SGX Nifty up 10 points; here's what changed for market while you were sleeping

Domestic stocks may kick off Tuesday's session on a muted note amid weak cues from other Asian markets, even though US indices gained over 1 per cent overnight.

Here’s breaking down the pre-market actions:

STATE OF THE MARKETS
SGX Nifty signals flat start
Nifty futures on the Singapore Exchange traded 10.5 points, or 0.09 per cent higher at 11,464.50, in signs that Dalal Street was headed for a flat start on Tuesday.

Nifty forms a Bearish Engulfing pattern
Nifty50 on Monday saw selling pressure around recent swing high of 11,584 and gave up all the gains to end up below the 11,450 level. It engulfed Friday’s bullish candle to form a Bearish Engulfing Candle on the daily chart. Analysts said the 11,500-11,585 range would continue to offer resistance to the index in the short term.

Asian shares edge lower
Japan's Nikkei 225 index was down 0.44 per cent or 103.06 points at 23,456.24 in early trade. Hong Kong shares opened slightly lower after putting on more than one per cent over the previous two sessions. The Hang Seng index eased 0.08 per cent, or 18.63 points, to 24,621.65. China's Shanghai Composite index edged down 0.05 per cent, or 1.69 points, to 3,277.13.

Oil inches lower on weak demand outlook
Oil prices inched lower on Tuesday as a bleaker outlook for global fuel demand prompted fresh selling, but short-covering ahead of a meeting later this week of OPEC and its allies, known as OPEC+, limited losses. Brent crude was down 3 cents, or 0.1 per cent, at $39.58 a barrel, reversing earlier gains. US West Texas Intermediate (WTI) crude futures were down 2 cents, or 0.1 per cent, at $37.24 a barrel.

US stocks rise amid tech rebound
US stocks ended higher, fueled by a rebound in big tech names. On Monday, the Dow Jones Industrial Average index increased 327.69 points, or 1.18 per cent, to 27,993.33. The S&P500 index rose 42.57 points, or 1.27 per cent, to 3,383.54. The Nasdaq Composite index rallied 203.11 points, or 1.87 per cent, to 11,056.65.

Bearish bets rising in Nifty
Traders raised bearish bets by selling more weekly Nifty call options, with the market failing to hold above the key technical level of 11,561.5. The index could immediately test the supports of 11,330 and 11,260. A breach of these levels could take the Nifty to 11,185.15. The 128.85-point correction in the Nifty from the day’s high to 11,440.05 was marked by aggressive call writing on September 17 expiry Nifty options. The negative bias is underscored by the open interest put call ratio falling to 0.88 Monday from 1.10 Friday.

FIIs buy Rs 298.22 cr worth of stocks
Net-net, foreign portfolio investors (FPIs) were buyers of domestic stocks to the tune of Rs 298.22, data available with NSE suggested. DIIs were net sellers to the tune of Rs 120.35 crore, data suggests.

MONEY MARKETS
Rupee: The rupee managed to end 5 paise higher at 73.48 to the US dollar after a see-saw session on Monday as weaker American currency against key rivals and easing crude oil prices led to a positive sentiment.

10-year bonds: India 10-year bond yield fell 0.17 per cent to 6.03 after trading in 6.02-6.07 range.

DATA/EVENTS TO WATCH

The DAY PLANNER

• Australia RBA Meeting Minutes (07:00 am)
• Australia House Price Index YoY Q2 (07.00 am)
• China Industrial Production YoY AUG (07:30 am)
• China Unemployment Rate AUG (07.30 am)
• UK Employment Change JUN (11:30 am)
• UK Unemployment Rate JUL (11:30 am)
• Euro Area ZEW Economic Sentiment Index SEP (02:30 pm)
• India Balance of Trade AUG (06:45 pm)
• US Industrial Production MoM AUG (06:45 pm)

MACROS
August CPI inflation at 6.69%... Lower food prices pulled down India's August retail inflation to 6.69 per cent from 6.73 per cent in July, official data showed on Monday. The data furnished by the National Statistical Office (NSO) showed that India's consumer food price index during the month under review eased a bit to 9.05 per cent against 9.27 per cent reported for July 2020.

Sub-3.5% interest rate can shrink economy: Policy rates cannot dip below a threshold, beyond which a rate cut could be counter-productive and lead to an economic contraction rather than stimulating it, according to a research report by SBI economists. They further said that lowering policy rates below 3.5 per cent could be counter-productive and recommended an activist fiscal policy going forward. The SBI economists analysed banking sector data over a 15-year period, looking at the net interest income and capital gains.

Economic activity picking up… Economic activity accelerated further in the week ended September 13, returning almost to pre-lockdown levels, a private tracker released on Monday showed. The Nomura India Business Resumption Index, which monitors economic activity normalisation, rose to 81.6 from 79 in the week ended September 6. Separately, S&P Global Ratings said India’s economy will likely contract 9% in FY21 from a previous estimate of -5%. Still, that was less steep than cuts forecast by its peers following the June quarter’s 23.9% contraction.

RBI asks banks to automate NPA recognition… The Reserve Bank of India has mandated banks to fully automate non-performing assets (NPA) classification and provisioning calculation process. All borrower accounts will be covered under the new regime and lenders will have time till June 30, 2021, to complete this process. The new guidelines will include all borrower accounts, including temporary overdrafts, irrespective of size or sector. Banks’ investments will also be covered under the new system.

Govt lines up Rs 20,000 cr infusion in PSBs… The Centre will infuse Rs 20,000 crore in PSU banks through bonds in FY21 and spend an additional ₹1.67 lakh crore on Covid relief measures announced earlier. FM Nirmala Sitharaman on Monday sought Parliament’s nod for gross additional expenditure of ₹2.36 lakh crore, presenting the first batch of supplementary demands for FY21.

Top realty firms consolidating market… June quarter data on sales volumes and financials of the real estate sector show that the pandemic has intensified consolidation in favour of listed large players. The slump in demand and lack of labour for construction activities led to a sharp decline in volumes and revenues of realty companies. Some of the large listed entities, however, reported lower fall than the overall industry.

Diwali battle looms in grocery space… This Diwali, India’s top ecommerce companies will start their market share battle with dal/chawal. Not just BigBasket and Grofers but Amazon and Flipkart, too, will kick off their festive period efforts with big sales events in the grocery space, according to brands and marketplaces ET spoke to. Amazon and Flipkart’s big grocery push is triggered by Reliance JioMart’s entry, market observers said.

Wealth planners advise avoiding multicap funds… Financial advisers are advising investors to avoid fresh investments in multi-cap schemes — a mutual fund product that bets on a mix of blue-chips, mid- and small-cap stocks after Sebi’s new rules for such schemes triggered uncertainty over the product’s future. In the absence of clarity on which multi-cap funds will continue being in the category and how the new norms would impact returns, investment advisors are recommending clients to consider other equity categories such as large- and mid-cap funds or focussed funds.