After four weeks, gold rebounds, saves $1,900/ounce; traders should short on every bounce

By Jigar Trivedi

Weekly, the metal gains 1.4% after four consecutive periods of declines. Initially, the yellow metal dropped below $1,885 an ounce on Friday, facing pressure from a strong dollar as investors continued to gauge the monetary policy outlook following Federal Reserve Chair Jerome Powell’s Jackson Hole remarks. The banker noted caution is required in next meetings to assess the health of the economy, but further hikes won’t be ruled out since the regulator aims to bring inflation back to the target. At the same time, traders bet on a possible pause in tightening from the ECB due to the weak European data. More insights on that could be provided in Lagarde’s comments later in the day. Previously, two Fed officials indicated that the jump in bond yields could complement the central bank’s effort to slow the economy and reign in price pressures without needing to raise rates.

Dollar Index firms at 11-week high

The dollar index rose above 104.2 on Friday, reaching its highest levels in eleven weeks and on track to advance for the sixth straight week as investors digested Federal Reserve Chair Jerome Powell’s Jackson Hole speech. Powell’s statement emphasized the US Federal Reserve’s commitment to bringing inflation back to 2% and stated that the central bank is ready to hike rates if needed. At the same time, Powell suggested the Fed could hold rates steady at its next meeting in September to assess the incoming data and the evolving outlook and risks.

US durable goods orders fall the most in over 3 years

New orders for manufactured durable goods in the US plummeted by 5.2% in July 2023, following a downwardly revised growth of 4.4% in June and exceeding market expectations for a 4.0% decline. It was the sharpest decrease in durable goods orders since the aftermath of the COVID-19 outbreak in April 2020, driven by a significant drop in demand for transport equipment.

US 10-year treasury yield retreats further

The yield on the 10-year US Treasury note retreated toward 4.2% after hitting a 15-year high of 4.342% on August 21st, triggering a sharp rebound for government bonds worldwide as credit markets continued to assess the policy outlook for the Federal Reserve and gauge the impact that higher bond supply may have on their bidding levels. Cooler-than-expected PMI figures engaged bond buyers in the market to take further advantage of the recent slump in Treasury securities, reflecting bets that fears of a slowing US economy will force the Fed to ease its hawkishness. Still, other data releases countered slowdown fears, as strong retail sales underscored the resilience of the US consumer while robust industrial growth and a relatively tight labor market suggested the US central bank may still have more room to tighten monetary policy. Additionally, risks remain for bond prices in the secondary market due to concerns about higher long-dated debt issuance from the Treasury this month.

Outlook

US will release consumer confidence on Tuesday but most importantly, ADP employment change for August and Q2 GDP on Wednesday and Non-farm payrolls on Friday will be releasing. From the technical angle, $1,885/ounce, the low point of last week is now a crucial support for now for gold price. In case the yellow metal with the support of the volumes, falls below it, may fall further to $1,860 an ounce. The dollar index too has appreciated last week, hence if the bull-run continues in the greenback, the yellow metal may decline further. Hence we recommend to short on every bounce.

(Jigar Trivedi, Senior Research Analyst – Currencies & Commodities at Reliance Securities Limited. Views expressed are the author’s own.)

Heating equipment maker JNK India files draft papers with Sebi to float IPO

Heating equipment maker JNK India Ltd has filed preliminary papers with capital markets regulator Sebi to raise funds through an initial public offering (IPO).The IPO comprises a fresh issue of equity shares worth up to Rs 300 crore and an Offer for Sale (OFS) of up to 84.21 lakh equity shares by promoters and an existing shareholder, according to the Draft Red Herring Prospectus (DRHP) filed on Tuesday.

Those offloading shares in the OFS are of promoters — Goutam Rampelli, Dipak Kacharulal Bharuka, JNK Heaters Co. Ltd. and Mascot Capital and Marketing Pvt Ltd. — and shareholder Milind Joshi.The Mumbai-based company may consider an issue of equity shares aggregating up to Rs 60 crore in the pre-IPO placement round. If such placement is completed, the fresh issue size will be reduced.

