The benchmark Sensex and Nifty indices are likely to open marginally lower on January 10 as trends in the GIFT Nifty indicate a negative start for the broader index with a loss of 30 points.
On January 9, the benchmark indices had a strong opening after a day of correction but erased most of the gains in the last hour of trade and finally settled with moderate gains due to profit-taking at higher levels. Overall, the indices traded within the previous day's range. The BSE Sensex was up 31 points at 71,386, while the Nifty 50 gained 32 points at 21,545 and formed a bearish candlestick pattern on the daily charts as the closing was lower than opening levels.
"Technically, this is a negative indication and signal occurrence of sharp weakness from the overhead hurdles around 21,750 levels," Nagaraj Shetti, senior technical research analyst at HDFC Securities said.
The Nifty 50 has now started to visit the immediate supports of the 10-day EMA (exponential moving average 21,565) frequently, after showing minor upside bounces. The said moving average was intact for the past two months and a decisive break below this support at 21,500 could trigger more weakness ahead, he said.
Further, he feels the short-term trend of Nifty remains weak and the emergence of selling pressure at the lower highs around 21,750-21,850 levels indicates a weak bias for the short term. "Any upside bounce from here could encounter a hurdle around 21,700 levels."
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 30 points. GIFT Nifty futures stood at 21,596 points after making a high of 21,817 points.
Trade setup for Wednesday: Top 15 things to know before the opening bell
US Markets
Stock futures were little changed in overnight trading on January 9. Futures tied to the Dow Jones Industrial Average dipped 35 points, while S&P 500 futures inched down 0.05 percent. Nasdaq-100 futures hovered near the flatline.
Cryptocurrency exchanges Coinbase and Marathon Digital fell 1 percent and 2 percent, respectively, as bitcoin prices declined. The price movement came on the back of an incorrect announcement posted to the US Securities and Exchange Commission’s X account, saying that it had approved bitcoin ETFs.
Elsewhere, Juniper Networks added nearly 1 percent, building on the January 9 gains after Hewlett Packard Enterprise said it would buy the company for roughly $14 billion, or $40 per share, in an all-cash deal. HPE shares slipped 0.3 percent, adding to the nearly 9 percent loss on January 9.
European Markets
European markets retreated on January 9, reversing earlier gains and extending their gloomy start to the new trading year. The Stoxx 600 index provisionally closed 0.17 percent lower, with most sectors and major bourses in negative territory.
Mining stocks led the losses, down 1.35 percent, while healthcare stocks ticked 0.69 percent higher. Global investors are looking ahead this week to the release of the latest US inflation data and big bank earnings for further clues on the state of the economy, and the path of rate cuts from the Federal Reserve.
Asian Markets
Asia-Pacific markets were set for a mixed open ahead of Australia’s November inflation data, with Japan stocks set to extend gains after hitting a 33-year in the previous session. Australia’s weighted consumer price index — defined as the weighted average CPI of Australia’s eight capital cities — is expected to rise 4.4 percent year on year in November, according to a Reuters poll.
The S&P/ASX 200 started the day 0.39 percent lower, after snapping its four-day losing streak on Tuesday. Japan’s Nikkei 225, meanwhile, is set to touch levels not seen since March 1990, with the futures contract in Chicago at 33,870 and its counterpart in Osaka at 33,880 against the index’s last close of 33,763.18. Futures for Hong Kong’s Hang Seng index stood at 16,145, pointing to a weaker open compared with the HSI’s close of 16,190.02.
Global economy surprisingly resilient, but outlook 'dark': World Bank
The global economy, while "surprisingly resilient", is set for a dark outlook, with growth expected to slow down for a third year in a row in 2024, the World Bank has said.
After a low-base fueled rebound to 6.2 percent in 2021, the World Bank estimates global growth cooled to 3.0 percent in 2022 and then to 2.6 percent in 2023. It now projects the world economic growth to slow down further to 2.4 percent in 2024, before edging up to 2.7 percent in 2025 — well below the 3.1 percent average growth seen in the 2010s.
"Yet beyond the next two years, the outlook is dark," Indermit Gill, the bank's chief economist, said in its Global Economic Prospects report, released on January 9.
Moody's downgrades rating on senior unsecured bonds issues by Vedanta Resources
Ratings agency Moody’s Investors Service on January 9 said it has downgraded its rating on the senior unsecured bonds issued by Vedanta Resources to Ca from Caa3. The rating for the Corporate Family Rating (CFR) of Vedanta Resources was also downgraded to Caa3 from Caa2, Moody’s said.
