Sensex is trading lower today in line with other Asian stocks

Traders are entering 2024 with a thoroughly dovish rhetoric, at least in case of Fed. Expectations are that the reverberation will be felt across major central banks, sooner or later. Hang Seng rose the most, followed by Shanghai Comp

Aditi Gupta,

Economist,

Bank of Baroda

Mumbai, November 29, 2023: Macro data from US suggested a further cooldown in economic activity, indicating that the Fed is on track to cut rates. Jobless claims rose by 12,000 to 218,000 versus consensus estimate of 210,000, marking a second consecutive weekly increase. Separate data showed that pending home sales remained flat at a record low, below expectations of a 1% increase, despite lower mortgage rates. CPI inflation in South Korea moderated to 3.2% in Dec’23 versus an increase of 3.3% in Nov’23. RBI’s Financial Stability Report highlighted that GNPA of SCBs declined further to 3.2% in Sep’23 from 3.9% in Mar’23. However, the report flagged some risks with regard to higher vintage delinquency in some personal loan segments. Further, macro stress tests results indicated that even under severe stress scenario banks’ CRAR is expected to remain above the minimum capital requirements.

• Global equity indices broadly closed higher. Traders are entering 2024 with a thoroughly dovish rhetoric, at least in case of Fed. Expectations are that the reverberation will be felt across major central banks, sooner or later. Hang Seng rose the most, followed by Shanghai Comp.  Sensex rose by 0.5%, led by oil and gas stocks. It is trading lower today in line with other Asian stocks.
• Except EUR and GBP, other global currencies appreciated against the dollar. After falling for 4-straight sessions, DXY recovered amidst an uptick in US treasury yields. CNY appreciated by 0.5%. Following a dip in oil prices, INR strengthened and rose by 0.2%. It is trading further stronger today, in line with other Asian currencies.
• Global yields broadly closed higher due to realignment of portfolio ahead of the last trading day of the year. UK’s 10Y yield rose by 6bps, followed by US and Germany, noting 5bps increase each. This is despite US jobless claims data pointing towards softer labour market conditions. India’s 10Y closed stable amidst announcement of 7-day VRR auction. It is trading lower at 7.19% today.

(The views expressed in this research note are personal views of the author(s) and do not necessarily reflect the views of Bank of Baroda. Nothing contained in this publication shall constitute or be deemed to constitute an offer to sell/ purchase or as an invitation or solicitation to do so for any securities of any entity.)