As of March 2023, it had an order book of about Rs 868 crore, way higher than the over Rs 143 crore order book in March 2021.In terms of financials, the company’s consolidated revenue from operations surged by 37.42 per cent to Rs 407.30 crore for the fiscal year 2023 from Rs 296.40 crore a year earlier and net profit increased by 29 per cent to Rs 46.36 crore in fiscal 2023 from Rs 35.98 crore in fiscal 2022.IIFL Securities and ICICI Securities are the book-running lead managers of the public issue. The equity shares are proposed to be listed on BSE and NSE.

Aeroflex Industries IPO Listing: Shares have bumper debut on bourses, list at 83% premium

Aeroflex Industries IPO: Aeroflex Industries shares listed at 83% premium over IPO price on NSE and BSE amid flat domestic market. The share debuted at Rs 197.40 on the BSE, as compared to the issue price of Rs 108. Aeroflex Industries shares’ grey market premium gained 66% on Thursday, commanding a premium of Rs 71 over upper end of the IPO price, implying a listing price of Rs 179 per share.

Aeroflex Industries IPO subscription data

Aeroflex Industries IPO opened for subscription on 22 August and the issue was fully subscribed 97.11 times on the last day of subscription, helped by overwhelming participation from institutional investors. The Qualified Institutional Buyers (QIBs) category was subscribed 194.73 times, the portion for non-institutional investors received 126.13 times subscription and Retail Individual Investors (RIIs) quota got oversubscribed by 34.41 times.

“On FY23 financials, the IPO is valued at 42x P/E, 26.6xEV/EBITDA and 5.3x EV/Sales. The company is likely to benefit from growth prospects in traditional industrial segments like manufacturing, automotive, oil & gas among others as well as emerging industries like solar, lithium-Ion battery management and robotics among others. Moreover, a strong track record of commercialising and scaling up new products and R&D capabilities puts the company in a good position to capture the requirements of diverse end user industrial sectors. In view of diversified product portfolio, strong financials, global footprint, focus on expanding its capacities, products and R&D capabilities, we recommend a SUBSCRIBE to the issue,” said Reliance Securities.

About Aeroflex Industries

Aeroflex Industries, a subsidiary of SAT Industries manufactures and supplies environment friendly metallic flexible flow solution products like multiple variety of hoses, tubes and hose assemblies.The company’s clientele includes distributors, fabricators, maintenance repair and operations companies (MROs), original equipment manufacturers (OEMs), and companies operating in a wide range of industries. Moreover, the company has recently forayed into manufacturing products made of bronze. The company’s products replace flow solutions made of rubber and polymers. Flexible flow solutions made with stainless steel corrugation are becoming a preferred solution because of their advantages. The company recorded more than 1,700 product SKUs (Stock Keeping Units) in its product portfolio.

Oil ticks higher after China moves to support flagging economy

Oil prices ticked higher on Monday, along with equity markets, after China took steps to support its flagging economy, though investors remained worried about the pace of growth as well as further U.S. interest rate hikes that could dampen fuel demand.

Brent crude rose 22 cents, or 0.3%, to $84.70 a barrel by 0049 GMT while U.S. West Texas Intermediate crude was at $80.08 a barrel, up 25 cents, or 0.3%.

“Unfortunately, after last week’s modest (Chinese central bank interest) rate cut, the announcements above amount to another piecemeal measure that won’t alter investor gloom towards China,” he added.

China’s manufacturing purchasing managers’ index (PMI) due later this week will likely reveal more dour economic news around the world’s second-biggest economy, Sycamore said. The PMI is likely to remain in contraction territory for a fifth consecutive month, he added.

CMC markets analyst Tina Teng said a soft-landing scenario for the U.S. economy buoyed energy markets on Monday despite the Federal Reserve’s ongoing hawkish stance on rate hikes.

Brent and WTI posted a second week of loss on Friday after Fed Chair Jerome Powell said the U.S. central bank may need to raise rates further to cool still-too-high inflation.

However, oil prices remained above $80 a barrel on support from falling oil inventories and supply cuts from the OPEC+ collective of oil producers.

