Brent crude is now below 80$ per barrel. This news can be taken positively by those companies whose raw material is dependent on crude oil prices like paints, OMCs, Tyres, Chemicals, etc. This is good news for our economy as well as it helps us reduce our import bill and help us with the Current account deficit (CAD)
But does that mean, markets will also go up? Not necessarily true. Historically, crude and equity have had a positive correlation most of the time as both are proxies for global risk-on environment (higher the prices, higher the risk appetite)
News to keep on track for the auto industry. The entry of Tesla will likely result in lots of changes in the industry.
US markets were stable till the 24 billion dollar auction started. It received far less demand from investors than usual - Banks and other big dealers had to up their purchases.
This is clearly an indication that bond market participants are still not fully convinced about inflation and are not willing to subscribe to auctions at these rates and that turned the equity markets negative.
Global equity markets are most likely to react to this news today which came over the weekend after a very strong close by US markets last week.
Even a small baccha knows how US debt is ballooning and how rising inflation and rates are making things worse. But, everyone are counting (rightfully for now!) on the reserve currency status of the Dollar. They will inflation away their debt is what experts say. But for how long is it tenable needs to be seen.
More or less flat, Most of the participants are likely to be in a long weekend mood. My guess is we may have drier volumes than usual today. not that it affects the trading scene in any way btw.
US inflation data was softer than expected and with markets already being strong technically from last week went up massively with the US Small cap index surging more than 5% to have its best day in a year while Dow and Nasdaq were up nearly 2%.
The Dollar Index has given a decisive breakdown as it fell nearly 1.5% to close below 104 levels while US 10-year yields closed lower by nearly 3.5% to close near 4.44%. It has fallen by more than 0.6% in absolute terms in a month.
Gift Nifty is indicating a gap up of more than 200 points compared to the previous day’s future close of 19497
RBI’s measures against consumer credit and bank credit to NBFCs
My view: Tough for Banks and NBFCs which are into risky lending but an extremely proactive move that more or less does an impact of 2 rate hikes in terms of tightening financial conditions.
consumer credit (other than housing, vehicle, gold, edu, and MFI loans) see an increase in risk weight to 125% from 100% - Basically, RBI is cautioning the banks to lend responsibly and has tightened the screws by increasing the capital requirements for banks if banks want to do risky unsecured lending especially the personal loans and credit cards which are seeing an unprecedented boom.
Double whammy for NBFCs and new fintechs, as the same thing applies to NBFCs which not only increases the capital requirements while lending but even their borrowing costs are gonna go up as Bank’s credit to NBFCs as well, will require banks to keep higher risk weightage by 25%
Deepak Shenoy has explained this in detail in the following tweet thread
Gift Nifty is indicating a 40-50 point gapdown but I assume today things are going to be more interesting in the morning as all the financials will most likely see an impact with yesterday’s news .
With unemployment data in US coming in worse than expected, Oil fell nearly 4-5% to close near 77$ for Brent and 72.5$ per barrel for WTI crude on fears of sanctions between US and China and most importantly, lower demand and recessionary fears. Now suddenly, it’s the fear of deflation !!! Markets are funny
Over the weekend, there was news about Sam Altman being ousted as CEO of Open AI where Microsoft is the one of the biggest investors, some action in some of the tech heavyweights in NASDAQ is possible.
Brent crude surged 4.5% to reclaim 80$ per barrel levels on news of further production cuts from Saudi and Russia and probably, short covering after a good 10% fall over the last couple of weeks.
Overall, it is a narrow rangebound market for now. Will incorporate more data points and triggers in the daily market brief.
Markets are slated to open 250-300 points higher from the previous closing due to a combination of both local and global factors.
The most important factor being, the thumping victory of the BJP in 2 major states and also winning Chhatisgarh which drastically brings down the political risks in 2024. The market kind of was going with the base assumption that the current ruling party would continue even after 2024, but any clues that make this assumption stronger will most likely be cheered by the market due to various factors like political stability, higher capex, necessity for more freebies, etc which affect fiscal prudence.
Dow Jones hit fresh highs after the Fed chairman indicated indirectly that the fed may be done hiking.
Gold has hit fresh highs after crossing $2100 for the first time. it has spiked nearly 5% in the last week.
There’s also news about escalation at Red Sea as US warships encounter an attack from the Houthi group.
Both global and Indian markets have rallied by more than 1500-1700 points in the last 30-35 days which is nearly pretty significant. While the base assumption that there will be a secular bull run over the medium term is extremely fair, the ride will never be easy when there is consensus in the market. Currently, the consensus across the board is mad bull run in Indian markets. I think it’s time to be slightly alert and focus on cleaning up any questionable stocks in the portfolio instead of going all in.
With FII money coming back after a long time, There is a possibility that their favorite large caps that have not participated in the rally may start doing well.