- Economy is reopening in India and globally
- Developed economies are moving from fighting virus to adding more stimulus
- Quarterly results of heavy weights have not disappointed so far.
- Higher Government borrowing and bigger deficit
- Watch out for reaction of rating agencies on 5.3% fiscal deficit?
Global Markets: - Turning around?
Global markets are continuing to rebound from recent lows. US and European futures are trading in positive territory in Asian session this morning. US, EU and Japan are all talking about increasing the stimulus package for the virus hit economy. This should also help global and emerging economies such as India
Risk assets and industrial metal are continuing their rally and volatility index is pointing downwards
ASIAN Markets this morning: -Inching upwards.
Almost all markets in the region are trading in positive territory this morning. This morning SGX Nifty is trading near Fridays Nifty close but with upward bias.
Trade deficit numbers will be released today. Trade deficit numbers may actually improve due to crude oil price collapse and lessor imports. Industrial production and consumer price inflation numbers will be out tomorrow. India’s industrial output is estimated to fall by 8.7%. Consumer price inflation is expected to fall to 5.68% Vs 5.91%
India: Higher Govt borrowing
Indian Government is planning to increase borrowing to Rs.12 lakh Crores that will send the fiscal deficit from 3.5% to 5.3%. The rating agencies have been warning on fiscal slippages and here we have a much bigger deficit number. Therefore, how rating agencies are going to react to this news is important for Nifty and overall market direction.
On positive side, global sentiment and better than expected quarterly results for most of the corporates should aid the sentiment.
There are no heavy weights declaring results today. Havells will declare results tomorrow. Godrej consumer products will declare their quarterly numbers on 13 May.
NIFTY -Technical Bias:
Price Action & Pattern:
Nifty has been consolidating for few days with negative bias. This could change as positive opening of the Asian markets to start the week and global economy getting back on its feet should aid sentiment today.
However, traders should watch out for rating agencies views on higher government borrowing which could damage market sentiment
A directional bull vertical spread is appropriate. Traders should be ready to be out of position on negative comments from rating agencies if any.
Global Markets: - Risk-on is back on
Global markets are rebounding. All most all risk asset classes are rallying, European equities, US equity markets, crude oil and even industrial metal such as Copper. It appears that brief correction is over and upward move will continue for a while.
ASIAN Markets this morning: - Joining the Global markets in rallying upwards.
Almost all markets in the region are trading in positive territory this morning. SGX Nifty is up about 80 points as well
RBI will release data on forex reserves, bank loan and deposit growth tomorrow. Trade deficit numbers will be released on May 11. Industrial production and consumer price inflation numbers will be out on May 12. India’s industrial output is estimated to fall by 8.7%. Consumer price inflation is expected to fall to 5.68% Vs 5.91%
India: - Reliance Industries is on overdrive to cut debt
Apart from Global risk-on rally improving the overall mood, there are few good news in the domestic front as well.
First Indian Rupee is rallying in off-shore markets as safe haven USD is pulling back.
Second Reliance Industries Ltd (RIL) is moving fast and bringing in new investors to its subsidiary “Reliance-Jio” almost every day. There are also news that RIL will be selling its stake in Asian Paints through block deals. This could send Asian paints share down but Index heavy weight RIL is expected to do well and maintain its upward momentum. Credit rating agencies has said that aggressive debt reduction plan followed by RIL is credit positive.
Adani Gas, Reliance capital, Reliance infra, SBI Card are few notable names that will be announcing quarterly results today. Tomorrow ICICI Bank & HDFC AMC will declare their results.
NIFTY -Technical Bias:
Price Action & Pattern:
Nifty has been consolidating for few days with negative bias. That may change today with global risk-on mood lending support. SGX Nifty indicate a gap up opening for Nifty and the momentum is likely to continue during the day.
A directional bull vertical spread is appropriate