In the United States, energy firms cut the number of active oil rigs for a ninth month in August, Baker Hughes said in its report.

Also, Tropical Storm Idalia has formed in the Caribbean and could strengthen into a hurricane and hit Florida.

The hurricane is forecast to miss oil and gas centres in the Gulf and the most likely impact is a day or two of power outages, said IG’s Sycamore. That “should see some short term support for the oil price”, he said.

USD-INR may consolidate within 81.70- 82.75, expect bargain buying near lower band; BoE, ECB eyed for cues

BY Dilip Parmar

The Indian rupee notched the best week since 3 March following the weaker greenback and risk-on sentiments. All Asian currencies gained against the US dollar in the week gone. However, the rupee underperforms among the region on weekly as well as month to date amid higher dollar demand from importers.

Short-term Outlook

Spot USDINR formed the Bullish Engulfing pattern on Friday, representing a change of sentiments. The pair has closed below 200 DMA but it has remained within 2 standard deviations of 20 DMA since February. We expect the pair to further consolidate between 81.70 to 82.75 and expect bargain buying near the lower band.

The ICE Dollar index registered its worst week in eight months following a fall in US yield after a surprise drop in monthly core inflation, the lowest since 2021, which led traders to abandon their previous idea that there might be two more rate increases still to come. The dollar fell and everything else climbed. The Japanese Yen and Euro gained the most against the US dollar among the major currencies. Elsewhere, a gauge of EM currencies saw its best week since January. Oil notched its third weekly advance, but fell on Friday as traders locked in profits and the commodity’s 200 DMA again provided a barrier to further advances.

As per the CFTC data, the flow was mixed during the week in the FX. Speculators sold Euro, Swiss franc and Australian dollar while gone for a long pound. However, they held a net short dollar position on aggregate of $12.5 billion.

What to Watch

China’s economy will be front and centre in the week ahead, starting with the People’s Bank of China setting its one-year rate on Monday. Later that day second-quarter GDP and June activity data. The UK and EU inflation report due Wednesday is set to be the week’s main event as it will help traders and investors fine-tune their bets on how far the Bank of England and ECB will raise interest rates after a strong repricing over the past week.

(Dilip Parmar is a Research Analyst at HDFC Securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)

Amarnath Yatra 2023: First batch of pilgrims leave from Jammu base camp – See Photos

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The Lieutenant Governor of Jammu and Kashmir Manoj Sinha on June 30 flagged off the first batch of Amarnath Yatra pilgrims from Jammu. Before flagging off the batch, Sinha performed a puja.The 62-day yatra pilgrimage will start from July 1. Pilgrims will leave for the twin base camps of Baltal and Pahalgam in Kashmir to journey on the pilgrimage to the 3,880-metre-high cave shrine of Lord Shiva in the south Kashmir Himalayas. Over 3,500 pilgrims have reportedly arrived in Jammu to go on the pilgrimage.

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Jammu and Kashmir Lt Governor Manoj Sinha flags off the first batch of pilgrims for the Amarnath Yatra 2023 after conducting a puja at the Bhagwati Nagar base camp in Jammu on June 30. (Image: PTI)

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Pilgrims shout religious slogans while boarding a bus as the first batch of pilgrims leaves for the Amarnath Yatra 2023 in Jammu. (Image: PTI)

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Security forces personnel keep vigil as a convoy of the first batch of pilgrims leaves for Kashmir. (Image: PTI)

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First batch of pilgrims leaves for the Yatra in Jammu. (Image: PTI)

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Sadhus wait to get themselves registered at Ram Mandir base camp in Jammu on June 30

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 Pilgrims wait for registration at Mahajan hall in Jammu. (Image: PTI)

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A sadhu being examined by the paramedical staff at Ram Mandir Amarnath Yatra base camp, in Jammu on June 30. (Image: PTI)

Vishnu Prakash IPO subscribed 87.81 times on last day of offer

The Initial Public Offering (IPO) of Vishnu Prakash R Punglia Ltd was subscribed 87.81 times on the last day of bidding on Monday, helped by strong engagement from institutional buyers.The company is into Engineering, Procurement, and Construction (EPC) works.

