US NFP and quarterly earnings will be keenly watched

Big week for the Indian primary markets, 5 companies would be aiming for successful subscription. Result seasons is underwhelming as many corporates are concerned about rising raw material costs which is impacting margins. Previous week, Sensex & Nifty declined by 2.5% each as the broader markets witnessed selling pressure. On macro front, Infrastructure output in India rose 4.4% YoY in September of 2021, the slowest in seven months, easing from a downwardly revised 11.5% increase in the previous month. India�s fiscal deficit narrowed to Rs 5.3 trillion in April-September of 2021-22 from Rs 9.1 trillion in the corresponding month of the previous fiscal year. That was equivalent to 35% of the government�s estimate for this financial year, compared with 114.8% of budget aim in the same period last year. In the coming week, worldwide PMI levels and US NFP will be keenly watched by the investors.

FIIs/FPIs have invested Rs. 131 billion in September 2021 and sold Rs. 135 billion in October 2021. Foreign Institutional Investors (FIIs) Derivative Statistics have shown a rise in the open interest in stock futures, stock options, index futures and index options. Implied volatility (IV) rose for put options in the last week and for call options. Rise in IV for put option and fall in IV for call option shows unsteady support for Nifty at present levels.

Wallstreet indices closed at record highs on Friday amid stronger earnings from oil & natural gas producing companies. However, Nasdaq heavy weight Apple and Amazon reported lower than expected results. During the week, Dow Jones up by 0.4%, Nasdaq up by 3.32%, and S&P 500 rose by 1.14%.

European markets closed on a mixed note on Friday taking the earnings cues from the US tech companies. During the week, FTSE up by 0.46% and DAX gained by 0.94%.

Increasing demand for oil and supply tightness is benefiting oil producers. Brent crude crossed USD 85 mark which was last seen in 2018. Higher natural gas prices and shortage of coal are supporting the oil prices upward rally. During the month, Brent crude prices gained by 13%.

Global Economy

The American economy expanded an annualized 2% on quarter in Q3 2021, well below market forecasts of 2.7% and slowing sharply from 6.7% in Q2. It is the weakest growth of pandemic recovery as an infusion of government stimulus continued to fade and a surge in COVID-19 cases and global supply constraints weighted on consumption and production.

The number of Americans filing new claims for unemployment benefits fell to a fresh 19-month low of 281,000 in the week ending 23rd October 2021 as the labor market slowly recovers to its pre-pandemic normal.

Stocks of crude oil in the United States rose by 2.318 million barrels in the week ended 22^nd October 2021, following a 3.294 million barrels jump in the previous week, and marking the fifth straight weekly gain.

The Euro Area economy expanded by 2.2% on quarter in the three months to September 2021, following a downwardly revised 2.1% growth in the previous period and slightly beating market expectations of 2%.

The European Central Bank left monetary policy unchanged during its October meeting and pledged once again to keep interest rates at record-low levels until inflation rises back to the ECB's 2% target by the middle of its projection horizon and holds there on a durable basis. President Christine Lagarde reiterated the central bank is in no hurry to tighten its policy, even though inflation was widely discussed during the meeting.

Annual inflation rate in the Euro Area jumped to 4.1% in October 2021 from 3.4% in September 2021 and higher than market forecasts of 3.7%.

Industrial production in Japan dropped by 5.4% (M-o-M) in September 2021, compared with market consensus of 3.2% fall and after a 3.6% decline.

The Bank of Japan left its key short-term interest rate unchanged at -0.1% and kept the target for the 10-year government bond yield at around 0% during its October policy-meeting. In a quarterly outlook report, the central bank slashed its projected rates of the GDP for the current FY to 3.4% from earlier forecasts of 3.8% made in July 2021.

The official NBS Manufacturing PMI for China unexpectedly fell to 49.2 levels in October 2021 from 49.6 levels a month earlier and missing market expectations of 49.7 levels.