Trade Setup: Top 15 things to know before market opens on April 8, 2022

Weak global cues and concern ahead of the Reserve Bank of India’s monetary policy conclusion tomorrow kept investors on the sidelines on Thursday, with Indian market benchmarks languishing in the red throughout the day and ending roughly a per cent lower. 

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Investors stayed concerned, with a private report stating that the 10-year government bond yield has risen to about 7% ahead of the Reserve Bank of India’s (RBI) monetary policy review on Friday, on fears that the central bank will hike the inflation forecast.

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The Nifty50 has formed a reasonable negative candle on the daily chart with a minor upper shadow, though the positive sequence of higher tops and bottoms is in play, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities. 

The short-term trend of the 50-scrip index remains negative, he said.

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Indian Indices

Sensex fell 575.46 points or 0.97% to 59,034.95 and Nifty was down by 168.10 points or 0.94% to 17,639.55 in the previous session. Sensex touched a high and low of 59,504.92 and 58,977.35, respectively. There were 12 stocks advancing against 18 stocks declining on the index. Nifty traded in a range of 17,787.50 and 17,623.70. There were 22 stocks advancing against 28 stocks declining on the index.

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Broader Indices

The broader indices ended in red with the BSE Midcap index falling 0.42%, while the Small cap index was down by 0.75%. The top gaining sectoral indices on the BSE were Healthcare up by 0.44%, Bankex up by 0.06%, Realty up by 0.03% and FMCG up by 0.02%, while Oil & Gas down by 2.59%, Energy down by 2.28%, Consumer Durables down by 1.98%, Utilities down by 1.54% and Power-down by 1.47% were the top losing indices on BSE.

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India VIX Index

Nifty or India VIX, a gauge of the market’s expectation of volatility over the near term, fell 0.13% to 19.00 on Thursday.

SGX Nifty

The trends on SGX Nifty indicate a flat opening for the index in India with a 10-points gain. The Nifty futures were trading at 17,750.50 on the Singaporean Exchange around 06:35 hours IST.

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Support and Resistance levels

The key support level for the Nifty is placed at 17,580, followed by 17,520. If the index moves up, the key resistance levels to watch out for are 17,743 and 17,847, according to pivot charts.

US Markets

The S&P 500 rose 19.06 points, or 0.4%, to 4,500.21.

The Dow Jones Industrial Average rose 87.06 points, or 0.3%, to 34,583.57.

The Nasdaq rose 8.48 points, or 0.1%, to 13,897.30.

The Russell 2000 index of smaller companies fell 7.14 points, or 0.4%, to 2,009.80.

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Asian Markets

Asian markets finished sharply lower yesterday with shares in Japan leading the region. The Nikkei 225 was down 1.69% while China’s Shanghai Composite was off 1.42% and Hong Kong’s Hang Seng was lower by 1.12%.

European Markets

European markets finished lower yesterday with shares in France leading the region. The CAC 40 was down 0.57% while Germany’s DAX was off 0.52% and London’s FTSE 100 was lower by 0.47%.

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Major News Headlines

RBI MPC meet: Central bank expected to keep key rates unchanged

The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC), which began its three-day meeting on Wednesday, is expected to keep key policy rates unchanged in the first bi-monthly policy review of the fiscal year. Following the surge in crude oil and commodity prices, analysts believe the MPC will alter its growth and inflation forecasts. The RBI maintained the repo rate at 4% for the tenth time in a row at its previous policy meeting on February 10. The big question is whether the RBI’s accommodating policy will shift. To combat excessive inflation, the US Federal Reserve hiked interest rates last month. “We expect the RBI MPC to hold all rates on April 8 while retaining their accommodative stance. We then see the MPC turning neutral in June alongside raising the reverse repo rate by 40 bps, normalising the policy corridor. Thereafter, as favourable base effects fade and CPI inflation rises further, we see the RBI MPC delivering their first repo rate hike of 25 bps in August,” said a Bank of America Securities report. In the previous policy, the RBI anticipated real gross domestic product (GDP) growth of 7.8% for FY23. In February, retail inflation was 6.07%.

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CBDC would not eliminate cryptos or stablecoins: Chief Economic Adviser Nageswaran

The introduction of a Central Bank Digital Currency (CBDC) will not lead to the elimination of cryptocurrencies and stablecoins as they satisfy different objectives, Chief Economic Adviser V. Anantha Nageswaran said on April 7. “Will CBDC effectively end even cryptos, let alone stablecoins? My answer is no to both of that because the underlying objective for cryptos to emerge is…basically, it’s about tax evasion, money laundering, and speculation. And CBDC is clearly not a vehicle for evasion and speculation,” he said. “Therefore, in the presence of CBDCs, neither stablecoins nor cryptos would actually disappear because they satisfy different objectives. Therefore, they have to be tackled separately from other regulatory instruments. The advent of CBDC will not obviate the need for regulatory instruments as well,” according to the adviser. Nageswaran was speaking at a webinar organised by the Indian Council for Research on International Economic Relations, ‘Getting Central Bank Digital Currency (CBDC) Right for India: Lessons from G20 and the Rest of the World’.

