Markets likely to be volatile; banks, realty stocks in focus

  Indian markets are likely to be volatile on Tuesday even as the SGX Nifty trends suggest a gap up opening of the benchmark indices.

On Monday, the Sensex had ended at 38,417.23, gaining 60.05 points or 0.16%. The 50-share Nifty was at 11,355.05 adding 21.20 points or 0.19%.

Asian shares regained some footing on Tuesday following a small bounce in European shares as investors looked to whether high-flying US tech shares could recover from their recent rout.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2% while Japan's Nikkei gained 0.4%.

Back home, banks and financial services stocks will be in focus today. In its report, the five-member panel led by KV Kamath identified five financial parameters to gauge the health of sectors facing difficulties. The committee has selected 26 sectors which will require restructuring based on its analyses of financial parameters hit due to the economic crash led by covid-19.

Realty stocks will also be in focus as the central bank has allowed greater leeway to the real estate sector with the highest debt to Ebitda ratio permissible among the 26 sectors it has identified.

India’s largest lender State Bank of India (SBI) on Monday raised around ₹4,000 crore in perpetual bonds at a record-low coupon, a sign that investors are willing to invest in these securities once again after the Yes Bank episode, which saw the private lender’s perpetual bonds being written off under its rescue plan.

The Enforcement Directorate (ED) on Monday made its first arrest in the ICICI Bank quid pro quo case, when it arrested Deepak Kochhar. This comes after the agency had registered a money laundering case against him and his wife former head of ICICI Bank Chanda Kochhar.

Meanwhile, the 10-year US Treasuries yield stood at 0.716%, off a five-month low of 0.504% touched in August.

In currencies, sterling dropped after the European Union told Britain on Monday that there would be no trade deal if it tried to tinker with the Brexit divorce treaty. The warning came after British Prime Minister Boris Johnson's government was reported to be planning new legislation to override parts of the Brexit Withdrawal Agreement it signed in January.

The pound lost 0.80% on Monday to $1.3167, near its lowest levels in two weeks.

Other currencies barely moved with rises in US yields helping to stem the dollar's recent weakness. The euro eased slightly overnight to $1.1818 while the dollar was little moved at 106.31 yen. Gold was little changed at $1,930.9 per ounce.

Oil prices dropped to five-week lows after Saudi Arabia made its deepest monthly price cuts to supply for Asia in five months and as uncertainty over Chinese demand clouds the market's recovery.

US WTI futures fell 1.4% to $39.23 per barrel.