SGX Nifty down 70 points; here's what changed for market while you were sleeping


Asian markets edged higher this morning, but domestic stocks may see a weak start amid a record rise in Covid cases and prospects of lockdown in Maharashtra. All eyes would be on TCS’ quarterly earnings, while CPI and factory output readings are scheduled for release later for the day. The rupee, which fell for five days, would also be on investor radar, as FPIs have turned net sellers in April so far.

Here’s breaking down the pre-market actions.

STATE OF THE MARKETS

SGX Nifty signals negative start
Nifty futures on the Singapore Exchange traded 73 points, or 0.49 per cent, lower at 14,799 in signs that Dalal Street was headed for a negative start on Monday.

Tech View: Nifty’s Long-Legged Doji
Nifty50 on Friday formed a small bearish candle on the daily chart and a Long-Legged Doji on the weekly chart, suggesting indecisiveness among traders. The index has been failing to take out the immediate resistance at 14,900 level for some time, but has been trading above the key moving averages, suggesting more consolidation ahead.

Asian markets off to cautious start

Asian shares started cautiously on Monday as investors waited to see if US earnings can justify sky-high valuations, while bond markets could be tested by what should be very strong readings for U.S. inflation and retail sales this week. MSCI’s broadest index of Asia-Pacific shares outside Japan was off 0.05 per cent in slow early trade. Tokyo’s Nikkei edged up 0.1 per cent, while South Korean stocks rose 0.2 per cent.

US stocks ended at record highs on Friday

On Friday, the Dow Jones Industrial Average index rose 297.03 points, or 0.89 per cent, to 33,800.6, the S&P 500 gained 31.63 points, or 0.77 per cent, to 4,128.8 and the Nasdaq Composite index added 70.88 points, or 0.51 per cent, to 13,900.19.

Maha lockdown decision on or after Wednesday

A lockdown may be impending in Maharashtra, the Cabinet Minister Aslam Sheikh on Sunday said after a meeting chaired by Chief Minister Uddhav Thackeray with state Covid 19 Task Force representatives amid an increase in coronavirus infections and deaths. State health minister Rajesh Tope said that a decision could happen after it is discussed during Wednesday’s cabinet meeting.

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TCS’ Q4 results today

Healthy March quarter numbers on Monday would be a prerequisite for TCS stock to sustain record levels. Analysts so far are anticipating a 2.8-4 per cent sequential growth in sales and 5-10 per cent QoQ growth in profit. The company’s revenue in dollar terms and constant currency terms are expected to beat key peers on a sequential basis. Unlike peers, TCS had already absorbed wage revision in the December quarter, but select brokerages believe the margin could get impacted by the recent onsite-centric large deals.


FPIs sell Rs 653 crore worth of stocks


Net-net, foreign portfolio investors (FPIs) were sellers of domestic stocks to the tune of Rs 653 crore, data available with NSE suggested. DIIs were net sellers to the tune of Rs 271 crore, data suggests.


MONEY MARKETS


Rupee: The rupee depreciated by another 15 paise against the US dollar to register its fifth loss in a row on Friday, facing headwinds on the economy front due to rising covid-19 cases. Tumbling to its weakest level since November 4, 2019, the rupee settled at 74.73 against the US dollar.

10-year bonds: India 10-year bond yield declined 0.23 per cent to 6.01 after trading in 5.99-6.03 range.

Call rates: The overnight call money rate weighted average stood at 3.13 per cent, according to RBI data. It moved in a range of 1.90-3.50 per cent.

Data/Events to Watch

  • India Industrial Production YoY Feb (05:30 pm)
  • India Inflation Rate YoY March (05:30 pm)
  • India Manufacturing Production YoY Feb (05:30 pm)
  • Euro Area Retail Sales MoM Feb (02:30 pm)
  • US Consumer Inflation Expectations March (08:30 pm)
  • China New Yuan Loans March

MACROS

Fed says US economy on a high…Fed Chair Jerome Powell says the US economy is at an “inflection point” with stronger growth and hiring ahead thanks to rising vaccinations and powerful policy support. In an interview with CBS’s 60 Minutes aired on Sunday, he said a resurgence of Covid-19 remains the principal risk to the economy. Sian Fenner, senior economist at Oxford Economics, said ““The Fed is going to be more concerned about the labor market. Inflation is definitely not spiraling out of control.”

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CPI, IIP data likely today

Data on February factory output or IIP is likely on Monday post market hours. The day may also see the release of CPI inflation for March. Globally, data on China’s new loans, Japan’s PPI , German’s WPI and euro zone’s retail sales will be eyed keenly.

FDI in pension sector may rise… The government may hike FDI limit in the pension sector to 74% from 49% and a bill in this regard is expected to come in the next Parliament session, according to sources. Last month, Parliament approved a bill to increase FDI limit in the insurance sector to 74% from 49%. Sources said the amendment bill may also contain separation of NPS Trust from the PFRDA, which intends to keep the trust separate from the pension regulator and be managed by a 15-member board. Majority of the members are likely to be from the government.

PAN-Aadhar link by June 30 a must… If you are among a handful of taxpayers who haven’t linked your Permanent Account Number (PAN) with Aadhaar, it’s high time you do it. On March 31, the Central Board of Direct Taxes had again extended the deadline to link the two IDs until June 30, citing requests from taxpayers. Senior tax department officials, however, said this is the last extension as the government has now armed itself with powers to levy a penalty against those who are non-compliant.

New P/E math cuts Nifty valuation by 20%…The valuation of India’s key benchmark has shrunk following the NSE’s move to change the calculation methodology and the decline in the market in the past month. The Nifty’s Price to Earnings (P/E) ratio — a popular valuation measure — based on 12-month earnings has declined nearly 20% from a March high of 41.60 to 33.5. The NSE decided to consider consolidated earnings to calculate PE ratio from March 31. This has resulted in Nifty’s PE ratio based on earnings estimates decline 26% from a March high of 29 to 21.35

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Top CEOs against lockdowns… Nearly three-fourths of India Inc’s CEOs fear partial lockdowns and night curfews will impact labour and goods movement, affecting production at their units, a poll conducted by industry lobby CII showed. As much as 15% of the 710 CEOs, including from MSMEs, fear that half the production could be wiped out with states — ranging from Maharashtra to Uttar Pradesh and Delhi — imposing curbs on movement of people due to a second wave of coronavirus, which has pushed the number of people getting infected in the country to record levels.

Corp bonds suffer in yield twist… India’s bond buyers seem to have cut a long story short — to the evident disadvantage of companies selling debt locally. An unexplained skew in the yield curve has meant that lower-tenure sovereign bonds are generating nearly as much as the 10-year benchmark. In such a rate environment, project-financing corporate bonds — of longer tenures — could suffer. Unless, of course, the wrinkles are ironed out.

Paper gold sales hit record… Investor appetite for paper gold, especially for sovereign gold bonds (SGBs), grew to record levels in FY21, a year which saw the metal hit a record high of Rs 56,191per 10 gm. The value of SGBs subscribed by investors was Rs 16,048.74 crore, the highest in any financial year since the bonds were launched by the NDA government in FY16. Inflows into gold ETFs in FY21, though the highest in a fiscal, were comparatively lower at Rs 6,918.96 crore.

SIP additions at 3-year high… The monthly net addition of SIP accounts rose to a three-year high of 9.62 lakh in March, data from the AMFI showed. March SIP account net addition is nearly double the last five-year average of 4.52 lakh. The highest net SIP account addition in a single month was 9.68 lakh — in January 2018. Gross additions at 16.71 lakh accounts are the highest since AMFI kept records of this data set.



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