Markets may rise; HDFC, Tata Motors in focus

Asian stocks edged higher on Monday, led by a post-election jump in Japan’s Nikkei, though bonds wobbled and the dollar firmed as traders braced for central bank meetings in Britain, Australia and the United States to define the rates policy outlook

Markets are likely to rise on Monday following strength in global peers while trends in SGX Nifty suggest a mild positive opening of Indian benchmark indices. On Friday the BSE Sensex ended at 59,306.93, down 677.77 points or 1.13% and the Nifty was at 17,671.65, down 185.60 points or 1.04%.

Japan’s Nikkei rose 2.3% to a one-month high after Prime Minister Fumio Kishida’s Liberal Democratic Party did better than expected at Sunday’s election, with exit polls showing the party easily retaining a majority.

Trade elsewhere was more muted, with MSCI’s index of Asia-Pacific shares outside Japan up marginally. Weekend data showing a sharper-than-expected contraction of Chinese factory activity weighed on the mood.

Among key companies, HDFC, Tata Motors, Relaxo Footwears, Indian Railway Finance Corporation, Whirlpool of India, Aditya Birla Capital and Bayer Cropscience, Phoenix will release their September quarter results today.

State-owned power giant NTPC has placed an order of 9,30,000 tonnes of biomass pellets for co-firing in power plants that will help improve air quality, said the power ministry. Besides, Haryana, Punjab and Uttar Pradesh are procuring 1,301,000 tonnes of biomass pellets for co-firing in their power plants, the power ministry said in a statement issued on Sunday.

LIC’s holding across 281 NSE-listed firms, where it owns more than 1% of the shareholding, declined to 3.69% of the aggregate market value of these companies as of 30 September, according to data analyzed by primeinfobase.com, Prime Database Group.

That’s lower than the 3.91% it held at the end of September last year and the record 5% as of 30 June 2012.

Meanwhile, the US Federal Reserve is the highlight of a week full of central bank meetings likely to move markets, with policy adjustments possible at the Bank of England and Reserve Bank of Australia, as inflation puts upward pressure on the rates outlook. The Fed, which concludes a two-day meeting on Wednesday, is expected to say it will start to taper bond purchases, though markets’ focus is on clues about rates lift-off.

Fed funds futures are pricing hikes beginning early in the second half of 2022 and Goldman Sachs on Friday pulled forward its hike forecast to July from Q3 2023.

The prospect of higher rates sooner has roiled short-dated bonds around the world, straining liquidity in recent weeks, though Monday trade was a little calmer. Two-year US Treasury yields rose 2 basis points in Asia trade to 0.5227%. Benchmark 10-year yields rose 1.2 basis points to 1.5732%. October was the worst month in more than three-years for two-year Treasuries.

In currency markets the dollar held sharp Friday gains and inched a little higher on the risk-sensitive Australian and New Zealand dollars. It rose as far as 114.26 yen and climbed 0.1% to $1.1554 per euro. Sterling slipped to a two-week low of $1.3663 as traders reckon a small rate hike on Thursday might come with a dovish outlook.

Commodity prices eased a tad with benchmark Brent crude futures down 0.2% at $83.45 a barrel in early trade and US crude futures down 0.6% to $83.06 a barrel. The stronger dollar weighed on gold, which sat at $1,781 an ounce.
 

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