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Global Market – Gold, ECB Meeting & U.S. Fed – Powell ‘s testimony

Global Market – Gold, ECB meeting & U.S. Fed – Powell ‘s testimony

This week we will focus on ECB meeting outcome, ECB kept interest rate unchanged and commentary is important to watch out for.  U.S. Fed chair Jerome Powell testimony this week provided further cues on interest rate trajectory and we would be focus on gold which is currently trading at above $2150.

ECB Meeting outcome on 7-Mar-24

ECB kept rates unchanged at 4.50% for fourth straight time as ECB expect softer inflation and stable economic growth, ECB guides for rate cut in June 2024 meeting. 

“We clearly need more evidence, more detail,” she told reporters Thursday in Frankfurt. “We know that this data will come in the next few months. We will know a little more in April, but we will know a lot more in June.”

Christine Lagarde Signals ECB Cut in June with 2% Inflation in Sight

European Central Bank President Christine Lagarde indicated policymakers may be in a position to lower interest rates in June as fresh projections showed inflation hitting the 2% target in 2025.

U.S. Fed Chair Jerome Powell’s Senate Testimony

Powell reiterated that it’s likely the Fed will cut interest rates this year. “We’re waiting to become more confident that inflation is moving sustainably at 2%,” he said. “When we do get that confidence — and we’re not far from it — it’ll be appropriate to begin to dial back the level of restriction.” He also said the Fed is well aware of the risk of cutting too late.

Gold Climbs to Record on Mix of Fed Pivot and Geopolitical Risks

Gold touched an all-time high as fund buying combined with speculation over a Federal Reserve pivot and geopolitical and financial risks underpinned a rally in the precious metal.

Equichain Wealth Advisors: Market View & Opinion

Last week, we have turned neutral to cautious with balance view last week, this week’s comment by U.S. Fed chair Jerome Powell in a testimony to U.S. Congress and ECB ‘s guidance on expectation of first rate cut in June has provided positive trigger to risk-on sentiment.

We will use any correction to add / deploy fund and recent trend looks positive.  Market not expecting any change in rate in this month, but guidance on rate cut in coming months or likely by May 2024 meeting could provide much needed trigger and rally.

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Global Market – Gold, ECB Meeting & U.S. Fed – Powell ‘s Testimony.pdf
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Weekly Reports

9-Mar-24 Technical & Fundamental Insight

Last week – review

Technical trend turned positive and expected indices to test higher level in 4-day trading week.  Banknifty outperformed this week as ICICIBANK, AXISBANK & SBIN lead the Banknifty rally.  Mid-cap & Small-cap under performed as Small-cap index closed the week with cut of 2%.

Technical Insight

• Nifty range of this week seen at 22334 to 22627 and Nifty above 22627 could provide fresh upside triggers.

• Banknifty range seen at 47206 to 48535.  Banknifty has outperformed this week and outperformance likely to continue.

Approach on Technical: Going into trade next week, GIFT Nifty is indicating gap-up opening of more than 100 points on positive global cues.

Technical trend continues to remain positive and Nifty @ 22627 & Banknifty @ 48161 to act as resistance.  If Indices manage to move above these levels, it could further trigger short covering rally and indices could test higher level in this week on Nifty @ 22921 & Banknifty @ 48535.  

Fundamental Insight

1) Centre Hikes Dearness Allowance To 50% Of Basic Pay For Its Employees
2) Gold Rallies To Record High But May Have Overshot Its Near-Term Upside
3) How Discoms Will Be Hit If They’re To Meet Peak Demand Of 250 GW In April-June
4) Singtel Divests 0.8% Stake In Bharti Airtel For Rs 5,849 Crore

Equichain Wealth Advisors: Market View & Strategy

Global sentiment is turning positive ahead of next round of central banks meeting which starts with Bank of Japan on 19-Mar-24, U.S. Fed on 20-Mar-24 & Bank of England on 21-Mar-24.  Recent rally in Gold, US 10-year bond yield below 4.10% & Dollar index below 103 – market rally on hope of rate cut by US Fed by in May 2024.  ECB kept interest rate unchanged on 7-Mar-24 and guided for rate cut in June 2024 depending on incoming data.  BOJ is expected to hike rate on 19-Mar-24.

We have maintained our exposure around 65% – 75% and would prefer to increase deployment gradually with stock specific approach.  Market continues its uptrend and momentum could get strong if it is supported by action of central banks which could lead to short covering rally ahead of financial year end.

