After a day off, the market is set to enter the weekend with gains. The signal from the western markets is also positive. The US Dow Jones Industrial Average closed up 0.6 percent yesterday for a fifth straight day of gains. The rise in foreign markets is giving hope to the Indian market, which was in a major slump on Wednesday. It is concluded that the market will not show much concern over the Hindenburg report against the Adani Group.
The US indices were boosted yesterday by the excitement provided by the GDP figures. Tesla’s strong results also helped. But later US futures turned lower. The reason is that Intel Company’s report was worse than expected. Asian shares are showing modest gains at the start of the day. The Chinese market is still closed today.
The SGX Nifty rose to 18,029 from 17,953 yesterday in derivatives trade on the Singapore Exchange. This morning the index moved to 18,035. This indicates that trading will start with the Indian market gains.
Hindenburg Research’s report on Wednesday not only led to a fall in Adani Group companies but also the market itself. If the Adani Group suffers a setback, it will affect banks including SBI, which have given them huge loans. That is what shook the market.
On Wednesday, the Sensex closed down 773.69 points (1.27%) at 60,205.06 and the Nifty closed down 226.35 points (1.25%) at 17,891.95. The mid-cap index fell 1.52 percent while the small-cap index lost 0.94 percent.
Nifty Bank fell 2.54 percent (1085.75 points). Sectors like consumer durables, capital goods, healthcare, IT and oil and gas were also underwhelming.
The market closed in a bearish mood. It is estimated that if Nifty moves below 17,840, it will undergo a major correction. Nifty has support at 17,850 and 17,790. On the upside, resistance may be encountered at 18,045 and 18,200.
On Wednesday, foreign investors sold shares worth Rs 2393.94 crore in the cash market. Swadeshi funds bought shares worth 1378.49 crore.
Crude oil remains high. Brent crude is at $87.64. The talk is that prices will rise when China returns to the market next week.
China’s New Year holiday dampened industrial metals markets. Prices moved up and down in a small area. Copper remains above $9,600 per ton and aluminum at $2,640.
Gold again failed in its attempt to cross $1950. After peaking in 1950, it declined until 1918. Get in again. Gold is at 1933 – 1935 dollars this morning. The drop came after the US GDP figures.
Gold closed at 1848 in the US market on Wednesday. In Kerala on Thursday, pavan prices increased by Rs 320 to touch a new record of Rs 42,480. The price may drop a bit today.
The dollar closed at Rs 83.59, a loss of 13 paise, after a flurry on Wednesday. The dollar index closed at 101.64 yesterday and rose to 101.80 today.
Hindenburg bomb against Adani Group
The bomb dropped by US activist Nathan Anderson’s Hindenburg Research against the Adani Group has shaken the Indian market. The Adani Group denied the allegations and said it would take legal action. The group’s market capitalization fell by Rs 85,000 crore.
The core of the Hindenburg report is not the old allegation that the group is in debt. The report alleges Gautam Adani’s brother Vinod used shell companies in tax-free countries to manipulate the prices of group companies and manipulate the accounts of the companies. According to the report, the group’s share price should fall by 85 percent.
Anderson is not a retailer
In 2020, it was Hindenburg Research that exposed financial irregularities at electric vehicle maker Nickelodeon Motors and fired founder Trevor Milton. Companies like China Metal, Vince Fin Tech and Genius Brands have also been victims of Hindenburg Research. Anderson’s stance is that if Adani gets ready for a legal battle, he will get a chance to subpoena the company’s documents and expose the fraud.
It is clear that the release of the allegation on the occasion of Adani Enterprises’ further sale of shares (FPO) to raise Rs 20,000 crore is deliberate. On the same day, there were reports that anchor investors would invest Rs 6,000 crore in the FPO. Of this, 35 percent is owned by Adani’s UAE partner, International Holding Company. Other West Asian groups also bought stakes. LIC, SBI Life, HDFC Life, SBI Employee Pension Fund etc. bought shares from India. Goldman Sachs, Nomura, Morgan Stanley, Citigroup and others have also become investors.
Many feel that Adani will tire if things turn into a legal battle. Past fights have shown that Anderson is a well-trained guy.
US GDP growth beats expectations
US indices on Thursday were boosted by US GDP growth of 2.9% in the December quarter. Growth was slower than the previous quarter and the final quarter of 2021, but better than expected. Annual GDP growth to 2.1 percent in 2022. Although much lower than the 5.9 percent in 2021, the jump without falling into recession is a big achievement. GDP, which was on the decline in the first half, advanced in the second half.
There is comfort in the fact that the economy has moved forward despite the interest rate hike of 4.25 percent. The accompanying initial job loss estimate and new home sales estimate were better than expected. What these figures suggest is that there is little impact on the momentum of US growth. There is no weakness in the employment sector either. The US Fed will continue to raise interest rates. But the rate of increase will decrease.
The Fed Committee announces interest rates on February 1. The market is expecting rate hike from 4.25-4.50 to 4.5-4.75 percent. It is concluded that even on March 22, the rate will be increased to 4.75-5.00 percent.