Investors would on Monday kick off the week reacting to a couple of major quarterly earnings and the government measures announced over the weekend to deal with the Covid crisis. Record Covid cases in India, extension of the lockdown in Delhi and a depreciating rupee could hurt foreign portfolio flows and may ensure any upside in the market gets sold off.

Here’s breaking down the pre-market action:

STATE OF THE MARKETS


SGX Nifty signals positive start


Nifty futures on the Singapore Exchange traded 31.50 points, or 0.22 per cent, higher at 14,371.50 in signs that Dalal Street was headed for a positive start on Monday.

Tech View: Nifty charts showing weakness

Nifty50 on Friday saw selling pressure at higher levels. The index formed a Doji on both daily and weekly scales. It has been forming indecisive candles over the past three occasions on the weekly time frame charts, with a lower high-low formation, which reflected weakness.

Asian markets rise in early trade

Asian markets were trading mostly higher in Monday’s trade. Korea’s Kospi rose 0.44 per cent while China’s Shanghai Composite index edged 0.09 per cent higher. Japan’s Nikkei added 0.23 per cent to 28,981.54. Hong Kong’s Hang Seng, however, fell 0.30 per cent.

US stocks settled higher on Friday

Wall Street stocks rose on Friday to finish a volatile week on a positive note following strong new home sales data. The Dow Jones Industrial Average index finished up 0.7 per cent at 34,043.49. The broad-based S&P500 index advanced 1.1 per cent to 4,180.17, while the tech-rich Nasdaq Composite index jumped 1.4 per cent to 14,016.81.

D-Street’s P/E premium to EMs shrinks

The recent surge in Covid cases has shrunk India’s valuation premium to its emerging market (EM) peers, perhaps giving an entry opportunity for those on the sidelines. The P/E premium of MSCI India — an index tracked by global fund managers to measure local stock values — dropped below its five-year average to 38%, Bloomberg data showed. The MSCI India index is trading at 20.2 times its one-year forward projected earnings. Asia’s fourth-biggest market by value historically trades at a premium of 45-50% on the long-term basis to its EM peers.

Q4 earnings today

HDFC Life, SBI Card,

, Castrol India, Delta Corp, Alok Industries, Tata Teleservices (Maharashtra) and Snowman Logistics are some of the companies which will announce their March quarter results today.

DIIs buy Rs 1,696 crore worth stocks

Net-net, foreign portfolio investors (FPIs) were sellers of domestic stocks to the tune of Rs 1,360.76 crore, data available with NSE suggested. DIIs were net buyers to the tune of Rs 1,695.59 crore, data suggests.

FPIs cuts bullish F&O bets

Overseas investors have slashed their bullish derivative bets on India’s main benchmark Nifty as the second wave of Covid-19 across the country has forced them to turn cautious about the country’s near-term prospects. Their net bullish positions in index futures, including the Nifty, have lightened to Rs 2,250 crore from Rs 9,500 crore on January 8, according to IIFL Securities.

MONEY MARKETS

Rupee: Falling for the fourth session in a row, the rupee on Friday closed below the 75 mark against the US currency for the first time in nearly two weeks as a record spike in COVID-19 cases and losses in the domestic equities weighed on investor sentiment.

10-year bonds: India 10-year bond yield fell 0.25 per cent to 6.03 after trading in 6.03-6.10 range.

Call rates: The overnight call money rate weighted average stood at 3.24 per cent, according to RBI data. It moved in a range of 1.90-3.50 per cent.

DATA/EVENTS TO WATCH

  • Q4 Earnings: HDFC Life I SBI Cards I TechM I Castrol India I Delta Corp
  • Japan Leading Economic Index Final Feb (10:30 am)
  • Japan Coincident Index Final Feb (10:30 am)
  • US Durable Goods Orders MoM March (06:00 pm)
  • US Dallas Fed Manufacturing Index April (08:00 pm)

MACROS

Insurers line up to buy InVIT bonds… Top life insurance companies, including LIC of India, ICICI Life, HDFC Life and SBI Life, are set to invest in the bonds issued by Infrastructure Investment Trusts (InVIT), providing much-need long term funding to the capital-starved sector that lends further to build roads, bridges, energy towers, malls, and other infrastructure assets. Insurance regulator IRDA last week permitted insurers to invest in InvITs and Real Estate Investment Trusts.

Banks’ asset quality under the lens… Asset quality at Indian banks is under the lens yet again as the second Covid surge and widespread curbs on mobility and businesses put a question mark on the ability of the borrowers to repay. Recent curfews have prompted lenders to conduct stress tests yet again on their portfolios after collection ratios fell up to 10% in the first fortnight of April. Business could be down about a fifth, and the situation might worsen further before a turnaround is possible.

Govt seeks to break up

… In a move that will turn ONGC into a lame duck, the oil ministry has drawn up plans to carve up the country’s largest explorer into smaller entities, sell stake in its major producing and upcoming fields to private companies and privatise smaller discoveries. The action plan centres around hiving off in-house operations — drilling, well services, logging, workover services and data processing — into separate entities. It identifies Ratna-R and Pana-Mukta offshore fields as well as Gandhar onland in Gujarat for inducting private partners in the western region.

Manufacturing begins to take a hit… Covid-19 cases spreading in manufacturing units, poor availability of components and raw materials — suppliers’ facilities being virus-hit, too — and a total ban on industrial use of oxygen are impacting production of both essentials and non-essentials. Companies said supplies will be affected next month. It may get worse if the second wave of infections doesn’t wane, said executives.

States told to go for localised curbs… The Centre has asked the state governments to identify districts or cities or panchayats showing over 10% positivity rate for a week or 60% bed occupancy and introduce strict containment measures to prevent intermingling of people. The ministry of health and family welfare has asked states witnessing a surge in cases to identify “well-defined geographies” showing a spike and take containment measures.

Now, pick and choose you vaccine… Indians can choose their Covid vaccine when making an appointment at a private centre from May 1, when the next phase of the country’s public immunisation programme starts. The health ministry has directed that all private vaccination centres will have to declare which jab will be on offer, stocks available and the price they will charge on the CoWIN platform. Vaccinations will be opened up to all who are 18 and above starting next month.

HSBC to stay put in India… HSBC has retained its growth forecasts for India despite the second wave of Covid and has said that it intends to grow its business in the country. The bank, which has around 39,000 employees here, gets a big chunk of revenue from the country and sees it as the third-largest economy by 2030. Even as MNC rivals like Citi have announced their exit from the consumer business in India amid the pandemic, HSBC has said that it is going the other way.

Preserve capital amid Covid surge… The surge in Covid infections is forcing investors to look at preserving their capital by moving a higher percentage of their portfolio into liquid funds, other fixed income instruments and gold, and less into equities. Financial advisers and industry experts say, given the current crisis, investors should look at preserving capital even if that means earning lower returns, rather than making some dangerous moves and invest heavily in risky assets like stocks.

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