The benchmark Sensex and Nifty are likely to open marginally lower on January 3 as trends in the GIFT Nifty indicate a negative start for the broader index with a loss of 70.5 points.
On January 2, the BSE Sensex was down 380 points at 71,893, while the Nifty50 fell 76 points to 21,666 and formed a bearish candlestick pattern with a long lower shadow on the daily charts indicating some buying interest at lower levels.
The smaller range movement of the last 3-4 sessions has been broken on the lower side. "Technically, this indicates a short-term reversal pattern. Such minor weaknesses post range movements in the recent past have turned out to be a buy-on-dips opportunity," Nagaraj Shetti, senior technical research analyst at HDFC Securities, said.
Positive chart patterns like higher tops and bottoms are intact on the daily chart and the present consolidation/weakness is in line with the formation of new higher bottom of the sequence. The bottom reversal needs to be confirmed at the lows, he said.
The pivot point calculator indicates that the Nifty may get support at 19,322, followed by 19,292 and 19,242. In case of an upside, 19,421 can be the key resistance, then 19,452 and 19,502.
Stay tuned to Moneycontrol to find out what happens in the currency and equity markets today. We have collated a list of important headlines across news platforms, which could impact Indian as well as international markets.
GIFT Nifty
The GIFT Nifty indicates a marginally negative start for the broader index with a loss of 70.5 points. GIFT Nifty futures stood at 21,682 points after making a high of 21,820 points.
Trade setup for Wednesday: Top 15 things to know before the opening bell
US Markets
Stock futures were little changed in overnight trading after the Nasdaq Composite registered its worst session since October. Outback Steakhouse owner Bloomin’ Brands jumped more than 4 percent after it added two new members to its board. The additions are in accordance with an agreement Bloomin’ reached with activist investor Starboard Value.
Futures tied to the Dow Jones Industrial Average rose just 10 points, while S&P 500 futures and Nasdaq-100 futures hovered near the flatline. Stocks started the new calendar year on a sour note, with the S&P 500 falling 0.6 percent and the 30-stock Dow finishing less than 0.1 percent higher. The Nasdaq Composite dropped more than 1.6 percent for its worst day since October, dragged down by major technology stocks and a nearly 4 percent decline in Apple after Barclays downgraded the iPhone maker.
Artificial intelligence beneficiaries Nvidia, Advanced Micro Devices slumped 2.7 percent and 6 percent, while chatbot challengers Alphabet and Microsoft lost more than 1 percent. The VanEck Semiconductor ETF (SMH) dropped 3.4 percent, while Intel shed 4.9 percent.
“The burden of proof being on the bears is exactly how we’re starting the year,” Strategas’ Chris Verrone said on CNBC’s Closing Bell: Overtime on Tuesday. “When you think about the momentum surge we saw to end 2023, we’re talking about things that are rare.”
Short-term corrections are nothing out of the ordinary in a market that’s coming off of fresh highs and entering the primary season, he added, noting that the longer-term setup looks positive on a six- to twelve-month horizon.
European Markets
European stocks on Tuesday closed lower, shortly after the regional benchmark hit its highest level in nearly two years. The Stoxx 600 index provisionally ended down 0.2 percent, erasing gains of nearly 0.7 percent earlier in the session which saw it clock its highest level since January 20, 2022, according to LSEG data.
Oil and gas stocks were up 0.6 percent as investors monitored tensions in the Red Sea and the impact on oil prices, while the technology sector fell 1.8 percent. The latest euro zone purchasing managers’ index from S&P Global, meanwhile, suggested the bloc entered a recession in the third quarter of last year.
A “relentless slump” in manufacturing meant output continued to decline in December, according to Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
Asian Markets
Asia-Pacific markets fell Wednesday after Wall Street saw the Nasdaq Composite and the S&P500 indexes tumble on the first trading day of the year. Investors in Asia await India’s factory activity data from S&P Global for December, while oil prices will also be closely watched following Iran’s deployment of a destroyer to the Red Sea that has ratcheted up tensions in the region.
In Australia, the S&P/ASX 200 retreated 1 percent after nearing its all-time high on Tuesday, while futures for Hong Kong’s Hang Seng index stood at 16,687, pointing to a weaker open compared with the HSI’s close of 16,788.55.
South Korea’s Kospi dropped 1.36 percent, while the small-cap Kosdaq fell 1 percent. Japan’s markets are closed until Thursday. A Japan Airlines flight collided with a coast guard aircraft at Tokyo’s Haneda airport on Tuesday, causing five deaths.
The Coast Guard aircraft was headed to Niigata prefecture to provide relief for the recent earthquake that hit Japan on New Year’s Day, according to initial reports.
Banks' valuations look reasonable, 2024's credit growth to be around 15%: Jefferies
Valuations of bank stocks look reasonable with their price rise lagging that of the market and emerging-market financials in 2023, said Jefferies in their latest report on the sector.
"In 2023, Nifty banks rose 12 percent, lagging market & EM financials, despite healthy RoE. So, valuations look reasonable," the brokerage's analysts wrote.
"With performance gap between private & PSU banks narrowing, range of valuations should also narrow," they added. The brokerage rated Axis Bank, IndusInd Bank, ICICI Bank and HDFC Bank as 'buys' among private banks and SBI as a 'buy' among public-sector banks (PSBs).
UPI transactions cross 100-billion mark in 2023
Transactions through the unified payments interface (UPI) platform crossed the 100 billion-mark in calendar year 2023 to close at around 118 billion, as per the data shared by the National Payments Corporation of India (NPCI).
