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Global Market – Focus shift to central banks – US Fed, ECB & BOJ

Global Market – Focus shift to Central banks – US Fed, ECB & BOJ

This week, we will discuss how the focus will shift back to central banks as 3 central banks are schedule to meet this week and take decision on interest rate.  Inflation still remains major concern of all these central banks as they continue to focus on their long-term target on inflation at 2%.  We will discuss what market expectation is from this central bank outcome.

US Fed meeting on 14-Jun-23

• US Fed expected to pause on 14-Jun-23, to take breather after more than a year.
• US Fed chair Jerome Powell signaled after May 2023 US Fed meeting.
• Recent hike in interest rate cycle is the most aggressive rate hike, U.S. Fed has hike rates in every meeting since March 2022.

US fed chair Jerome Powell commentary after meeting outcome will be key event market will be watching out for.  Any comment which will mean that further rate hike could be expected after a pause would be negative.

Bank of Japan meeting on 16-Jun-23

• Bank of Japan may keep interest rate at -0.10%, maintain interest rate at ultra-low rate.
• BOJ to make no tweaks to yield control policy
• Board to maintain forecast of moderate economic recovery
• BOJ may lay groundwork for July upgrade in price forecasts
• Gov Ueda to hold briefing after policy meeting

BOJ may signal robust recovery as robust corporate and house hold spending cushion the blow from slowing oversea demand.  BOJ may also signal that inflation is overshooting its forecast.

Equichain Wealth Advisors: Market View & Opinion

This week focus will shift back to central banks, and market would focus on commentary from US Fed and BOJ.  There is major surprise expectation from ECB as market expectation another hike & temporary pause.

US Fed chair Jerome Powell post meeting press conference will be important as market as already factored in pause from U.S. Fed.  U.S. CPI & Core CPI inflation data are due on 13-Jun-23 and U.S. fed policy outcome on 14-Jun-23.  Comment from BOJ will also be important if there is any change in JGB yield curve or any change in policy would be negative.

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Global Market – Focus shift to central banks – US Fed, ECB & BOJ.pdf
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Daily Reports

Daily Report 9-Jun-23

RBI kept repo rate unchanged at 6.50%.  Governor Das: Inflation still above target.  RBI MPC maintain stance – Withdrawal of Accommodation.

Wall Street gained as tech stocks led the rally as Dollar index cooled-off and volatility in U.S. is below pre-COVID level.  Market now focused on U.S. inflation data and US Fed meeting next week.

RBI lowers FY24 inflation target at 5.1%, aims at 4% target.  GDP growth forecast at 6.5% for FY24.

F&O data: FII were net seller by 4542 contracts in index futures, Nifty PCR @ 1.05 Vs 1.37 previous.  Banknifty PCR @ 0.77 Vs 0.95 previous

Approach on Indices: Nifty remain in uptrend above 18619 & Banknifty could gain momentum above 44360.  Yesterday’s correction can be considered as consolidation and due to weekly option expiry.

SGX Nifty @ 18755 up 34.50 points at 8:15 AM

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9-Jun-23 Daily-Report.pdf
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Daily Reports

Daily Report 8-Jun-23

Wall Street ended mix as market looks forward for US Fed meeting and CPI & Core CPI inflation data next week.  Fed fund rate monitor tool indicate 66.8% probability of pause.

RBI MPC meeting outcome today at 10:00 AM: – Market expecting another pause today, any change in stance from withdrawal of accommodation or relaxation in CRR could provide positive trigger.

Defense stocks continue to remain in focus ahead of PM Modi’s visit to U.S.  HAL & GE defense deal could benefit 600 MSME.

F&O data: FII bought 8579 contracts in index futures, Nifty PCR @ 1.37 Vs 1.01 previous.  Banknifty PCR @ 0.95 Vs 0.97 previous.

Approach on Indices: Nifty giving clear break-out is heading towards fresh life-time high of 18887.  Banknifty is expected to take decisive move after today’s policy

Market View: Stocks & sectors leading are changing fast, we see typical move where tail end of the stocks is showing huge rally which market usually witness in last leg of rally before formation of top.  Just need to keep close look on any sign of trend reversal.

SGX Nifty @ 18832 up 20 points at 8:10 AM

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8-Jun-23 Daily-Report.pdf
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Daily Reports

Daily Report 7-Jun-23

Wall Street had another flat session, as market awaits US CPI & Core CPI data next week ahead of US Fed meeting on 14-Jun-23.

India’s GDP growth for FY24 is seen at 6.3% as compared with a previous estimate of 6.6% in January, according to its latest Global Economic Prospects report.

