WEEKLY WISDOM
Dipak Kr Shaw
Strategic leader and versatile thinker with more than 24 years of insightful experience and a proven record of accomplishments in leading top performing teams focused on exceeding goals in the area of Sales, HNI Advisory
WEEKLY WISDOM
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INDIA SHINES IN 2022
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WORLD MARKETS
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US and European markets ended with modest cuts while most of the Asian markets gained in the last week of 2022. Relaxation of Covid restriction in China and gyrations in US treasury yields mainly drove the equity indices.
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For the week, US indices fell 0.2%-0.6%. European markets eased 0.1%-0.5%. In Asia, Nikkei fell 0.25% but Hang Seng and Shanghai rose 1.5% each while Nifty rose 1.7%.
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For the year, most of the world markets ended lower with US indices falling the most since 2008. Dow fell 8.8% while S & P 500 and Nasdaq nosedived 19.4% and 33.1% respectively, snapping 3-year winning streak. In Europe, FTSE inched up 1.2% but CAC and DAX fell 9.5% and 12.5% respectively. In Asia, Nifty rose 4.3% but Nikkei, Hang Seng and Shanghai fell 9.4%, 15.5% and 15.1% respectively.
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For the week, US 10-year treasury yield rose 13 bps to 3.88%. Dollar index fell 0.8% to 103.49.?Gold rose 1.4% to $1823 per ounce. For the year, US 10-year treasury yield surged 156% or 237 bps. Dollar index surged 8.2% for its best performance in seven years. Gold was down 0.4%.
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For the week, Brent and WTI crude rose 1.7% and 1.2% respectively. For the year, Brent gained 10.4% and WTI rose 6.7%.
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Now let's look at the daily movement of the US market for the week.
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US and European markets were shut on Monday for Christmas holiday.
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On Tuesday, Dow inched up 0.1% but S & P 500 and Nasdaq fell 0.4% and 1.4% respectively as bond yields climbed and Tesla shares plunged 11% on reports that it would continue a weeklong production pause at a Shanghai facility.
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On Wednesday, US indices tumbled 1.1%-1.4% on the back of a 3% slide in Apple, rising treasury yields and weak economic data. Pending home sales slipped 4.0% in November on a monthly basis, worse than the expected decline of 1.8%.
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On Thursday, US indices surged 1%-2.6% as treasury yields and dollar dipped after initial unemployment claim data pointed to a cooling off in the U.S. labor market. Initial claims for unemployment benefits rose 9,000 to a seasonally adjusted 225,000 for the week ended Dec. 24, slightly above the 223,000 estimate.
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On Friday, after falling between 1-1.5%, a late surge helped US indices trim the losses to just 0.1%-0.2% on the last session of the year. For the year, Dow fell 8.8% while S & P 500 and Nasdaq nosedived 19.4% and 33.1% respectively, snapping 3-year winning streak and marking the worst yearly performance after 2008.
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China, at the start of the week officially announced that it will end quarantine for inbound travelers on Jan. 8.
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AT HOME
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Last week of calendar 2022 brought a much needed respite for the bulls as Nifty rose 1.7%, snapping a 3-week losing streak. Nifty mid-cap and small-cap indices surged 4.5% and 6% respectively but still fell short of recouping huge losses suffered last week. Nifty PSU Bank index made a spectacular come back by rising 11% and recouping all the losses made last week. Metal index followed with 8% gains. Healthcare and Pharma indices were the top losers, down 1.9% and 1.5% respectively.
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India's Q2 Current Account Deficit surged to $36.4 bn, hitting a 9-year high of 4.4% of GDP, as imports surged 30% while exports rose 16%. India's core sector, comprising eight core industries, grew at 5.4% in November, up from 0.9% growth in the previous month.
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FIIs net sold stocks worth Rs 2512 cr but net bought index futures and stock futures worth Rs 136 cr and 2524 cr respectively. DIIs were net buyers to the tune of Rs 5063 cr.
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OUTLOOK
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As 2022 and 2023 begins, recession fears are at the top of the mind as Central Banks across the world are ramping up interst rates to control inflation. This, along with developments in China related to Covid restrictions and economic data will be key things to eye at the start of 2023.
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US and UK markets will remain shut on Monday. Final reading of Eurozone December manufacturing PMI will be the data to eye for the day.
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Data to eye on Tuesday include, China's December Caixin Manufacturing PMI, Germany December unemployment and CPI and final reading of December manufacturing PMIs from UK and USA.
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On Wednesday, minutes of the latest Fed meeting will be watched along with US December ISM Manufacturing index and Eurozone December services PMI.
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US weekly jobless claim will be data to eye on Thursday along with China December Caixin services PMI, Japan December consumer confidence and Eurozone November PPI.
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Friday brings all important US December nonfarm payroll data. In Europe Germany November factory orders and Eurozone December inflation, consumer confidence and November retail sales are due on the same day.
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Economic data, December auto sales numbers, foreign and domestic flows and global cues will be watched at home.
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India's Nikkei S & P Global manufacturing PMI will be out on Monday, which will be followed by Services PMI on Wednesday
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Taking cues from the charts, 34-DMA, placed around 18400, is the next upside target as well as resistance to eye. Upon crossover of this hurdle, 18462 and 18650, the 61.8% and 78.6% retracement levels of the recent 18887-17774 fall, would be next upside levels to eye. On the way down, 17967, the low made Tuesday, is the immediate support on the hourly chart, below which, 17774, the low made during the week, would be next downside level to eye. Meanwhile, trading longs can be held on to with the stop-loss of 17967.