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Global Market – Key events this week – 14 to 19 January 2024

Global Market – Key events this week – 14th to 19th January 2024

This week we will cover we will cover how China’s stock sell-off and oil squeeze at start of 2023 is seen at surplus.  Red sea crisis event could impact food supply and impact inflation.  U.S. economic data released this week came above market estimate as jobless claim declined.  How key risk indicator reacted this week.

China’s $6.3 Trillion Stock Selloff Is Getting Uglier by The Day

Chinese stocks just capped another dismal week, with a gauge of mainland firms listed in Hong Kong languishing at the bottom of global equity index rankings for the year so far.

Oil Squeeze Of 2023 Turns to Surplus In Warning For Market Bulls

A year ago, crude traders and forecasters anticipated that the fourth quarter would be the strongest point of 2023, with China’s post-pandemic demand recovery pushing prices up to $100 a barrel. More recently, the Organization of Petroleum Exporting Countries has been predicting a record deficit of 3 million barrels a day.

Red Sea Unrest Is Bad News for The World’s Fragile Food Supply

Chaos in the Red Sea is starting to disrupt shipments of produce from coffee to fruit — and threatening to halt a slowdown in food inflation that brought some relief to strained consumers.

U.S. Jobless Claims Plunge To 187,000, Lowest Since September 2022

Initial claims decreased by 16,000 to 187,000 in the week ending Jan. 13, according to Labor Department data released on Thursday. The figure was below all estimates in a Bloomberg survey of economists.

ECB To Pick Right Moment for First Rate Cut, Economists Say

Almost three-quarters of respondents in a Bloomberg survey are confident policymakers will neither wait too long nor act too early — after they were widely accused of tardiness in responding to the continent’s once-in-a-generation price shock.

US 10-year bond yield @ 4.16% & Dollar Index @ 103.10

Key risk indicator in last week has seen risk-off sentiment as US 10-year bond yield rises from 3.94% a week earlier to 4.16% this week, rise of more than 20-bps.  Dollar Index is currently trading above 103 level was trading around 102 level.

Equichain Wealth Advisors: Market View & Opinion

Global cues were positive till last week on December 2023 on optimism of interest to cool-off sooner than expected but global cues in first three weeks of January 2024 does not provide any support to this trend.

We see next two week will be important and as BOJ meeting outcome on 23-Jan-24, ECB meeting outcome on 25-Jan-24, US Fed meeting outcome on 31-Jan-24 & BOE meeting outcome on 1-Feb-24.  Commentary of all these central banks could provide further cues.

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Global Market – Key events this week 14 to 19 Jan 2024.pdf
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21-Jan-24 Technical & Fundamental Insight

Last week – review

Nifty started this week’s trade with a bang as Nifty manage to cross 22100 level and close at 22097 on Monday.  Market seen major fall on Wednesday as reaction to HDFCBANK which disappointed market as HDFCBANK ADR was down by more than 15% in two trading session.  HDFCBANK seen cut of more than Rs 200 or 12% from 1679 closing ahead of result on 16-Jan-24.  

Technical Insight

• Nifty key support and resistance level this week could be 21411 to 21680.  Break-out on either direction to provide fresh move in a holiday shorten week.
• Banknifty expected to trade in range of 45295 to 46571.  Decisive move can be expected once this level is crossed on either side

Approach on Technical: Indices will be reacting to ICICIBANK ‘s result on Tuesday & holiday shorten week.  Banknifty monthly expiry on 24-Jan-24 & Nifty and stocks final F&O expiry on 25-Jan-24.

Indices after last week has seen sharp correction on back of HDFCBANK ‘s result on 16-Jan-24.  Nifty @ 21411 & Banknifty @ 45295 to act as important support level and indices to remain in uptrend till these levels are hold.  

Fundamental Insight

1) RBI Not Discussing Rate Cuts Yet, Governor Das Says
2) Retail Inflation For Farm Workers Rises To 7.71% In Dec
3) EPFO Adds 13.95 Lakh Net Members During November 2023
4) India’s Fiscal Deficit To Be Budgeted At 5.3% Of GDP In FY25: BofA Securities

Equichain Wealth Advisors: Market View & Strategy

F&O expiry for January series due this week in a holiday shorten week, Indian market will be trading for only 3 days this week as Friday will be holiday for Republic Day and soon after that focus will shift to Vote-On-Account, Mini-budget on 1-Feb-24.  ICICIBANK result is in-line with market estimate with NIM at 4.43% Vs 4.53% in previous quarter.  ICICBANK result is better than street estimate and no major concern seen as compared to HDFCBANK.

