The benchmark Sensex and Nifty indices are likely to open marginally higher on January 12 as trends in the GIFT Nifty indicate a positive start for the broader index with a gain of 21 points.
On January 11, the BSE Sensex advanced 63.5 points to 71,721, while the Nifty 50 was up 28.5 points at 21,647 and formed bearish candlestick pattern on the daily charts as the closing was lower than opening levels.
"Technically, this pattern indicates a rangebound action in the market below the immediate resistance. The market is now placed at the hurdle of down sloping trendline, that connected recent lower highs at 21725 levels," Nagaraj Shetti, senior technical research analyst, HDFC Securities said.
Having showed a false downside breakout at 21,500 levels on Wednesday, the Nifty is expected to reach up to the upper trajectory of 21,750-21,850 levels in the near term, he feels. "A decisive move above the hurdle of 21,850 could open sharp upside momentum." Immediate support is placed at 21,590 levels, he said.
Kunal Shah, senior technical & derivative analyst, LKP Securities, also said that presently Nifty's immediate support has shifted to 21,600, while 21,730 serves as a resistance level on the technical chart. "The broader positional support for Nifty remains at 21,500."
India VIX, the fear index, dropped further, by 1.07 percent to 12.77 levels, which made the bulls comfortable.
The pivot point calculator indicates that the Nifty is likely to see immediate resistance at 21,659 followed by 21,738 and 21,789 levels, while on the lower side, it can take support at 21,605 followed by 21,574 and 21,523 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 positive start for the broader index with a gain of 21 points. GIFT Nifty futures stood at 21,715 points after making a high of 21,763 points.
Trade setup for Friday: Top 15 things to know before the opening bell
US Markets
Stock futures are near flat Thursday night as investors looked ahead to the second in a pair of closely watched inflation reports this week. Futures tied to the Dow Jones Industrial Average lost 18 points, or 0.1%. S&P 500 futures and Nasdaq 100 futures were also both down around 0.1%.
The moves follow a muted day on Wall Street. The 30-stock Dow inched up by around 15 points, while the S&P 500 finished marginally lower. The technology-heavy Nasdaq Composite closed at its flat line.
Investors focused on inflation data released Thursday morning. December’s consumer price index came in modestly hotter than economists forecasted, with prices up 0.3% on the month and 3.4% from a year ago.
European Markets
European markets closed lower Thursday after U.S. inflation came in above expectations. After a choppy session, the regional Stoxx 600 index finished 0.77% lower, with all sectors in the red. Bank stocks were down 1.9%, as utilities fell 1.23%.
British retailer Marks & Spencer fell toward the bottom of the Stoxx 600, down 4.5%, after pointing to “near-term challenges,” despite reporting strong Christmas sales growth. Meanwhile, Tesco rose 1.35% after lifting its profit forecast.
December’s U.S. inflation report showed an increase in consumer prices of 0.3% on the month and 3.4% year-on-year. Economists polled by Dow Jones predicted readings of 0.2% and 3.2%, respectively.
Asian Markets
Asia-Pacific markets were largely lower Friday, except for Japan, which continued its record-breaking rally, while investors awaited a slew of economic data out of China, including inflation and trade numbers for December.
Both the benchmark Nikkei 225 and Topix are at their highest levels since 1990, having surged in the past week. The Nikkei popped 2.1% on open before paring some gains, while the broader Topix was up 0.53%. Overnight in the U.S., all three major indexes ended Thursday close to the flat line even as U.S. inflation for December came in higher than expected.
December’s consumer price index report came out slightly higher-than-expected, reflecting a 0.3% increase in consumer prices for the month, pushing the annual rate to 3.4%, compared to the 3.2% expected by economists polled by Dow Jones.
The Nasdaq Composite closed at the flat line, while the Dow Jones Industrial Average eked out a gain of 0.04%. The S&P 500 edged lower by 0.07%, although earlier in the session, the broad market index briefly traded above its record closing high of 4,796.56.