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9-Mar-24 Fundamental & Technical Insight.pdf
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Global Market – Gold, Cryptocurrency & U.S. Govt averts shutdown

Global Market – Gold, Cryptocurrency & US averts shutdown

Last week, we have discussed how global market continues to trade at recent high on hope of interest rate peaked out and hope of economic stability.  This week we will focus on Gold which has now trading around $2050 & BITCOIN which is now above $60000 almost after two years.  We will also discuss China’s continues effort to boost economy.

Congress Approves Interim Funds to Avert U.S. Government Shutdown

The Senate passed the bill on a 77-13 vote on Thursday night, hours after the House acted on it.

Fed Officials emphasize Data to Guide Pace of Interest-Rate Cuts

Three Federal Reserve officials said the pace of interest-rate cuts will depend on incoming economic data, suggesting the path to lower borrowing costs may look different than in previous rate-cutting cycles.

U.S. Fed’s Preferred Inflation Metric Increases by Most in A Year

The Federal Reserve’s preferred gauge of underlying inflation rose in January at the fastest pace in nearly a year, helping explain policymakers’ patient approach to start cutting interest rates.

Bitcoin Scales $60,000 As ETF Demand Puts Record High in Sight

A wild 24 hours for the cryptocurrency market saw Bitcoin jump as much as 13% on Wednesday to $63,968 — its first trip above $60,000 since November 2021. Along the way, leading US digital-asset exchange Coinbase suffered outages as traffic surged before eventually restoring services.

Gold trading above $2050

Gold has been trading around $2000 level for some time now, gold price would rally if interest rate decline or any economic uncertainty.  Gold is considered as safe heaving and asset class which comes into focus in case of any economic uncertainty.  

Japanese Currency Official Warns Against Unstable FX At G-20

Japan kept up its drumbeat of warnings against currency volatility, with a top finance ministry official saying that foreign exchange rates should reflect fundamentals, and authorities in Tokyo are watching moves closely.

Equichain Wealth Advisors: Market View & Opinion

We remain cautious on Japan ‘s change in monitory policy which was -0.10 interest rate since 2016.  Japanese currency official warning against unstable FX at G-20 needs to see with cautious.

Global market and risk-on sentiment remains very much strong; however, we have been cautious for past weeks, but market momentum seems to be very strong.  Incoming economic data due next week could provide further cues as we remain neutral with balance view.   Recent up move in Gold & Bitcoin is interesting to watch as incoming economic data needs to be watched carefully ahead US Fed meeting on 20-Mar-24.

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Global Market – Gold, Cryptocurrency & US averts shutdown.pdf
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Weekly Reports

2-Mar-24 Technical & Fundamental Insight

Last week – review

Indices closed mixed this week as Nifty 50, SENSEX & Banknifty ended with around 1% gain, while Mid-cap 100 & Small-cap 100 closed with loss of around 1%.  GDP data released on Thursday after market hours provided much needed rally from lows of the week to record high on major indices.  Mid-cap & Small-cap underperformed this week as SEBI asked for further disclosure and regulation from Mutual fund.

Technical Insight

• Nifty could see fresh upside above 22446.  Nifty range for this week could be 22297 to 22796.  Nifty above 22297 is seen as fresh break-out.

• Banknifty move on Friday can be seen as big positive and now immediate support @ 47052 and trend remains positive till it holds 47052.

Approach on Technical: Friday’s move after strong GDP data on Thursday after market closing has change direction in short term.  Last Wednesday & Thursday market remain under pressure.

Nifty @ 22096 & Banknifty @ 46562 to act as important and decisive support level.  Technical chart has turned positive and could test higher level.  Nifty is expected to test 22446 & 22796.  Banknifty likely to test 47748 & 48636.  We see Friday’s move as big trigger as Nifty 50 index made fresh high and could open further upside.  

Fundamental Insight

1) India’s GDP Grows 8.4% In Q3 Surpassing Estimates; Full-Year Growth Pegged At 7.6%

The gross domestic product grew 8.4% over a year earlier in the October-December quarter, according to the latest estimates released by the government’s statistical agency. Gross value added, which strips out indirect tax and subsidies, is estimated to have grown 6.5%.

2) Fiscal Deficit Widens To 64% Of Revised Estimates till January
3) India’s GST Collection Rises 12.5% To Rs 1.68 Lakh Crore in February
4) Cabinet Nod for Three Semiconductor Units Entailing Rs 1.26 Lakh Crore Investment

Equichain Wealth Advisors: Market View & Strategy

Nifty closed at fresh 52-week high lead by broad base rally from banking to infrastructure sector.  GST Collection for February came at 1.68 lakh crores, records 12.5% growth compared to previous year while decline compared to previous month’s collection of 1.74 lakh cores.

