with substantial operations abroad are on high alert after Cairn Energy moved to attach assets of national carrier Air India over the weekend to enforce a $1.2 billion arbitration award against the Indian government. Lenders including SBI, PNB and BoB, which have branches and subsidiaries across the world, are monitoring filings against them in courts abroad and have kept attorneys ready to defend their assets against any claims by Cairn.

Major spike in insurance claims… Health insurance claims due to Covid reported since April 1, 2021 are 57% of the claims filed in the year ended March 2021. Non-life insurance companies are seeing a sharp spike in claims, which could impact their balance sheets if the trend continues. As of March 31, non-life companies, including health insurers, received 9.8 lakh claims for Rs14,560 crore for Covid treatment. This went up to 14.8 lakh as of May 14, 2021, for Rs 22,955 crore. This means that in the first 44 days, Covid claims amounted to Rs 8,385 crore, which is 57% of the pandemic-related claims for FY21.

Covid hits fuel, power demand… The second wave of Covid has pummelled India’s fuel and power demand in the first fortnight of May as more and more states impose lockdown, confining people to their homes as well as curtailing commercial and economic activities. Latest market data for the first fortnight of the month shows petrol and diesel consumption shrunk 20%, while jet fuel sales dipped 38% from the same period of April. The decline is steeper at more than 27% for petrol, nearly 29% for diesel and 59.5% for jet fuel as compared to the same period of 2019 — the pre-pandemic year with ‘normal’ consumption.

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