Asian shares traded mixed on early Wednesday following an overnight drop in US stocks. For India, while SGX Nifty futures hinted at a positive start, technical charts suggested that Nifty50 is stretched and could face resistance at 14,000 level.

Here’s breaking down the pre-market actions:

STATE OF THE MARKETS

SGX Nifty signals positive start
Nifty futures on the Singapore Exchange traded 45 points, or 0.33 per cent, higher at 14,042.50, in signs that Dalal Street was headed for a positive start on Wednesday.

Tech View: Nifty forms Doji candle
Aditya Agarwala of YES Securities said a sustained trade above the 13,950-13,975 zone will extend the gains and take Nifty higher to 14,050, which happen to be the upper end of a crucial rising channel formed by joining major highs and lows after the March selloff. He sees support for the index at 13,850.

Asian shares pause recent rally
Asian shares retreated as investors cashed in on a recent rally, while the euro flirted with highs not seen in more than 2-1/2 years on as hopes of a gradual global economic recovery supported demand for riskier currencies. Australian shares lost 0.79 per cent while Japan’s Nikkei declined 0.63 per cent after jumping to a 30-year high on Tuesday. Hong Kong’s Hang Seng was up 0.8 per cent, however, while E-Mini futures for the S&P500 were little changed.

Oil rises on hopes of recovery in fuel demand

Oil prices gained more ground on Wednesday as a US coronavirus fiscal aid package and expectations of global economic recovery lifted hopes for higher fuel demand. US West Texas Intermediate (WTI) crude futures rose 27 cents, or 0.6 per cent, to $48.27 a barrel, while Brent crude futures added 24 cents, or 0.5 per cent, to $51.33 a barrel.

US stocks settled lower

Stocks closed modestly lower on Wall Street Tuesday as investors turned cautious a day after major indexes closed at their latest record highs. The S&P 500 fell 8.32 points, or 0.2 per cent, to 3,727.04. The Dow Jones Industrial Average dropped 68.30 points, or 0.2 per cent, to 30,335.67. The tech-heavy Nasdaq slid 49.20 points, or 0.4 per cent, to 12,850.22. The Russell 2000 gave up 36.89 points to 1,959.36.

FIIs buy Rs 2,350 cr worth of stocks

Net-net, foreign portfolio investors (FPIs) were buyers of domestic stocks to the tune of Rs 2,349.53 crore, data available with NSE suggested. DIIs were net sellers to the tune of Rs 2,010.50 crore, data suggests.

MONEY MARKETS

Rupee: Rising for the fourth straight session, the rupee appreciated by 7 paise to close at 73.42 against the US dollar, amid heavy buying in domestic equities and unabated foreign fund inflows. A weaker greenback in the overseas markets also supported the rupee, forex dealers said.

10-year bonds: India 10-year bond yield rose 0.03 per cent to 5.92 after trading in 5.92-5.93 range.

Call rates: The overnight call money rate weighted average stood at 3.2 per cent, according to RBI data. It moved in a range of 1.9-3.5 per cent.


EVENTS/DATA TO WATCH

  • UK Nationwide Housing Prices YoY Dec (12:30 pm)
  • UK Nationwide Housing Prices MoM Dec (12:30 pm)
  • US MBA Mortgage Applications 25/Dec (05:30 pm)
  • US Goods Trade Balance Adv Nov (07:00 pm)
  • US Wholesale Inventories MoM Adv Nov (07:00 pm)
  • US Chicago PMI Dec (07:15 pm)
  • US Pending Home Sales YoY Nov (08:30 pm)
  • US EIA Crude Oil Stocks Change 25/Dec (09:00 pm)

MACROS

Banks face higher NPA risks… India’s financial sector should brace for challenging times ahead with an increased risk of deterioration in asset quality and lower demand for loans, RBI said in a report on Tuesday. The performance of the Indian banking sector improved in fiscal 2020, when lenders reported a profit on an aggregate basis after two years of losses, the central bank said in its yearly assessment report. The banking system’s bad loans fell and capital buffer improved, but banks need to be vigilant about competition from nimbler tech rivals, RBI said.

Banks need ₹1L cr for NPAs… RBI has said banks will need additional capital of up to one and a half percentage points of risk-weighted assets in its assessment of the impact of Covid-19 on lenders. Given that total bank loans are around Rs 104 lakh crore, the capital requirement would be more than Rs 1 lakh crore. “Preliminary estimates suggested that potential recapitalisation requirements for meeting regulatory purposes as well as for growth capital may be to the extent of 150 basis points (100bps = 1 percentage point) of the common equity tier I (CET I) ratio for the banking system,” the central bank said in a report

Farmers-govt talks today… Ahead of their next round of talks with the Centre on Wednesday, farm unions opposed to the new agri laws revised one of their four demands — replacing “necessary changes” to the proposed electricity amendment bill with a call to repeal it. In a letter to the government while accepting its invitation for the seventh round of talks, the 40 agitating unions on Tuesday claimed their earlier stance over the electricity bill was due to a “mistake”.

Strong IT recovery seen in Q3… The improvement that IT companies have been seeing after the slump in the June quarter is expected to continue in the December quarter and after. Accenture, which follows a September-August financial year, recently announced the first quarter results for fiscal year 2021 that lifted its share price by 7%. The company also revised its revenue guidance for the fiscal to 4-6%, from its previously stated 2-5%, reflecting accelerated spends in digital, cloud and security.

Loan recast estimates lowered… With the loan restructuring window coming to a close, analysts are cutting the estimates on loan recast by banks to 2.5-4.5% of their total advances from the previously projected 6-8%. Analysts are also forecasting lower credit provisions and better profitability for banks in the next fiscal year starting April 1, on the back of improved asset quality with a quick economic turnaround.

NBFCs brace for impact on profit … Profitability of NBFCs may be impacted due to loan impairment, lower credit demand and a tendency to preserve cash, Reserve Bank of India said in its report on Trends and Progress of Banking in India. The stronger and the deposit-taking NBFCs may, however, fare better as many have reported strong revival in disbursements and collections, almost to pre-Covid levels, the regulator observed.

Onion prices surge 28%… Onion prices have increased by almost 28% in leading wholesale markets a day after the government announced lifting of the ban on exports from January 1, and traders said the move will support prices even as the kharif harvest season has started. “The prices will continue to remain firm with the pickup in exports,” Nanduseth Dhaga, president of Lasalgaon Traders Association, said. Onion prices reached Rs 23 a kg in Lasalgaon APMC on Tuesday, up from Rs 18 a kg the previous day, he said. The government had banned exports in September this year as prices were rising after a low harvest

Tata Sons to buy out Air Asia stake… Tata Sons will buy 32.67% of AirAsia Berhad’s stake in the Indian joint venture AirAsia India, giving the group complete freedom to make it the vehicle for its upcoming Air India bid. Tata’s stake in AirAsia India will rise to 83.67% while the Malaysian carrier’s stake will drop to 16.33%. The deal was done for $37.6 million (Rs 275.9 crore). Tata Sons can exercise a call option for the remaining stake any time after the transaction, which is slated to be completed by March 2021.





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