We remain cautious optimistic as we see many stocks are fairly valued and focus will clearly shift to budget due on 1-Feb-24.  Market will react positively to successful PRAN PARTHISTHA ceremony of RAM MANDIR as focus will now shift to budget and election.  

We would also be focusing on booking part profit and shifting to stocks which are valued attractively.   We remain open to review our allocation strategy based on incoming data and we do not rule out profit booking post budget on 1-Feb-24.

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21-Jan-24 Fundamental & Technical Insight.pdf
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Global Market – Key event for 8 to 12 Jan 2024

Global Market – Key events this week – 8th to 12th January 2024

This week we will cover various events this week and but these events does not have any major impact
on global cues.  China continues to their longest streak of deflation since 2009, threatening a deflationary spiral that may require more government support to reverse.

Brent Oil Hits $80 After Airstrikes Target Yemen’s Houthis

President Joe Biden said strikes had been conducted against a number of targets used by the Iran-backed group, with US officials saying radar sites and missile launchers were hit. A tanker industry group said military forces in the region were advising ships to avoid a key chokepoint near Yemen.

China’s Worst Deflation Streak in 14 Years Puts Pressure on PBOC

China’s consumer prices marked their longest streak of declines since 2009, threatening a deflationary spiral that may require more government support to reverse. Its export growth engine is also faltering.

Bitcoin ETF Trades Top $4.6 Billion in ‘Ground-Breaking’ Day

Over $4.6 billion worth of shares traded between the almost a dozen US spot Bitcoin exchange-traded funds on Thursday. The Grayscale Bitcoin Trust, which converted into an ETF, saw about $2.3 billion in volume, according to data compiled by Bloomberg. Meantime, BlackRock’s iShares Bitcoin Trust—IBIT— saw over $1 billion change hands.

U.S. Mortgage Rates Climb for Second Straight Week, Hitting 6.66%

Borrowing costs have risen slightly as traders grapple with questions around the Federal Reserve’s future path. US inflation accelerated in December, tempering expectations about possible rate cuts from the central bank.

Iran Captures Oil Tanker Off Oman in Deepening Mideast Turmoil

A tanker previously seized by the US for carrying illicit Iranian oil was captured by Tehran off the coast of Oman, heightening tensions in the world’s most important trade lane for global crude supply.

Equichain Wealth Advisors: Market View & Opinion

Market news and events this week does not have any major impact on equity while crude oil has seen spike on Friday as Brent crude oil approaches $80.  China’s is facing deflation and China’s CPI continues to mark longest streak of deflation since 2009.  Rising geo-political tension in Red-sea remain uncertainty in global market.

With recent development and geo-political event unfolding we will remain watchful and these events could trigger risk-off sentiment and provide much needed correction in global market.   Global market continues to trade near its recent high and remain venerable to any potential negative triggers.

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Global Market – Key events this week 8 to 12 Jan 2024.pdf
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13-Jan-24 Technical & Fundamental Insight

Last week – review

Going into trade last week, we expected Nifty range 21506 – 21834 & Banknifty range 47575 – 48636, Nifty tested both end of the range while Banknifty manage to hold lower end of the range.  Banknifty was showing weakness on chart and it has underperformed.  IT result was key highlight for this week as INFY narrowed guidance to 1.5% – 2% indicating worst may be behind as TCS report operating margin at 25%.  

Technical Insight

• Nifty range for this week could be seen as 21631 to 22306.  Nifty move above 21834 has opened further to 22306 level.
• Banknifty range for this week could be seen as 47575 – 48636.  Banknifty range for this week remains same as last week.

Approach on Technical: IT result provided trigger to Nifty this week and Banknifty could take cues from HDFCBANK result due on 16-Jan-24.  Banknifty to take move on either direction.

We will turn cautious or bearish if Banknifty breaks 47575 and fresh upside momentum can be seen on Banknifty above 47980 to 48636 level.  Banknifty could led the positive momentum as chart indicates positive from consolidation. 

Fundamental Insight

1) India’s CPI Inflation Rises to Four-Month High Of 5.69% In December
2) IIP: Growth In India’s Industrial Output Falls To Eight-Month Low At 2.4%
3) Parliament’s Budget Session Likely Between Jan. 31 And Feb. 9

Equichain Wealth Advisors: Market View & Strategy

HDFCBANK result could provide decisive direction to Banknifty and could led next round of rally.  IT stocks rallied this week helped Nifty cross its previous and closed at life time high.  HDFCBANK ‘s quarterly business updates were positive and no negative surprise could support to HDFCBANK stock prices which has seen correction in last two weeks after year end rally which on HDFCBANK which crossed 1700 level.  

