Listen: What’s the connection between Nifty and crude oil prices?

Hi hello. Welcome to ETMarkets Morning, the money, business and markets show. I am Nikhil Agarwal. Let’s start with the headlines first.

– Blackstone to Close Deal with VFS at Over $ 2 Billion Valuation
– October-December hiring intention reaches a peak of 18 months
– Banks could post a sharp rise in profits in the second quarter
– The promoters of the Srei group move Bombay HC

Now let me give you a quick overview of the state of the markets.

Dalal Street is expected to have a positive start this morning. The crafty futures on the Singapore Stock Exchange traded 147 points higher at 8:40 a.m. (IST). Asian stock markets mostly opened higher on Thursday, extending gains on Wall Street as Republicans in the U.S. Congress offered a compromise in high-stakes talks about lifting the U.S. debt limit. The largest MSCI index of Asia-Pacific stocks excluding Japan rose 1.30 percent.

Elsewhere, the yield on 10-year Treasuries climbed to 1.54%. The safe-haven dollar held fast near a 14-month high against the euro on Thursday, as a surge in energy prices fueled fears that inflation could dampen economic growth while spurring the Federal Reserve to act sooner to normalize its policy. Oil prices fell for a second session on Thursday, under pressure from an unexpected increase in US crude inventories that raised demand concerns after prices hit multi-year highs. Brent crude slips 2 cents to $ 81.06 a barrel.


That said, here’s what’s in the news.

ET study shows that the correlation between crude oil prices and Nifty’s move has been positive over the past two decades. Over the past two decades, the benchmark Nifty has rebounded six out of nine times when crude prices have risen. In the month following the rally, the benchmark gained five out of nine times. Losses on three of the four times were less than 2%. Likewise, in the three month period after the crude oil price spike, Nifty rose six times out of nine. Analysts say stocks and crude mostly tend to move in tandem, as these two assets react to risk sentiment in the same way.

Whenever traditional-minded investors think they have finally understood the role of cryptocurrencies in financial markets, the digital asset class always seems to prove them wrong. Ink had barely dried on the analysis pointing out that Bitcoin and stocks were moving in the same (downward) direction in September when that positive correlation quickly reversed this month. As it stands, the S&P 500 is down around 5% from its last high on September 2, while the largest cryptocurrency is up 10%.

Tata Power Company stock was up 33% in one month after remaining within a range for the previous five months. The trend reversal is due to expectations that the impact of rising coal prices on the company’s finances will be limited as the company has taken steps to reduce losses at its Mundra thermal power plant by shrinking power generation and subsequently increased output from its Indonesian coal mines to take advantage of higher world prices.


Aditya Birla Sun Life Asset Management Company could list 4-5% above its IPO price of 712 per share if its unofficial gray market premium is to pass. Analysts said that while the stock’s valuation is cheaper relative to its listed peers, investors may be holding back from raising prices aggressively following recent market weakness. Its gray market premium fell to 10 yen per share on Tuesday, but stabilized at 30-35 yen on Wednesday. At the time of the IPO process, that premium was around 40 yen per share, down from its high of around 70 yen in the third week of September.


NOW Before you go, here’s a look at the actions buzzing this morning …

Tata Power announced on Wednesday that it has hired renewable energy artificial intelligence company BluWave-ai. In a statement, the company said it has signed a three-year business agreement with BluWave-ai.

Real estate firm Macrotech Developers, which markets properties under the Lodha brand, reported on Wednesday an 88% growth in sales bookings to Rs 2,003 crore for the September 2021 quarter. In London business, Macrotech Developers reported on Wednesday made a sales reservation of Rs 1,450 crore during the September quarter.

Inox Wind said on Wednesday that its board of directors had approved the issuance of preferred shares worth Rs 1,100 crore to its promoters. Decisions in this regard were made at a board meeting held on October 6 of this year, according to an ESB file.

Subhash Chandra, founder and chairman emeritus of Zee Entertainment Enterprises (ZEE) on Wednesday called Invesco’s demand to remove chief executive and CEO Punit Goenka and to reconstitute the company’s board of directors, a “clandestine attempt” to take of “illegal” control of the company.

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Felix J. Dixon

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