An overnight rally in US stocks and a positive start to Asian markets — despite mixed economic data — may help domestic stocks post opening gains on Tuesday. But as technical charts are showing indecisiveness, it remains to be seen whether any such gains is sustained.
Here’s breaking down the pre-market actions.
STATE OF THE MARKETS
SGX Nifty signals positive start
Nifty futures on the Singapore Exchange traded 76.50 points, or 0.75 per cent higher at 10,323.50, in signs that Dalal Street was headed for a positive start on Tuesday.
Tech view: Nifty forms Doji candle
Nifty50 on Monday closed almost at the same level where it had opened, and in the process formed a Doji candle on the daily chart for the second consecutive session. The back-to-back formation of such candles suggests investors are indecisive after the recent rally. A pause is likely, said analysts, who believe the recent swing low of 10,194 will act as immediate support for Nifty.
Asian stocks open higher
Hong Kong’s Hang Seng rose 0.69 per cent, or 166.96 points, to 24,468.24. China’s Shanghai Composite Index edged up 0.12 per cent, or 3.59 points, to 2,965.11. In Japan, the benchmark Nikkei 225 index gained 1.55 percent or 340.37 points to 22,335.41 in early trade while the broader Topix index was up 1.34 percent or 20.69 points at 1,569.91.
US stocks settled higher
US stocks finished noticeably higher, boosted by solid gains in Boeing shares. On Monday, the Dow Jones Industrial Average jumped 580.25 points, or 2.32 per cent, to 25,595.80. The S&P500 index was up 44.19 points, or 1.47 per cent, to 3,053.24. The Nasdaq Composite index increased 116.93 points, or 1.20 per cent, to 9,874.15.
Oil prices slip on weak Japan data
Oil prices fell in early trade on Tuesday after weak Japanese industrial production data, not usually a market-moving factor, was enough to jangle trader nerves over a bumpy recovery in fuel demand as coronavirus pandemic restrictions ease. Brent crude futures for September fell 32 cents, or 0.8 per cent, to $41.53 a barrel, paring Monday’s 92-cent gain.
Gold set for best quarter in 4 years
Gold prices held steady on Tuesday and were heading for their biggest quarterly rise in more than four years as fears over rising Covid-19 cases around the world boosted demand for the safe-haven metal. Spot gold was mostly unchanged at $1,770.77 per ounce by 0052 GMT, just $8.29 shy of a near eight-year high of $1,779.06, hit last week.
Nifty may see insurers’ entry in Aug rejig
The semi-annual review of the components of the Nifty by exchanges could lead to inclusion of more financials, say analysts. Edelweiss said two of the country’s largest life insurance firms, HDFC Life Insurance and SBI Life Insurance, could make their way into the main index in the upcoming reshuffle. Divi’s Laboratories and consumer major Dabur India are the others that stand a good chance of making it into the Nifty, the brokerage said. Vedanta, Zee Entertainment, Bharti Infratel and GAIL are likely to be excluded, the brokerage said.
Safe haven currencies on back foot
currencies were on the back foot on Tuesday as hopes of an economic turnaround boosted stock prices. The dollar touched a three-week high against the yen, the euro gained a tad against the greenback, while safe-haven Swiss franc eased a bit against the US currency. Sterling was under pressure after UK government promise to boost public spending.
Q4 results today
Vodafone Idea, ONGC, Ircon International, Deepak Fertilisers, Goa Carbon, Bajaj Healthcare, Cera Sanitaryware, Cupid, Hindustan Motors, Lovable Lingerie, Nirlon and Rajesh Exports are among the companies scheduled to announce their results on Tuesday.
FPIs sell Rs 1,937 cr worth of stocks
Net-net, foreign portfolio investors (FPIs) were sellers of domestic stocks to the tune of Rs 1,937 crore, data available with NSE suggested. DIIs were net buyers to the tune of Rs 1,036.13 crore, data suggests.
Rupee: The rupee on Monday rose by 7 paise to close at 75.58 against the US currency on easing crude oil prices and a weak dollar in overseas markets.
10-year bonds: India 10-year bond yield fell 0.17 per cent to 5.90 after trading in 5.89-5.93 range.
DATA/EVENTS TO WATCH
Q4 Earnings: Voda Idea I CERA | NBCC I ONGC I BGR Energy | Deepak Fertiliser I ICRA
Japan May Unemployment Rate (05.00 am)
China June Manufacturing PMI (06.30 am)
UK Q1 GDP Growth Final (11.30 am)
UK Q1 Current Account (11.30 am)
Euro Area June Core Inflation (02.30 pm)
India May Core Sector Growth (05.00 pm)
India May Fiscal Deficit (05.00 pm)
India Q1 Current Account Deficit (05.00 pm)
Fed Chair Powell Testimony (10.00 pm)
China clears HK security law… China’s top legislative body, the National People’s Congress Standing Committee, has voted unanimously to approve a landmark national security law for Hong Kong, in a sweeping attempt to quell dissent, risking US retaliation and the city’s appeal as a financial hub. The details of the law will be fully disclosed to the public today.
