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January 04, 2024

*Very Good Morning!!!*
*US Markets in Detail Along with Asia Opening*
*GIFTNifty: 21,603: +23: +0.11%*
*Today*
*Listing of New Securities of Aurionpro Solutions Ltd*
2,15,000 equity shares of Rs. 10/- each issued at a premium of Rs.1240/- to Non Promoters on a preferential basis
*Listing of new securities of Lancer Container Lines Ltd*
5724000 Equity shares of Rs. 5/- each issued at a premium of Rs. 120/- pursuant to conversion of Foreign Currency Convertible Bonds (FCCBs) of the Company.
*Listing of New Securities SG MART LIMITED*
1577000 equity shares of Rs. 10/- each issued at a premium of Rs.4990/- to Non Promoters on a preferential basis
*Provisional Cash Rs. In Crs. (3rd Jan)*
FIIs -666 (9,103 - 9,769)
DIIs -863 (10,403 -11,266)  
Sensex: 71,357 (-536) (-0.75%) 
Nifty: 21,517 (-148) (-0.69%) 
BankNifty: 47,705 (-57) (-0.12%) 
NiftyIT: 34,395 (-888) (-2.52%) 
MIDCAP: 46,529: +139: +0.30% 
Dow: 37,430 (-285) (-0.76%)
S&P: 4,705 (-38) (-0.80%)
Nas: 14,592 (-174) (-1.18%)
Brazil: 132,834: +137: +0.10%
Ftse: 7,682 (-39) (-0.51%) 
Dax: 16,538 (-231) (-1.38%)
Cac: 7,412 (-119) (-1.58%)
MOEX: 3,130: +31: +1%
WTI Oil: $73.18: +3.98% 
Brnt: $78.64: +3.62% 
Natural Gas: 2.69: +4.59% 
Gold: $2049 (-24) (-1.17%) 
Gold 22 Carat/g: 5,850 (-25) (-0.42%) 
Silver: $23.2 (-3.16%) 
Copper: $387 (-0.22%)
Cotton: $80.93: +1.24%
Copper (LME): $8,545 (-15) (-0.17%)  
Alluminum (LME): $2,336 (-49) (-2.03%)
Zinc (LME): $2,621 (-37) (-1.39%)
Tin (LME): $25,184 (-231) (-0.91%)
Eur-$: 1.092 (-0.2%)
GBP-$: 1.2664: +0.37% 
Jpy-$: 143.29: +0.92% 
Re: 83.2863 (-0.04%) 
USD-RUB:  91.6447: +0.63%   
US10yr: 3.92% (-1 bps) 
GIND10YR: 7.216: +0.14% 
$ Index: 102.477: +0.27%  
US Vix: 14.04: +6.36%
India Vix: 14.1 (-3.31%)  
BalticDry: 2,093 (-1) (-0.05%)
  
*ADR/GDR* 
Cogni (-0.98%)
Infy (-0.22%) 
Wit (-2.01%)  
IciciBk (-1.28%) 
HdfcBk (-1.07%) 
DrRdy (-0.45%) 
TatSt (-5.36%) 
Axis: +1.54%
SBI: +1.17% 
RIGD (-0.96%) 
INDA (-0.16%) (IShares MSCI INDIA ETF)  
INDY (-0.57%) (IShares MSCI INDIA 50 ETF) 
EPI (-0.22%) (Wisdom Tree India Earning)  
PIN (%) (Invesco India Etf) 
*A look at the day ahead in Asian markets.*
The early 2024 shake out continued on Wall Street, after having spilled over into Asian trade on Wednesday, and marks a potential headwind for Japanese shares when they reopen on Thursday.
The Nikkei (.N225) rose 28% in 2023, biggest yearly gain in a decade, ending it less than 1.0% shy of a 33-year high set in November. Tokyo markets have been shut for a public holiday and will reopen Thursday.