We remain positive and would continue to maintain bullish stance unless we see negative cues dominating and market direction turns negative.   Our strategy would to remain long on Banks, Defense stocks and Infrastructure stocks going into Vote-on-account (mini-budget).

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13-Jan-24 Fundamental & Technical Insight.pdf
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Global Market – In focus – U.S. Economic & Geo-political tension

Global Market – In focus – U.S. Economic data & Geo-political tension

This week will on U.S. economic data and geopolitical tension as corporate earnings will start from next week.  So next week we will review corporate earnings of global companies and its impact on global as well as Indian market.

Now let us focus on the data released this week.  Most of the jobs data indicate strong economy, JOLTS Jobs opening came in-line with estimate while average hourly earnings were up by 0.40% Vs estimate of 0.30%.  Non-farm employment change came at 216k Vs estimate of 168k.

Market trend remains unclear as rally seen in December 2023 was on narrative of interest rate could starting declining earlier then estimate.  Strong economic data would mean the rate could stay at higher level for some more time.  US FOMC meeting minutes released this week also failed to provide clear trend and incoming data would be important to watch out for.

Geo-political tension – Red Sea Crisis

Freight costs, including surcharges, have increased by over 500% amid the Red Sea crisis as shipping companies were forced to take the longer route via Cape of Good Hope, according to the Federation of Indian Export Organizations.

Equichain Wealth Advisors: Market View & Opinion

US Market in December 2023 rallied from 3.81% to 4.94% on major indices will now need positive trigger from corporate earnings.

We would focus on corporate earnings where major US Banks are due to announce their earnings next week.  As we have seen economic data is U.S. continues to be strong will result in positive surprise in corporate earnings.

 
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Global Market – In focus – U.S. Economic data & Geo-political tension.pdf
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6-Jan-24 Technical & Fundamental Insight

Last week – review

Going into trade in the first week of 2024, we expected to consolidate after year-end rally seen in last two weeks of December 2023.  Market had volatile session in range and ended the week flat on major indices.  Mid-cap 100 & Small-cap 100 stocks gained around 2% on major indices, rally continues in Mid-cap & Small-cap stocks.

Technical Insight

• Nifty range for next week could see break-out from this range of 21506 – 21834.  Nifty technical indicate positive momentum to accelerate once 21834 is crossed.
• Banknifty range of this week is expected from 47575 to 48636.  We remain positive on Banknifty and will review long position only if Banknifty goes below 47575.

Approach on Technical: last week was all about consolidation and we expect this week, market to take decisive direction.  Indices consolidated this week after two weeks of major rally.

Nifty is strong as compared to Banknifty on daily chart, Indices likely to maintain positive momentum as Nifty @ 21506 & Banknifty @ 47575 holds on closing basis.  

Fundamental Insights

1) India GDP: Advance Estimates Peg FY24 Growth At 7.3%, Nominal GDP Expansion At 8.9%
2) HDFC Bank Q3 Updates: Deposit Accretion Slows
3) India To Tighten Budget Deficit as Bond Index Inclusion Beckons

Equichain Wealth Advisors: Market View & Strategy

Global cues are muted as incoming U.S. economic data will play important role in providing fresh cues for interest rate which was key reason of rally in global market in December 2023.  U.S. CPI & Core CPI inflation data will due next will provide important direction as US 10-year bond yield back above 4.00%.

IT stocks – INFY & TCS to start earnings season on 11-Jan-24, we see IT stocks may have bottomed out and we go into result season with positive view on IT stocks.  HDFCBANK quarterly business failed to cheer the market but we see this number as positive as credit growth remains healthy.

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06-Jan-24 Fundamental & Technical Insight.pdf
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Global Market – Rewind 2023 – Part 2

Global Market – Review of 2023 – Part 2

We have covered from January 2023 to May 2023 in a flash back 2023.  In today’s article we will cover from June 2023 to December 2023 and how rally in last 1 – 2 months has changed global market narrative.

June 2023

• U.S. suspends debt ceiling limit till next U.S. Presidential election, till 1-Jan-25.  
• Non-defense discretionary spending would be “roughly flat” at current year levels in 2024, “when factoring in agreed upon appropriations adjustments,” according to White House officials.
• ECB hikes rate by 25-bps to 4.00%.  ECB guides for continuation of rate hike to bring long term inflation at 2% and to keep interest rate higher as long as necessary.
• BOE – Bank of England raises rates by 50-bps to 5.00%, highest level since 2008.

