A major selloff in US stocks overnight, tension on the India-China border and a report suggesting a pause in late-stage trial of a Covid drug could drag domestic market sentiment on Wednesday.
Here’s breaking down the pre-market actions.
STATE OF THE MARKETS
SGX Nifty signals negative start
Nifty futures on the Singapore Exchange traded 41.5 points, or 0.37 per cent lower at 11,271.50, in signs that Dalal Street was headed for a negative start on Wednesday.
Tech View: Nifty50 support at 11,250
Nifty50 on Tuesday failed to capitalise on the intraday gains, as it faced selling pressure near the 11,450 level. The index tested the 11,300 level at the fag-end, before closing the session at 11,317. It formed a small bearish candle on the daily chart. Nifty has been making small candles for a couple of sessions now, suggesting consolidation. A fall below the 11,250 level may attract selling, analysts said, who believe the 11,450 level may continue to be the immediate hurdle for Nifty.
Asian shares fall on US selloff
Asian shares fell on Wednesday and oil prices hit lows not seen since June after a rout of technology shares sank Wall Street for a third consecutive day and a major drugmaker delayed testing of a coronavirus vaccine. MSCI’s broadest index of Asia-Pacific shares outside Japan slid 1.12 per cent. Australian stocks dropped 2.24 per cent, while shares in China fell 1.16 per cent. Japan’s Nikkei skidded by 1.69 per cent. US S&P 500 E-mini stock futures fell 0.01 per cent, but Nasdaq futures rose 0.72 per cent.
Investor sentiment hit by Covid drug delays
Sentiment for equities and other risky assets took a hit after AstraZeneca Plc paused a late-stage trial of one of the leading COVID-19 vaccine candidates due to an unexplained illness in a study participant. In a statement issued on Tuesday evening, the company said its “standard review process triggered a pause to vaccination to allow review of safety data.”
Oil drops in early trade
Oil futures extended their sharp decline in Asian trading to the lowest levels since June due to concern about weak global energy demand and excess supply. Brent fell 0.53 per cent to $39.57 a barrel, while US crude lost 0.68 per cent to trade at $36.51 per barrel.
US stocks settled lower
US stocks plunged on Tuesday as investors continued to rotate out of the tech sector. The Dow Jones Industrial Average index dropped 632.42 points, or 2.25 per cent, to end at 27,500.89. The S&P500 index sank 95.12 points, or 2.78 per cent, to 3,331.84. The Nasdaq Composite index shed 465.44 points, or 4.11 per cent, to 10,847.69.
Route Mobile IPO to kick off today
Route Mobile, a cloud communications service provider, said it has garnered Rs 180 crore from 15 anchor investors ahead of its initial share-sale offer that opens for public subscription on Wednesday. Goldman Sachs, Franklin Templeton Mutual Fund, SBI Life Insurance, Kuwait Investment Authority, Vantage Equity Fund, Axis Mutual Fund, Macquarie and SBI Mutual Fund are among the anchor investors, according to information available with stock exchanges.
Happiest Minds IPO subscribed 8.4x on Day 2
The initial public offer of IT services firm Happiest Minds Technologies was subscribed 8.40 times on the second day of bidding on Tuesday. The Rs 702-crore IPO, received bids for 19,53,36,630 shares against a total issue size of 2,32,59,550 shares, according to data available with the NSE.
FIIs sell Rs 1,057 cr worth of stocks
Net-net, foreign portfolio investors (FPIs) were sellers of domestic stocks to the tune of Rs 1,056.52 crore, data available with NSE suggested. DIIs were net buyers to the tune of Rs 620.29 crore, data suggests.
Bharat Dynamics OFS may be good deal
Retail investors can subscribe to the OFS of Bharat Dynamics on Wednesday for a possible return of 20% in one year as the government is offering a Rs 20 per share discount over the cut-off price, market experts and advisors said. Based on a burgeoning orderbook which is expected to be at Rs 22,500 crore in FY22, analysts estimate an EPS of Rs 24.9 for the year. At a PE multiple of 16, the stock is valued at Rs 400 per share, a 20% upside from the OFS level.
Rupee: The rupee depreciated by 25 paise to settle at more than one-week low of 73.60 against the US dollar on Tuesday amid growth concerns and fresh border tensions between India and China.
