Domestic stocks are likely to kick off the week on a flat note, as caution prevailed across Asia amid the rising of Covid cases. Crude oil prices hit October 2018 highs, while the dollar remains firm despite slightly softer-than-expected US inflation data. All eyes would be on the listings of KIMS and Dodla Dairy shares. Here’s breaking down the pre-market actions:
STATE OF THE MARKETS
SGX Nifty signals a flat start
Nifty futures on Singapore Exchange traded 5 points, or 0.03 per cent, higher at 15,876, signaling that Dalal Street was headed for a flat start on Monday.
- Tech View: Nifty50 on Friday formed an indecisive candle on the daily chart that resembled a ‘Hanging Man’ pattern. On the weekly scale, the index formed a bullish candle.
- India VIX: The fear gauge eased over 11 per cent to 13.37 level on Friday over its close at 15.10 on Thursday.
Asian markets off to cautious start
Asian shares got the week off to a cautious start on Monday as a spike in coronavirus cases across Asia over the weekend hurt investor sentiment while oil hovered around 2-1/2 year highs. MSCI’s broadest index of Asia-Pacific shares outside Japan was down by 0.14 per cent.
- Japan’s Nikkei declined 0.08%
- Korea’s Kospi inched up 0.1%
- Australia’s ASX 200 shed 0.32%
- China’s Shanghai Composite rose 0.07%
- Hong Kong’s Hang Seng added 0.01%
US stocks settled mostly higher on Friday
Stocks ended mostly higher Friday, helping the S&P500 index close out its best week since February. It’s a notable turnaround for the market, which only the previous week had its worst week since February on concerns about inflation.
- Dow Jones rallied 0.69% to 34,433.84
- S&P 500 gained 0.33% to 4,280.70
- Nasdaq retreated 0.06% to 14,360.39
Dollar firm as inflation data fails to quell worries
On Monday, the dollar held firm after slightly softer-than-expected US inflation did little to chip away investors’ conviction that the Federal Reserve would tighten monetary policy if consumer price pressures continue to intensify.
- Dollar index steady at 91.793
- Euro slipped to $1.19385
- The pound declined to $1.3888
- Yen shed to 110.80 per dollar
- Yuan unchanged at 6.4563 against the greenback
Crude oil hits October 2018 highs
Oil prices climbed to highs last seen in October 2018 on Monday as the United States and Iran wrangled over the revival of a nuclear deal, delaying a surge in Iranian oil exports, while investors eyed the outcome of the OPEC+ meeting this week. Brent crude for August had gained 22 cents, or 0.3%, to $76.40 a barrel by 0051 GMT while U.S. West Texas Intermediate crude for August was at $74.30 a barrel, up 25 cents, or 0.3%.
Q4 earnings today
Hindustan Aeronautics, National Aluminium Company, Graphite India, NLC India, IFCI, Triveni Turbine, Welspun Corp, Kiri Industries, Federal-Mogul Goetze, Tamilnadu Petroproducts, GIC Housing Finance, Brightcom Group, GFL, and Federal-Mogul Goetze are among the companies that will announce their March quarter results today.
Dodla Dairy, KIMS to make market debuts
Secunderabad-based Krishna Institute of Medical Science (KIMS) and Hyderabad-based Dodla Dairy will make their debuts on Monday. The Rs 909-crore IPO was subscribed 45.62 times. The company sold its shares in the price band of Rs 421-428. KIMS’ Rs 2,144 crore IPO was sold in Rs 815-825 price band. The issue was subscribed 3.86 times.
FPIs sell shares worth Rs 679 crore
Net-net, foreign portfolio investors (FPIs) turned sellers of domestic stocks to the tune of Rs 678.84 crore, data available with NSE suggested. DIIs, turned buyers to the tune of Rs 1832.76 crore, data suggests. FPIs in June turned net buyers by pumping in a net Rs 12,714 crore into Indian markets.
Rupee: The rupee saw a marginal 2 paise drop to end at 74.20 against the US dollar on Friday as month-end demand for the American currency from oil companies brought the domestic unit under pressure.
10-year bond: India’s 10-year bond yield jumped 0.27 percent to 6.3 after trading in 6.01 – 6.06 range.
Call rates: The overnight call money rate weighted average stood at 3.14 percent, according to RBI data. It moved in a range of 1.90-3.40 percent.
EVENTS/DATA TO WATCH
- BoJ Summary of Opinions (05:20 am)
- Euro Area ECB Panetta Speech (01:40 pm)
- BoE Haldane Speech (05:30 pm)
- US Dallas Fed Manufacturing Index June (08:00 pm)
CEOs call for fiscal stimulus
India’s top CEOs called for a large fiscal stimulus or tax incentives from the government, expressing concern about a modest economic recovery in the next two quarters through many see a swift recovery in their own sectors, a survey by ET showed. Eighty-two percent of the 59 top corner-room occupants who voted in the ET poll see 5-10% GDP growth in FY22 while 56% said demand for their goods or services had been impacted adversely by the pandemic’s second wave.
FMCG firms in a bind
Companies selling daily essentials are caught in a bind due to a steep rise in the cost of commodities, freight and packaging. They are forced to either increase retail prices or risk a hit on profitability in the next two quarters. The other choice is to reduce pack sizes — thereby selling less quantity at the same price points — and cutting down on packaging costs.
Discretionary leaders have more legs
In the past one year, share prices of leaders of discretionary sectors such as aviation, hospitality and cinema exhibition have increased considerably. Share prices of Indian Hotels, Inter-Globe Aviation and PVR have run up 85%, 71% and 38%, respectively. In the same period, the benchmark Nifty 50 has delivered a return of 53%. Analysts say the run-up in these counters is not just about the broad market rally. They say the second wave has been operationally more challenging for unorganized players and this has worked in favor of only the sector leaders in the organized segment.
Cairn aims to target more Indian assets
After Air India, the UK-based Cairn Energy plans to target assets of other state-owned companies and banks abroad as it looks to ramp up efforts to recover the amount due from the government after winning an arbitration against the levy of retrospective taxes.
FDI rules to cut Jack Ma’s India plans
Jack Ma’s Ant Group may not be able to participate freely in corporate actions such as rights and bonus issues by Paytm and Zomato after they list due to curbs on Chinese foreign direct investment (FDI) introduced by the Indian government last year. Lawyers and tax experts say the rules clearly specify that any new shares being allotted to investors coming from countries sharing land borders with India will need a government security clearance.
RIL’s green push may draw ESG money
RIL has hitherto been a trailblazer in reaching conventional financial milestones. With investment themes now acquiring a pronounced green accent globally, India’s most valuable company could harness its latest raft of blockbuster sustainability initiatives to set another benchmark — as a recipient of ESG funds. RIL’s capital allocation toward renewable assets and decarbonization, besides anchoring long-term growth of legacy businesses, should lift P/E multiples in lockstep with ESG scores the $10-billion (Rs 75,000 crore) of pledged green investments are expected to undergird.