Japan’s industrial output falls for 4th month
Japan’s industrial output fell for a fourth straight month in May to the lowest level since the global financial crisis, highlighting the widespread impact of the coronavirus on factory and overall business and consumer activity. Factory output fell 8.4 per cent month-on-month in May to 79.1, a level not seen since March 2009 when the financial crisis sapped global demand.
China’s June factory activity quickens
China’s factory activity expanded at a stronger pace in June, as the economy continues to recover after the government lifted strict lockdowns and ramped up investment. The official manufacturing Purchasing Manager’s Index (PMI) came in at 50.9 in June, compared with May’s 50.6, National Bureau of Statistics (NBS) data showed on Tuesday, and was above the 50.4 forecast in a Reuters poll of analysts.
Tiktok, 58 other Chinese apps banned… A day before the third round of talks to resolve the border dispute with China, the Modi government on Monday “blocked” 59 apps owned or backed by the Chinese, including popular ones such as Tik-Tok, UC Browser, WeChat, Shareit and CamScanner for “engaging in activities prejudicial to sovereignty and integrity of India, defence of India, security of state and public order”. The Centre said, without naming China, that the “targeted move” against the “malicious apps…used in mobile and nonmobile internet-enabled devices” comes “amid raging concerns” about the “data security and privacy of 130 crore Indians” and follows “several complaints…about misuse of some apps … for stealing and surreptitiously transmitting users’ data in an illegal manner to servers located outside India”.
Unlock 2.0 paused… In an indication that the Covid situation remains serious, the “unlocking” process has been paused with fresh guidelines stating that the lockdown shall continue to be strictly implemented in all containment zones till July 31 even as opening of schools & colleges, international passenger flights, Metro services, cinema halls, gymnasiums as well as social, political and religious congregations remain barred. The Unlock 2.0 guidelines issued by the home ministry under the Disaster Management Act for the next one month have relaxed the night curfew timings to between 10pm and 5am. There shall be no restriction on inter-state and intra-state movement of persons & goods
Airlines cancelling 10-25% daily flights… Domestic airlines are cancelling 10 to 25% of flights every day, leading to chaos, confusion and hundreds of disgruntled passengers, most of whom have not even got refunds, industry executives said. Airlines are selling tickets for up to one-third of their total flights but are operating only about one fourth, cancelling the rest due to either low demand or new norm in the constantly changing lockdown and quarantine rules of states.
Govt to licence A/C import… The Centre is looking to license the import of 10-12 items, including air conditioners and several of its components, and parts of television sets, as it discourages the entry of foreign goods, especially those from China, into the country. While work on licensing of products had started a few months ago, with agarbatti and tyres being among the initial set of items along with palm oil, the list has been expanded in recent weeks as tension on the LAC has escalated, government sources said. The focus on reducing import of products is also part of an exercise to boost domestic production.
Auto firms red-flag China curbs… After telecom, the auto industry has raised a red flag over sudden restrictions on imports from China and subjecting parts and consignments to rigorous checks at ports, saying this would disrupt manufacturing in the sector at a time when it is struggling with the corona-induced slowdown. The objections have been made by companies as well as industry associations, which say that curbs will hinder operations as many critical parts related to new emissions norms such as BS6 as well as those related to electric vehicles come from China
IT biggies reprioritize China biz… IT services providers such as TCS, Wipro and Infosys are likely to reprioritise their China businesses, as economic stress and unstable geopolitical relations are impacting their already struggling units that have failed to scale up in the Middle Kingdom, analysts said. For these software services providers, growth in China has been challenging as they have been focusing largely on Western companies with operations there.
RIL close to buying Future Group…. Reliance Industries has moved close to clinching a deal to buy the retail businesses of Kishore Biyani’s Future Group, which owns brands like Big Bazaar and EasyDay. The move will further cement RIL’s position as the top brick-and-mortar player across categories like groceries, fashion and general merchandise, said two people briefed on the matter. The deal will involve at least three companies promoted by Biyani—Future Retail, Future Lifestyle Fashions and Future Supply Chain Solutions—going for a merger.
SBI writes to UK for Mallya extradition… SBI has written to UK home secretary Priti Patel’s office, challenging Vijay Mallya’s asylum plea, said three people in the know. The letter, written on behalf of the consortium of lenders led by SBI, and dispatched earlier this month, urged the British authorities to expedite the fugitive businessman’s extradition proceedings as this was key to recovering dues from him, said one of the persons.