Bond yields are diverging, with short-term rates falling due to liquidity while long-term rates rise, signaling the end of the current rate-cut cycle. Institutions are locking in long-term funds, anticipating future rate increases, as the market prices in a potential shift to higher rates.
Nifty faces a range-bound week after failing to breach 26,000. Analysts anticipate cautious trading with support seen at 25,300 and resistance at 25,700-26,000. Traders are advised a wait-and-watch approach. Key stock picks include Bajaj Finance, Torrent Pharma, Tata Motors Passenger Vehicles, Dr. Reddys Laboratories, L&T, and Pricol, offering potential trading opportunities.
Chinese stocks face a gloomy outlook as corporate earnings show a significant downturn. Investors are concerned that upcoming holiday spending will not be enough to boost the market. Economic indicators point to weak consumer demand. This situation is fueling worries that the Lunar New Year will not bring its usual economic uplift.
Debt investors are increasingly concerned about major tech companies taking on significant debt for AI development, leading to a surge in credit derivative trading. This market activity, particularly for single-company contracts on issuers like Meta and Alphabet, reflects a growing demand for protection against potential defaults as AI investments escalate.
Overseas fund managers have reduced bearish derivative bets on India, moving from near-lifetime lows as market pessimism eases. However, they remain cautious, retaining significant short positions due to ongoing AI trade uncertainties on Wall Street. This cautious approach is reflected in the fluctuating Long-Short Ratio of FPIs' Nifty futures.
Non-banking finance companies (NBFC) can now factor in DLGs when setting aside buffers for potential loan losses, provided the guarantee forms an integral part of the loan arrangement, the RBI said last week.
The Reserve Bank of India is seeking input from banks to streamline overseas investment rules. This move aims to simplify procedures and ease compliance hurdles for Indian companies. Discussions are underway to address practical challenges and ambiguities in the current framework. The central bank is looking to clarify regulations and facilitate smoother outbound investments for businesses and individuals.