We see recent development as fresh positive triggers and we may find opportunity to deploy fund available.  In last few weeks, we have been underweighted as we were expecting correction, but market witness sideways correction / consolidation and Friday ‘s rally changed the sentiment.  Q3FY24 GDP number just ahead of election could limit the downside.  Any correction could be seen by market as buying opportunity as strong domestic inflows is now backed by strong economic data

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2-Mar-24 Fundamental & Technical Insight.pdf
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Global Market – US Market at record high – DOW30 above 39000 & S&P500 above 5000

Global Market – US Market at record high – DOW30 above 39000 and S&P500 above 5000

This week we will discuss US market which are trading at record high, US FOMC meeting minutes released this week and how China continue to provide support to its economy which continue to struggle despite opening up in last January.

NVIDIA after its fantastic earnings lead the rally in tech stocks.  US FOMC meeting minutes released this week failed to provide any timing of rate cut, yet not negative reaction by market and market took this outcome with a stable view.  

Fed Minutes Suggest Officials Are Seeking Smallest Balance Sheet Possible

Federal Reserve policymakers are gearing up for a bigger discussion about the central bank’s balance sheet, but for now its clear officials are keen to make it as small as possible.

U.S. Jobless Claims Decline to Lowest Level in A Month

Initial claims decreased by 12,000 to 201,000 in the week ending Feb. 17, according to Labor Department data released on Thursday. The figure was lower than all economists’ estimates in a Bloomberg survey.

Top Fed Officials Bolster Case for Patient Stance on Rate Cuts

Three top Federal Reserve officials hammered home the message Thursday that the US central bank is still on track to cut interest rates this year — just not anytime soon.

China’s Central Bank Tries to Catch Markets Off Guard with Surprise Easing

A record cut to a key lending rate earlier this week announced by the People’s Bank of China was just the latest unexpected move since Governor Pan Gongsheng took office last summer. At a press briefing last month, he shocked with an outsized cut to banks’ reserve requirement ratio.

Equichain Wealth Advisors: Market View & Opinion

We are certainly cautious as rally seen in market globally seems to be running ahead of its on positive expectation and events will follow later on.  Risk-On sentiment continue to provide much needed boost as economy remains strong.  

In such time we would continue to maintain balance approach with investment around 65% to 75% while keeping cash level anywhere between 25% to 35%.  We do fear that market may be venerable to any negative news which could increase volatility in near term. 

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Global Market – US Market at record high.pdf
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Weekly Reports

24-Feb-24 Technical & Fundamental Insight

Last week – review

Last week market movement were more related to volatility seen during this week but indices continue to trade in narrow range.  Nifty 50 & SENSEX closed at fresh all-time high was market sentiment remain cautious.

Technical Insight

• Nifty this week range seen at 21956 & 22446 with positive trend.  Nifty around 21938 level likely to act as important support level on trend line from October 2023.
• Banknifty this week range seen at 46073 to 47748.  Banknifty @ 46073 to act as important support level and fresh up move can be seen above 47052.

Approach on Technical: Going into trade this week, Nifty remain strong as compared to Banknifty.  This week’s trade will be dominated by final F&O expiry for February 2024 series.

Technical setup remains bullish till Nifty @ 21957 & Banknifty @ 46073 holds.  We expect indices to test higher target on Nifty @ 22448 & Banknifty @ 47748 & higher.

Fundamental Insight

1) Policy Pivot Unlikely Until Inflation Is Under Control, Show MPC Minutes
2) Citi Research: Nifty Expected to See 14% Earnings Growth for Couple of Years
3) RBI Allows Banks, Non-Banks to Issue Public Transport Payment Instruments

Equichain Wealth Advisors: Market View & Strategy

Even though market is trading near its fresh life time, market sentiment remains cautious.  High volatility was seen this week cues from domestic & global market remains stable and positive while valuation seems to be stretched.

We continue to maintain our stance to keep allocation level around 65% to 70% while remain bullish with medium to long term view.  We remain cautious with short term view and keeping our strategy to make fresh allocation only on decline.  Technical setup looks bullish going into F&O expiry this week for February 2024 series.  However, we continue to play cautious and expecting high volatility in final F&O expiry week.

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24-Feb-24 Fundamental & Technical Insight.pdf
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Global Market – Key events 5 to 9 Feb 2024

Global Market – Key events for 5th to 9th February 2024

This week we will focus on China’s economy, how Powell ‘s interview to “60 Minutes” and also discuss BOJ shift in policy change from negative interest rate.  This week has been relatively quite and focus has been on corporate earnings.

