All You Need To Know Going Into Trade On October 25

Most Asian stocks fell early Monday as traders weighed inflation risks, a Covid-19 outbreak in China and earnings prospects for major technology firms. Turkey’s lira slid to a record low amid a diplomatic spat.

Equities fell in Japan and South Korea, while Australia edged up. S&P 500 and Nasdaq 100 futures dipped, the 10-year U.S. Treasury yield rose and a gauge of the dollar was steady. Federal Reserve Chair Jerome Powell on Friday flagged inflation could stay higher for longer, while making clear the Fed will begin tapering bond purchases shortly but stay patient on rate hikes.

The Singapore-traded SGX Nifty, an early indicator of India's Nifty 50 Index’s performance, was littlechanged at 18,142, as of 7:00 a.m.

The lira tumbled after President Recep Tayyip Erdogan said the ambassadors of 10 nations, including the U.S., Germany and France, were no longer welcome in Turkey after they demanded the release of a prominent businessman and philanthropist.

Elsewhere, Crude oil extended a rally. Saudi Arabia said oil producers shouldn’t take the rise in prices for granted because the coronavirus pandemic could still hit demand. Bitcoin was trading around $61,000.

Trading Tweaks

• Ex-Date Interim Dividend: L&T Infotech

• Record Date Rights Issue: Nxtdigital

• Record Date Special Dividend: INEOS Styrolution India

• Move Into Short-Term ASM Framework: Ugro Capital,

• Move Out Of Short-Term ASM Framework: Radico Khaitan, Nxtdigital, Inox Wind, Best Agrolife

• Move Out Of ASM Framework: Karda Constructions, Tata Steel Long Products, PNB Housing Finance, Adani Green Energy, Affle (India), Ashapura Minechem, Borosil Renewables, Hindustan Foods, Neuland Laboratories, Indo Rama Synthetics

• Price Band Revised From 10% To 5%: Paras Defence and Space Technologies

• Price Band Revised From 20% To 10%: Rail Vikas Nigam

• Price Band Revised From 5% To 10%: Godawari Power and Ispat

Money Market Update

• Indian bond traders will parse the minutes of RBI’s October meeting for cues about the future path of policy normalization.

• The MPC did not want to rock the boat in the October policy, but the discussion about the appropriate real policy rate at this juncture indicates a strong likelihood of 20bps reverse repo rate hike in the December policy, says Kaushik Das, chief India economist at Deutsche Bank

  • RBI and MPC now seem to be on the same page about “right-sizing,” or absorbing excess liquidity, but nowhere close to considering changing the accommodative monetary stance

  • The 12-day Rs 4.5 lakh crore VRRR auction conducted on Oct. 22 came with a cut-off rate of 3.99%. We are not surprised by the increase in the VRRR cut-off rate, as this is the game-plan of RBI (whether it admits openly or not) to justify an eventual reverse repo rate hike, from current levels of 3.35%

  • Prior to that, expect another intermediate stage of liquidity absorption to come into force, by way of triggering longer-tenor VRRR

  • USD/INR up 0.1% at 74.8963 on Friday

    • Implied opening from forwards suggest spot may start trading around 74.97

  • 10-year yields rose 3bps to 6.36% on Friday; yields rose after auction cutoffs disappointed

F&O Cues

• Nifty October futures ended at 18,138.85, a premium of 23.95 points.

• Nifty October futures shed 3.69%, and 7,667 shares in Open Interest.

• Nifty Bank October futures ended at 40,415, a premium of 91.35 points.

• Nifty Bank October futures shed 5.42%, and 3,212 shares in Open Interest.

• Securities in the ban list: Escorts, Vodafone Idea, SAIL, Punjab National Bank

• Securities added to the ban list: Indiabulls Housing Finance, IEX

• Securities removed from the ban list: Amararaja Batteries, Nalco, Sun TV, IRCTC, L&T Finance, Tata Power