July 2023

• U.S. CPI & Core CPI inflation data for June 2023 came in July 2023 was below market estimate.  Inflation rise in June 2023 was lowest growth since April 2021.
• Key risk indicator – Dollar Index was trading @ 100.80 & US 10-year bond yield @ 3.83%

August 2023

• Fitch downgrades U.S. ratings to AA+ from AAA.  Rating downgrade expects fiscal deterioration over next three years.
• BOE raises rates by 25-bps to 5.25%.  China cuts RRR rate in a bid to support economy.
• Jackson hole symposium – U.S. Fed chair Jerome Powell indicated interest rate to remain higher.

September 2023

• U.S. & China’s economic data – indicates mix picture.  Top two economic indicates opposite trends and interest rate policy by the respective central banks.
• Brent oil rose above $90 a barrel for the first time since November as the largest OPEC+ producers extended their supply cuts to year-end.
• U.S. Fed keeps rate unchanged on 20-Sep-23, indicates rate hike cycle may be done but signaled rate to remain higher for longer period of time.

October 2023

• ISRAEL-HAMAS war started in first week of October 2023 over the weekend, providing trigger to risk-off sentiment and resulting in surge in crude oil & Gold.
• US bond yield was trading at highest level since 2007.  US 30-year bond yield above 5% while 10-year bond yield around 5%.

November 2023

• Bank of Japan continue to maintain interest rate at -0.10% and US Fed keeps interest rate unchanged in first week of November 2023.
• In Diwali special article – we have focused on SAMVAT 2080 could belong to Gold, Oil, Inflation & Interest rate globally.
• US Fed meeting minutes – “Proceed Carefully” – indicating pause by US Fed and one more rate hike which was expected earlier is now ruled out after recent US FOMC meeting minutes.

December 2023

• Global sentiment has turned positive after US Fed meeting minutes.  
• Global market rallied in range of 3% to 7% in the month of November 2023 and setting the trend for December 2023 on positive note.

Equichain Wealth Advisors: Market View & Opinion

Global market closed the year 2023 on high note and the key reversal came from November 2023 and clear trend emerge post US Fed meeting minutes which highlighted – “Proceed Carefully”.  Now if we look back and compare to Jackson Hole Symposium event in August 2023, which indicated interest rate to remain higher for longer period of time.

We strongly believe that positive news from global central banks has been factored and now the focus will shift to corporate earnings.

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Global Market – Rewind 2023 – Part 1.pdf
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30-Dec-23 Technical & Fundamental Insight

Last week – review

Going into trade into last trading week, we expected market to test its recent high and close at higher level due to year end rally.  Most indices closed at highest level with week gains of around.  Indices on Monthly basis has rallied more than 7% on major indices while Mid-cap & Small-cap gained just under 7%.  

Global market closed flat on weekly basis as market was in holiday mood and low volatility.Now let us looks at year change for all these major indices.  Nifty 50 & SENSEX30 gained around 20% while Banknifty underperformed among indices by growth of up to 12.34%.  

Highlight will be Mid-cap 100 & Small-cap100 indices which gained by 46.57% and 55.62% respectively.  After underperforming in 2022 and early part of 2023, 2nd half of calendar year 2023 delivered one of the best returns in recent times.  

Equichain Wealth Advisors: Market View & Strategy  

This week we will not focus on technical because the movement we have seen in last two weeks was mainly due to year-end rally.  We would now focus on fresh indication from technical trend.

We see year-end rally to cool-off in first week and then corporate earnings will take lead from here on.  We remain optimistic on IT and Banking stocks going into earnings season as improvement in global sentiment will play important role, even if result may be weak but we expect positive commentary from IT companies.   Globally expectation of interest rate to cool-off has provided big boost for banking and financials company.  Any correction in first few weeks can be seen as opportunity to deploy fund available.

As mentioned in our earlier we have remained invested around 70% in trading portfolio and 80% in positional portfolio.  Rally in last week was used to book part profit for short term trades and fresh review will be taken with view on corporate earnings, Vote on account (mini budget before general election on 1-Feb-24) and potential reversal in interest rate globally.