But other Asian stock markets extended a global sell-off on Wednesday, while their currencies mainly fell against the dollar. MSCI's broadest index of Asia-Pacific shares outside Japan was down almost 1.5% after a 1.0% drop on Tuesday in a sluggish start to 2024. The index rose 4.6% in 2023.
Data wise, there is nothing big on the docket until Friday's U.S. payrolls number. Wednesday's U.S. release of the minutes from the December Federal Open Market Committee meeting barely moved the markets. It looks unlikely to have any spill over into Thursday's trade, confirming that policymakers were on the cusp of easing this year, and saw the battle against runaway inflation as all but won.
*US Futures*
U.S. stock futures inched higher Wednesday night after the Nasdaq Composite fell for a fourth straight trading day.
Dow Jones Industrial Average futures rose by 49 points, or 0.13%. S&P 500 futures and Nasdaq 100 futures climbed 0.12% and 0.13%, respectively.
On the economic front, the December ADP private payrolls report is due out Thursday morning. Economists polled by Dow Jones expect a rise of 130,000 last month, up from 103,000 the prior month.
*US Markets*
Dow ends down by 285 points, S&P 500 suffers third straight loss after Fed releases December minutes
*Minutes from central bank’s last meeting show policymakers didn’t rule out further rate hikes.*
*The new-year slump in US stocks extended while bonds eked out a gain in the aftermath of the minutes of the Federal Reserve’s last meeting.*
U.S. stocks finished lower on Wednesday after minutes from the Federal Reserve’s December meeting showed policymakers had a high level of uncertainty around their interest-rate projections and did not rule out further rate hikes.
*The Nasdaq 100 fell 1.1%, extending a losing streak for a fourth day — the longest in over two months — as investors continued to retreat from last year’s winning tech sector. The S&P 500 slid 0.8% while the Russell 2000 small-caps gauge notched its worst drop since the March banking crisis. Tesla Inc. and semiconductor stocks slumped while crypto-tied equities floundered as Bitcoin erased most of its gains this year.*
*Oil prices rose more than 3% on Wednesday as the U.S. warned Houthi militants against attacks in the Red Sea and OPEC pledged unity to support market stability.*
Libya’s Sharara oilfield was also shut down due to protests, two engineers told Reuters.
*Investors appeared to be selling last year’s tech winners, which soared as the market anticipated easing monetary policy in 2024. But with uncertainty around when the Federal Reserve will finally begin cutting rates, investors seem to have curbed their enthusiasm.*
Short-term corrections are nothing out of the ordinary in a market that’s coming off of fresh highs and entering primary season, the longer-term setup looks positive on a six- to twelve-month horizon.
*The major averages were also under pressure Wednesday afternoon following the release of the Fed’s latest meeting minutes, as they showed the central bank was still not quite ready to lower rates.*
*“Participants generally stressed the importance of maintaining a careful and data-dependent approach to making monetary policy decisions and reaffirmed that it would be appropriate for policy to remain at a restrictive stance for some time until inflation was clearly moving down sustainably toward the Committee’s objective,” the minutes stated.*
*However, officials indicated that they expect three quarter-percentage point cuts sometime this year, although a high degree of uncertainty remains around when these cuts are likely to occur.*
It was the first time the benchmark S&P 500 index has started the year with two straight declines since it kicked off 2015 with a three-session skid. It is also its worst two-day result, on a percentage basis, since late-October.
The decline contrasts with the blistering run for all three major Wall Street benchmarks in the final two months of the year. The S&P 500 came within striking distance of its all-time closing high last week as signs of cooling inflation spurred investors to bet on an aggressive rate-cutting schedule.
However, investors have been cautious so far in 2024, wary of the U.S. central bank's expected pivot to rate cuts this year and how quickly these might be implemented. While the Fed is widely expected to keep rates on hold in January, traders have priced in a 67% chance of a 25 basis point rate cut in March, as per CMEGroup's FedWatch tool.
