Jefferies sees Nifty at 15,800 by December

Hi there! Welcome to ETMarkets Morning, the show about money, business and markets. I am Nandini Sanyal, and here is what we have to start your day.

>> FPIs fret over block deals on Dalal Street
>> MNC dividends turn a headache for HNIs
>> Jefferies sees Nifty at 15,800 by Dec
AND
>> Nomura tracker shows India’s Economic upcycle in full swing

And there is more. But first, a quick glance at the state of the markets..

>> Nifty futures on the Singapore Exchange traded 13.50 points higher at 8 am (IST), signalling indecisiveness on Dalal Street.

ELSEWHERE
>> Asian stocks edged lower amid uncertainty about Senate runoffs in Georgia, which could have an impact on incoming US President Joe Biden’s economic policies. Australian stocks fell 0.16%, Japanese shares 0.47% and South Korea’s Kospi 0.2%.

>> Uncertainty over the Georgia vote and worries about rising Covid infections sent Wall Street sharply lower in overnight trade. Dow fell 1.27%, the S&P500 lost 1.49%, while the tech-heavy Nasdaq dropped 1.48%.

IN CURRENCIES
>> The rupee appreciated by 9 paise to close at a four-month high of 73.02 against the US dollar on Monday, supported by sustained foreign fund inflows and weakness of the American currency overseas.

>> The dollar found support as concerns about surging COVID-19 cases and held the overnight gains. The British pound was under pressure after sliding 0.73% on Monday, as Prime Minister Boris Johnson ordered a nationwide lockdown to try and slow a fast-spreading coronavirus variant. The safe-haven Japanese yen was little changed as was the euro. The offshore yuan dipped 0.1%.

>> Bitcoin traded at $32,860 following a roller-coaster ride to start the New Year that took it to a record high of $34,800 on Sunday.

IN OIL MARKET
>> Oil extended losses after Opec+ talks were suspended unexpectedly amid a disagreement over whether to raise output in February. WTI crude fell 0.5% to $47.38 a barrel.

AND IN BULLION
>> Gold prices rose by Rs 871 to Rs 51,115 per 10 gm in the futures trade on Monday as speculators created fresh positions on a firm spot demand. On the MCX, gold contracts for February delivery rose by Rs 871, or 1.73 per cent, to Rs 51,115 per 10 gm while silver prices rose by Rs 2,114 to Rs 70,237 a kg. In international markets, gold fell 0.1% to $1,940.43 an ounce.

All in all, the trade setup on Dalal Street looked a little uncertain. On Monday, Nifty extended the gains, but negated a higher low and formed a ‘Hanging Man’, suggesting exhaustion of the ongoing momentum.

LET ME NOW GIVE YOU A HEADS-UP on some of the top news we are tracking at this hour.

… Jefferies has set a target of 15,800 on the Nifty by December citing a supportive global backdrop as the key reason. The target implies an upside of 11.8% from Monday’s record close of 14,132.90. The brokerage has maintained its positive stance on India’s cyclical recovery aided by growing evidence of the housing market showing signs of a multiyear upswing. Its top picks are HDFC, ICICI Bank, Godrej Properties, ACC, HUL, Concor, Maruti Suzuki, L&T, Tata Steel and Dixon Technologies.

… Block deals are increasingly becoming a challenge for India’s FPIs. Some institutional investors and domestic brokerages, anticipating such deals, are trying to make quick profits out of them, said multiple people aware of the developments. Several FPIs, including two large US-based public institutions, reportedly raised complaints with market regulator Sebi early December. Leading foreign fund grouping, ASIFMA that represents bulge-bracket FPIs like Citi, CLSA and Amundi, has made multiple representations to Sebi between August and October over this.

… The change in the dividend laws has dimmed the allure of MNC stocks for India's HNIs — ironically at a time of record payouts. For investors in the highest tax bracket, the abolition of dividend distribution tax has meant an effective tax incidence of 43%. Companies such as SKF India, Pfizer, Sanofi, Abbott, GSK Pharma, Timken India, and Oracle Financials have more than doubled their dividend pay-outs this year, mainly due to the abolition of DDT, as they will stand to benefit from the removal of the DDT as they can now claim credit at home for the corporate taxes paid in India.

… Rate-cut transmission for the end user has trailed the pace at which India’s central bank reduced the cost of funds, and the country’s deposit mobilisation structure is largely considered responsible for the relatively slower percolation effect. RBI slashed rates 115 basis points (one bps is 0.01%) since March, but the weighted average lending rates have fallen 40 bps and 50 bps, respectively, on outstanding and fresh loans between April and November.

… In an encouraging start to the New Year, financial services major Nomura on Monday said its weekly tracker that measures economic normalisation in India, has touched a new high starting January reflecting a further moderation in new cases and also indicated an economic upcycle in 2021. Led by an improvement in mobility indices, in sync with the holiday season, the Nomura India Business Resumption Index picked up to 94.5 for the week ending 3 January from an average of 91.7 December.

LASTLY, AN UPDATE ON ALL THE STOCKS BUZZING THIS MORNING

>> The Income-Tax department on Monday carried out a search and survey at the offices of Zee and L&T India in connection with alleged tax evasion.

>> Steelmaker JSPL reported a 20% year-on-year rise in production to 19.3 lakh tonnes during the third quarter of FY 21 with December production reaching record high levels of 7.27 lakh tonnes, a rise of 30% YoY.

>> Mortgage firm HDFC on Monday said its disbursements in the individual loan category have grown by 26 per cent during the third quarter ended December 2020

>> PTC India Financial Services on Monday said it has approved the resolution of one of its stressed loan accounts in the thermal-based segment -- IL&FS Tamil Nadu Power Company.

>> L&T arm L&T Hydrocarbon Engineering won two orders from HPCL Rajasthan Refinery, including an order to build a dual feed cracker unit worth over Rs 7,000 crore, the engineering major said on Monday

That’s it for now. For all the market news through the day, do track ETMarkets.com. Have a great day ahead! Bye-bye