Microsoft overtakes Apple as world's most valuable company
Microsoft overtook Apple as the world’s most valuable company on Thursday after the iPhone maker’s shares made a weak start to 2024 due to growing concerns over demand.
Shares of Redmond, Washington-based Microsoft were last up 1.6%, giving it a market valuation of $2.875 trillion as its early lead in the race to make money from generative artificial intelligence helped draw investors.
Apple was 0.9% lower with a market capitalization of $2.871 trillion – the first time since 2021 that its valuation has fallen below that of Microsoft. The Cupertino, California-based company’s stock has slid 3.3% in January as of last close, compared with a 1.8% rise in Microsoft.
Banks’ Q3 FY24 earnings: Top five things to watch out for
After robust profits, as earnings for the banking sector kick off in the middle of January, experts say that asset quality, net interest margins (NIM), unsecured loans, deposit and credit growth, and write-offs are going to be some of the crucial elements to watch out for.
TCS reports $8.1 billion in deal wins for Q3, misses guidance
India’s largest IT services company Tata Consultancy Services (TCS) on January 11 reported that its deal total contract value (TCV) for the third quarter ended December 31, came in at $8.1 billion, missing the company’s quarterly deal win guidance of $9-10 billion.
This was largely driven by the company not winning any mega deals this quarter, apart from a decline in key verticals like banking, financial services and insurance (BFSI) and the overall market sentiment not changing despite cuts in the Fed’s interest rate cuts. Also, Q3 is a seasonally weak quarter for the IT sector. TCV declined from $11.2 billion reported in Q2.
Infosys ADR spikes 5% despite weak Q3 performance
Infosys ADR (American Depository Receipt) shares jumped nearly 5 percent even as the company reported a drop in net profit for the quarter ended December 2023.
India’s second-largest IT services company reported a 7.3 percent year-on-year (YoY) fall in net profit at Rs 6,106 crore in the third quarter of FY24. This was below Moneycontrol’s poll estimates of Rs 6,244 crore.
As of 8.25 pm IST, the stock traded up 4.61 percent at $18.93 per share on NYSE. The rise in price can be indicative of a similar reaction on January 11 when the domestic market opens.
US Fed policy rate will not go to zero, will be around 3% over next 5-10 years: Howard Marks
Howard Marks, the legendary stressed asset investor, who is usually obstinate about not forecasting how markets will move going ahead, said with a degree of certainty that US Fed interest rates may not go as low as it was before Covid-19 pandemic upended the world.
“I’ll still stick with my guess that rates will be around 2-4 percent, not 0-2 percent, over the next few years,” Marks said “Do you want more specificity? My guess – and that’s all it is – is that the fed funds rate will average between 3 percent and 3.5 percent over the next 5-10 years.”
Even Marks, who co-founded Oaktree Capital Management, acknowledged that this forecasting was a bit uncharacteristic of him.
“Before readers protest my uncharacteristic descent into forecasting, I’ll point out that, at Oaktree, we say it’s okay to have opinions on the macro; it’s just not okay to bet clients’ money on them,” he wrote in a memo published on January 9. “We invest with an awareness of current macro conditions, but our investment decisions are always based on bottom-up analysis of companies and securities, not macro forecasts.”
SoftBank to restart India investments mid-2024 as founders reset valuations: Sumer Juneja
After a funding drought of almost 18 months, mega technology investor SoftBank is gearing up to invest in Indian startups again.
The Japanese investor will resume signing deals in the coming months, Sumer Juneja, head of India and EMEA at SoftBank Investment Advisers, said in an interview with Moneycontrol.
Juneja’s comments come after investors across the board tightened their purse strings and became more selective about the companies they back. Late-stage investors such as Tiger Global, Prosus, and Alpha Wave also remained on the backfoot.
While SoftBank has also been in wait-and-watch mode, it is now firming up plans to back new-age companies and build its portfolio in India.
Jeremy Siegel's Weekly Commentary: S&P 500 to gain 8-10% in 2024, might scale 5,300 level
Economist Jeremy Siegel has predicted an 8-10 percent gain for the S&P 500 in 2024, suggesting that the index has the potential to reach the 5,300 level.