This marks a 60 percent growth as compared to 74 billion UPI transactions recorded in 2022. During August 2023, UPI had crossed the milestone of 10 billion transactions a month for the first time and continued to do so in the following months. In December, UPI recorded 12 billion transactions with a cumulative value of Rs 18.23 lakh crore.
The total value of UPI transactions in 2003 stood at around Rs 182 lakh crore, higher by 44 percent as compared to Rs 126 lakh crore in 2022.
RBI may announce new 10-year benchmark bond on January 8, say experts
The Reserve Bank of India (RBI) is likely to announce a new 10-year benchmark bond early next week or on January 8, money market experts told Moneycontrol on Tuesday.
“The outstanding amount of the current benchmark bond has reached Rs 1.53 lakh crore, so we can expect a new 10-year bond next week,” said Abhishek Bisen, Head, Fixed Income, Kotak Mutual Fund.
An announcement on the new bond is expected as the current 10-year benchmark bond—7.18 percent 2033—has reached an outstanding amount of Rs 1.53 lakh crore, as per RBI data. The current benchmark bond was auctioned by the central bank on August 11.
Adani-Hindenburg case: SC to pronounce judgment on January 3
The Supreme Court will pronounce the judgment in a batch of petitions filed on the Adani-Hindenburg issue today. SC will pronounce judgement on a batch of petitions seeking court-monitored investigation into the allegations made by made by the US-based Hindenburg Research against the Adani group of companies regarding violations of the stock market.
According to the Supreme Court's causelist (list of cases for the day) the judgment is authored by Chief Justice of India (CJI) DY Chandrachud.
On November 24, the CJI led bench reserved the pleas pertaining to the Adani-Hindenburg issue for orders, during the course of the hearing the bench indicated that they would pass some directions to markets regulator SEBI. Through the hearing, the CJI maintained that they decided to interfere in the issue only to ensure that the existing regulatory framework is strengthened to protect loss of investor wealth under these circumstances.
Equity markets don’t appear exhausted but do seem frothy: TRUST Mutual Fund’s CIO
The Indian equity markets don't appear exhausted but do seem frothy, especially with higher valuations in mid-caps and small-caps. Despite a positive global sentiment towards India, Mihir Vora, Chief Investment Officer (CIO) at TRUST Mutual Fund, emphasised the importance of closely monitoring consumption growth, which is still perceived as uneven, following a 'K-shaped' trajectory. He expressed keen interest in observing the kick-off of the capital expenditure cycle by the private sector.
According to the CIO's insights, the market is expected to deliver single-digit or lower double-digit returns in 2024, significantly lower than the 20 percent provided by the Indian equity markets in 2023. Additionally, the CIO noted that valuations of select large-caps in information technology (IT), pharma, banks, metals, and certain specialty chemicals still appear appealing.
D-Mart Q3 business update: Revenue jumps 17% to Rs 13,247 crore
Avenue Supermarts, parent company of retail chain D-Mart, on January 2 said standalone revenue from operations for the quarter ended December 31, 2023 rose 17.19 percent to Rs 13,247.33 crore.
The company reported revenue at Rs 11,304.58 crore in the same quarter last year. “The total number of stores as of December 31, 2023 stood at 341,” said the company in an exchange filing.
The standalone revenue from operations for quarter ended December 31, 2023 given above is subject to limited review by the statutory auditors of the company, Avenue Supermarts added.
Oil Prices
Oil prices were volatile on Tuesday after Iran dispatched a warship to the Red Sea, as the situation remains tense in the critical waterway for global shipments that has seen vessels attacked by Yemen’s Houthi rebels.
The West Texas Intermediate contract for February gained 1 cent, or .01 percent, to trade at $71.66 a barrel on Tuesday. The Brent contract for March gained 14 cents, or .18 percent, to trade at $77.18.
Crude prices had jumped more than 2 percent earlier in the trading the session. Iran on Monday announced it sent the Alborz destroyer through the strategic Bab al-Mandeb Strait, the country’s state media reported, without elaborating on details of the warship’s mission. It added that operations are periodically conducted in the Red Sea to secure shipping routes.
The move comes after the US Navy destroyed three boats of Iran-backed Houthi rebels, killing 10 militants, according to an AP report. The Navy was responding to a distress call by Singapore-flagged vessel Maersk Hangzhou which had come under Houthi fire, the US Central Command said in a statement.
Dollar Index
The Dollar index traded 0.77 percent higher in futures at 102.11, whereas the value of one dollar hovered near Rs 83.28.
Gold Prices
Gold prices gained on Tuesday, boosted by expectations of an easing of monetary policy by the US Federal Reserve in 2024 as investors look forward to a slew of economic data this week that could shed more light on the timing of rate cuts.
Spot gold gained 13 percent in 2023, its first annual rise since 2020. On Tuesday it was up 0.6 percent at $2,074.40 per ounce as of 1025 GMT. U.S. gold futures also rose 0.6 percent, to $2,084.00 per ounce.
“The markets are starting the year holding on to the belief that the Fed will cut rates sooner rather than later, that is the reason why gold prices are higher,” said Ricardo Evangelista, senior analyst at ActivTrades.
“If inflation continues to slow down and economic activity also slows down, then that scenario would be very favourable for gold and we could see strong gains in 2024 with Treasury yields dropping further and the dollar also softening.”
Markets are now pricing in an 86 percent chance of a rate cut from the Fed in March, according to CME FedWatch tool. Lower interest rates decrease the opportunity cost of holding non-yielding gold.
FIIs and DIIs
Foreign institutional investors (FIIs) bought shares worth Rs 1,602.16 crore, while domestic institutional investors (DIIs) sold Rs 1,959.04 crore worth of stocks on January 2, provisional data from the NSE showed.
With inputs from Reuters and other agencies.
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