China’s Consumer Prices Drop at Fastest Pace Since 2009

China’s consumer prices fell last month at the fastest pace since the global financial crisis as the world’s second-largest economy struggles to shake off persistent deflation pressures.

Germany’s Industrial Downturn Stretches into A Seventh Month

German industrial output extended its slump to a seventh month in December, underlining the struggles gripping Europe’s largest economy.

China Tightens Some Trading Restrictions for Domestic and Offshore Investors

China is tightening trading restrictions on domestic institutional investors as well as some offshore units as authorities fight to stem a deepening stock rout, according to people familiar with the matter.

Powell Tells ‘60 Minutes’ Fed Is Wary of Cutting Rates Too Soon

Federal Reserve Chair Jerome Powell said Americans may have to wait beyond March for the central bank to cut interest rates as officials look for more economic data to confirm that inflation is headed down to 2%.

Trillions Of Yen Pile Up at Negative Rates in Bets on BOJ Shift

Japan’s biggest commercial banks are letting money accumulate in negative interest-rate accounts at the central bank — another sign that the world’s last sub-zero rate policy is coming close to the end.

Equichain Wealth Advisors: Market View & Opinion

In last few weeks in our coverage of global market, we have been focusing mainly on three countries and their central banks.  U.S., Japan & China.

We would like to highlight that market is optimistic and currently trading near its high as interest rate going down in US could be positive for risk-on sentiment, China’s effort to boost economy is also positive but the real concern in BOJ moving away from negative interest rate policy.

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Global Market – Key events this week 5 to 9 Feb 2024.pdf
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Weekly Reports

10-Feb-24 Technical & Fundamental Insight

Last week – review

Going into trade last week, we were cautious as market rally seems to be showing some sing of weakness post Budget on 1-Feb-24.  We see budget as non-event as there was no major expectation as it was Vote-On-Account ahead of general election in April – May 2024.  Market this week ended with minor cuts as RBI MPC policy was due this week.

Technical Insight

• Nifty in last two week has been trading in range of 21411 to 22115, Nifty has made double top on last Friday would act as resistance level.  Nifty range expected this week is 21680 to 22115.

• Banknifty range for this week is expected to be 45295 to 46571.  Any major move in Banknifty expected once this range is broken on either side.

Approach on Technical: Indian market reacted to Budget last week and RBI MPC policy this week.  We expect indices to follow technical direction as there are no major scheduled event, outcome of which can impact market direction.

Nifty @ 21680 & Banknifty @ 45295 to act as important support level.  If indices break this level – fresh downside could be expected, otherwise we see indices could attempt fresh up move.

Fundamental Insight

RBI Monetary Policy Key Takeaways

• To keep the repo rate unchanged at 6.5% by a 5:1 majority.
• The standing deposit facility rate, pegged 25 basis points below the repo rate, is at 6.25%.
• The marginal standing facility rate, which is 25 basis points above the repo rate, is at 6.75%.

The MPC also decided to remain focused on the withdrawal of accommodation to ensure that inflation progressively aligns with the target, while supporting growth.

India To Sell $11.6 Billion Airwaves to Boost Phone Networks

India’s federal cabinet Thursday approved a plan for selling airwaves in an auction to improve quality and coverage of networks in the world’s second-biggest telecom market.

Forex Reserves Jump To $622.469 Billion

India’s forex reserves jumped by $5.736 billion to $622.469 billion for the week ended Feb. 2, the Reserve Bank said on Friday. In the previous week, the overall reserves had increased by $591 million to $616.733 billion.

Equichain Wealth Advisors: Market View & Strategy

We have remained cautious in last few weeks and continue to remain cautiously optimistic but will continue to follow strategy of fresh allocation on correction.  

We see market at current level has factored in political stability, US fed pivot on interest rate and earnings season so far has failed to provide fresh positive triggers.  Rally in PSU stocks continue on optimism of political stability, but we do believe valuation are stretched in near term.

We would continue to keep exposure around 75% and major allocation would be preferred on correction.  We may review our stance incase indices hit fresh high supported by some positive triggers on interest rate going down or any other substantial news which could change market narrative.

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10-Feb-24 Fundamental & Technical Insight.pdf
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Global Market – Key events for 22 to 26 January 2024

Global Market – Key events for 22 to 26 January 2024

This week, we will focus on US Q4 2023 GDP data, ECB interest rate decision & China’s steps to boost economic recovery.  Central banks meeting starts with BOJ & ECB meeting this week.  We would like to focus on stocks whether news this week would have any impact global trend.