HAL gets in-principle nod for deal with GE to make engines in India: Sources.  Deal likely to get signed when PM visit U.S. later in June.

F&O data: FII were net seller by 10457 contracts, now FII have turned net short with 46.19%:53.81 long: short exposure.  

Approach on Indices: Indices are seeing sideways consolidation and we expect positive break-out.  RBI MPC policy outcome tomorrow morning will provide directional move.

Market View: Defense stocks were in focus, news of HAL deal with GE, Mid-cap & Small-cap will continue to remain in focus as it could benefit 600 MSME companies.  Broader market will take directional move only after RBI MPC decision.

SGX Nifty @ 18704 up 25 points at 8:35 AM

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7-Jun-23 Daily-Report.pdf
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Daily Report 6-Jun-23

Wall Street seen some profit booking on ISM services PMI data which came below estimate at 50.3 – indicates flat.  Crude oil gave up some of the gains made after OPEC+ nations production cut announcement.

Defense stocks were flying all around as we see HDFC defense NFO funds getting deployed.  M&M, AXISBANK & TATAMOTORS were major gainers on Nifty 50, while DIVISLAB, ASIANPAINT & TECHM witness some profit booking.

IT stocks ADR were under pressure on NASDAQ, INFY ADR down by 2.53% & WIPRO ADR down by 2.63%.

F&O data: FII were net buyer by 7448 contracts in index futures, Nifty PCR @ 1.00 Vs 0.95 previous.  Banknifty PCR @ 0.87 Vs 0.80 previous.

Approach on Indices: Nifty above 18619 & Banknifty above 44360 could be considered as fresh positive trigger, Nifty @ 18458 & Banknifty @ 43781 to act as support level.

Market View: We would position our self for a potential rally only on some positive news flow and trigger by global cues or RBI MPC event on 8-Jun-23.  Banknifty could lead next round of rally.

SGX Nifty @ 18703 down 22 points at 8:25 AM

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6-Jun-23 Daily-Report.pdf
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Daily Report 5-Jun-23

Wall Street had massive rally on Friday as DOW30 rallied over 2%, S&P500 was up 1.45% & NASDAQ up by 1.07%.  U.S. debt deal and strong jobs data provided much needed trigger for Friday’s rally.

OPEC+ nations decided another cut in crude oil production, SAUDI ARABIA to make additional cut of 1 million barrels per day as part of new OPEC+ deal.

RBI Weekly bulletin: Deposit growth at 10.9% & Credit growth comes at 15.4% for fortnightly 19-May-23.

F&O data: FII added 4979 contracts in index futures, net long: short remain at 47.55%:52.45%.  Nifty PCR @ 0.95 Vs 1.00 previous.  Banknifty PCR @ 0.80 Vs 0.76 previous.

Approach on indices: SGX Nifty indicate opening on Nifty spot around 18619 & Banknifty around 44360, we expect another round of rally and indices to test higher levels this week.

SGX Nifty @ 18725.50 up 96.50 points at 8:20 AM

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5-Jun-23 Daily-Report.pdf
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Weekly Reports

3-Jun-23 Technical & Fundamental Insight

Last week – review

Indices on weekly basis closed flat and traded in narrow range, momentum seen in Mid-cap & small-cap and ended the week with minor gains.  We went into trade with a view that any rally to be utilized for reducing the exposure and incase of any correction will deploy fund which is currently available.

Technical Insight

• Nifty RSI @ 63.88 & RSI average @ 64.87.  Nifty extension of rally from 17553 to 18458 & retracement to 18060 – extension of rally to test 18619 & 18965.
• Banknifty RSI @57.72 & RSI average @ 61.88.  Banknifty closing at 43937 on Friday around 44018 – previous Friday’s level.

Approach on Technical: We will start our view on technical based on indicative opening of SGX which will be around 80 – 100 points higher compared to Friday’s closing.

Nifty @ 18458 & Banknifty @ 43552 will act as support level for uptrend to remain positive, Indices are heading higher on Nifty towards 18965 & Banknifty towards 44959.  

Fundamental Insight

1) GST Collections Grow 12% To Rs 1.57 Lakh Crore in May
2) Forex Reserves Decline for Second Week To $589.14 Billion
3) India’s GDP Grows Faster Than Expected At 6.1% In Q4, 7.2% In FY23
4) India Restricts Fiscal Deficit to Targeted 6.4% Of GDP In FY23
5) Bank Credit to Industry Decelerates in April to 7%: Reserve Bank Of India
6) Core Sector Growth Flat in April

Equichain Wealth: Market View & Strategy

RBI MPC meeting on 8-Jun-23, with previous inflation data well below 6% and within comfortable range, market participant expected to announce pause and maintain its stance – “Withdrawal of accommodation”.  RBI may change norms for CRR which could be beneficial for Banks, we expect banks to have another round of rally.

