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SGX Nifty suggest a soft opening for domestic benchmark indices. (Photo by Daniel ROLAND / AFP) (AFP)
SGX Nifty suggest a soft opening for domestic benchmark indices. (Photo by Daniel ROLAND / AFP) (AFP)

Markets may be volatile; financial services shares, Dr Reddy's, HUL in focus

  • Asian stocks were mostly lower on Tuesday, tracking Wall Street declines as political turmoil in Washington and rising coronavirus cases worldwide weighed on sentiment ahead of the start of the quarterly earnings season

MUMBAI : After record-high closing on Monday, Indian stock markets are likely to be volatile on Tuesday. Trends on SGX Nifty suggest a soft opening for domestic benchmark indices. On Monday, the BSE Sensex ended at 49,269.32, up 486.81 points or 1% and the Nifty closed at 14,484.75, up 137.50 points or 0.96%.

Asian stocks were mostly lower on Tuesday, tracking Wall Street declines as political turmoil in Washington and rising coronavirus cases worldwide weighed on sentiment ahead of the start of the quarterly earnings season.

Political uncertainty dominated trading as House Democrats introduced a resolution to impeach US President Donald Trump, accusing him of inciting insurrection following a violent attack on the Capitol last week. Several big tech giants, including Twitter Inc, Amazon.com Inc , Alphabet Inc, Facebook Inc and Apple Inc, have taken action against Trump and his network of supporters, as concerns mounted over the risk of continued violence.

Investors also kept an eye on the continued spread of the coronavirus globally as cases surpassed 90 million on Monday, according to a Reuters tally.

Japan’s Nikkei slipped 0.48%, South Korea’s Kospi fell 0.91% and Hong Kong’s Hang Seng index futures lost 0.5%.

Back home, the Reserve Bank of India (RBI) said Indian banks’ bad loan ratio could rise to 13.5% under the baseline stress scenario by September, the highest in more than 22 years, posing a risk to the broader economy. The gross bad loan ratio of banks which stood at 7.5% as of 30 September, could almost double to 14.8% under a severe stress scenario, RBI warned on Monday in its semi-annual Financial Stability Report (FSR).

Dr Reddy's Laboratories on Monday said the Data and Safety Monitoring Board (DSMB) has recommended recruitment for the phase 3 clinical trials of Sputnik V vaccine for covid-19. The DSMB has reviewed the safety data from the phase 2 clinical trial of the Sputnik V vaccine and recommended the phase 3 recruitment and continuation of the clinical trial without any modifications, the Hyderabad-based drug major said in a statement.

Hindustan Unilever Limited's stock will be in focus as the Bombay High Court on Monday granted an ad-interim ex-parte injunction to the company against the advertisements released by personal care brand Sebamed which compared beauty soaps Lux and Dove to detergent brand Rin claiming that HUL beauty soap brands do not maintain the optimal 5.5 pH level meant for sensitive skin.

Meanwhile, longer-term Treasury yields were at their highest since March before new long-dated supply coming this week and on speculation of more US fiscal stimulus as Democrats will have control of Congress and the White House.

Benchmark 10-year notes last fell 11/32 in price to yield 1.1443%, from 1.107% late on Friday. The spread between the two-year and 10-year Treasury yields brushed against 100 basis points to hit its steepest since July 2017.

The climb in yields in turn offered some support to the dollar, which rose to its highest in over two weeks against a basket of currencies.

The US dollar index rose 0.256%, with the euro down 0.54% to $1.2152. The Japanese yen weakened 0.24% versus the greenback at 104.20 per dollar, while Sterling was last trading at $1.3516, down 0.35% on the day.

Crude oil prices fell, hit by renewed concerns about global fuel demand amid tough coronavirus lockdowns across the globe, as well as the stronger dollar. US crude recently fell 0.1% to $52.19 per barrel and Brent was at $55.61, down 0.68% on the day.

Safe-haven spot gold dropped 0.2% to $1,844.27 an ounce. Silver fell 1.70% to $24.94.

(Reuters contributed to the story)

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