Connect with us

Published

on

Mumbai, Dec 9 : The outcome of Assembly elections in five states, along with fears over an escalation in US-China trade war and volatility in crude oil prices, are expected to determine the trajectory of the key Indian equity indices next week.

Market observers opined that the direction of foreign fund flows in the backdrop of US Fed’s policy decision, coupled with the upcoming macro-economic data points on industrial production and inflation will also affect investor sentiments.

“Going into the next week, undoubtedly the outcomes of state elections, US Federal Reserve policy meet and other developments from the global arena will dictate the trend of the market,” said SMC Investments and Advisors’ Chairman and Managing Director D.K. Aggarwal.

On Tuesday, December 11, the results of state Assembly elections in Rajasthan, Madhya Pradesh, Chattishgarh, Telangana and Mizoram will be declared. These elections are considered as a crucial indicator of public mood before the Lok Sabha elections which are due in April-May 2019.

“In the week ahead, Indices are also likely to face pressure from a global sell-off and renewed up-tick in crude oil prices,” said Sahil Kapoor, Chief Market Strategist, Edelweiss Investment Research.

“State election results can cause markets to remain volatile and 1 per cent plus intra-day moves may be a common place.”

Besides the outcome of the state elections, an escalation in global trade protectionist measures after the arrest of Huawei’s Global CFO over alleged violation of US sanctions on Iran is expected to exert pressure on the indices.

Even an anticipated rise in crude oil prices after the Organisation of Petroleum Exporting Countries (OPEC) and Russia decided to go in for a production cut of 1.2 million barrels per day from 2019 might hinder the markets’ attempts to edge higher.

The brent crude oil was priced at over $63 per barrel last Friday.

Additionally, investors will remain cautious over an expected hike in US interest rates which can potentially drive away foreign portfolio investors (FPIs) from emerging markets such as India.

Last week, provisional figures from the stock exchanges showed that foreign institutional investors (FIIs) sold stocks worth Rs 865.52 crore during the week ended December 7.

These factors are also expected to exert pressure on the Indian rupee.

According to Anindya Banerjee, Deputy Vice President for Currency and Interest Rates with Kotak Securities, the Indian rupee is expected to range from 70.50 and 72.50 against a US dollar in the coming week.

“With exit polls showing the risk of a BJP loss in key states of Rajasthan and MP, USD/INR can rally on Monday morning due to short covering from traders who are short on the US Dollar,” Banerjee told IANS.

“Next week will be dominated by the election results. If BJP retains MP and at least one from Chhattisgarh and Rajasthan, then rupee can rally. However, a BJP loss can be negative for INR. The range can be large. It can between 70.50 and 72.50.”

However, in the past week, the local currency moved Rs 1.21 from its previous week’s close of Rs 69.59. The rupee closed at 70.80 a US dollar last Friday.

Apart from the rupee movement, markets will take cues from the macro-economic data points such as the IIP (Index of Industrial Production) and Balance of Trade figures.

The Central Statistics Office (CSO) is slated to release the macro-economic data points of IIP and CPI (consumer price index) on December 12, Wednesday.

Other key data points such as the wholesale price indexed-inflation (WPI) and the Balance of Trade data will be released on December 14.

On technical charts, the trajectory of National Stock Exchange (NSE) Nifty50 is expected to be volatile.

“Technically, while the Nifty has corrected sharply this week, the index has managed to bounce back and hold above the 50-day SMA. This gives the bulls a chance to make a comeback,” HDFC Securities’ Retail Research Head Deepak Jasani told IANS.

“Further, upsides are likely once the immediate resistances of 10,775 points are taken out. Crucial supports to watch for any weakness are at 10,588 points.”

Last week, the Indian equity indices dipped over concerns of a resurgence of US-China trade tensions and reports of crude oil supply cut.

Consequently, the S&P BSE Sensex lost 521.05 points, or 1.43 per cent, to close at 35,673.25 points, whereas the 50-share NSE Nifty declined 187.05 points, or 1.71 per cent, to settle at 10,693.70 points.

(Rohit Vaid can be contacted at [email protected])

Analysis

Eliminated JeM leadership within 100 hrs of Pulwama attack: Army

Published

on

Dantewada Attack

Srinagar, Feb 19 (IANS) The Indian Army on Tuesday said within 100 hours of the February 14 Pulwama attack on a CRPF convoy that left 40 troopers dead, it eliminated the Jaish-e-Mohammad (JeM) leadership in the valley that planned and executed the deadly carnage.

This was stated by Lt Gen K.S. Dhillon of the 15 Corps Commander, at a joint press briefing here in Jammu and Kashmir, along with officials state police and the Central Reserve Police Force (CRPF).

He also made it clear that the Pulwama attack was carried out by the JeM, which is based in Pakistan, with active support of the Inter-Services Intelligence (ISI) and the Pakistan Army.

“Within 100 hours of the Pulwama terror attack, we hit the JeM in the Kashmir Valley which was being handled by the Pakistan-based JeM,” Dhillon said.

He also added that the details of the two terrorists and one local conduit who were killed in the operation was shared on Monday.

“The local commanders, most of them Pakistanis, who were in-charge of controlling, coordinating, fabricating and executing the attack on Thursday, were the top leadership of the JeM in the valley,” Dhillon said.

