Month: March 2023

US Stocks: Wall Street set for muted open after rout

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Wall Street was set for a subdued open on Wednesday following a sharp selloff in the previous session after red-hot inflation data fanned worries about how much and how long the Federal Reserve will hike interest rates.

The three major indexes on Tuesday posted their biggest one-day percentage declines since June 2020, as the consumer price report cemented bets that the U.S. central bank will go ahead with its third straight 75 basis points increase in rates next week.

In the latest data, monthly U.S. producer prices dipped 0.1% in August, while it rose 8.7% year-on-year in August from 9.8% in July. Economists polled by Reuters had forecast the PPI edging up 0.1% and increasing 8.8% year-on-year.

Excluding the volatile food, energy and trade services components, core producer prices rose by higher-than-expected 7.3%. Markets are now likely to look forward to the monthly retail sales data on Thursday.

“After yesterday’s sell-off, just about anything would be welcome. And what we see is that the producer price index numbers came in pretty much as expected,” said Hugh Johnson, chief economist of Hugh Johnson Economics in Albany, New York.

Also Read: US equities slump after US inflation falls to 8.3%

“It’s fairly clear now that they’re (Fed) going to raise interest rates by 75 basis points at the September meeting. The expectation is for 50 basis point rate hike in November and maybe another 25 in December.”

Stocks had rallied ahead of the inflation data as easing commodity prices, especially oil, had raised hopes the Fed would scale back its aggressive policy tightening even as policymakers reiterated their determination to bring inflation to their 2% target through rate hikes.

Growing expectations for a more hawkish Fed are an unwelcome development for a market already contending with worries that the central bank’s efforts to tame inflation could tip the economy into a recession.

September, which is a seasonally-weak period for markets, will also see the Fed ramp up the unwinding of its balance sheet to $95 billion per month, a move some investors worry may add volatility in markets and weigh on the economy.

“With the federal funds rate poised to be above 3% after next week’s meeting and QT running at full speed, Fed officials may finally start to feel that the pace of tightening can moderate in Q4 and beyond,” Wells Fargo economists wrote in a note.

“That said, there is a big difference between slowing the pace of tightening and a full-blown policy pivot.”

At 8:40 a.m. ET, Dow e-minis were up 50 points, or 0.16%, S&P 500 e-minis were up 11 points, or 0.28%, and Nasdaq 100 e-minis were up 42.5 points, or 0.35%.The CBOE volatility index, also known as Wall Street’s fear gauge, rose to 27.18 points, inching closer to a two-month high hit on Tuesday.

Rate-sensitive shares of technology and growth companies such as Tesla Inc, Apple Inc, Amazon.com , Meta Platforms, Alphabet Inc and Microsoft Corp were mixed in premarket trading after leading declines on Tuesday.

Honor says its new Magic 6 phone will let you open apps with your eyes

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Generative AI has become a prominent topic of discussion, with continuous advancements emerging on a daily basis. Today, we witness new breakthroughs in this field regularly. Now, Honor is elevating this technology to a new level with its innovative Magic 6.

Honor CEO George Zhao at Qualcomm’s 2023 Snapdragon Summit announced that its Magic 6 smartphone will feature eye-tracking technology, which will allow users to open apps and perform other actions using only their eyes. The company calls this technology “Magic Capsule,” and it is described as an “eye-tracking based multimodal interaction” feature.

ALSO READ l Honor Magic VS2 with Snapdragon 8+ Gen 1 launched, shipping expected from Oct 17

The use of eye-tracking technology in smartphones is not entirely new. In 2018, Samsung released the Galaxy S9 with an eye-tracking feature called Iris Scanner, which allowed users to unlock their phone and authenticate payments with their eyes.

Honor is the first company to announce a smartphone with eye-tracking technology that is specifically designed for interacting with apps and features. If Magic Capsule is successful, it could change the way we interact with our smartphones. Magic 6 smartphone will also have a virtual assistant powered by Qualcomm’s on-device AI. It can help you find and edit videos on your device by selecting specific criteria.

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Buy TCS, Infosys for near-term gains, charts show upside potential for these four IT stocks

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By Manish Hathiramani

The Nifty has been moving from strength to greater strength and continues to project a strong momentum going forward. While short term corrections and profit booking phases cannot be ruled out, the overall trend remains bullish. We just witnessed a sharp correction a couple of days back where from a high of 13777 the Nifty made a low of 13131. This has not changed the macro trend and one can still find stocks worth investing in. I have shortlisted a few stocks within the IT pack which in my opinion still have steam left and can propel the index further.