10-year bonds: India 10-year bond yield rose 1.05 per cent to 6.05 after trading in 6.01-6.06 range
Call rates: The overnight call money rate weighted average stood at 3.42 per cent, according to RBI data. It moved in a range of 1.80-4.10 per cent.
DATA/EVENTS TO WATCH
- Australia Home Loans MoM JUL (07:00 am)
- China Inflation Rate YoY AUG (07:00 am)
- China PPI YoY AUG (07:00 am)
- Canada Housing Starts AUG (5.45 pm)
- US Redbook YoY 05/SEP (06:25 pm)
- BoC Interest Rate Decision (07:30 pm)
Shots fired on China LAC after 45 tears… Shots were fired for the first time in 45 years on the LAC as tensions rose when Chinese troops tried to approach a newly established forward position of the Indian Army at Mukhpari heights in the Chushul sub-sector. Army officials told ET that troops from PLA fired a few rounds in the air on Monday evening in an attempt to intimidate Indian soldiers. The officials added that the Indian Army exercised restraint in the face of grave provocation.
Time-bound loan recast to avert misuse… RBI’s loan restructuring plan would be a success this time as it comes with a specific time frame and there is very little scope for misuse by either corporates or banks, said KV Kamath. “The way RBI has crafted the boundary conditions, it’s very difficult to misuse it,” said Kamath, who headed the panel formed by the central bank to frame rules for loan restructuring. “It is in everybody’s interest — whether it’s the lending institution or the borrower — to get back to health. So, if that objective is kept in mind, I don’t think there will be any misuse.”
India stares at sharp contraction…. Goldman Sachs forecast a 14.8% contraction in India’s economy in FY21, possibly the deepest cut estimated thus far and steeper than the 10.5% fall estimated by Fitch Ratings. India Ratings said it expects an 11.8% contraction against shrinkage of 5.3% forecast earlier, following a deeper-than-expected 23.9% decline in June quarter GDP. All three estimates were issued on Tuesday. Goldman Sachs had earlier forecast an 11.8% contraction, while Fitch had forecast a 5% fall in its June estimates.
Stiff scrutiny likely for loan recast…Lenders will likely put loan-restructuring requests from companies in the traditionally capital-intensive and Covid-battered sectors, such as power, property, hotels, tourism and aviation, through greater scrutiny after the KV Kamath committee set stiff future financial milestones for the affected businesses being given the facility. So, bankers are likely to assess the ability of their borrowers to meet the future capital-structure milestones while taking a call on restructuring requests. Theoretically, the scrutiny will be rather intensive for overleveraged firms.
Kochhar home ‘proceeds of crime’… The CCI Chambers residence of former ICICI Bank CEO Chanda Kochhar and her businessman husband Deepak Kochhar was bought at a “nominal consideration” and is being treated as “proceeds of crime”, the Enforcement Directorate told a PMLA court on Tuesday. The agency was seeking the custody of Deepak Kochhar, who was arrested on Monday
RIL closer to value unlocking in Q2C… RIL has moved a step closer to its goal of value unlocking its oil-to-chemicals business with the release of a detailed plan to hive off the business into a separate entity, Reliance O2C. The move may help the Mukesh Ambani-led conglomerate attract global investments in the business, after receiving big-ticket investment in its digital arm Jio.
Price dynamics favours Nalco… With aluminium prices once again on the rise after a declining trend over the past two years, investors may prefer state-owned Nalco given its pure-play aluminium focus compared with the more diversified operations of its peers. Nalco’s cheaper valuation will be another favourable factor. Aluminium price on the London Metal Exchange has climbed up by 25% from the April lows to nearly $1,800 per tonne
Govt okays labour code amendments… The Cabinet on Tuesday approved amendments to the labour codes on social security, industrial relations, and occupational safety and health, which could include pension and medical benefits to gig workers. These codes will allow states to introduce key changes to their labour laws framework via notifications.
Damani buys stake in NSE… Radhakishan Damani, billionaire investor and founder of DMart supermarkets, has picked up a stake in NSE, the country’s biggest bourse. According to the latest shareholding data filed by NSE, Damani has bought 7.8 million shares of NSE, which constitutes a 1.58% stake in the exchange. The value of the stake could be anywhere between Rs 650 and Rs 800 crore, industry estimates suggest.