As clarity emerged on the US Volatility Indicator, India’s VIX plummeted sharply in the morning, indicating that investors are more or less confident about the market’s direction. Analysts, however, still preach cautiously.
Factors driving markets
- American elections: It is very likely that Joseph Biden will be the next president of the United States. Investors increasingly expect the Republican and Democratic parties to retain their respective control of the Senate and House of Representatives, mitigating the prospect of higher taxes and financial regulation even with a Biden victory.
- Negative rates in the UK: The Bank of England is said to be considering a move towards negative interest rates, the Telegraph newspaper reported late Wednesday, without citing any source, ahead of the central bank’s monetary policy decision in November on Thursday.
- Meeting of the US Fed: The Federal Open Market Committee (FOMC) is scheduled to issue its policy decisions, likely reaffirming its commitment to supporting the pandemic-hit economy and keeping interest rates unchanged.
- The service sector comes to life after 8 months: Activity in India’s dominant service industry expanded for the first time in eight months in October as demand increased, but businesses affected by the pandemic continued to cut jobs, a private survey showed on Wednesday. The Nikkei / IHS Markit Services PMI rose to 54.1 in October from 49.8 in September. It was the highest reading since February and comfortably above the 50 mark that separates growth from contraction.
How are the bluechips?
After opening a bullish gap, the benchmark indices maintained their gains as the day progressed. At 11:27 a.m. M., BSE’s flagship Sensex, was up 593.79 points, or 1.46 percent, to 41,209.93. The NSE benchmark, Nifty, followed suit, rising 174.50 points or 1.47 percent to 12,083.
“We have opened with a bang that is well above the 11,950 resistance levels at Nifty. As mentioned yesterday, any drop can be used to accumulate long positions in the index. Markets should now head to 12,300-12,400, ”said Manish Hathiramani, technical analyst and property index trader at Deen Dayal Investments.
In the Nifty 50-share package, SBI that posted second-quarter numbers that beat Street gained the most, 5.58 percent. HCL Tech, Grasim Industries, BPCL, UPL, Nestlé India, Asian Paints, Tech Mahindra and Infosys were among other winners.
Hero Moto was the only loser in the group, down 0.81 percent.
Wider markets
The broader market indices also saw shopping online with their major peers in morning trading, as Nifty Smallcap was up 1.21 percent, while Nifty Midcap added 0.77 percent. NSE’s broadest index, Nifty 500, was up 1.14%.
Edelweiss Financial Services, ICICI Security, Jubilant Foodworks, Firstsource Solutions, Sonata Software and Alok Industries were among the top winners of the space, while Lux Industries, Lemon Tree Hotels, DCM shriram, Godrej Properties, Navin Fluorine and Godrej Agrovet were under pressure from sale.
Global markets
MSCI’s broader Asia-Pacific stock index outside of Japan rose 1.3% to its highest level since February 2018. Japan’s Nikkei rose 1.1% to a nine-month high and Korea from the South rose 1.5%.
Chinese blue chips gained 0.8 percent, helped by rumors that the Biden White House could cut trade war tariffs. E-Mini futures for the S&P 500 were up 0.1 percent, after strong gains overnight, while EUROSTOXX 50 futures were down 0.3 percent.
Tech and healthcare stocks led overnight prices, while those leveraged by consumer demand lagged behind. With tech stocks making up such a large part of the indices, the S&P 500 gained 2.20% and the Nasdaq 3.85%.
What to expect
- American elections: Investors will continue to track the news about the US election, as Trump is likely to take the result to court.
- FOMC meeting: The US Fed is likely to issue its decision on monetary policy later in the day, which will be watched by investors around the world.
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