A surge in virus cases in US, India-China border tensions, fresh US tariffs targeting the EU and the UK, and June series F&O expiry promise a volatile day ahead with a negative bias on Dalal Street. Here’s breaking down the pre-market actions.

STATE OF THE MARKETS

SGX Nifty signals negative start

Nifty futures on the Singapore Exchange traded 106 points, or 1.03 per cent lower at 10,198.50, in signs that Dalal Street was headed for a negative start on Thursday.

Market-wide rollovers at 76%

The market-wide rollovers stood at 76 per cent till Wednesday. Nifty futures rollovers stood at 61 per cent, which were higher than the average rollovers of 59 per cent last three series. Meanwhile, rollovers in stock futures at 79 per cent was higher than 77 per cent rollovers seen in the last three series.

Tech View: Nifty forms ‘Bearish Engulfing’ candle

On Wednesday, the index formed a Bearish Engulfing candle on the daily chart. This pattern usually indicates a change in trend ‘from bullish to bearish or a consolidation’. “A negative close on Thursday will confirm this pattern. The immediate support for Nifty50 stood at 10,050. A breach of this level on a closing basis could lead to more fall,” said Arun Kumar of Reliance Securities.

China, HK markets shut for public holiday

Japan’s Nikkei 225 index lost 1.06 per cent or 238.95 points to 22,295.37 in early trade. Financial markets in China, Hong Kong and Taiwan are closed today for the public holiday.

Oil prices edge lower on US stockpile

Oil prices inched up in early trading on Thursday after sliding more than 5 per cent in the previous session. US WTI crude futures rose 12 cents, or 0.3 per cent, to $38.13 after dropping $2.36 on Wednesday. Brent crude futures climbed 5 cents, or 0.1 per cent, to $40.36, after falling $2.32.

US stocks settled lower

In overnight trade, US stocks ended sharply lower as investors grew concerned over increasing new coronavirus cases across the country. The Dow Jones Industrial Average index plunged 710.16 points, or 2.72 per cent, to 25,445.94. The S&P500 index fell 80.96 points, or 2.59 per cent, to 3,050.33. The Nasdaq Composite index shed 222.20 points, or 2.19 per cent, to 9,909.17.

Q4 results today

Apollo Hospitals, Ashok Leyland, Bank of India, Endurance Technologies, Apar Industries, ION Exchange, Star Cement, Taj GVK Hotels, TTK Prestige and Zuari Global are among companies that are expected to announce their March quarter earnings on Thursday.

FIIs buy Rs 1,767 cr worth of stocks

Net-net, foreign portfolio investors (FPIs) were buyers of domestic stocks to the tune of Rs 1,766.90 crore, data available with NSE suggested. DIIs were net sellers to the tune of Rs 1,524.90 crore, data suggests.


MONEY MARKETS


Rupee: The rupee pared its early gains to settle down by 6 paise at 75.72 against the US currency due to concerns over fresh trade tensions between the EU and the US and rising COVID-19 cases.

10-year bonds: India 10-year bond yield rose 0.25 per cent to 5.91 after trading in 5.88-5.93 range.

Call rates: The overnight call money rate weighted average stood at 3.52 per cent, according to RBI data. It moved in a range of 1.80-4.10 per cent.

DATA/EVENTS TO WATCH

  • Q4 Earnings: Apollo Hospitals I Ashok Leyland I BoI I EIL I Concor I Icra I IDFC I TTK Prestige
  • ECB General Council Meeting
  • ECB Monetary Policy Meeting Accounts (05.00 pm)
  • US June Initial Jobless Claims (06.00 pm)
  • US Q1 GDP Growth Rate Final (06.00 pm)

MACROS

Rupee may head to 80 level… The growth shock to India’s economy from the coronavirus pandemic will trigger more weakness in the rupee, dragging it toward an unprecedented 80-per dollar level. That’s the view from Venkat Thiagarajan, who has traded currency markets for 26 years, and most recently served as the head of forex at Reliance Industries, which runs India’s largest corporate treasury. The rupee, he argues, has a stronger link with economic growth, and metrics like current account, balance of payments and global dollar dynamics have a marginal impact in the medium term.

