Making Sense

It will be an interesting start of the week for Indian Markets post the exit polls announcement. The Exit polls suggest a comfortable victory for the NDA. Even though the seat tally differs across various pollsters, there is consensus over an NDA victory with seats range seen between 342 to 385 on the lower end and 358 - 415 seats range on the upper end.  There will be considerable euphoria in the markets when we open on Monday alongside the tailwind from positive US markets after benign PCE Readings.  The buzz on social media if for Nifty to gap up towards the 23100 level. India VIX closed at 24.60 on Friday.  The low voter turnout had espoused uncertainty in the markets. The larger public mood has been for the NDA to win with domestic equity inflows during 2024 at over $ 7 bn per month in 2024. However, unlike earlier elections in 2014 and 2019 when we saw positive flows ahead of Elections, this time round FPIs have been net sellers CYTD to the tune of ~ $ 2.80 bn....

  NIFTY - On Friday, we had an outside day candle and a weekly one-day reversal candle which suggests shifting trends but does not suggest an immediate sharp move in the opposite direction of the trend. However, it sets us up on alert to look for signs of reversal in the ensuing weeks that follow. Sellers have stepped in ahead of 22800 level and we observe negative divergence of RSI. Levels on Nifty: Closing Level as on 05 May 2024 - 22423 Index S3 S2 S1 R1 R2 R3 R4 NIFTY 21860 22000 22337 22620 22800 22900 23038   India VIX has risen steadily in the last 8 session from 9.95 to this week’s high of 16.96 as Lok Sabha Elections are underway. Low voter turnout in phase 1 and phase 2, generally considered negative for the incumbent, could possibly translate into a lower margin of victory and that has spurred buying in vols...

After the tumultuous Asian Session yesterday, risk sentiment stabilized overnight as markets took comfort  in the  spate of liquidity measures announced by CBs media reports of  U.S. Treasury Department staff studying if federal regulators have enough emergency authority to insure deposits above the current $250,000 cap on accounts without the consent of Congress  and most recently Tsy Secretary Janet Yellen comments " US aggregate deposit outflows from Regional Banks have stabilised. Tsy, Fed, FDIC actiions reduced risk of further bank failures that would have imposed losses on Deposit insurance fund. Similar actions to protect Depositors could be warranted if smaller institutions suffer deposit runs that pose risk of contagion" Sharp moves were seen across Rates. After the sharp dip in rates on write off of AT1 bonds by Credit Suisse, USD bonds pulled back.  For Domestic markets, RBI injected liquidity through the LAF window to the tune of 79K crore on 20 Mar ...

  Quick wrap on the market moves in the Asian Session: USDINR touched a low of 81.63 on Monday and caught a bid towards the end of the session as risk sentiment deteriorated. Today, trading in USDINR has opened with a gap up on hawkish remarks from the Federal Reserve Chairman. Balance 25% holdings were squared on the gap up. Next crucial resistance for the pair is 82.30. Domestic equity markets are trading in the red with Nifty at 17700, down 0.30% and is seen facing resistance at the 17770 level .  India  Money market operations (figures in bracket show prev day closing numbers) LAF absorption                     -49,000 crores (-61,000 crs) O/S Repo                                  +89,000 crore (+86000 crs) SDF+MSF                       ...

 Meditate!!  The February ISM Manufacturing Index came in at 47.70 (prev 47.4). The reading reflected contraction in manufacturing activity for the 4 th straight month. However, what stood out in the report was the sharp increase in the Prices Index which jumped to 51.3 from 44.5 and the new orders index rose to 47.0 (prev 42.50). The activity contracted at a slower pace amid a backdrop of rising prices which adds to fears around Fed tightening. Comments from FOMC voting member   Neel Kashkari also pushed rates higher. “We’re not yet seeing much of a sign of our interest-rate increases slowing down the services sector of the economy and that is concerning to me,” he said. “Wage growth is at a level that it actually is too high to be consistent with our” 2% inflation target. He also said that if the Fed declares "victory too soon, there will be a flood of exuberance" and it will need to do even more work that if the Fed declares "victory too soon, there will be a flood...