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Whistleblower files complaint with SEBI for alleged wrongdoings at Invesco MF

Invesco Mutual Fund has been rocked by reports of whistleblower allegations of mismanagement in its fixed-income schemes during 2018-19, reported moneycontrol. The allegations pertain to wrongdoings by the fixed income team, according to moneycontrol. The whistleblower has filed complaints with the Securities and Exchange Board of India and the US Securities and Exchange Commission. The first allegation is that the former chief investment officer of Invesco MF’s fixed income schemes also acted as an advisor to its offshore portfolio management services focussed on Indian debt. As per Sebi guidelines, there should be a Chinese wall between portfolio management services and mutual funds, which means different personnel, different systems and different trade execution. The CIO was said to have been dismissed in 2019. The second allegation is centred on the execution of trades. It was alleged that Invesco India’s fixed income team executed trades on behalf of their offshore funds, in violation of regulations requiring the execution to be done by the offshore counterparts because their relationship was advisory in nature. The third allegation is that after the default by Infrastructure Leasing & Financial Services in 2018, the fixed income team of Invesco MF identified securities of other companies including Dewan Housing Finance Corporation Ltd. that were likely to come under stress and transferred them to the offshore funds. While the transfer itself was not illegal at the time, the matter of concern was that the clean-up was done at the cost of offshore clients.

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Revenues in domestic pharmaceutical industry are expected to rise by 6-8% in FY2023: ICRA

Revenues of leading domestic pharma companies are likely to grow by 6-8% in the current fiscal, rating firm ICRA said on Thursday. The revenues of homegrown drug firms are expected to moderate from a growth of 8-10% in 2021-22, it stated citing findings from the sample set of 21 companies. Growth in FY2023 is expected to be supported by the growth of 7-9% in the domestic market, 12-14% in the emerging markets and 7-9 % in the European business, ICRA said. Besides, growth in the US business is expected to remain muted, owing to the subdued pricing environment in the market in the near to mid-term, it added. Further, ICRA expects the research and development (R&D) expenses to stabilise at current levels of 6.5%-7.5% of revenues for its sample set as companies continue to focus on complex generics, first-to-file opportunities and speciality products, which entail higher R&D expenses. Stable investments in R&D to develop such products will support growth and margin improvement over the medium-term, it added.

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Bulk Deal data

MANISH VERMA bought 1,10,240 shares in Agro Phos India Limited at Rs 30.40 per share on the NSE.

MADHAV STOCK VISION P LTD ERROR bought 1,41,534 shares in AMD Industries Limited at Rs 60.26 per share on the NSE.

INDIUM IV (MAURITIUS) HOLDINGS LIMITED sell 33,79,797 shares in Aster DM Healthcare Ltd. at Rs 192.59 per share on the NSE.

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LOK PRAKASHAN LTD bought 1,06,886 shares in Gillanders Arbuthnot Ltd at Rs 85.12 per share on the NSE.

IDBI TRUSTEESHIP SERVICES LTD sold 63,25,000 shares of GTL Limited at Rs 11.27 per share on NSE.

ALACRITY SECURITIES LTD sold 53,890 shares in Nitiraj Engineers Ltd at Rs 77.17 per share on the NSE.

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INTEGRATED CORE STRATEGIES ASIA PTE LTD sold 34,30,700 shares in RBL Bank Limited at Rs 139.07 per share on the NSE.

TRADE DEAL FINANCIAL SERVICES PRIVATE LIMITED sold 2,84,121 shares of Uma Exports Limited at Rs 79.80 per share on NSE.

KAILASH KUMAR AGRAWAL bought 2,42,534 shares in Vaishali Pharma Limited at Rs 77.28 per share on the NSE.

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DII and FII data

Foreign institutional investors (FIIs) sold shares worth a net Rs 5,009.62 crore, while domestic institutional investors (DIIs) bought shares worth a net Rs 1,774.70 crore in the Indian equity market on April 7, as per provisional data available on the NSE.

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NSE F&O Ban

No security or stock has been put under the F&O ban for April 8. Securities in the ban period under the F&O segment include companies in which the security has crossed 95% of the market-wide position limit.