Optimism surrounding the news of positive results from a Covid-19 vaccine lifted US stocks overnight and that is getting rubbed off on Asian stocks this morning. Early signs showed Dalal Street, too, was getting ready for a rebound.
Here’s breaking down the pre-market actions.
SGX Nifty signals gap-up start
Nifty futures on the Singapore Exchange traded some 153.55 points, or 1.74 per cent higher at 8,981 in signs that Dalal Street was headed for a gap-up start on Tuesday.
Nifty Tech charts bearish
The 9,040 level will act as a stiff resistance. If the bears push the index below the 8,800 level, Nifty can slide all the way down to the 8,740-8,700 range. The RSI has turned southwards from the neutral level of 50, confirming bear dominance at the moment.
Asian markets rise in early trade
Elsewhere in Asia, Hong Kong stocks started Tuesday with healthy gains. The Hang Seng jumped 2.32 per cent to 24,489.55. China’s benchmark Shanghai Composite index added 0.77 per cent to 2,897.69. In Japan, Nikkei 225 index was up 1.65 per cent at 20,465.14.
Oil prices gain for 4th day
Oil prices rose, extending gains for a fourth straight session, amid signs that producers are cutting output as promised just as demand picks up, stoked by more countries easing out of curbs imposed to counter the coronavirus pandemic. Brent crude climbed $0.85, or 2.4 per cent, to $35.66 a barrel.
Gold prices rise on US-China tensions
Gold prices inched up, supported by strained Sino-US relations and a dismal global economic outlook. Spot gold was up 0.2 per cent at $1,735.04 per ounce.
US indices surge 3-4% in overnight trade
On Monday, the Dow Jones Industrial Average spiked 911.95 points, or 3.85 per cent, to 24,597.37. The S&P 500 rose 90.21 points, or 3.15 per cent, to 2,953.91. The Nasdaq Composite Index increased 220.27 points, or 2.44 per cent, to 9,234.83.
Nasdaq restricts Chinese IPOs
Nasdaq Inc is set to unveil new restrictions on initial public offerings (IPOs), a move that will make it more difficult for some Chinese companies to debut on its stock exchange, people familiar with the matter told Reuters.
Q4 earnings today
Bajaj Finance, Tata Power, Apollo Tyres, Embassy Office Parks REIT, Larsen & Toubro Infotech, Gabriel India will detail their March quarter earnings on Tuesday.
FIIs sell Rs 2,513 cr worth of stocks
Net-net, foreign portfolio investors (FPIs) were sellers of domestic stocks to the tune of Rs 2,513 crore on Monday, data available with NSE suggested. DIIs were net sellers to the tune of Rs 152 crore, data suggests.
MONEY MARKETS
Rupee: The rupee plummeted by 33 paise to close at 75.91 against the US dollar on Monday, tracking weak domestic equities and foreign fund outflows.
10-year bonds: India 10-year bond yield fell 0.51 per cent to 6.05 after trading in 6.04-6.10 range.
Call rates: The overnight call money rate weighted average stood at 3.92 per cent, according to RBI data. It moved in a range of 2.30-4.50 per cent. (Not updated)
HAPPENING TODAY
The DAY PLANNER
- Q4 Earnings: Bajaj Finance | Tata Power | Apollo Tyre | Ujjivan SFB
- Japan March Industrial Output (10.00 am)
- Euro Area April New Car Registrations (11.30 am)
- UK March Unemployment Rate (11.30 am)
- US Fed Chair Powell Testimony (07.30 pm)
- ECB Lane Speech (7.30 pm)
MACROS
Covid vaccine news lifts mood… Data from an early-stage trial for a coronavirus vaccine lifted hopes late Monday, sending global equity markets and oil prices surging. Data from Moderna Inc’s Covid-19 vaccine, the first to be tested in the US, showed it produced protective antibodies in a small group of healthy volunteers, the company said on Monday. Shares of the pharmaceutical company surged. There are currently no approved treatments or vaccines for Covid-19, and experts predict a safe and effective vaccine could take 12 to 18 months to develop.
