Domestic stocks may look to make a comeback after Thursday’s selloff, but rising fears over spread of virus in Europe and waning hopes of US stimulus package may keep the upside capped.
Here’s breaking down the pre-market actions:
STATE OF THE MARKETS
SGX Nifty signals positive start
Nifty futures on the Singapore Exchange traded 66.5 points, or 0.57 per cent higher at 11,761.50, in signs that Dalal Street was headed for a positive start on Friday.
Tech View: Nifty forms Bearish Engulfing candle
Aditya Agarwala, Senior Technical Analyst at YES Securities, said the ‘Bearish Engulfing’ pattern at the top was something very similar to what Nifty50 witnessed on August 31 at the 11,800 level. August’s candle was followed by a significant decline in the index towards the 10,800 level, he said.
Asian stocks mixed in early trade
Asian stocks were mixed on Friday as investors sought safe havens, such as the US dollar, fearing that a resurgence in coronavirus cases and a lack of additional US fiscal stimulus would hobble the world economy. Australia’s S&P/ASX 200 was down 0.02 per cent while Japan’s Nikkei 225 fell 0.01 per cent. Hong Kong’s Hang Seng index rose 0.58 per cent. E-mini futures for the S&P500 added 0.04 per cent.
Oil falls on likely OPEC+ supply boost
Oil prices fell on concerns that major producers will move ahead with plans to ease their supply cuts even as a spike in COVID-19 cases in Europe and the United States is curtailing demand in two of the world’s biggest fuel consuming regions. Brent crude futures for December dropped 22 cents, or 0.5 per cent, to $42.94 a barrel, while US WTI crude futures for November delivery slid 16 cents, or 0.4 per cent, to $40.8 a barrel.
US stocks settled lower
Wall Street’s major averages finished lower as uncertainty over a fresh US coronavirus relief package unnerved investors.On Thursday, the Dow Jones Industrial Average index fell 19.80 points, or 0.07 per cent, to 28,494.20. The S&P500 index declined 5.33 points, or 0.15 per cent, to 3,483.34. The Nasdaq Composite index decreased 54.86 points, or 0.47 per cent, to 11,713.87.
Q2 earnings today
Federal Bank, HCL Technologies, Bajaj Consumer Care, LKP Securities, Shoppers Stop, Tata Communications and Uniply are slated to announce their financial results for the September quarter on Friday.
DIIs sell Rs 808 cr worth of stocks
Net-net, foreign portfolio investors (FPIs) were sellers of domestic stocks to the tune of Rs 604.07 crore, data available with NSE suggested. DIIs were net sellers to the tune of Rs 808.29 crore, data suggests.
MONEY MARKETS
Rupee: The rupee pared its initial gains and settled 5 paise lower at 73.36 against the US dollar on Thursday tracking heavy selling in domestic equities and strengthening American currency.
10-year bonds: India 10-year bond yield fell 0.03 per cent to 5.89 after trading in 5.88-5.91 range.
Call rates: The overnight call money rate weighted average stood at 3.41 per cent, according to RBI data. It moved in a range of 1.8-3.9 per cent.
DATA/EVENTS TO WATCH
- Q2 Earnings: HCL Tech I Federal Bank I Bajaj Consumer
- RBI Foreign Exchange Reserves OCT/09 (5.00 pm)
- EU New Car Registrations YoY SEP (11:30 am)
- Euro Area Balance of Trade AUG (2.30 pm)
- Euro Area Core Inflation Rate YoY Final SEP (02.30 pm)
- US Industrial Production YoY SEP (06:45 pm)
- European Council Meeting
- IMF/World Bank Virtual Annual Meeting
MACROS
Centre offers to borrow to end GST logjam… The Centre will borrow the GST compensation shortfall of Rs 1.1 lakh crore, if all the states choose that option, and pass the amount on to them, marking a dramatic shift in stand that should resolve the row over the matter. The expectation is that the conciliatory move will bring the opposition-ruled states round.
Trump offers to increase stimulus size
US President Donald Trump on Thursday said he is willing to raise his offer of $1.8 trillion for a COVID-19 relief deal with Democrats in the US Congress, but the idea was shot down by his fellow Republican, Senate Majority Leader Mitch McConnell. It helped narrow Wall Street losses, though many investors still believe a deal is unlikely before the November 3 election.
India to allow IPOs in 7 countries… Paving the way for a global listing by the likes of Reliance Jio, LIC and Indian startups, the government is set to notify seven countries and GIFT City where they can go public, while easing several norms to facilitate the process. The ministry of corporate affairs and the department of economic affairs have agreed to do away with the contentious clause of dual listing, which required a company to list in India as well as overseas.
FPIs oppose T+1 settlement regime… Overseas portfolio investors, who collectively own about one-fifth of top Indian stocks, are opposing the regulator’s proposal to crunch the settlement cycle for trades to just one day instead of two — something they believe will create more procedural problems instead of solving them. Asia Securities Industry & Financial Markets Association (ASIFMA) has written to the finance ministry, seeking intervention to halt the proposed change that seems to have the support of local funds and investors.
Gopinath says Indian economy needs direct support… More direct funding support that includes the urban poor and migrant workers within its fold can help India speed up economic recovery, but monetisation of the deficit is not advisable, said Gita Gopinath, chief economist of the International Monetary Fund (IMF). She’s also concerned about “overheating” in the financial markets. India’s new farm and labour laws are a step in the right direction and have the potential to strengthen the supply side and also help boost demand, along with some level of direct support, she said.
Telcos push Trai for floor price… Mobile phone companies have renewed their “legitimate” demand for Trai to set a floor price for services, saying new chairman PD Vaghela should seriously consider the step to improve the health of the sector. “The demand (of floor tariff) remains unanswered,” Cellular Operators Association of India Director General SP Kochhar said. “It should be looked at with a greater amount of depth due to the prevailing environment.”
The wealthy chases REIT returns… Sovereign funds and wealthy investors are buying into real estate investment trusts (REIT) that offer relatively more attractive returns and are perceived to be safer than bonds – at least on paper. The listed units, such as Mindspace or Embassy, are trading at about 10-20% premium to their listing prices. This is in addition to periodic interest payments, yielding 6-7.5% post-tax returns
IRDAI issues term policy norms…. Insurance regulator IRDAI has come out with guidelines for standardised individual term policies to make life cover cheaper and accessible. All life insurance companies will have to mandatorily offer this policy called Saral Jeevan Bima, which has been designed as a nonlinked, non-par protection policy. Insurers must file their products by December and start selling them in 2021.