Going into trade this week, we remain positive and expecting momentum to accelerate supported by pause in interest rate by RBI on 8-Jun-23 & US Fed on 14-Jun-23.   We will position our self with bullish view and may deploy fund fully before event or post event.  We expect huge market swings with a positive bias as Nifty may soon test new life time high and Banknifty toward 45000 level.

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3-Jun-23 Fundamental & Technical Insight.pdf
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Research Report

Global Market – U.S. debt deal & suspends debt ceiling till 1-Jan-25

Global Market – U.S. debt deal – suspends debt ceiling till 1-Jan-25

This week we will discuss the U.S. debt deal details as it suspends debt ceiling limit till next U.S. presidential election, but it comes with certain curbs on spending and restriction.  Prime facie deal looks well balance – we do believe it another round of monitory expansion.

U.S. debt deal details

• Deal would suspend the $31.4 trillion debt ceiling until Jan. 1, 2025, allowing the U.S. government to pay its bills.
• 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.

Relief for U.S. Presidential election 2024

• The debt limit extension lasts past 2024, meaning Congress would not need to address the deeply polarizing issue again until after the November 2024 presidential election.
• Still, tough conversations about how to allocate money under the new spending caps will need to take place in Congress this year.

Biden and McCarthy agreed to claw back much of the unused COVID relief funds as part of the budget deal. The estimated amount of unused funds is between $50 billion and $70 billion.

Equichain Wealth Advisors: Market View & Opinion

We expect current U.S. deal could have very limited impact in near term, we see this as yet another round of monitory expansion in a gradual manner.  Incoming U.S. economic data would be very important in near term ahead of US Fed meeting on 14-Jun-23.

We see current U.S. debt deal & likely pause by US Fed on 14-Jun-23 would have huge positive impact of risk-on sentiment and big rally is not ruled out.  Another hike of 25-bps by US Fed could change the matrix and probability of rally or change in risk-on sentiment.  So now US Fed meeting on 14-Jun-23 becomes a very important event for global market.

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Global Market – U.S. debt – suspends debt ceiling limit till 1-Jan-25.pdf
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Daily Reports

Daily Report 2-Jun-23

Indian market witness late pressure due to weekly options expiry as Banknifty took major dip below 44000 to close 43790.  Auto stocks were mostly on positive side ahead of monthly sales data.

Wall Street Nasdaq and S&P 500 surged to nine-month closing highs on Thursday as signs of slowing wage pressure raised hopes the Federal Reserve will pause hiking interest rates and investors cheered a vote in Congress to suspend the U.S. debt ceiling.

GST collections in May for transactions in April stood at Rs 1,57,090 crore, an increase of 12% over a year earlier, according to data released by the Ministry of Finance on Thursday.

F&O data: FII continue to unwind long position & add short position & net short by 22693 contracts in index futures.  

Approach on Indices: Indices indicate gap-up opening of around 70 – 80 points, likely to recover last hour fall seen yesterday.  Nifty @ 18619 & Banknifty @ 44360 will act as resistance / target level.

SGX Nifty @ 18640.50 up 77 points at 8:30 AM

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2-Jun-23 Daily-Report.pdf
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Daily Report 01-Jun-23

GDP is estimated to have grown 7.2%, according to the second advance estimates of national income, as compared with 9.1% in FY22.

US debt ceiling bill passes House with broad bipartisan support.  Wall Street ended with minor cuts as fear on interest rate hike continues.  US debt deal need to be passed through senate before 5-Jun-23.

Adani To Raise $3.5 Billion From Share Sale, in three Group Companies.  ADANIENT, ADANITRANS & ADANIGREEN in focus.

F&O data: FII were net seller by 21752 contracts in index futures.  Nifty PCR @ 0.99 Vs 1.32 previous.  Banknifty PCR @ 0.82 Vs 1.22 previous.  

Approach on Indices: Technical indicates indices have satisfied near term correction requirement, weekly index options expiry today – Nifty range seen between 18500 – 18600 & Banknifty range seen 44000 – 44300 with positive bias.

SGX Nifty @ 18606.50 down 57.50 points at 8:20 AM

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1-Jun-23 Daily-Report.pdf
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