SGX Nifty up 229 points; here's what changed for market while you were sleeping


Signs of progress on the $1.9 trillion US Covid rescue plan and easing of US 10-year bond yield may send domestic stocks rallying on Monday. Here’s the breaking down of the pre-market actions:

State of the markets

SGX Nifty signals gap-up start:Nifty futures on the Singapore Exchange traded 229 points, or 1.58 per cent, higher at 14,753.50 in signs that Dalal Street was headed for a gap-up start on Monday.

Tech View: Nifty forms Island Reversal

Nifty50 tumbled over 550 points on Friday and formed an Island Reversal pattern on the daily chart. On the weekly scale, it formed a bearish candle, along with a lower high lower low formation. The candle patterns suggest a bearish bias for the market.

Asian stocks bounce as bond market calms

Asian shares firmed on Monday as some semblance of calm returned to bond markets after last week’s wild ride, while progress in the huge US stimulus package underpinned optimism about the global economy. MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.1 per cent, after shedding 3.7 per cent last Friday. Japan’s Nikkei rallied 2 per cent. Hong Kong’s Hang Seng gained 0.87 per cent to 29,232.35.

prices climb on stimulus bill progress

Oil prices rose more than $1 on Monday on optimism in the global economy thanks to progress in a huge US stimulus package and on hopes for improving oil demand as vaccines are rolled out. Brent crude futures for May rose $1.07, or 1.7 per cent, to $65.49 per barrel. The April contract expired on Friday.

US stocks settled lower on Friday

On Friday, the S&P 500 fell 18.19 points, or 0.5 per cent, to 3,811.15. The Dow Jones Industrial Average fell 469.64 points, or 1.5 per cent, to 30,932.37. Technology stocks recovered slightly following several days of heavy selling, but the Nasdaq still posted its biggest weekly loss since October. The Nasdaq rose 72.91 points, or 0.6 per cent, to 13,192.34.

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FIIs sell Rs 8,295 crore worth stocks

Net-net, foreign portfolio investors (FPIs) were sellers of domestic stocks to the tune of Rs 8,295.17 crore, data available with NSE suggested. DIIs were net buyers to the tune of Rs 1,499.70 crore, data suggests.

Money Markets

Rupee: The Indian rupee on Friday posted its biggest single-day fall in nearly 19 months, tumbling 104 paise to close at 73.47 against the US dollar as a rout in global bond markets weighed on investor sentiments.

10-year bonds: India 10-year bond yield rose 0.76 per cent to 6.22 after trading in 6.20-6.24 range.

Call rates: The overnight call money rate weighted average stood at 3.26 per cent, according to RBI data. It moved in a range of 1.90-3.50 per cent.

Data/events to watch

  • India Markit Manufacturing PMI Fed (10:30 am)
  • India Balance of Trade Prel Fed (05:50 pm)
  • India Feb Exports/Imports data (05:50 pm)
  • India Feb Car Sales data…
  • Japan Jibun Bank Manufacturing PMI Final Feb (06:00 am)
  • China Caixin Manufacturing PMI Feb (07:30 am)
  • Euro Area Markit Manufacturing PMI Final Feb (02:30 pm)
  • UK Mortgage Lending Jan (03:00 pm)
  • UK Markit/CIPS Manufacturing PMI Final Feb (03:00 pm)
  • US Markit Manufacturing PMI Final Feb (08:15 pm)

Macros

US House passes $1.9 trillion Covid relief plan… US House of Representatives passed a $1.9 trillion coronavirus relief package early Saturday. Democrats who control the chamber approved the sweeping measure by a mostly party-line vote of 219 to 212 and sent it to the Senate, where Democrats planned a legislative manoeuvre to allow them to pass it without the support of Republicans.

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Nine banks to invest in bad bank… Nine banks and two non-bank lenders, including the State Bank of India (SBI), Punjab National Bank (PNB) and Bank of Baroda (BoB), are coming together to jointly invest Rs 7,000 crore of initial capital in a proposed bad bank that aims to help extract funds stuck in bad loans. Two other state-run financiers of power projects will also own stock in the bad bank, three people familiar with the talks told ET. Canara Bank, Union Bank of India and Bank of India will join their larger state-run peers as investors in the bad bank. ICICI Bank, Axis Bank and Life Insurance Corp of India (LIC)-owned IDBI Bank are also among the shareholders.

Wood says Fed to decide stocks’ future… Christopher Wood, chief global market strategist at Jefferies, says he was expecting the bond market selloff. “As long as the Fed is talking dovish, stock markets will continue to rally. The risk to the markets becomes clear that the economies are rebounding more than the Fed was expecting. The risk is that there will be a taper, but for now Powell is still talking dovish. The stock market will keep going up and the bond market will keep selling off until the Fed reacts. The key issue is how they react. They may try and stop the bond market surge and long-term interest rates rising by adopting some version of what the Japanese call yield curve control, says he.

Yields not signalling equity peak… Equity peaks have historically been preceded by a 130-basis point rise in yields on an average from the trough. From the recent trough, yields climbed 80 basis points, according to Credit Suisse. During the 2008 Global Financial Crisis (GFC), bond yields rose nearly 170 basis points before the market peaked. The equity market would keenly watch the bottoming out of the treasury inflation-protected security (TIPS) as the real bond yields continued to fall despite inflationary expectations.

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Notices are out under black money law… The probe unleashed by the harsh Black Money Act is coming to a head. Five years after the law was passed, the first set of show cause letters will be issued across the country in the next few weeks. The tussle between the taxman and citizens, and the trail of events that follow, would test the role of judicial authorities in a law that requires assessees to prove their innocence. Close to 400 notices, including 40-50 in Mumbai, are expected to be served under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, which was passed in mid-2015 and came into force on April 1, 2016.

Budget tax going to hurt PF subscribers hard… It turns out the Budget proposal to tax interest earned by provident fund contributions exceeding Rs 2.5 lakh annually may make as many as 75% subscribers cut their contribution to the retirement scheme. That was the key finding of an online poll conducted by ET Wealth over February 20-22. Investment experts caution against abandoning PF, saying the voluntary provident fund option is still among the better bets. Only a small percentage of provident fund subscribers have a basic salary of more than Rs 1.73 lakh a month. In a majority of cases, mandatory contribution won’t breach the annual tax-free threshold of Rs 2.5 lakh.





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