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Market likely to be tepid; bonds & banks may be hit on RBI move

Dragged by weak global cues, the market may stay flat on Monday. The SGX Nifty also indicates a tepid start on Dalal Street. Asian markets start the week on the back foot as the greenback starts to soften and oil prices slip. All eyes are on OPEC meet this week.

November 28, 2016 / 09:01 AM IST

Dragged by weak global cues, the market may stay flat on Monday. The SGX Nifty also indicates a tepid start on Dalal Street. Asian markets started the week on back foot as the greenback is softenening and oil prices slipping. All eyes are on OPEC meet this week. 

Both the Sensex and Nifty ended last week higher by 166.10 points (0.63 percent) and 40.20 points (0.49 percent), respectively. Macroeconomic data and quarterly earnings from Tata Power and Oil India would set the trend in the stock market this week. In a surprise move, Reserve Bank of India has asked banks to maintain an incremental cash reserve ratio of 100 percent, the  move is estimated to suck out around Rs 3.24 lakh crore of excess liquidity from the system and will be applicable on deposits between September 16 and November 11 fortnights. Bonds and bank stock will take a hit in trade today. Among global cues, Japanese stocks traded weaker after an 11 straight sessions of gains as the yen fell sharply against the dollar and oil prices slipped.

Japan's Nikkei 225 fell 0.82 percent, likely due to the yen strength, which is seen as a negative for Japanese export-oriented stocks. The yen surged more than 1 percent to 111.63 against the dollar as of 10:01 am HK/SIN, well below levels above 113 last week.Last Friday, China and Hong Kong securities regulators announced that the long-awaited Hong Kong-Shenzhen stock connect would kick-off on December 5. The trading link would allow foreign investors to trade Shenzhen stocks from Hong Kong.

The dollar fell against major rivals on Friday as investors took advantage of a pullback in US bond yields and a holiday-shortened week to consolidate gains that have propelled the currency to a nearly 14-year peak. Expectations of rises in US inflation and interest rates have driven the greenback to a more than 6 percent gain in the past two months, its strongest showing over a similar period since early 2015.

Prices fell as much as 4 percent on Friday, dragged down by uncertainty over whether the organization of the petroleum exporting countries will reach an output deal.

Futures extended early losses after Saudi Arabia said it will not attend talks today with non-OPEC producers to discuss supply cuts.

Gold pared a third weekly drop as the dollar halted a rally that sent bullion prices to a nine-month low and pushed silver into a bear market. Gold's first gain in four days cut last week's loss to 2 percent.

first published: Nov 28, 2016 08:07 am

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