Economic cycles do not move in the same direction all the time. A point comes when the law of averages catches up and the trends begin to revert. Dalal Street is awaiting that point to see the market rally broaden from the 15-20 stocks that are currently driving the indices higher. For investors, the focus should be on identifying sectors and stocks that will catch this trend reversal first. Some analysts say it should first play out in spaces like auto ancillary, cement, building material and FMCG, among others, where there are operating leverages to ride on.
STREET PULSE: Where we stand Nifty futures on Singapore Exchange traded 25 points higher at 7 am (IST), promising a good start to trade on Dalal Street. Asian stocks were mixed after technology shares propelled US benchmarks to fresh record highs.
HERE'S WHAT TO WATCH  | South Korea's Kospi dropped as a number of companies traded without the right to the next dividend payment. Ex-dividend trading also held back Japanese stocks. Australian equities edged up. |
| US stock markets advanced on Thursday, as the century old Santa Claus rally showed signs of returning this year. Dow rose 105.94 points to 28,621, while the S&P500 climbed 0.51% to 3,239 and the Nasdaq finished 0.78% higher at 9,022, topping the 9,000 mark for the first time ever. |
| Oil prices rose on Friday, hitting three-month highs after data showed record online spending by US consumers, stoking faith in the world's No 1 economy even before the hoped-for end to the trade war between Washington and Beijing. Brent crude futures rose 13 cents to $68.05 a barrel while the WTI contracts gained 13 cents to $61.81. |
| The rupee erased early gains to settle down by 4 paise at a three-week low of 71.31 against the US currency on Thursday, marking its fifth straight day of losses amid heavy selling in domestic equities and steady rise in crude oil prices. |
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Rewarding Deals… Several blue-chip companies that accept fixed deposits have lowered rates in December by up to 50 basis points, but their offers still seem more attractive than the returns high-street banks are promising risk-averse savers. HDFC has lowered rates by 11 basis points in the one-to-five-year period, now offering a maximum of 7.50 per cent on its deposits. ICICI Home Finance has reduced rates by 20-50 basis points across tenures and it now offers a maximum of 7.7 per cent. Similarly, Bajaj Finance has lowered deposit rates by 15-40 basis points and the maximum it pays is 8.35 per cent. PNB Housing Finance and Shriram Transport Finance are likely to reduce rates by 20-25 basis points, beginning early January.
Read More Op Twist II… RBI has sought to buy Rs 10,000 crore worth of longer-duration bonds for the second time in a fortnight and sell an equivalent amount of debt maturing in FY21 in a move experts believe should help lower yields, reducing the gap between policy rates and those prevailing in the market. In the auction scheduled to take place on Monday, the central will buy bonds worth Rs 10,000 crore, due to mature in 2029. On December 19, RBI conducted its first version of the so-called of Operation Twist, a US Federal Reserve tool that seeks to change the shape of the yield curve. The benchmark yield has dropped 17 basis points since then, pushing prices up.
Read More Dream Run… The Nasdaq crossed the 9,000 mark for the first time on Thursday as all three major Wall Street indices posted record closing highs, boosted by optimism over US-China trade relations and gains in shares of Amazon.com after a report signaled robust online holiday sales. Cooling US-China trade tensions have fueled the latest leg of Wall Street's record-setting rally. With just days to go until the year-end, the benchmark S&P 500 is up 29% so far in 2019, which would be its biggest annual percentage gain since 2013. The Nasdaq posted a record closing high for a 10th straight session, its longest such streak since 1997.
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Short Circuit…The upcoming Union Budget on February 1 is likely to dictate market direction in the January series. Even as it watches out for steps to revive the economy, Dalal Street would be keeping a close eye on whether the government breaches the fiscal deficit target. The December series saw the Nifty end 0.2% lower on an expiry-to-expiry basis. Derivative analysts said Nifty traders cut short positions, and that explains the 61 per cent lower Nifty rollovers than the three-month average. At 1.13 crore shares, open interest in Nifty is lowest in five years.
Read More Fare Hike Ahead... Indian Railways may increase passenger fares up to 40 paise per kilometre soon to tide over the financial crisis it is grappling with owing to the ongoing economic slowdown. "Work is on to rationalise both passenger and freight fares. Since freight fares are already high we cannot increase them. In fact, there is a need to lower freight fares to attract more freight from road," Railway Board chairman Vinod Kumar Yadav said at a press conference on Thursday.
Read More Meanwhile... Power loans are going to come with riders. The government is considering stricter conditions while extending loans from PFC and REC to state power distribution companies to help them clear their dues to power generation plants. These special loans will have stricter performance norms like reducing commercial losses, bringing financial discipline, and implementing prepaid metering, besides state government guarantees, timely release of subsidies and timeframe for payment of government department dues, officials said. However, distribution utilities of many states are not keen on borrowing money to pay their power bills.
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