A slight drop in Covid cases for two straight days is a positive sign for Dalal Street, but persistent selloff by FIIs isn’t. After a smart recovery on Monday, domestic stocks may see a muted start to Tuesday’s trade, much in line with their Asian peers. Technical charts, however, are signalling gains ahead.

Here’s breaking down the pre-market actions:

STATE OF THE MARKETS

SGX Nifty signals flat start

Nifty futures on the Singapore Exchange traded 12 points, or 0.08 per cent, lower at 14,670.50 in signs that Dalal Street was headed for a flat start on Tuesday.

Tech View: Nifty likely to see recovery

Nifty50 on Monday staged a strong comeback from the day’s low point, which coincided with the 100-day moving average and the 62 per cent retracement of the last leg of its rally. The index erased entire intraday losses and closed above the 50-day exponential moving average. Analysts are hopeful.

Asian markets mixed in early trade

Financial markets in Japan and mainland China are closed on Tuesday for a public holiday. Korea’s Kospi edged 0.08 per cent lower to 3,110.07 while Hong Kong’s Hang Seng added 0.24 per cent to 28,263.37. Taiwan’s TWSE index declined 0.19 per cent to 17,039.52. MSCI’s broadest index of Asia-Pacific shares outside Japan was up by 0.05 per cent on the back of a positive lead from Wall Street overnight.

US stocks settled mostly higher

On Wall Street, the Dow Jones Industrial Average index rose 0.7 per cent and the S&P500 gained 0.27 per cent. The Nasdaq Composite index dropped 0.48 per cent. A slide in high-flying tech and related stocks – including Amazon.com Inc, Tesla Inc and Salesforce.com Inc, pressured the Nasdaq, as growth-oriented shares slid and cyclical stocks sensitive to the recovery rose.

Q4 earnings today

Adani Ports, Adani Total Gas, L&T Infotech, P&> Hygiene, RBL Bank, Morepen Labs, DCM Shriram, IIFL Securities, Suven Life and Greaves Cotton are among companies which will report their March quarter results on Tuesday.

FPIs sell Rs 2,289 crore worth stocks

Net-net, foreign portfolio investors (FPIs) were sellers of domestic stocks to the tune of Rs 2,289.46 crore, data available with NSE suggested. DIIs were net buyers to the tune of Rs 552.92 crore, data suggests.

MONEY MARKETS

Rupee: The rupee rose by 14 paise to close a nearly one-month high of 73.95 against the US dollar on Monday following losses in the American currency in the global markets.

10-year bonds: India 10-year bond yield fell 0.48 per cent to 6 after trading in 6.00-6.02 range.

EVENTS/DATA TO WATCH

  • Q4 earnings: Adani Ports | Adani Total Gas | L&T Infotech I RBL Bank
  • Australia Balance of Trade March (07:00 am)
  • Australian Home Loans MoM March (07.00 am)
  • RBA Interest Rate Decision (10:00 am)
  • UK Mortgage Approvals March (02:00 pm)
  • UK BoE Consumer Credit March (02:00 pm)
  • US Balance of Trade March (06:00 pm)
  • US Factory Orders MoM March (07:30 pm)

MACROS

Rupee-dollar forwards premium shoots up… The cost of covering unhedged currency risks in the derivative markets surged Monday, potentially affecting companies with large import bills, with the one-month onshore forwards premium on the rupee-dollar pair spiking up to 360 basis points through the trading session. The unusual movement is attributed to several factors: Inbound dollar flows for the

initial offer, a legal tussle between the government and Cairn Energy over arbitration payments, and likely regulatory intervention in the currency markets.

Private banks laggards in rate cut… Private sector banks failed to match RBI’s reduction in the interest rate in the past year to ease the pain inflicted by Covid-19 while their state-owned peers have been generous in extending the benefits to borrowers by reducing more than the central bank. The average fall in lending rates for banks such as Axis Bank,

, Federal Bank and DCB was about 22 basis points on fresh loans compared with RBI’s115 basis points reduction in the past year.

Job market went into panic in April… India’s job market, which was on the path of recovery, was thrown into a state of panic in April as the second Covid-19 wave spiralled across the country and lockdowns re-emerged in various states. Open positions at the end of April dropped 31% from March to touch the lowest level in 2021, according to data from official company job pages on LinkedIn and direct postings on top job boards. The count of active jobs barely touched the 200,000 mark in April, down from 290,000 in March. This was sharper than the18% drop in active job vacancies in the same period last year, when a nationwide lockdown was in force.

Manufacturing PMI rises in April… India’s manufacturing activity improved slightly in April even as rates of growth for new orders and output eased to the slowest since last August amid the devastating second wave of Covid-19, a private survey showed Monday. The IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) for April marginally rose to 55.5 after declining to a seven-month low of 55.4 in March. A reading above 50 indicates expansion, while one below that signals contraction. Amid rising Covid-19 infections, manufacturing activity expanded for the ninth consecutive month.

Banks confused with surplus rupee liquidity… Large banks, particularly some of the top MNC lenders in India, are understood to have asked RBI whether they can freely convert surplus rupee liquidity into dollars to invest in US treasury bills and other foreign sovereign securities. This follows a widely shared perception in the market that such transactions may not go down well with the regulator and the government, which would prefer the surplus money in the banking system to bring down local interest rates and bond yields.

DIIs provide cushion for FII selling… Sustained buying by domestic investors offset the selling pressure from foreign investors in April, showed data from market regulator Sebi and stock exchanges. The local mutual funds and insurance companies together bought equities worth Rs 9,651 crore during the month. Of this, 61% was by mutual funds. On the other hand, FPIs sold equities worth Rs 9,659 crore ($1.3 billion) following the surge in Covid-19 caseloads.

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