The Rs 308.88 crore-public issue received bids for 1,92,56,17,350 shares against 2,19,30,000 shares on offer, according to NSE data.The category for Qualified Institutional Buyers (QIBs) received 171.69 times subscription while the quota for non-institutional investors got subscribed 111.02 times.

Proceeds from the fresh issuance will be utilised for purchasing capital equipment, funding the working capital requirements of the company, and the balance for general corporate purposes.

The Jodhpur-based company has experience in the design and construction of major infrastructure projects for the central and state governments, with ongoing projects in nine states.Choice Capital Advisors and Pantomath Capital Advisors were the managers to the offer.The equity shares are proposed to be listed on the BSE and the NSE.

Share Market Highlights: Nifty closes just over 19300, Sensex under 65k; RIL AGM today, JFS ends 2% lower, RIL sheds 1.3%

Share Market News Today | Sensex, Nifty, Share Prices Highlights: Domestic equity indices NSE Nifty 50 and BSE Sensex closed in the green on Monday, as traders celebrated the US Federal Reserve Chairman’s less hawkish stance and new measures by the Chinese authorities to support the markets. Nifty 50 closed at 19,306.05, while Sensex closed the trading session at 64,996.60, giving up the 65,000 level. The broader markets settled largely in the green, with Nifty Midcap 100 and Nifty Smallcap 100 adding 0.5% and 0.74%. Sectorally, all indices save for Nifty FMCG, Nifty IT and Nifty Oil & Gas gained. Bank Nifty rose 0.6%, while Nifty Pharma, Nifty Realty and Nifty PSU Bank clocked the highest gains.

Live Updates

Share Market Today | Sensex, Nifty, BSE, NSE, Share Prices, Stock Market News Live Updates on 28 August

15:59 (IST) 28 Aug 2023 Markets at close

Nifty 50 closed at 19,306.05, while Sensex closed the trading session at 64,996.60, giving up the 65,000 level.

13:18 (IST) 28 Aug 2023 NBFC-MFIs outlook

ICRA predicts that non-banking financial companies-microfinance institutions (NBFC-MFIs)’ profitability will improve to 2.7-3.0% in FY2024 and 3.2-3.5% in FY2025, from 2.1% in FY2023.

12:07 (IST) 28 Aug 2023 Upcoming week data-heavy

“At the Jackson Hole symposium, Fed Chair Jerome Powell recognised the progress made in controlling inflation from last year’s peak. However, he warned that inflation was still at levels considered “too high” implying that interest rates could stay elevated. Powell emphasized that policy would continue to be restrictive until inflation steadily declined toward its 2% target. This week the market will get direction from forthcoming US reports on ADP non-farm employment, the PCE price index, personal income and spending data, JOLTS job openings, ISM Manufacturing PMI.”

– Chintan Mehta, CEO, Abans Holdings

11:13 (IST) 28 Aug 2023 RIL AGM expectations

“All eyes would be on RIL AGM and its announcement focusing on Jio Financial future outlook post demerger. RIL has a lot of plans on cards for value unlocking which started from Jio Financials but first initial reactions post listing was not as street expectations. I believe Mukesh Ambani would be focusing more on the Jio Financial plan of action in coming days, which would give a road clear for further value unlocking of retail and Jio telecom ventures.”

– Prashanth Tapse, Senior VP (Research), Mehta Equities.  

10:59 (IST) 28 Aug 2023 BHEL gains 3%

BHEL bags order worth Rs 22.4 billion from NHPCL. The share price rose over 3% to Rs 109.25 apiece.

09:50 (IST) 28 Aug 2023 August weak for equities

“August has been weak for global equity markets. In the mother market of the US, S&P 500 is down by 4% so far in August. This weakness has impacted all other markets including the Indian market where Nifty is down by around 2% so far in August. The global economic scenario and the growth, inflation and interest rate trends in the US will continue to determine stock market trends globally.”