"We view the debt restructuring as default avoidance and assess that the creditors have incurred an economic loss with respect to the original promise. We consider the transaction to be a distressed exchange under our criteria, which underpins our downgrade of VRL’s ratings," Moody’s Senior Vice President Kaustubh Chaubal said. Last week, Vedanta Resources, the UK-headquartered parent company of Vedanta group, received bondholders’ approval to restructure four series of bonds.
"Proforma the debt restructuring, holdco VRL’s near-term liquidity will improve only slightly and its refinancing wall will start building up as it approaches its next bond maturity in April 2026. Furthermore, a springing covenant requiring holdco VRL to refinance its April 2026 bond maturity by December 2025, failing which all amended bonds will mature in April 2026, will keep refinancing risk elevated and the likelihood of further distressed exchanges high," Chaubal said.
The company’s ratings reflect its unsustainable capital structure characterised by high financial leverage at the holding company and its perennially weak liquidity amid a period of continued large negative free cash flow, Moody’s said. The ratings agency said that it believes the company will still face material liquidity issues during the next 24 months and that its default risk remains high.
Infosys’ December quarter earnings performance will be marred by lower pass-through revenues, higher-than-usual furloughs, and weak discretionary spending, say analysts. The Street also expects the operating margin of India’s second-largest IT services company to decline due to salary hikes that the company rolled out in November last year.
Pass-through revenues are one-off revenues earned by IT companies.
The Bengaluru-based IT services exporter will declare its October-December earnings on January 11.
Infosys’ profit after tax (PAT) for the quarter is expected to rise 0.5 percent quarter-on-quarter (QoQ) to Rs 6,244 crore, according to an average of six brokerage estimates. Revenue is seen falling by 0.9 percent to Rs 38,630 crore for the quarter, according to average estimates by the same set of brokerages. Kotak Institutional Equities expects the company to return to sequential revenue growth in the March quarter.
Bulls of D-St charge SIP registrations to hit a record 40.32 lakh in Dec
A record 40.32 lakh people registered for systematic investment plans (SIPs) in December riding on the back of a sustained bull run in markets. This was a 31 percent spike over November and a 73.5 percent surge over the last year.
A consistent 30 lakh fresh additions every month since July has driven the SIP registrations for FY24 above the combined figure for FY23 and FY22, according to the Association of Mutual Funds in India (AMFI). Between April and December 2023, there were 2.85 crore new registrations, surpassing the totals of 2.51 crore and 2.66 crore for the entire FY23 and FY22 respectively.
FTSE semi-annual rejig: All eyes on Suzlon Energy, Thermax, Phoenix Mills
FTSE will announce changes to its indices in February as Phoenix Mills, Thermax, and Suzlon Energy are most likely to be added to the FTSE All World index, as per IIFL Alternative Research.
The firm on January 9 said that Phoenix Mills' addition can bring in flows worth $46.2 million, Thermax could see $26.5 million worth of flows and Suzlon Energy is likely to get $89.4 million inflows.
Airtel’s enterprise arm to power 20 million smart meters for Adani Energy Solutions Limited
Airtel’s enterprise arm said it will power over 20 million smart meters for Adani Energy Solutions Limited (AESL).
Adani Energy Solutions has an order book of over 20 million smart meters from the power utilities of Assam, Andhra Pradesh, Bihar, Maharashtra, and Uttarakhand.
“Our partnership with Airtel marks a critical step towards realizing the vision of a smarter, more efficient grid for all. This strategic tie-up leverages the best of both worlds: our deep domain expertise in the T&D sector and Airtel's nationwide network and comprehensive suite of IoT offerings,” Kandarp Patel, CEO - of Adani Energy Solutions Ltd, said in a joint statement.
"This powerful combination will enable us to seamlessly deploy our current order book of over 20 million smart meters across India, empowering millions of consumers with real-time consumption data and control," he added
Jyoti CNC Automation IPO: Should you subscribe to Rs 1,000-crore issue?
The public issue of Jyoti CNC Automation opened for subscription on January 9. The stock attracted a 30 percent premium in the grey market over the issue price. Despite sky-high valuation, volatile financials and comparatively lower return ratios, several analysts have assigned a ‘subscribe’ rating to the issue, citing growing industry demand, improving financial risk profile by repaying certain debt, and a strong order book of Rs 3,315.33 crore to be executed over next few years.
The business
Jyoti CNC Automation is a manufacturer and supplier of metal-cutting computer numerical control (CNC) machines. The customer base includes ISRO, BrahMos Aerospace, Turkish Aerospace, Uniparts India, Tata Advances System, Tata Sikorsky Aerospace, Bharat Forge, Shakti Pumps, Shreeram Aerospace & Defense, Rolex Rings, Harsha Engineers, Bosch Limited, HAWE Hydraulics, Festo India, Elgi Rubber, National Fittings and others.