*The Fed minutes released on Wednesday offered new insight, with policymakers appearing increasingly convinced that inflation was coming under control, with "upside risks" diminished and growing concern about the damage that "overly restrictive" monetary policy might do to the economy.*
*Little light was shed on when rate cuts might commence though.*
The market wanted to hear when and how much the Fed was going to drop rates, and they didn't get that - even if it's not the Fed's job to do that," said Jason Betz, private wealth advisor at Ameriprise Financial.
"What we're seeing play out in today's selling maybe is a little bit of frustration with the perceived lack of transparency of the Fed."
Betz noted that profit-taking from 2023's gains and recalibrations for the new year were likely also factors influencing traders' thinking.
The dollar strengthened against most of its Group-of-10 peers for a fourth day, the longest run for the currency since November.
*Fed policymakers said rates could stay restrictive for longer than anticipated last month, while noting rate cuts could emerge before the year is out. Swaps traders have been reining in their bets on rate cuts after factoring in a full quarter point cut to the benchmark rate by the March meeting.*
Treasury yields ended the day near session lows with the rate on the 10-year reversing after climbing just above 4%, the highest since mid-December, earlier in the day.
*The Institute for Supply Management’s manufacturing gauge hit 47.4 last month, data out Wednesday showed. The index has remained below the 50 level — indicating a contraction – since late 2022. Separate data showed the number of job openings fell slightly in November from the prior month’s revised number.*
“Overall, the labor market remains strong, but demand is cooling, coming into better balance with supply,” Rubeela Farooqi, chief US economist at High Frequency Economics wrote. “These data will be welcome news for policymakers and support the Fed’s view that the next move in rates will be lower, likely in Q2.”
*Friday’s jobs report could cement the cooling narrative, according to ING’s James Knightley. The makeup of jobs growth is “almost as important as the payrolls number itself in determining the prospect for rate cuts in 2024,” he said.*
*U.S. bankruptcy filings surged by 18% in 2023 on the back of higher interest rates, tougher lending standards and the continued runoff of pandemic-era backstops, data published Wednesday showed, although insolvency case volumes remain well below the level seen before the outbreak of COVID-19.*
Total bankruptcy filings - encompassing commercial and personal insolvencies - rose to 445,186 last year from 378,390 in 2022, according to data from bankruptcy data provider Epiq AACER.
Commercial Chapter 11 business reorganization filings shot up by 72% to 6,569 from 3,819 the year before, the report said. Consumer filings rose 18% to 419,55 from 356,911 in 2022.
*For the final month of the year, total filings dipped to 34,447 from 37,860 in November, though they were up 16% from a year earlier.*
*Bankruptcy case counts are expected to keep climbing in 2024, though there is still some distance to go to top the 757,816 bankruptcies filed in 2019, the year before the pandemic struck.*
On Tuesday, the Dow rose less than 0.1% to a record close of 37,715.04, while the S&P 500 declined 0.6% to 4,742.83, and the Nasdaq Composite slumped 1.6% to end at 14,765.94.
*The volume on U.S. exchanges was 11.84 billion shares, compared with the 12.35 billion average over the last 20 trading days.*
What drove markets
*Minutes from the Fed’s Dec. 12-13 meeting, released on Wednesday, showed that almost all the central bank’s officials had penciled some easing into their forecasts for 2024. However, an “unusually elevated degree of uncertainty” was attached to those forecasts.*
*Fed-funds futures traders pulled back on the likelihood of a first interest-rate cut arriving by March. However, they clung to a high likelihood of more rate cuts from the Fed by year-end than the three quarter-point moves implied in policymakers’ December projections.*
The message from the Fed’s December meeting is that policymakers “are behind the curve on how quickly inflation has fallen,” said Luke Tilley, an economist. “While the minutes are a good reflection of Fed officials being cautious, we would expect them to cut more than three times as more inflation data comes in low.”