TCS: It was imperative for this stock to get past 2450 on a closing basis for an investment buy which it did with complete ease. The stock continues to remain in the hands of the bulls and we should endeavor a short term target of 3000 with a stop loss of 2800. From an investment perspective, the target would be 3200 with a stop loss of 2600.

HCL TECH: The level of 800 was a good support point for this stock and we were able to bounce from there rather quickly and in a span of 4-5 weeks we are trading above 900. There is still a lot of steam left and we could project a target of 1070-1100 and place a stop loss at 795.

WIPRO: This stock has a similar chartical structure to HCL TECH. The resistance level was 290 which the stock flew out of and achieved 370-380 in just 3-4 weeks. We are headed higher and can trade for a target of 420 and a stop can be placed at 310.

(Manish Hathiramani is a proprietary index trader and technical analyst at Deen Dayal Investments. Views expressed are the author’s own. Please consult your financial advisor before investing.)

Bond yields seen tad lower on marginal borrowing cut; RBI decision key

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Indian government bond yields are expected to open marginally lower on Friday, after New Delhi slightly trimmed its planned borrowing, although the Reserve Bank of India’s (RBI) policy decision due later in the day would dictate further moves. The benchmark Indian 10-year government bond yield is seen in a 7.31%-7.36% band until the monetary policy decision due at 0430 GMT, a trader with a private bank said. The yield ended at 7.3405% on Thursday. B

India has cut its gross borrowing to 14.21 trillion Indian rupees ($174.41 billion) from 14.31 trillion rupees for 2022/23, and aims to borrow 5.92 trillion rupees during October-March, compared with 8.29 trillion rupees in the first half of the fiscal year. Supplies during October-March would also include 160 billion rupees of green bonds.

Also read| RBI Monetary Policy LIVE: MPC likely to hike repo rate by 50 bps; may cut growth forecast

“There should be a marginal impact of lower borrowing which also includes green bonds, but after the initial move, market will be reacting to monetary policy decision and more importantly (to) the guidance from the (RBI) Governor,” the trader said.A majority of market participants are expecting the central bank to raise its key interest rate by 50 basis points for a third consecutive time.

Also read| Share Market LIVE: Nifty, Sensex likely to open in red amid weak cues; RBI MPC eyed, 50 bps rate hike on cards

The RBI has already raised rates by 140 basis points between May and August to 5.40%, to tackle inflation that has stayed above its tolerance level for eight straight months through August.Meanwhile, global index provider FTSE Russell said, India will be retained on the watch list for a potential upgrade to Market

Accessibility Level ‘1’ and for consideration toward inclusion in the FTSE Emerging Markets Government Bond Index (EMGBI). “Though the country didn’t get added to the EMGBI, we expect the reaction in the G-Sec to be modest today as the AUM following EMGBI is small. The more consequential index decision would be JPM’s (JPMorgan) announcement,” DBS Bank said in a note.

Indian bonds yields have not reacted significantly to the recent spike in U.S. yields, as many market participants believe that an announcement regarding inclusion may happen soon. A recent Reuters said a decision may only happen in 2023.

Crude oil may fall to Rs 6500/bbl, recession, rate hike talks may weigh on oil prices; adopt sell on rise

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By Royce Vargheese Joseph

WTI Crude oil futures ended the previous week 2.34% lower and closed at $84.76 per bbl as demand concerns once again took center stage. A strong dollar also added downward pressure on energy prices as it makes commodities more expensive for buyers holding other currencies. Better than expected CPI data from the US improved the conviction of jumbo rate hikes from the Fed, inducing a demand-sapping recession. Comments regarding refilling US Strategic petroleum reserves added to the market volatility. Meanwhile, last week witnessed the most significant weekly SPR drawdown in US history, taking the emergency oil reserves to the lowest level since October 1984, as the government set a plan in March to release 1 million barrels per day over six months to tackle high fuel prices. 

Almost 8.4 million barrels of oil have been released from reserves, equivalent to 1.2 mbpd of release. Once again the momentum has picked up and this is the reason why we are seeing a rise in commercial crude inventories. On the supply side, the risk of disrupted rail shipments for crude and other products in the US amid the prospects of a labour dispute limited the downside.

Outlook: Oil might come under pressure ahead of the FOMC meeting

Crude oil has started the week on a positive note, amid reports that the Chinese city of Chengdu lifted a two-week lockdown, raising hopes of wider reopening throughout the country and boosting the demand outlook in the world’s largest crude importer. Stimulus measures are helping the recovery in China, which has been dampened by the zero covid policy and lockdowns. 