The company has three manufacturing facilities, two of which are in Rajkot, Gujrat, and one in Strasbourg, France. In November 2007, Jyoti CNC acquired Huron Graffenstaden SAS. The company has the third largest market share in India, accounting for approximately 10 percent in fiscal 2023 and the 12th largest market share globally, accounting for 0.4 percent in calendar year 2022.
IT Q3 FY24 earnings: Five factors to watch out for
India’s top IT firms will kick off December quarter earnings this week, with TCS being the first to report on January 11. The Street expects IT companies’ third quarter (Q3) earnings to remain subdued because of seasonal furloughs and continued cuts in discretionary spending by clients.
Analysts said in brokerage reports that deal announcements too have dried up compared to the September quarter. This would result in a moderation of total contract value (TCV) after record wins in Q2. For deals won, the Street expects IT companies to have won cost-takeout opportunities mostly.
Cost-takeout is a term used by IT companies to describe deals that are placed with them to increase productivity and reduce spending. In terms of specific verticals, communications, banking, financial services and insurance (BFSI), and retail will likely remain weak, while manufacturing, energy, and travel are relatively better placed.
Karkhana.io raises $6.3M from Arkam and Susquehanna Asia Venture Capital
Business-to-Business (B2B) on-demand manufacturing platform Karkhana.io has raised $6.3 million in its Series A funding round led by Arkam Ventures and Susquehanna Asia Venture as investors are betting big on manufacturing tech sectors.
Existing investor Vertex Ventures Southeast Asia and India also participated in this round. The firm plans to utilise the funding towards expanding its services across the US and UK while strengthening the MSME network within India, the firm's founder and CEO Sonam Motwani, told Moneycontrol in an interaction.
Founded in 2018, Karkhana.io’s platform provides flexible and scalable solutions for contract manufacturing for a range of product categories, from small scale to large volume, product assembly to product localization. Their solution helps address the lack of standardization and transparency in procurement processes.
Oil Prices
Oil prices rose on January 9 after sliding in the previous session as markets weighed Middle East tensions against demand worries and rising OPEC supply. Brent crude futures rose $1.47, or 1.93 percent, to settle at $77.59 a barrel, while US West Texas Intermediate crude futures gained $1.47, or 2.08 percent, to settle at $72.24 a barrel.
Geopolitical tensions in the Middle East and an ongoing supply outage in Libya offered support to prices on January 9, analysts said. “On the supply side, there are some bullish factors from the closure of Libya’s largest oilfield, which has affected around 0.3 million barrels per day of oil production,” said Suvro Sarkar, energy sector team lead at DBS Bank.
Some major shipping firms are still avoiding the Red Sea. Germany’s Hapag-Lloyd will continue to divert vessels around the Cape of Good Hope in the wake of maritime attacks by Yemeni Houthi militants, it said on Tuesday.
Dollar Index
The Dollar index traded 0.28 percent higher in futures at 102.50, whereas the value of one dollar hovered near Rs 83.16.
Gold Prices
Gold prices held steady on January 9 as investors remained cautious ahead of US inflation data due later in the week, which could provide more insights into the Federal Reserve’s policy path.
Spot gold rose less than 0.1 percent to $2,029.06 per ounce after hitting its lowest level in over three weeks on January 8. US gold futures also rose more than 0.1 percent to $2,035.3 per ounce. If inflation numbers offer an upside surprise, then the Fed may not be able to cut interest rates soon, which will bring in a bearish element for the gold and silver markets, said Jim Wyckoff, senior analyst at Kitco Metals.
Investor attention will now turn to the U.S. consumer and producer inflation reports due on January 11, with analysts expecting the rise in prices to slow in December.
Stock under F&O ban on NSE
The NSE has retained Balrampur Chini Mills, Bandhan Bank, Chambal Fertilisers & Chemicals, Delta Corp, Escorts Kubota, GNFC (Gujarat Narmada Valley Fertilisers & Chemicals), Hindustan Copper, Indian Energy Exchange, India Cements, National Aluminium Company, Piramal Enterprises, and SAIL to its F&O ban list for January 10, while Zee Entertainment Enterprises removed from the said list. Securities banned under the F&O segment include companies where derivative contracts cross 95 percent of the market-wide position limit.
FIIs and DIIs
Foreign institutional investors (FIIs) sold shares worth Rs 990.90 crore, while domestic institutional investors (DIIs) purchased Rs 104.23 crore worth of stocks on January 9, provisional data from the NSE showed.
With inputs from Reuters and other agencies.
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