Investors have been counting on easing inflation to help motivate the Fed to cut borrowing costs swiftly in 2024 — a factor that helped the tech-heavy Nasdaq Composite surge 43% last year, with a large chunk of that rise coming over the final two months of 2023. Hopes that companies like Microsoft MSFT, -0.07% and Nvidia NVDA, -1.24% will benefit from the increased adoption of artificial intelligence also contributed to the rally.
“It seems the near-term momentum from December was based primarily on the perception of a change in monetary policy, yet the reality is that economic data may not allow for the ‘pivot’ as soon as markets would like,” said Brian Mulberryan expert.
*The policy-setting Federal Open Market Committee “remains committed to 2% inflation as a target, and while there has been real progress in that direction, Core PCE [or the Fed’s preferred inflation gauge] is still well above 2%, leading us to believe that rates could still remain higher for longer than currently priced in.”*
The first trading day of the year on Tuesday saw the Nasdaq shed 1.6%, its biggest drop in more than two months, while the broader S&P 500 fell 0.6%. A downgrade of Apple AAPL, -0.75% to underweight from neutral by Barclays worsened market sentiment on the view that some big-tech valuations appeared stretched and that stocks looked overbought following a nine-week winning streak by the S&P 500.
“What we’ve seen in the last couple of months prior to this year is optimism for the best potential outcomes in rates and the economy. It was almost stupidly good and wasn’t going to persist forever,” said John Luke Tyner, a portfolio manager at Alabama-based Aptus Capital Advisors, which manages $4.25 billion.
In early 2024, “the data is not going to degrade fast enough to get a bunch of Fed rate cuts in the first half of this year,” Tyner said via phone.
“The FOMC minutes focused on better balanced risks to growth and inflation, but policy will remain restrictive for some time,” Morgan Stanley’s Ellen Zentner wrote. “We do not think this is a Fed planning to lower interest rates anytime soon.”
Fed Chair Jerome Powell ignited a markets rally last month after indicating that policymakers had discussed lowering interest rates. His colleagues at the US central bank then attempted to walk back market enthusiasm for quicker and deeper rate cuts in the days that followed.
*Richmond Fed President Thomas Barkin held off on giving a forecast on when the US central bank’s first rate cut would occur. “Conditions are ever evolving,” he said in prepared remarks Wednesday. “So too will our approach. So, buckle up. That’s the proper safety protocol even if you expect a soft landing.”*
*In U.S. economic updates on Wednesday, job openings slid to a 32-month low of 8.8 million in November from a revised 8.9 million in the prior month, the U.S. Bureau of Labor Statistics said in its JOLTS report. That’s seen as another sign that a prolonged hiring boom is fading in response to higher interest rates.*
*Meanwhile, data showed U.S. economic activity in the manufacturing sector contracted in December for the 14th consecutive month, according to the Institute for Supply Management. ISM’s U.S. manufacturing PMI rose to 47.4 in December from 46.7 in November; any number below 50 reflects a shrinking sector.*
*Elsewhere, a slump in Bitcoin on Wednesday saw the cryptocurrency erase almost all gains it had made so far this year. Stocks tied to the sector slipped with MicroStrategy Inc. sliding about 8% and Coinbase Global Inc. dropping roughly 3%.*
Airline stocks came under pressure as a jump in oil prices, following disruption at Libya's top oilfield, raised concerns about fuel costs. The S&P 1500 passenger airlines index tumbled 4%.
Higher crude prices supported the energy index which advanced 1.5%, the leading gainer among the minority of S&P sectors in positive territory.
Financials was among the sectors that traded lower, off 0.8%, with Charles Schwab and Blackstone among those pulling down the index. They dropped 3% and 4.6%, respectively, after Goldman Sachs downgraded the stocks to "neutral" from "buy."