Since the JeM leadership was already being tracked, the Indian operation was launched on Sunday night on specific information of the module.

Giving a stern warning to sympathisers of the terror movement in the state, he said: “Anyone who picks up a gun in Kashmir will be eliminated, unless the person surrenders.”

“I would also like to tell one thing to the parents of the Kasmhiri youths, especially the mothers, as I understand that they have a key role. Through you, I request the sons to surrender and join the main stream,” the officer said.

In the biggest crackdown after the February 14 attack by a suicide bomber that left 40 CRPF troopers dead in Pulwama district, the security forces ringed a militant hideout in Pinglena village, just 10 km from the Thursday’s terror attack site, triggering a gun battle Sunday overnight that continued intermittently till Monday evening.

They killed three militants of the Pakistan-backed JeM, two of them Pakistani nationals identified as Kamran and Abdul Rashid alias Ghazi Umar. Besides, a Major, three soldiers and a civilian were also killed in the initial burst of gunfire by the militants.

Continue Reading

Analysis

Dealings of European missile manufacture under scanner

Published

on

Rafale Fighter Jet

New Delhi, Feb 17 (IANS) A leading European arms manufacturer MBDA, which supplies missiles for the Rafale jets, has come under the scanner of probe agencies here for its suspected links with lobbyist Deepak Talwar, who was extradited from Dubai last month.

The country head of MBDA, Loic Piedevache, has been summoned by the Enforcement Directorate to appear before it on Monday in connection with the probe relating to the company’s links to Talwar, who is believed to have steered several deals with Airbus, which holds a stake in MBDA, during the UPA regime, according to sources.

Infrastructure major Larsen & Toubro had entered into a joint venture with MBDA to supply missiles and missile systems to the Indian armed forces.

L&T holds 51 per cent stake in the joint venture, L&T MBDA Missile Systems, and had identified defence as one of the key drivers for achieving growth in the sector.

The sources claimed that apart from questions on the company’s engagement with the Indian forces, Piedevache would also be questioned on the alleged payments to Talwar’s NGO. Advantage India, to the tune of Rs 88 crore between 2012 and 2015, from MBDA and Airbus.

Later, the entire money was said to have been withdrawn in cash by using “fake purchases”, the sources said.

Analysts said this was probably a rare occasion when the India head of a leading international firm was being summoned by a probe agency.

Piedevache has been heading the company’s operations in India for a decade. The Mirage upgrade programme and Rafale were signed during Piedevache’s tenure in India and he could be privy to information, the sources said.

“If required, the probe agency may also summon group export director Jean-Luc Lamothe. First of all, Piedevache would be asked to explain the company’s payments to Talwar’s NGO,” the sources said.

Piedevache could not be reached for his comments. An MBDA spokesperson said the company would support the authorities in their probe. It maintained that it had supported social development initiatives in India as part of corporate social responsibility, which included some payments to the NGO.

The company is involved in the Rs 30,000 crore offset programme associated with the 36 war planes.

Continue Reading

Analysis

Rupee weakened against $ in choppy weekly trade

Published

on

India Rupee

Mumbai, Feb 17 (IANS) In a choppy week’s trade, the Indian currency weakened against the US dollar to close above the 71 a dollar mark on Friday, owing to a sharp rise in crude oil prices, turmoil in the equity markets and uncertainty around the US-China trade relations.

In what could translate into further trouble for the domestic currency, analysts see an upward move of 6 to 7 per cent in the Brent crude prices in the coming week.

The rupee lost heavily towards the end of the week – over 70 paise in the last three trading session – as traders reacted to the sanction on Venezuela and production cut by OPEC and Saudi Arabia.

Sajal Gupta, Head Fx & Rates Edelweiss, said “technically … crude now looks set for another 6-7 per cent rise” which would mean that the rupee was likely to depreciate further in the coming sessions. “And if Rs 71.80 per dollar is broken, we can head towards Rs 72.50 mark.”

Among other factors impacting the currency, Gupta said, with crude and dollar index giving breakout, rupee would remain under pressure. Trade deficit data released on Friday post market was also not very encouraging with monthly deficit touching almost 15 billion dollars.

“Political tensions would also remain heightened with key leaders vowing strong retaliation in wake of the biggest terror attack in the Kashmir valley.”

Explaining the factors which has caused volatility, Anindya Banerjee of Kotak said the currency markets largely depend on the capital flows … and right now the fear of a possible retaliation by the government in response to the Pulwama attack is having an affect.

“The context of the whole event is also important because (Lok Sabha) elections are around the corner,” Banerjee said.

Also, the currency losing against the dollar and rising crude oil prices was a double whammy for the bond markets, he added.

On the global front, discussing the factors affecting the currency, Banerjee said, the Chinese economy was very fragile right now and moreover investors were looking for developments in the US-China trade talks.

However, Gurang Somaiya, currency analyst, Motilal Oswal, felt that the rupee was protected from any major weakness as “Foreign Institutional Investment (FII’s) came around good”, especially in February.

According to data from the bourses, FII has seen inflows worth Rs 1,096 crore in February.

India on Friday revoked the Most Favoured Nation Status (MNS) of Pakistan and has warned that more stern actions will follow the attack in Pulwama. Additionally, equity markets have declined for 6 straight sessions showing weak investor sentiments.

Continue Reading
Advertisement

Most Popular