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Daily Reports

Daily Report 14-Jun-23

Wall Street had another positive session after CPI came @ 4.0% Vs estimate of 4.1%.  U.S. Core CPI rises to 5.3% in May lowest since November 2021.

US Fed meeting tonight is now factoring in 95% probability of pause after CPI & Core CPI data came in-line with estimate.  US Fed chair Jerome Powell post policy press conference will be key event.

FMCG & defensives stocks continue to lead the Indices higher as Banks & IT stocks see some profit booking.  Mid-cap & Small-cap stocks continue to outperform.

VIX @ 11.11: surprisingly low, any increase in VIX needs to watch-out.

Approach on Indices: With Nifty is less than 170 points away from lifetime high at 18887, expected to test.  Banknifty likely to test 44965 as Banknifty likely to react to US Fed news.  Indices remain in uptrend till Nifty is above 18458 & Banknifty above 43552.  

Market View: We are going into event with indices near all time high, even if indices move higher, we would continue to reduce exposure on higher level.  In near term – even if US Fed decision comes favourable in-line with market expectation – we expect profit booking.

SGX Nifty @ 18830.50 up 45.50 points at 8:35 AM

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Daily Reports

Daily Report 13-Jun-23

India’s CPI for May came at 4.25% as compared to 4.7% in April and against estimate of 4.31%.  IIP data for April 2023 came at 4.2% as compared to revise growth of 1.7% in March 2023.

Wall Street closes strong, S&P 500 and Nasdaq close at highest since April 2022.  Oracle hit record high ahead of quarterly results as investor awaits inflation data & US Fed interest rate decision.

US CPI & Core CPI inflation data due today ahead of US Fed meeting outcome tomorrow.  Wall Street going into event with positive trend as market trade near April 2022 highs.

F&O data: FII covered short & net addition in long position by 10481 contracts, FII long: short position stands at 49.29%:50.71%.  Nifty PCR @ 0.92 Vs 0.84 previous.

Approach on Indices: SGX Nifty indicate around 40 – 50 points higher on positive global cues & lower CPI inflation data.  Nifty could test around 18700 & Banknifty around 44360 before an important US CPI & Core CPI data.  Indices remain in uptrend till Nifty @ 18458 & Banknifty @ 43552 holds and set to make fresh new high.

SGX Nifty @ 18751 up 52.50 points at 8:10 AM

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Weekly Reports

10-Jun-23 Technical & Fundalmental Insight

Last week – review

Indices remain flat for this week after less volatile session in narrow range, we expected indices to given clear directional move, but failed.  RBI MPC kept repo rate unchanged at 6.50% and maintain its stance as “Withdrawal of Accommodation”.  Reaction to monitory policy & post policy press conference was weak and Banknifty corrected on Thursday.

Technical Insight

• Nifty RSI @ 59.85 & RSI average @ 64.65.  RSI after testing 70 level this week again turned negative, Nifty immediate support at 18508 & 18458 would be important resistance comes at 18777.

• Banknifty RSI @ 56.23 & RSI average @ 59.65.  Banknifty trade in very narrow range in this week where RBI MPC event was there.

Approach on Technical: Indices failed to build on momentum could be considered as negative in near term.  RSI & RSI average on Nifty & Banknifty indicates further consolidation.

Nifty below 18458 & Banknifty below 43552 – needs to be turn cautious.  Indices continue to trade near its lifetime high, could expect another round of up move if supported by momentum.  Nifty above 18666 & Banknifty above 44360 could open upside up to Nifty @ 18965 & Banknifty @ 44959.

Fundamental Insight

1) RBI MPC Keeps Repo Rate Unchanged; Inflation Still Above Target, Says Das
2) RBI Monetary Policy: Banking System Liquidity Appears To Be Skewed, Says RBI Governor
3) Southwest Monsoon Arrives In Kerala: IMD
4) World Bank Trims India’s GDP Growth Forecast To 6.3% In FY24
5) India Likely To Stick To The Market Borrowing Plan For FY24

Equichain Wealth Advisors – Market View & Strategy

Last weeks narrow movement has turned as cautious again, however we continue to remain positive on market going into US Fed meeting on 14-Jun-23, ECB meeting on 15-Jun-23 & BOJ meeting on 16-Jun-23.  

Our strategy this week is to wait for better clarity as we expect increase in volatility ahead of event and on reaction to event.  US Fed is expected to pause, post meeting press conference will be key.

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Research Report

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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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.