However, Citigroup gained for a second straight day, rising 1.1% to its highest finish since mid-August 2022, as the bank continued to benefit from a price target upgrade and an upbeat analyst report from Wells Fargo released the previous day.
“The year is certainly off to a rough start, which may motivate more profit taking, after the outsized gains of last year, but the fundamentals haven’t changed, nor have earnings estimates,” according to Louis Navellier of Navellier & Associates. “There are opportunities in good stocks with attractive values being dragged down for no good reason.”
*European markets fell sharply on Wednesday, extending a gloomy start to new year trading.*
Danish shipping giant Maersk extended Tuesday’s gains to close 5.1% higher after announcing it would keep trade routes through the Red Sea on pause owing to security concerns, which could drive ocean freight rates higher.
Asia-Pacific markets fell overnight, with stocks in South Korea and Taiwan leading declines as major tech firms including ch
*It’s time to sell risk assets in a ‘Reverse Goldilocks’ environment, according to HSBC*
HSBC believes it’s time for investors to cut their exposure to risk assets.
That’s because the bank believes that following the latest Goldilocks rally, the next stage will be a return to a “Reverse Goldilocks” environment.
“Markets typically trade the direction of travel / rate of change. And that’s down and negative. The Fed’s dovish pivot in December amplifies this Goldilocks backdrop even more,” analyst Max Kettner wrote in a Wednesday note.
The analyst added that he’s since cut his overweight on equities to wait for a better reentry point in terms of investor positioning and sentiment. Specifically, within stocks he’s decreased his exposure to U.S. and European assets to underweight from overweight.
In corporate news, Walt Disney Co.’s Chief Executive Officer, Bob Iger, was drumming up investor support as he seeks to stave off pressure from billionaire activist Nelson Peltz.
Barrick Gold Corp. is sounding out some of First Quantum Minerals Ltd.’s major investors to gauge their support for a potential takeover.
Cigna Group slumped after a Wall Street Journal report it was near a deal to sell its Medicare business for $3 billion to $4 billion.
*Companies in focus*
• Shares of Apple Inc. finished down by 0.8% on Wednesday, after suffering their biggest drop in four months during Tuesday’s session following a downgrade by Barclays.
• Moderna Inc.’s stock closed down by 3.5% after leading the S&P 500’s gainers on Tuesday. Oppenheimer has upgraded the stock to the equivalent of buy and said it expects the biotech company to have five products approved by 2026.
• Tesla Inc.’s stock ended down by 4% on Wednesday, handing shares of the electric-vehicle company their fourth straight day of declines after the firm was surpassed as the EV-selling leader by China’s BYD Co. 002594, +0.30%.
*Key events this week:*
• China Caixin services PMI, Thursday
• Eurozone S&P Global Eurozone Services PMI, Thursday
• US initial jobless claims, ADP employment, Thursday
• Eurozone CPI, PPI, Friday
• US nonfarm payrolls/unemployment, factory orders, ISM services index, Friday
• Richmond Fed President Tom Barkin — an FOMC voter in 2024 — speaks, Friday
• - Thailand CPI (December)
• - China Business Surveys, PMI (December)
*Currencies*
• The Bloomberg Dollar Spot Index rose 0.2%
• The euro fell 0.2% to $1.0921
• The British pound rose 0.4% to $1.2664
• The Japanese yen fell 0.9% to 143.24 per dollar
*Cryptocurrencies*
• Bitcoin fell 5.3% to $42,749.04
• Ether fell 6.2% to $2,219.55
*Bonds*
• The yield on 10-year Treasuries declined two basis points to 3.90%
• Germany’s 10-year yield declined four basis points to 2.02%