Also read: Gold Price Today, 20 Sep 2022: MCX gold falls ahead of US Fed policy decision; check support, resistance

Meanwhile, Iraq has resumed crude oil exports from Basrah oil terminal after an oil spill that occurred late 15th September halted loadings from the facility, curbing some 1 million b/d of exports from OPEC’s second biggest producer. Global oil consumption is being threatened by a darkening economic outlook. A hawkish US Federal Reserve, looming recession in Eurozone and China’s zero covid policy might add to demand concerns. Investors await two major central bank meetings this week – the Fed and the Bank of England. Fed is expected to deliver another jumbo-sized 75 bps hike, while BoE might go for 50 bps and raise concerns of a recession. Talks of recession and aggressive rate hikes might weigh down on oil demand and prices. We recommend a sell on rise strategy and expect prices to decline towards Rs.6,500 per bbl for the week. A bounce back could be seen in the event of a less hawkish Fed. 

(Royce Vargheese Joseph is a Research Analyst, Commodity at Anand Rathi. The views expressed are the author’s own. Please consult your financial advisor before investing.)

MCX crude oil Oct futures: Wait for crude to cross Rs 7,150/bbl; check key levels to watchout for next week

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By Bhavik Patel

US Fed’s commitment to keeping inflation under control was reiterated by the Fed chairman on the 21st Sept and the market was surprised by the bullish tone. Fed had predicted an interest rate of 4.4% by 2022 and 4.6% by 2023 which was more than what the market had anticipated. The market was looking at 4-4.25% by end of 2022 and this spooked the market with investors flocking to safe-haven US dollars. Oil prices in return slid as US Dollar got stronger. Oil prices were already trending down prior to the meeting. The rate hike sank them further. In this same week, before the FOMC meeting, crude got a boost after Russian President Vladimir Putin ordered a partial mobilization of troops that could signal an escalation of the war. This will be the first mobilization called since World War II.

Crude is hanging in the balance with negative and positive news on both sides. The interest rate hike is making the USD stronger and aggressive rate hikes will push the biggest economy into recession. US and China are the biggest consumers of oil and so prices are facing resistance. Until now it was the Chinese covid lockdown which was keeping prices checked but now recession fears are helping bears to control the price. On the other side, the positive news is that OPEC+ is already under-producing and the expected surplus this year will not be significant. Also, there is an increase in demand from China after the ease of lockdown. Chinese oil demand is on the mend, with several refiners planning to ramp up processing rates considerably. Europe is an obvious source of this higher demand after an embargo on Russian crude oil kicks into effect in December and an embargo on fuel imports follows in February. In anticipation of the higher demand, refiners in China expect the government to issue another fuel export quota batch for up to 15 million tons. With Natural gas prices at a record high, there are chances of crude replacing natural gas for electricity which will create additional demand.

Also read: MCX gold may give 1% return next week, rally seems to continue; support seen at Rs 48800 per 10 gm

Crude is trying to make base around 6500 in MCX Oct Fut. Below $80, OPEC and Non-OPEC won’t let the price remain for a long time and would start cutting production. So it would be unwise to short at the current position but there isn’t any technical set-up which calls for taking a long position. Since 30th August, crude is unable to cross the 20-day moving average displaying inherent weakness. We would recommend waiting for crude to cross the level of 7150 which is a recent swing high for taking a fresh long position with an expected price till 7400 and stop loss of 6600. As long as crude is in a range of 6500-6900, one can take directional trade for intraday traders but positional traders should avoid and take only once it breaches above 7150 in the Oct contract.

(Bhavik Patel is a commodity and currency analyst at Tradebulls Securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)

Gold outlook remains bullish in 2021, but may not repeat 2020 performance this year; here’s why

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By Ravindra Rao

Gold has been on a rise for the last few years and the rally exacerbated this year owing to pandemic, which forced central banks and governments to undertake unprecedented monetary and fiscal measures to support their economies. Gold surged to a record high level of near $2080/oz in August 2020. However, it witnessed a correction of about 15% reaching a low of near $1770/oz in late November, before recovering back to currently traded $1880/oz. The recent sell-off has been mainly due to profit-taking amid hopes of a COVID -19 vaccine and year-end position squaring. Although it has slightly dented market sentiment overall outlook for gold is still upbeat.

In 2020, the Indian gold demand was severely impacted, by higher prices and slower economic activity. The sector has however seen some recovery with pick up in jewellery sales near festivals. Market players are now looking at the Budget to see if the government takes any measures to boost recovery in the jewellery sector. One of the long-standing expectations of the industry is to reduce the import duty to boost retail sales. A duty cut may make the domestic gold price cheaper and this may help boost demand. Another concern of the industry is KYC norms for jewellery purchases as it may dampen demand from small buyers. E-gold has become increasingly popular in urban India but more efforts are required to increase its appeal in the rural market in the form of digital literacy and awareness.