– V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

09:22 (IST) 28 Aug 2023 Gold outlook

“Gold has support at $1904-1892 while resistance is at $1928-1940. Silver has support at $24.00-23.88, while resistance is at $24.35-24.48 In INR terms, gold has support at Rs 58,480, 58,310. while resistance is at Rs 58,865, 59,040. Silver has support at Rs 72,710-72,150, while resistance is at Rs 74,240–75,040.”

– Rahul Kalantri, VP Commodities, Mehta Equities

09:19 (IST) 28 Aug 2023 Markets at open

While Nifty 50 opened at 19,298.35, the NSE index reclaimed the 19,300 level while Sensex began the trading session at 64,908.08, however, it topped the 65,000 level shortly after opening.

09:14 (IST) 28 Aug 2023 Markets at pre-open

Domestic indices NSE Nifty 50 and BSE Sensex end the pre-open session flat. Sensex added 0.03% while Nifty 50 gained 0.17% early Monday morning.

08:51 (IST) 28 Aug 2023 Global cues to drive markets

“Local markets are likely to join the positive global trend following a dovish Federal Reserve Chair Jerome Powell’s speech at the central bank’s annual economic symposium in Jackson Hole on Friday. Markets have been lingering in the negative territory in the past few weeks due to weak global cues and FII selling, and hence recovery is anticipated owing to India’s underlying economic strength compared to other global economies.”

– Prashanth Tapse, Senior VP (Research), Mehta Equities

08:23 (IST) 28 Aug 2023 Fed Chair Powell reaffirms inflation fight

Federal Reserve Chair Jerome Powell on Friday did little to dissuade markets from the “higher for longer” mantra for rates that has driven up Treasury yields in recent weeks, leaving some investors looking for more cautious bets in case the economy is unable to escape a downturn next year.

Speaking at the Kansas City Fed’s annual gathering in Jackson Hole, Wyoming, Powell left open the possibility of further rate increases and stressed the U.S. economy’s surprising strength, though he acknowledged declines in the pace of inflation over the past year.

07:52 (IST) 28 Aug 2023 RIL AGM eyed

Key index heavyweight Reliance Industries is gearing up for its 46th annual general meeting (AGM), which will drive domestic cues for the forthcoming week. The AGM, to be held today, follows closely on the heels of Jio Financial Services making its market debut and the Qatar Investment Authority’s purchase of a stake in Reliance Retail Ventures (RRVL).

07:47 (IST) 28 Aug 2023 Wall Street

U.S. stocks ended a volatile session higher on Friday as investors digested comments from Federal Reserve Chair Jerome Powell that the U.S. central bank may need to raise interest rates further to ensure inflation is contained, according to Reuters. The Dow Jones Industrial Average experienced an increase of 0.7%, the S&P 500 gained 0.7%, and the Nasdaq Composite rose by 0.9% on Friday.

07:40 (IST) 28 Aug 2023 F&O ban

The National Stock Exchange has Escorts Kubota, SUN TV, GMR Airports Infrastructure, RBL Bank, Hindustan Copper, Manappuram Finance, India Cements and BHEL securities on its F&O ban list for 28 August.

07:38 (IST) 28 Aug 2023 FII, DII data

Foreign institutional investors (FII) sold shares worth net Rs 4,638.21 crore, while domestic institutional investors (DII) bought shares worth net Rs 1,414.35 crore on 25 August.

07:33 (IST) 28 Aug 2023 Crude oil

Oil prices ticked higher on Monday, along with equity markets, after China took steps to support its flagging economy, though investors remained worried about the pace of growth as well as further U.S. interest rate hikes that could dampen fuel demand.

07:33 (IST) 28 Aug 2023 Asian shares in focus

Stock markets across the Asia-Pacific region surged in trade on Monday as China announced new measures to support its ailing markets, though the mood was cautious ahead of readings on U.S. jobs and inflation could decide whether interest rates have to rise again.

Chinese indices Shanghai Composite and Shenzhen Component jumped 5% and 5.63% respectively. Japan’s Nikkei-225 added 1.5%, while Hong Kong’s Hang Seng index surged 3.16%. South Korea’s KOSPI added 0.85% while the Taiwan index rose by 0.34%.