IMF forecasts major contraction… The International Monetary Fund (IMF) has projected a deeper 4.5% contraction for India in FY21 than earlier estimated, citing a longer lockdown period and slower than anticipated recovery. In the June update – A Crisis Like No Other, An Uncertain Recovery – of its flagship World Economic Outlook (WEO), the IMF has forecast a –4.9% global growth in 2020, 1.9 percentage points below the April 2020 estimate. The IMF had forecast a 1.9% growth for India in the April edition of the WEO and 3% contraction for the world.

Indian equities most expensive… Indian equities have emerged as the most expensive among major global peers thanks to a sharp rally over the past few weeks amid earnings downgrades. The benchmark Nifty50 now trades at a trailing price-to-earnings multiple of 22.6%, which is the highest among top global markets barring South Korea. In addition, the one-year forward P/E stood at 19, which is at a 25% premium to the 15-year average and higher than 18.2 in February. Nifty has gained 35.2% in the past three months.

Chinese troops re-enter Indian territory… China has brought back the tent-like structure that Indian troops had destroyed on June 15 near Patrol Point 14 in the Galwan Valley, escalating tensions that were expected to cool down after Monday’s corps commander-level talks. Indian troops have physically verified the reappearance of a tent and this has been spotted in fresh satellite imagery as well.

Govt seeks to boost dollar inflows… The Centre has sought the inputs of bulge-bracket overseas funds on boosting dollar inflows, with top North Block officials leveraging technology to virtually reach out to key offshore financiers and custodian banks in the second week of June. The issues discussed feature prominently on the wish list of overseas funds: Allowing FPIs to use existing structures to make FDI investments, streamlining the taxation for government securities under Fully Accessible Route and allowing NRIs to invest via portfolio investor route.

Demand for loan against gold rises… Demand for loans against gold is likely to increase this financial year as easy approvals, surging value of gold and risk aversion by lenders push people to pledge their ornaments in exchange for cash. Domestic banks are already seeing an increase in demand for these loans and some have started new gold loan verticals with expectations that it would become the fastest growing segment this financial year.

China raises blocks imports issue… Beijing has sought clarity from Delhi on imports from China getting stuck as they were being subjected to 100% examination. Domestic industry lobby groups have complained that the resultant supply chain disruption comes at a bad time as companies are reopening after the lockdown. The development comes amid anti-Chinese sentiment in the wake of border hostilities. India, which is moving to bar Chinese firms from central and state government projects, had already been taking steps to cut dependence on imports from that country as part of a self-reliance drive.

Trump’s approval rating drops… American approval of President Donald Trump’s handling of the coronavirus pandemic has dropped to the lowest level on record, as new Covid-19 cases surged and Trump was widely criticised for suggesting he wanted to slow down testing. The latest Reuters/Ipsos opinion poll showed that 37% of Americans approved of the way Trump has responded to the pandemic, the lowest on record since Reuters/Ipsos started asking the question at the beginning of March. The June 22-23 poll also found that a majority of Americans want Trump’s former national security adviser, John Bolton, to testify to Congress under oath, after he accused Trump in a new book of misdeeds, including seeking Chinese President Xi Jinping’s help to win re-election.

Closed Templeton schemes receive some money…Franklin Templeton has told investors in its six debt schemes that are being wound up that the plans received Rs 1,964 crore as routine proceeds from their investments, and two of the funds featuring in the unusual list of terminated programmes have repaid their loans to banks. Franklin Templeton India president Sanjay Sapre said the money came in over the past couple of months from maturities, pre-payments and coupon payments since the money manager decided to close the six investment plans.

Auto firms seek to rev up rural sales… Top auto firms Maruti Suzuki, Hyundai Motor India, M&M, Hero MotoCorp and others are turning to rural markets to rev up sales after the lockdown. Fewer Covid-19 cases in villages, higher government spending, a bumper rabi harvest and forecast of a normal monsoon that augurs well for a good kharif crop have triggered hopes of a faster recovery in rural India, even as cities struggle with the pandemic.

Tatas begin job cuts… The Tata Group may eliminate jobs at some of the businesses to save fixed costs as it grapples with falling profits due to the pandemic, and global economic projections pointing to a challenging time ahead. The pandemic had led to a suspension of the conglomerate’s several businesses — including aerospace, automotive and aviation — depressing its earnings in key markets across the world. The conglomerate has already made moves to cut contract workers at various facilities, including at Tata Motors and its arm Jaguar Land Rover.







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