Markets likely to be volatile; Tata Motors, Hero, IDBI Bank in focus

Asian stocks saw a strong start on Friday, following firm overnight leads from Wall Street and Europe as a further retreat in bond yields eased concerns about rampant inflation

Markets are likely to be volatile while trends in SGX Nifty suggest a flat opening of Indian benchmark indices on Friday. Markets were shut on Thursday.

Asian stocks saw a strong start on Friday, following firm overnight leads from Wall Street and Europe as a further retreat in bond yields eased concerns about rampant inflation, restoring appetite for battered tech stocks.

Euro zone bond yields fell after the European Central Bank said it was ready to accelerate money-printing to keep a lid on borrowing costs, using its 1.85 trillion euro Pandemic Emergency Purchase Program (PEPP) more generously over the coming months to stop any unwarranted rise in debt financing costs.

The yield on the benchmark 10-year Treasury note fell as low as 1.475%, the first time it had dipped below 1.5% in a week. It last yielded 1.5352%, from 1.52% late on Thursday.

On Wall Street, the easing inflation worry helped support equities, with the highly valued technology sector leading the way higher, up 2.12%. Expensive stocks, many of which are in the tech sector, have been highly sensitive to the recent rise in yields.

Tata Motors Ltd expects its commercial vehicle sales to sharply rebound next fiscal, in line with an industry recovery, after two years of double-digit sales decline, a senior company executive said, as India’s largest truck and bus maker bets on a better-than-expected economic revival and greater government focus on the infrastructure sector.

Hero MotoCorp Ltd has set an ambitious target of producing 7.5 million motorcycles and scooters in the next fiscal—the most in four years and the second-highest in its history—as India’s largest two-wheeler maker bets on a rebound in economic growth, recovery in rural demand and improved consumer sentiment due to progress on coronavirus vaccines.

IDBI Bank Ltd’s exit from central bank purgatory has raised hopes that the remaining three banks under prompt corrective action (PCA) could be next in line for similar relief, having achieved parameters to justify their exit. IDBI Bank will no longer be subject to strict lending curbs imposed by the Reserve Bank of India (RBI) in May 2017, with the central bank Wednesday stating that the private sector lender has been taken out of the prompt corrective action (PCA) framework.

Health authorities in Denmark, Norway and Iceland on Thursday suspended the use of AstraZeneca's covid-19 vaccine following reports of the formation of blood clots in some people who had been vaccinated. Austria earlier stopped using a batch of AstraZeneca shots while investigating a death from coagulation disorders and an illness from a pulmonary embolism.

The dollar was weaker for a third straight day coming off a 3-1/2-month high of 92.506 on Tuesday. The dollar index fell 0.43%, with the euro down 0.01% to $1.1983.

Oil prices resumed their climb following two days of declines, buoyed by the brightening economic outlook and a decline in the dollar.

U.S. crude settled up 2.5% at $66.02 per barrel and Brent was at $69.63, up 2.6% on the day.
 

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