Dec 07 2018

Rupee Higher After Brent Falls Below $60/Barrel

Financial Market Overview

07th December, 2018

Morning Coffee:-                                                                        

MARKETS AT OPEN:-

Rupee:-

  • The Indian rupee is expected to open higher against the dollar, helped by a retreat in crude oil prices amid signs that the OPEC may reduce output less than expected.
  • The rupee opened at 70.55 versus its previous close of 70.90. In addition to the decline in oil prices, the currency will further be supported by “less severe” global risk aversion and losses on the dollar index. However, the rupee is unlikely to see much traction above 70.50 in the wake of the increasing volatility across asset classes worldwide.
  • We are quite at the near-term bottom for the pair, and risks are clearly on the downside for the rupee from present levels on account of all the uncertainty posed by the declining long-term U.S. yields..
  • We expect USD/INR to trade in a range between 70.40 – 70.80 today.

 Indian Equities:-

  • Indian markets cracked on Thursday tracking weak trend seen in other Asian markets. The S&P BSE Sensex plunged 572 points while Nifty50 lost 181 points to end at 10,601.
  • The total market capitalisation of BSE listed fell by Rs 2.28 lakh crore. Global cues will be important for charting market direction in the near term along with state election outcome due next week. A defeat of BJP would signal uncertainty about the outcome of the general elections which are around the corner and markets hate uncertainty.

Global Markets:-

  • Asian markets are higher today as Japanese and Hong Kong shares show gains. The Nikkei 225 is up 0.10% while the Hang Seng is up 0.27%. The Shanghai Composite is trading 0.09% up.The Australian ASX 200 is up by 28 points or 0.49%.
  • European markets finished sharply lower today with shares in Germany leading the region. The DAX is down 3.48% while France’s CAC 40 is off 3.32% and London’s FTSE 100 is lower by 3.15%.
  • The S&P 500 and Dow industrials ended slightly negative but well above their session lows in volatile trading on Thursday as the arrest of a Chinese technology executive fanned fears of tensions between the United States and China over trade, while some big technology and Internet shares posted gains.
  • The Dow Jones Industrial Average fell 78.05 points, or 0.31 percent, to 24,949.02, the S&P 500 lost 4.1 points, or 0.15 percent, to 2,695.96 and the Nasdaq Composite added 29.83 points, or 0.42 percent, to 7,188.26.
  • The dollar index declined 0.3% yesterday amid mixed economic data. The non-manufacturing ISM data came ahead of expectations, while private job additions missed expectations. The more closely watched non-farm payroll data is due later today. 200,000 job additions in November and an average earnings increase of 0.3% on-month.
  • The Brent crude dropped below $60 a barrel in early Asia trading on Friday, adding to its losses in the previous session. The losses came amid reported comments by the Saudi Arabia energy minister that a cut of one million barrels per day would be enough for OPEC and its allies, which is at the lower end of the forecasts of analysts.
  • Russia will join its OPEC counterparts to decide on the next course of action to stabilize oil prices, which have fallen by 30% this quarter.
    Dollar index flat at 96.80 after falling 0.3% in the previous session.
  • Ten-year US yield at 2.89% after falling to fresh 3-month low of 2.82% yesterday.