There are also talks of a Gold Amnesty scheme, as the move will help tap on unaccounted gold while government tax revenue may increase. In the last few years, there has been an increasing emphasis on boosting gold refining in India. The government may take further measures to incentivize domestic refining.

(Ravindra Rao is VP- Head Commodity Research at Kotak Securities. The views expressed are the author’s own. Please consult your financial advisor before investing.)

Mahindra and Mahindra Rating: Buy | Mahindra unveils five new e-SUVs

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BORN ELECTRIC VISION: Mahindra had recently unveiled its Born Electric Vision, under which it will launch five electric SUVs based on the state-of-the-art INGLO platform (using Volkswagen MEB platform components). The company will be launching its products under two brand names – XUV and BE – so that it can target a wider customer base. The company envisions 25% EV penetration for its SUVs by 2027.

XUV 400: The company also unveiled its first electric SUV, the XUV400 (link ) recently. It is a C-segment SUV of 4.2m length, and comes equipped with a 39.4 kWh battery pack and torque of 310NM. The company also revealed that the EV has a range of ~456km and has the fastest acceleration in the non-luxury segment at 0-100kmph in 8.3 seconds. It will be MM’s first SUV to feature the new bronze-coloured ‘Twin Peaks’ logo in the center. Test drives for the XUV400 will start in Dec-22, with price announcement and bookings/sales starting in Jan-23.

Localisation is high, with only the cells and motor to be imported. The battery was designed by AVL and is being manufactured in MM’s Chakan plant, eBluzent has done the integration of the control units, and Valeo has provided the motor and motor controller units. ABS and suspension technologies used in the vehicle are provided by Bosch, Mando, Tenneco.

Our viewGiven India’s current policy framework, we believe EV penetration has high potential for SUVs in particular. If similar policy support continues, we think the company’s vision of 25% EV penetration for SUVs could turn out to be conservative. Leveraging VW’s MEB platform will have its own advantages, but the company will need to crystallise a localisation plan.

We maintain our view that in the current taxation regime, the large SUV segment is the sweet spot to launch EVs due to the wide GST differential between EVs (5%) and ICEs (50%).

We expect the pricing for XUV400 to be attractive to drive penetration of EVs.

ValuationWe expect M&M to be a key beneficiary of the strong model cycle in utility vehicles (UVs). Thus, despite flattish tractor volumes over FY22-24F, based on our assumptions, we expect a ~33% EPS CAGR on a likely strong auto launch cycle. We reaffirm our Buy rating and TP of `1,505. We maintain MM as our top pick among OEMs.

Punjab CM Mann announces hike in sugarcane price to Rs 380 per quintal

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Punjab Chief Minister Bhagwant Mann on Monday announced increasing the price of sugarcane to Rs 380 per quintal from the existing Rs 360 per quintal.He announced a hike in SAP (state agreed price) of sugarcane on the floor of the Punjab Assembly on the concluding day of its brief session.

In August 2021, the then Congress government had announced a Rs 50 per quintal hike in SAP of sugarcane to Rs 360 per quintal. Mann said farmers will get an additional Rs 20 per quintal under SAP of sugarcane as compared to last year.With this decision, the state government will spend an additional Rs 200 crore annually to benefit the farmers.

ALSO READ Govt assures sugar industry of examining demand related to export, MSP, ethanol rate

Informing the House about the present status of the payments, the chief minister said the cooperative sugar mills have already paid the entire dues of the farmers but two private sugar mills have not paid the dues yet.

He informed that the owners of these mills have fled from the country, adding that the state government has already initiated the process to confiscate their assets to pay the pending dues of the farmers. 

Sterlite Power postpones IPO plans on current market volatility

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Sterlite Power on Friday announced deferring its Rs 1,250 crore-IPO in view of current volatility in the stock market.

In August 2021, the company had filed the Draft Red Herring Prospectus (DRHP) with markets regulator Sebi. The Initial Public Offer (IPO) was to be worth Rs 1,250 crore.

Also Read: Kanpur-based Lohia Corp files IPO papers with Sebi 

Pratik Agarwal, Managing Director of Sterlite Power, said that given the volatility in the current markets and the limited window available under the currently filed DRHP, it has been decided to withdraw the DRHP.

“However, it remains observant of the market and will consider re-filing the DRHP in the future. In the meantime, we are in conversation with large private capital institutions to grow the business,” he said.

Sterlite Power has a portfolio of 30 projects covering approximately 14,602 circuit kilometres of transmission lines. It has projects in India and Brazil.

It also has a portfolio of high-performance power conductors, Extra High Voltage (EHV) cables and Optical Ground Wires (OPGW), among others.

The company was the sponsor of IndiGrid, the country’s first power sector InvIT.