BOJ Keeps Negative Rate for Now as It Prepares Ground for Hike

The BOJ maintained its -0.1% short-term rate and kept yield curve control parameters intact at the end of a two-day meeting, according to its statement Tuesday. 

Red Sea Turmoil Sends Economic Shockwaves Far and Wide

Two months of missile, drone and hijacking attacks against civilian ships in the Red Sea have caused the biggest diversion of international trade in decades, pushing up costs for shippers as far away as Asia and North America.

China To Cut Bank Reserve Ratio in Bid to Boost Growth, Markets

The 0.5 percentage-point cut to the ratio, or the amount of cash that banks have to keep in reserve, on February 5 will provide 1 trillion yuan ($139 billion) in long-term liquidity to the market, Pan said during a briefing with the press Wednesday.

Fed Raises Rate on Emergency Loan Program to Stop Arbitrage

The Federal Reserve raised the rate on loans to banks issued under an emergency lending program launched last year, after borrowing surged in recent weeks as institutions took advantage of the attractive financing terms.

ECB To Hold Interest Rates as Lagarde Beats Back Cut Bets

The European Central Bank is set to keep borrowing costs on hold for a third meeting while stepping up efforts to convince investors that interest-rate cuts aren’t imminent.

US GDP Grew 3.3% Last Quarter, Capping Unexpectedly Strong Year

Gross domestic product increased at a 3.3% annualized rate, according to the government’s preliminary estimate out Thursday. For all of 2023, the economy expanded 2.5%.

Equichain Wealth Advisors: Market View & Opinion

Bank of Japan is now preparing to hike interest rate, China is providing support for economic recovery, ECB guides for rate cut & while US last quarter GDP growth came above estimate ahead of US Fed meeting on 31-Jan-24.  We seen extreme mix picture of global economy which makes us cautious as year end rally seen in December 2023 could see trend reversal post US Fed meeting outcome.

Earnings season so far has remain mix and fail to provide fresh triggers for market.  We are currently focusing to reduce exposure at higher level and wait for better entry opportunity on correction.  Next big trigger could come when interest rate in US & Europe comes down and we see some economic slowdown before we see interest rate heading downward.

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Global Market – Key events this week 22 to 26 Jan 2024.pdf
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27-Jan-24 Technical & Fundamental Insight

Last week – review

Market going into 3-day trading week with F&O expiry and profit booking seen in previous week, we expected this week to resume uptrend as ICICIBANK result was in-line with market expectation.  Indices seen yet another week of profit booking as Banknifty continue to remain week as HDFCBANK remain weak closing at 1434.90 which is around 15% correction from 16-Jan-24 close.

Technical Insight

• Nifty expected to be in range of 20976 on lower end while fresh up move could be expected once Nifty crosses 21680.  
• Banknifty range for this week could be seen as 43230 on lower side while fresh up move could be expected once Banknifty sustains above 46571.

Approach on Technical: This week again news flow will drive the market as US FOMC meeting outcome on 31-Jan-24, Indian market will be reacting to it on 1-Feb-24 and Budget ahead of general election will be on 1-Feb-24.

Technical setup is weak and it indicates further downside.  Nifty @ 20976 & Banknifty @ 43230 on lower side could be tested this week.  Nifty @ 21680 & Banknifty @ 46571 could be tested on higher side.  VIX @ 13.86 will be important tool and need to turn cautious if VIX goes above 16.

Fundamental Insight

1) LIC Gets RBI Nod to Acquire 9.99% Stake in HDFC Bank
2) Cabinet Approves Rs 8,500 Crore Incentive Scheme For Coal Gasification Projects: Sources
3) Forex Reserves Fall By $2.8 Billion To $616.1 Billion, Says RBI
4) Budget 2024: Government Likely to Target 5.3% Fiscal Deficit Target for FY25, Say Economists

Equichain Wealth Advisors: Market View & Strategy

This week, US FED meeting outcome on 31-Jan-24, Indian market will react to it on 1-Feb-24 along with Union budget ahead of general election on same date 1-Feb-24.  So, we expect any major move is expected on 1-Feb-24.  

Our strategy would be to focus on keeping exposure around 70% and have balancing approach where we remain positive with medium to long term view and cautious in short term.  Technical setup looks bearish and any lack of positive trigger may lead to correction.  

When we see recent rally, which is seen from December 2023, state election result on 3-Dec-23 and US Fed guided that rate hike may done has triggered the ongoing rally.  We have mentioned earlier also that now focus will shift to earning season which has been mixed so far.  We believe post budget – market could see profit booking as run-up in PSU ‘s has been one of the best rallies seen in recent past.  

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27-Jan-24 Fundamental & Technical Insight.pdf
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