• Britain’s 10-year yield was little changed at 3.64%
*Commodities*
• West Texas Intermediate crude rose 3.8% to $73.02 a barrel
• Spot gold fell 0.8% to $2,041.50 an ounce
*India Daybook – Stocks in News*
*Ujjivan Small Finance:* Company's total deposits at Rs 29,869 crore, up 29% year-on-year. (Positive)
*RVNL:* Rail Vikas JV received LOA for Rs 123 cr order to redevelop Varkala Sivagiri railway station (Positive)
*Power Finance Corporation:* Company signs MoU with Gujarat government for projects worth Rs 25,000 crore. (Positive)
*Reliance:* Reliance Jio added 31.6 lakh subscribers in October (Positive)
*ONGC:* Company wins seven blocks in latest bid round (Positive)
*IEX:* Company's Q3 overall volume at 28,326 MU, up 16.9% year-on-year. (Positive)
*Tech Mahindra:* Company appoints Infosys veteran Richard Lobo as chief people officer (Positive)
*Affle:* Company to buy 9.03% stake in Explurger for Rs 37.3 crore. (Positive)
*Gujarat Alkalies:* Company signs initial pact with Vedanta Aluminium for exploring opportunities in areas of caustic-chlorine, other allied businesses. (Positive)
*Sun Pharma:* Company acquires Israel's Libra Merger. (Positive)
*Torrent Power:* Company signs 4 MoUs worth 47,350 crores with Government of Gujarat (Positive)
*Poonawalla:* Disbursements: Total disbursements during Q3FY24 were highest ever at approx. ₹ 8,730 crore up 159% YoY (Positive)
*Vedanta:* More than 97 percent of bondholders of Vedanta Resources (VRL) approved the restructuring of $3.2 billion worth of bonds due to mature in the next three years (Positive)
*RCF:* Gets environmental clearance for Setting-up a New 1200 MTPD (DAP BASIS) Complex Fertilizer Plant at existing RCF facility Thal, Maharashtra. (Positive)
*Mphasis:* Company announced a strategic reallocation of leadership responsibilities to accelerate growth across multiple vectors. (Positive)
*Surya Roshni:* Gets Order Worth Rs 72 Cr From Odisha Urban Infrastructure Development Fund (Positive)
*Jio Financial:* The joint venture entity of Jio Financial and BlackRock Financial Management has filed papers with the SEBI to launch mutual fund businesses in India (Positive)
*Gensol:* Company gets 138.72 Cr Solar Power project order from Sarda Energy & Minerals Ltd (Positive)
*Bharti Airtel:* Company added 3.5 lakh subscribers in October (Neutral)
*Vodafone:* Company lose 20.4 lakh subscribers in October (Neutral)
*NHPC:* Company signs MoU with Gujarat Power Corporation for investing Rs 4,000 crore 750 MW Kuppa Pumped Storage Project. (Neutral)
*Ceat:* Company gets GST demand, penalties of over Rs 19 crore (Neutral)
*MRF:* Company to buy 27.2% stake in First Energy 8 for Rs 35.8 crore (Neutral)
*Adani Ports:* Company approves raising up to Rs 5,000 crore via NCDs. (Neutral)
*Maruti:* Company gets adjudication order from Gujarat GST authority upholding Rs 174 crore GST demand (Neutral)
*Bharat Forge/RK Forge:* North America class 8 truck orders down 7% YoY at 26,620 units. (Neutral)
*Induslnd Bank:* Bank has registered a 13 percent on-year growth in deposits (up 3 percent QoQ) at Rs 3.69 lakh crore for quarter (Neutral)
*State Bank of India:* SBI is looking to tap the US bond markets to raise $500-750 million (Neutral)
*BGR Energy:* State Bank of India has classified the credit exposure of the company with them as Sub-Standard with effect from February 2, 2023. (Negative)
*Religare:* Burman Family Issue A Statement On Rashmi Saluja ESOPs Matter (Negative)
*LIC:* Company said it has received GST demands totaling ₹667.5 crore along with penalties from three states—Tamil Nadu, Uttarakhand, and Gujarat. (Negative)
*LTIMindtree:* Company said it has received a tax demand of ₹206 crore (Negative)

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