SGX Nifty down 50 points; here’s what changed for market while you were sleeping

Asia markets had negative cues this morning, as investors turned cautious amid a delay in fresh US stimulus and a spike in Covid-19 cases. Investors would also pay heed to manufacturing PMI prints for India, China, US and others and quarterly earnings numbers.Here’s breaking down the pre-market actions.

STATE OF THE MARKETS
SGX Nifty signals negative start
Nifty futures on the Singapore Exchange traded 49 points, or 0.44 per cent lower at 11,055 , in signs that Dalal Street was headed for a negative start on Monday.

Tech view: Nifty forms bearish candle
On Friday, the index closed below its immediate support level at 11,080 and formed a bearish candle on the daily and weekly charts. Analysts said the index is still in the overbought zone and its upside looks largely capped. A breach of the 11,000 level could trigger a near-term correction, they warned.

Asian shares mixed in early trade
Japan’s Nikkei 225 index was up 1.19 per cent, or 259.17 points, at 21,969.17 in early trade. Hong Kong’s Hang Seng eased 0.12 per cent, or 28.54 points, to 24,566.81. But the benchmark Shanghai Composite index rose 0.67 per cent, or 22.18 points, to 3,332.18.

Oil falls on oversupply concerns
Oil prices fell on Monday on concerns about oversupply as OPEC and its allies, together known as OPEC+, are due to pull back from production cuts in August while an increase in COVID-19 cases worldwide raised fears of slower pick-up in fuel demand. Brent crude futures slid 8 cents, or 0.2 per cent, to $43.44 a barrel while WTI crude futures were down 12 cents, or 0.3 per cent, at $40.15 a barrel.

US stocks settled higher
US stocks finished higher on Friday, fueled by strong earnings reports from big tech names. The Dow Jones Industrial Average increased 114.67 points, or 0.44 per cent, to 26,428.32. The S&P 500 was up 24.90 points, or 0.77 per cent, to 3,271.12. The Nasdaq Composite Index advanced 157.46 points, or 1.49 per cent, to 10,745.27.

Auto stocks may react to July sales data
July auto sales numbers showed a solid bounceback. Top industry players seem to be leading the sector’s crawl-back to normalcy amid an easing coronavirus lockdown. Sales of Maruti Suzuki and Hero MotoCorp returned to levels seen a year ago in July. TVS Motor, Eicher Motor, Mahindra and Mahindra also reported their July auto sales figures on Saturday.

Q1 earnings today
Exide Industries, VST Industries, Dixon Tech: Exide Industries, Dhanlaxmi Bank, VST Industries, Astral Poly Technik, Dixon Technologies, Hikal, MRPL, PTC India Financial Services and Tata Consumer Products are slated to announce their financial results on Monday.

FIIs sell Rs 959 cr worth of stocks

Net-net, foreign portfolio investors (FPIs) were sellers of domestic stocks to the tune of Rs 958.64 crore, data available with NSE suggested. DIIs were net buyers to the tune of Rs 442.73 crore, data suggests.

Analysts suggest ‘avoid’ on new gold bond
Investors already having a sizeable exposure to gold as an asset class could give the upcoming Sovereign Gold Bond Scheme offering a miss as the yellow metal prices have run up sharply in recent months. Wealth managers believe investors should have 10-15% of their portfolio allocation to gold because of the weakening dollar, geopolitical tensions and slowing global growth. However, given the 51% rise in gold prices over the last one year and 11% in July alone, investors could avoid aggressive bets on gold, they said.

Future defaults hit 4 Templeton funds

The net asset values (NAVs) of four debt schemes of Franklin Templeton Mutual Fund fell between 1.33% and 4.73% on July 31 due to payment defaults by two Future group firms — Nufutre Digital (NDIL) and Future Ideas (FICL). The four debt schemes are among the six that are in the process of being wound up. The worst-hit was Franklin India Income Opportunities whose NAV fell by 4.73%. The NAVs of Franklin India Short term Income Plan fell 1.75%, Franklin India Dynamic Accrual 1.33%, and Franklin India Credit Risk Fund declined 2.28%.

MONEY MARKETS
Rupee: On Friday, the Indian rupee closed with a marginal 3 paise gain at 74.81 to the US dollar amid weakness in the greenback against key global peers.