RBI’s ‘switch auction’ flops…. The move through which the central bank wanted to replace bonds worth Rs 30,000 crore maturing this year with longer-dated ones found few takers as investors are unsure of the trajectory of inflation and government borrowing at a time when future revenue collection looks uncertain. RBI managed to sell less than half of 2024 bonds offered in lieu of those maturing this year, none of the 2030 bonds and little more than half of the 2060 bonds with a cut off yield at 6.798%.
Loan repayments looking up… Domestic banks are seeing a slow but sure recovery in loan repayments as customers are increasingly choosing not to exercise the Reserve Bank of India-provided option of moratorium on payments to avoid paying higher compounded interests. Small entrepreneurs who had earlier opted for a moratorium on repayments are now paying a portion of their dues as the cash flow begins to improve with businesses opening up slowly, said bankers.
NBFCs set to start advances… Top NBFCs are set to resume sanctioning fresh loans in June with sentiment boosted by the government stimulus and easing of the lockdown, even as they tread cautiously, aware that repayment capacities may have weakened with job losses and income declines. The Edelweiss Group, Mahindra Finance, IIFL Finance and Shriram Transport Finance have started disbursing loans with their clients demanding to draw down the limits sanctioned in March. Companies expect double-digit loan growth in the September quarter or early in the December quarter.
HFCs find buyers for their bonds… Housing finance companies dominated primary bond sales on Monday as the government’s stimulus package helped lift the mood of debt investors. Tata Housing Finance, HDFC and ICICI Home Finance led the primary market bond sale, raising Rs 5,475 crore collectively. The spread or differential between top-rated corporate bonds and government papers — a barometer of calmness — narrowed to 80-90 basis points immediately after the government had announced the relief package, compared with 90-100 bps a few days earlier.
Full global recovery unlikely in 2021….The global economy will take much longer to recover fully from the shock caused by the new coronavirus than initially expected, the head of the International Monetary Fund said, and she stressed the danger of protectionism. Managing Director Kristalina Georgieva said the Fund was likely to revise downward its forecast for a 3% contraction in GDP in 2020, but gave no details. That would also trigger changes in the Fund’s forecast of a partial recovery of 5.8% in 2021. Talking to Reuters, she said data from around the world was worse than expected. She gave no specific target date for a rebound.
Economy to shrink despite stimulus… Economists are slashing their forecasts to factor in at least five percent shrinkage in the economy after the fiscal stimulus that is unlikely to boost demand to offset for lost growth as well as give a fresh impetus. While Nomura has forecast recession-three consecutive quarters of recession, Goldman Sachs, Bank of America, UBS and HSBC have been less harsh with economy contraction forecasts ranging from 0.1 per cent and 3.5 per cent. The latest revision is after the last tranche of the Rs 20 lakh crore stimulus package announced by the finance minister on Sunday.
China relents on Covid-19 origin probe… Under mounting global pressure, China has relented on its opposition for an inquiry into the origin of the coronavirus, expressing its backing for an EU draft resolution tabled at the World Health Assembly (WHA) calling for a probe into the source of the vicious virus that has killed over three lakh people. The WHA is the decision-making body of the Geneva-based World Health Organisation. The meeting is being held amid the global anger and concerns over Covid-19 which first emerged in the Chinese city of Wuhan and criticism over the role of the WHO and its Director General Dr General Tedros Adhanom Ghebreyesus.
Govt may monetise debt … The government may consider monetising its borrowings if the fiscal deficit overshoots expectations sharply, a senior government official told ET. The government has announced a Rs 20 lakh crore package to support the economy that’s been locked down for nearly two months now, providing support to small businesses, non-banking finance companies (NBFCs), migrant labour and farmers among others. It has also rolled out a series of reforms as part of the programme. “There is no legal bar and there is no conceptual bar either when we have low inflation. We in fact have a situation of deficient demand,” the official said.