“My outlook for the S&P 500 for 2024 is another good year—in the order of 8-10 percent price gain—and I think value stocks, particularly smaller-cap value stocks, trading at much lower multiples could do better, with around 15 percent appreciation,” Siegel said in his WisdomTree weekly commentary note. This optimistic projection comes after a period of profit-taking in tech stocks at the beginning of the year.
"No one wanted to pay capital gains tax in 2023, so those looking to reduce tech exposure delayed sales until 2024. We saw that in our own team’s model portfolio trades," Siegel said.
Algo trading firms rake in big bucks; Graviton top dog with Rs 3,500-cr revenue
Leading algorithm-based trading firms—algo firms—continued to consolidate their grip on the market in financial year 2022-23, growing their revenues 70-100 percent. These players, also known in market parlance as quant firms, use complex algorithms and powerful computers to execute trades. While they use multiple strategies, a key one is to execute trades at lightning speeds for tiny profit margins, which when done repeatedly adds up to a substantial sum. This has earned them yet another moniker—high frequency trading firms (HFTs).
Numbers collated from annual reports by Moneycontrol show Gurugram-based Graviton Capital Research as the leader of the pack. The firm, founded in 2014 by IIT Delhi alumni Ankit Gupta and Nishil Gupta logged revenues of Rs 3,525 crore and a net profit of Rs 605 crore. In the last three years, the firm has managed to nearly triple its revenues.
The other big players the algo trading space are Gurugram-based QE Securities (part of the Quadeye group founded by Sudeep Gupta), Mumbai-based Alphagrep Securities founded by Mohit Mutreja and Prashant Mittal, NK Securities Research, founded by Faraz Khan and Sudhanshu Narang and the Indian arms of international trading powerhouses like Jump Trading, Citadel Securities, Hudson River Trading and Tower Capital.
These companies engage in proprietary trading, conducting transactions exclusively for their own portfolios rather than on behalf of clients. Even in instances where they execute trades for clients, the proportion of such business is inconsequential.
Oil Prices
Oil prices rose nearly 1% on Thursday after Iran seized an oil tanker off the coast of Oman, raising the prospect of escalating conflict in the Middle East. The West Texas Intermediate futures contract for February rose 65 cents, or .91%, to settle at $72.02 a barrel. The Brent futures contract for March gained 61 cents, or .79%, to settle at $77.41 a barrel.
Earlier in the session, both benchmarks were up over $2 a barrel but have pulled back on an unexpected increase in U.S. inflation and reports that China was seeking less Saudi imports. Iran seized a tanker with Iraqi crude destined for Turkey in retaliation for the confiscation last year of the same vessel and its oil by the U.S.
The seizure of the Marshall Islands-flagged St Nikolas coincides with weeks of attacks by Yemen’s Iran-backed Houthi militias targeting Red Sea shipping routes. Yemen-based Houthis this week mounted their largest attack yet on commercial shipping lanes in the Red Sea.
Dollar Index
The Dollar index traded 0.06 percent lower in futures at 102.22, whereas the value of one dollar hovered near Rs 83.09.
Gold Prices
Gold eased on Thursday to a one-month low as the dollar ticked higher after hotter-than-expected inflation data, while hawkish remarks from Federal Reserve officials fueled worries that higher interest rates could stay unchanged beyond March.
Spot gold was down 0.1% at $2,024.99 per ounce, after rising as much as 0.8% before the data. U.S. gold futures settled 0.4% lower at $2019.20.
The dollar index extended gains after data showed U.S. consumer prices rose more than expected in December, which could delay a much anticipated U.S. rate cut in March.
FIIs and DIIs
Foreign institutional investors (FIIs) sold shares worth Rs 865 crore, while domestic institutional investors (DIIs) purchased Rs 1,607.08 crore worth of stocks on January 11, provisional data from the NSE showed.
With inputs from Reuters and other agencies.
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