10-year bonds: India 10-year bond yield rose 0.21 per cent to 5.83 after trading in 5.81-5.84 range.

Call rates: The overnight call money rate weighted average stood at 3.45 per cent, according to RBI data. It moved in a range of 1.80-4.10 per cent.

MACROS

China factory output bounces… China’s factory activity expanded at the fastest pace in nearly a decade in July as domestic demand continued to improve after the coronavirus crisis, though export orders and employment remained weak, a private business survey showed on Monday. The Caixin/Markit Manufacturing Purchasing Managers’ Index(PMI) rose to 52.8 last month from June’s 51.2, marking the sector’s third consecutive month of growth and the biggest jump since January 2011. It also beat analysts’ forecasts for a more modest improvement of 51.3. The 50-mark separates growth from contraction on a monthly basis.

Japan’s Q1 GDP unchanged… Japan’s economy shrank an annualised 2.2% in January-March, unchanged after a second revision, data from the Cabinet Office showed on Monday. The additional revision for gross domestic product (GDP) compared with economists’ median forecast for a 2.8% contraction in a Reuters poll. On a quarter-on-quarter basis GDP shrank 0.6%, also unchanged from the second preliminary reading and compared with a median forecast for a 0.7% fall.

India Manufacturing PMI print today On the macro front, market participants would be eyeing Markit India Manufacturing PMI reading for July on Monday. The day will also see the release of China, Germany, US and Japan’s manufacturing PMIs, in addition to Japan’s GDP numbers.

Bank FDs shoot up by Rs 6.1L cr… Banks have seen an increase in fixed deposits by Rs 6.1 lakh crore during the period April 1 to July 3, compared with Rs 3 lakh crore a year-ago, in an indication that investors expect interest rates to come down further. The increase is also reflective of risk-aversion. From the deposit numbers of large banks that have declared their results so far, it is seen that the share of FDs is either rising or is steady. In FY20, bank deposits accounted for 52.6% of household savings, followed by life insurance (23.2%), currency (13.4%) and mutual fund holdings (7%)

RBI likely to cut reverse repo rate… RBI could prioritise measures to step up credit flows, like reducing the rate on reverse repurchases and nudging banks to lend, instead of tinkering with the headline policy rate after the US Federal Reserve raised concerns about a prolonged delay in global economic recovery. Therefore, Mint Road may not change the policy repo rate but reduce the reverse repo to prompt high-street banks to lend to companies, showed a survey conducted by ET among 22 market participants

Car sales bounce back… Passenger vehicle sales almost doubled month-on-month and came close to pre-Covid levels last month as pent-up demand, a spike in production and revival of economic activities drove purchases of small cars, sedans and SUVs across the country. According to industry estimates, 197,523 passenger vehicles were sold in the local market in July, a tad lower than 200,790 units sold in the year-ago period, and significantly higher than 105,617 units sold in June.

Stray lockdowns hit economy rebound… The economy did not gather pace in July after the June spurt amid rising Covid-19 cases and local lockdowns to contain the spread, bending back the recovery trend. Transportation of goods, rail freight, exports, car sales, farming and employment indicators improved further in July from June levels, but retail remained sluggish, credit growth was lower, diesel demand fell and mobility indicators did not suggest increased activity in the month.

Licence raj likely in furniture, toys, sports goods… Imports of furniture, toys and sports goods are likely to require licences soon, a measure the government hopes will reduce imports and encourage domestic production, said people with knowledge of the matter. India has already imposed licensing requirements for tyres and colour TV imports, a big percentage of which comes from China. The government may also raise import duties for certain products to their bound rates to make imports costlier.

Airline refunds may take time… People who were issued credit shells against tickets cancelled for flights during and after the national lockdown may have to hold on to them longer, as cash-strapped airlines are unlikely to refund about Rs 3,000 crore they owe to passengers. Detailed data of refunds shared by airlines show they have issued credit shells worth Rs 3,000 crore that can be used for travel on a future date. Estimates show about Rs 1,500 crore has been refunded to passengers — a substantial part through the utilisation of credit shells by passengers.

Source: ET Markets

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