NEW DELHI: Fresh Covid shutdowns in major US cities have raised fears over a halt to economic recovery, offsetting optimism over vaccine development. Asian markets are largely down and the domestic market, too, looks set for a weak start.
Here’s breaking down the pre-market actions:
STATE OF THE MARKETS
SGX Nifty signals negative start
Nifty futures on the Singapore Exchange traded 106 points, or 0.82 per cent, lower at 12,888.00, in signs that Dalal Street was headed for a negative start on Thursday.
Tech view: Nifty support at 12,800
Analysts said there are no sell signals on the technical charts and the index has potential to take out the 13,000 level in the short term. They noted that the index has been making higher lows for a couple of sessions and support for the NSE barometer has shifted upward to 12,800 level.
Asian shares fall in early trade
Asian stocks followed Wall Street’s sharp selloff on Thursday as concerns about rising coronavirus infections and new shutdowns in major US cities hosed down earlier investor enthusiasm about COVID-19 vaccine developments. Australia’s S&P/ASX 200 lost 0.5 per cent in early trading, while Hong Kong’s Hang Seng index lost 0.02 per cent. Japan’s Nikkei225 fell 0.4 per cent.
Oil prices slip on surging Covid cases
US crude futures fell in early trade on Thursday, giving up some of gains from the previous day as surging COVID-19 cases and widening lockdowns raised fears over fuel demand, offsetting further upbeat vaccine news. US WTI crude futures were down 39 cents, or 0.9 per cent, to $41.43 a barrel. Brent crude was yet to trade, having risen 1.4 per cent on Wednesday.
US stocks end lower
New York City’s move to temporarily close schools because of the coronavirus offset optimism about Covid-19 vaccines Wednesday, weighing on US stocks two days after major indices hit records. The S&P 500 fell 41.74 points, or 1.2 per cent, to 3,567.79. The Dow Jones Industrial Average per cent dropped 344.93 points, or 1.2 per cent, to 29,438.42. The Nasdaq composite lost 97.74 points, or 0.8 per cent, to 11,801.60.
FPIs buy Rs 3,072 cr worth of stocks
Net-net, foreign portfolio investors (FPIs) were buyers of domestic stocks to the tune of Rs 3,071.93 crore, data available with NSE suggested. DIIs were net sellers to the tune of Rs 2,789.85 crore, data suggests.
MONEY MARKETS
Rupee: The rupee continued its winning run for the third session in a row on Wednesday, spurting 27 paise to settle at 74.19 against the US dollar amid unabated foreign fund inflows and a weak greenback overseas.
10-year bonds: India 10-year bond yield stood at 5.88 after trading in 5.86-5.88 range.
Call rates: The overnight call money rate weighted average stood at 3.12 per cent, according to RBI data. It moved in a range of 1.8-3.40 per cent.
DATA/EVENTS TO WATCH
- Australia Employment Change Oct (06:00 am)
- ECB President Lagarde Speech (01:30 pm)
- Euro Area Current Account Sept (02:30 pm)
- UK CBI Industrial Trends Orders Nov (04:30 pm)
- US Initial Jobless Claims 14/Nov (07:00 pm)
- US Existing Home Sales MoM Oct (08:30 pm)
- European Council Video Conference
MACROS
Indian economy may have shrunk 10% in Q2... The Indian economy likely contracted 10.2% in the July-September quarter from the year earlier according to the median estimate of 10 economists and experts polled by ET, which would be a substantial improvement from the 23.9% decline in the June quarter due to the Covid-led lockdown. It’s also an advance from the 12% median estimate in poll ET conducted in September as the economy picked up pace toward the end of the second quarter. At a contraction of 10.2% from the year earlier, the implied sequential growth from the first quarter would be 57%.
Cash in circulation hits a peak... Festival fervour seems to have released the pent-up demand created by the Covid-19 pandemic. According to RBI data, the pre-Diwali cash in circulation touched the highest in more than a decade indicating a revival of demand in the system and pickup in economic activity. The currency in circulation in the system rose by Rs 43,846 crore to Rs 27.8 lakh crore during the week ended November 13, RBI data release said. The last time one saw such a huge surge in weekly cash was in the first half of 2017 when demonetised currency was being replenished.
Digital news streaming under vigil… The government may have to revise the Information Technology Act, 2000 to include oversight on digital streaming and news portals, top officials say. The discussions to introduce new provisions are aimed at regulating technology aspects such as collection of users’ metadata, which refers to bulk demographic and other data that firms collect about their users, as well as the algorithms that define how content is served up to individual consumers.
Fund managers most bullish on equity… Fund managers have turned most optimistic on the stock market than they have been all year, according to the latest Bank of America fund manager survey. This bullishness has come on the back of US election outcome and progress on a vaccine for coronavirus, the survey showed. Vaccine expectations have moved forward by a month to the middle of January 2021 from the middle of February 2021.
Vedanta submits EoI for BOCL… Vedanta Resources said it submitted an expression of interest (EoI) for the government’s stake in Bharat Petroleum Corp Ltd, making it one of three likely bidders, according to people with knowledge of the matter. The privatisation of India’s second largest oil refining and marketing company is key to the government’s disinvestment programme for the fiscal year. Most of the big oil companies including Reliance Industries, Russia’s Rosneft, Saudi Aramco and Abu Dhabi National Oil Corporation are said to have stayed away.
Steel firms seeing solid rebound… India’s top steelmakers have reported a strong performance that is close to pre-Covid levels during the traditionally weak second quarter, making up for the losses posted during the three months to June. Several analysts have increased the target prices and earnings forecast for steel companies and expect the same performance to continue through the second half of FY 21.
Bonanza for LVB bondholders… Investors in Lakhsmi Vilas Bank’s (LVB) debt are having an extended Diwali celebration after the central bank proposed the capital-starved lender’s merger with DBS, considered Asia’s safest financier. Those bonds offered coupons in the range of 10.70-11.80% with maturities commencing from February 10, 2022. They are hardly traded in the illiquid secondary market due to the recent financial weakness of the bank. With a global bank taking it over, the local lender would be re-rated, with investors assured of total returns from their tier-II bond investments.