Wall Street set to open higher with focus on Nvidia’s high-stakes results

Wall Street was set to open higher on Wednesday, with the spotlight firmly on Nvidia as investors wait to see if its results could reignite an artificial intelligence-powered rally in megacap growth stocks.Rising bets that Nvidia’s revenue target will once again surpass Wall Street estimates pushed the chipmaker’s stock to a record high on Tuesday, but analysts also fear that a failure to match investor expectations could trigger a wider selloff.Its shares were up 0.8% in premarket trading.

A blowout forecast from the company last quarter has been one of the biggest catalysts for the S&P 500’s 14% gain so far this year.”When the market takes a focus on one stock, any disappointment could have a reverberation in the market,” said Andre Bakhos, managing member at Ingenium Analytics LLC.

Tesla fell 2.1% after a report that the company lowered the production target of its German plant.Supporting equities on Wednesday, the yield on the 10-year U.S. Treasury note slipped from near 16-year highs hit in the previous session.Data showedthe interest rate on the U.S. 30-year fixed-rate mortgage last week shot to the highest since December 2000.S&P Global’s flash U.S. Composite PMI index for August, due at 9:45 am ET, could provide additional clues on the path for interest rates ahead of a speech by Fed Chair Jerome Powell at Jackson Hole on Friday.

Traders’ bet of a rate hike pause by the Fed next month stands at 86.5%, according to CME Group’s FedWatch tool. A slew of downbeat earnings reports also kept a lid on market sentiment. Sport retailers Nike and Under Armour fell 3.6% and 1.5% , respectively, after a downbeat profit forecast from Foot Locker, whose shares slumped 30.8%.Shares of U.S. analog chipmakers NXP Semiconductors , Texas Instruments and ON Semiconductor slipped between 2% and 3% after Analog Devices reported lower quarterly revenue.

At 8:24 a.m. ET, Dow e-minis were up 34 points, or 0.1%, S&P 500 e-minis were up 6.5 points, or 0.15%, and Nasdaq 100 e-minis were up 25.5 points, or 0.17%.Shares of drugmakers Gilead Sciences and Merck & Co advanced about 3% each after Swiss rival Roche inadvertently published positive lung cancer drug trial data.Peloton Interactive shares plunged 27.8% after the fitness equipment maker pushed back its cash-flow positive target to 2024.

Oil rises on China, US economic data and OPEC+ cut expectations

Oil prices ticked up in Asian morning trade on Monday, as market sentiment was buoyed by positive China and U.S. economic data, as well as expectations of ongoing crude supply cuts from major producers.

Brent crude was up 17 cents, or 0.2%, at $88.72 a barrel at 0015 GMT. U.S. West Texas Intermediate crude (WTI) rose 25 cents, roughly 0.3%, to $85.80.

On the demand side, China’s manufacturing activity unexpectedly expanded in August, data from Caixin’s manufacturing PMI survey indicated, leading to renewed optimism about the economic health of the world’s largest oil importer.

A series of economic support measures announced by Beijing last week, such as deposit rate cuts at some of the country’s largest state-owned banks and an easing of borrowing rules for home buyers, have also supported prices.

However, investors continue to await more substantial moves to prop up the country’s embattled property sector, which has been one of main drags on the Chinese economy since its emergence from the pandemic.

In the U.S., employment data was higher than expected on Friday, with nonfarm payrolls increasing by 187,000 jobs last month.

A broader cooling of the U.S. labour market, as seen in slowing job growth, reduced the chances of further rate hikes by the Federal Reserve in the immediate future, analysts said.

Expectations of tightening oil supplies have grown after Russian Deputy Prime Minister Alexander Novak’s remarks on Thursday that Russia had agreed with partners in the Organization of the Petroleum Exporting Countries (OPEC) on the parameters for continued export cuts. An official announcement with details of the planned cuts is expected this week.

Russia has already said it will cut exports by 300,000 barrels per day (bpd) in September, following a 500,000 bpd cut in August. Saudi Arabia is also expected to roll over a voluntary 1 million bpd cut into October.