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30-Dec-23 Fundamental & Technical Insight.pdf
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23-Dec-23 Technical & Fundamental Insight

Last week – review

Indices ended this week with correction of around 1% but huge volatility was seen on Wednesday.  Market started this week on positive note before seeing sharp reversal on Wednesday & recovery on Thursday and Friday.  Market rally halted after two back-to-back weeks of positive news flow and rallied over 5% on all major indices.

Technical Insight

• Nifty after sharp fall on Wednesday is now trading in neutral zone with bullish trend.  Nifty likely to remain in 20809 to 21492 range.
• Banknifty range for this week likely to be in 46800 & 48200.  Banknifty Thursday’s low of 46919 to act as important level and fresh downtrend once this level is broken.

Approach on Technical: In last week’s technical approach, we mentioned that we will take rally of previous two weeks into consideration.  Historically market in last week of calendar year tends to remain higher specifically when it is trading near its life-time high.

Nifty @ 21070 & 20809 to act as important support level and 21492 as resistance level.  Banknifty @ 47042 & 46314 (23.6% & 38.2% retracement level) to act as support level and 48219 as resistance level.  Market likely to hold on last Thursday’s low and test recent high this week.

Fundamental Insight

1) India’s Agri Exports Likely to Reach $53 Billion This Fiscal: Government
2) RBI To Boost Liquidity with Rs 1.75 Lakh Crore VRR Auction
3) Fitch Says Better Profitability at Indian Corporates to Support Rating Headroom

Equichain Wealth Advisors: Market View & Strategy

We expect market to hold on to current level with year-end rally likely to test recent high made on Wednesday.  Market correction on Wednesday was over-due and COVID scare triggered further sell-off.  We do not expect COVID-19 could trigger fresh weakness as we have seen in March 2020.

Our strategy this week would to focus on year end rally and keep stock specific approach and keep investment level around 80% or increase to 90% with short term view.  We expect rally next week and it may continue in first week of January as well ahead of earnings season.  Once earnings season starts – corporate earnings will provide fresh cues.  Defense, IT & Banks would be interesting play for next 1 – 2 weeks on long side.

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23-Dec-23 Fundamental & Technical Insight.pdf
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Global Market – Rewind 2023 – Part 1

Global Market – Review of 2023

Today we will focus on few important events and article covered in 2023.  We will start with our first article for 2023, we focus on gold which was seen in a win-win situation at start of 2023.  We will cover key global events in last 12 months of 2023

January 2023

• China re-opens its economic from 8-Jan-23 after strict COVID restriction for past 3-years.  EURO zone inflation back to single digit @ 9.2%.
• Gold @ $1867 in January 2023 in a win-win situation?  After 2023, we can say Gold as asset class which has seen positive result for 2023 till date.

February 2023

• US Fed hikes rate by 25-bps to 4.50% to 4.75% on 1-Feb-23 and guided for more rate hike in 2023.
• Bank Of England raises rates by 50-bps to 4.00%, this brings interest rate by BOE to highest level since 2008.
• Russia plans to cut oil output by 500,000 bpd from March 2023.  German yield @ 2.34% highest level seen since 2008.

March 2023

• Silicon Valley Bank: first of few banks to fall his year, regulator shuts down SVB financial group and appoint FDIC.
• US regional bank (FRC) First Republic Bank – Big U.S. banks bail-out by depositing $30 billion.
• ECB hikes rate by 50-bps to 3.50%, highest interest rate since October 2008 and refrain from giving future guidance on interest rate.

April 2023

• OPEC+ nations announce surprise production cut from 1-May-23.  Production cut announced by OPEC + nations starting from 1-May-23 till end of the year is at 1.6 million barrels per day.  
• Corporate earnings for IT major in US help to improve sentiment.  META was up by 13.93% in April 2023 – reacting to its result.
• MICROSOFT & ALPHABET – manage to beat market estimate and improve market sentiment.

May 2023

• US Fed raises rates by 25-bps in meeting held on 3-May-23.  Policy statement soften the rate guidance indicating likely pause after May 2023 meeting outcome.
• US Fed on debt ceiling limit: no one should assume the fed can protect the economy from a failure to pay bills on time, economic consequences ‘highly uncertain’ if no debt deal.

Equichain Wealth Advisors: Market View & Opinion

In today’s article we have covered key events and central banks policy change, where we have seen many flip-flops and now when we look back at the events and how we have seen market then and now when global market is trading at life-time high, we might feel at the missed opportunity.

In next week, last article for 2023 – we will cover from June 2023 to December 2023 and we expect global indices to close 2023 at highest level.

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Global Market – Rewind 2023 – Part 1.pdf
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