Nifty may head higher if it stays above 7,500
We had mentioned in Monday’s closing report that Nifty, Sensex decline may end soon and that if Nifty holds above 7,500, it may head higher over the next few days. The Indian stock markets continued to be bearish for one more day but the losses were small and about 0.58%-1.76% lower than Monday’s close. The trends of the major indices during Tuesday’s trading are given in the table below:
Caution over third-quarter results, coupled with anxiety over the upcoming macro-data points subdued the Indian equity markets on Tuesday. This led to the BSE Sensex to decline by 173 points. Initially, both the bellwether indices of the Indian equity markets made modest gains as investors were attracted by a sizeable number of stocks that are trading near their yearly lows. Besides value buying, short covering amidst thin volumes led to the morning relief rally. However, both the indices soon ceded their gains, as anxiety was stroked by the third quarter (Q3) results which will start coming in from Tuesday. Amongst the companies which will release their Q3 results on Tuesday are information technology (IT) major Tata Consultancy Services (TCS), Federal Bank and IndusInd Bank. In addition, long-liquidation positions and lacklustre Asian markets, too, dented investors' sentiments. Caution also prevailed over the upcoming domestic macro-data on industrial output, and retail inflation. Both the data points are slated to be released on Tuesday.
As global oil prices continue their plunge into the New Year, the Indian basket of crude oils closed trade on Monday at a 12-year low of $28.73 a barrel, according to official data released on Tuesday. The Indian basket had touched a previous monthly low of $28.66 in August 2003. Crude oil prices maintained their relentless fall, as US West Texas Intermediate (WTI) traded early on Tuesday at $30.66 per barrel and Brent crude futures declined to $30.66, their lowest since April 2004. Brent and WTI have declined on every day of trading this year with markets expecting supply to surpass demand. Marking a 13-year low, the price of the Organisation of Petroleum Exporting Countries (OPEC) basket of twelve crudes stood at $27.07 a barrel on Monday, compared to $28.56 on the previous Friday, the organisation's secretariat said. Analysts like Barclays, Macquarie, Bank of America-Merrill Lynch, Societe Generale and Standard Chartered Bank (SCB) all cut their oil price forecasts for this year on Monday, with the latter saying that prices could fall to as low as $10 a barrel.
China's stocks closed higher on Tuesday, with the benchmark Shanghai Composite Index up 0.2%, at 3,022.86 points. The smaller Shenzhen index gained 0.8% to close at 10,293.7 points, reports Xinhua. The ChiNext Index, which tracks China's NASDAQ-style board of growth enterprises, rose 1.95% to close at 2,147.53 points.
The central parity rate of the Chinese yuan weakened by two basis points to 6.5628 against the dollar on Tuesday, according to the China Foreign Exchange Trading System. In China's spot foreign exchange market, the yuan is allowed to rise or fall by 2% from the central parity rate each trading day, according to Xinhua.
Japanese shares ended the morning session sharply lower on Tuesday with the Nikkei index plunging over two percent on declining oil prices and poor performances in other stock markets. The 225-issue Nikkei Stock Average tumbled 375.40 points, or 2.12%, from Friday to 17,322.56, Xinhua news agency reported. The broader Topix index of all First Section issues on the Tokyo Stock Exchange was down 34.15 points, or 2.36%, to 1,413.17.
The markets outlook for India this year is contingent on consumption demands, corporate earnings and inflation trends, American ratings agency Moody's said on Monday. "India enters 2016 on the cusp of a cyclical growth recovery, with inflation under control and the economy benefiting from lower commodity prices," Moody's associate managing director Atsi Sheth said in a note. "Market trends will depend on whether inflation remains under control and corporate profits revive," she said. Citing a projection of a boost in demand post-implementation of the recommended pay revision for central government employees and pensioners, and a potential upturn in agriculture, Moody's said a broad-based pick-up in investment will only unfold with a time lag. "We believe that these advantages will only yield sustainable growth acceleration once corporate and bank balance sheets are repaired, and if the private sector remains internationally competitive," Sheth said. She said inflation and corporate profit trends will offer clues as to whether these efforts have created conditions for growth that are sustainable over the next 3-4 years. Sheth's report also said low inflation may indicate a greater balance between domestic demand and supply conditions, and would help private sector remain globally competitive.
The top gainers and top losers of the major indices are given in the table below:
The closing values of the major Asian indices are given in the table below: