Bulls n Bears Daily Market Commentary : 28 October 2020

Wed Oct 28 15:58:46 CAT 2020

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Bulls n Bears Daily Market Commentary : 28 October 2020

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ZSE commentary

Market Turnover ZWL$6,168,881.00 with foreign buys at NIL and   foreign sales were ZWL$2,086,407.00 Total trades were 168

The All Share index lost 6.37 points to close at 1,462.81 points. FBC HOLDINGS eased $0.3402 to close at $13.9184, AFRICAN SUN dropped $0.2231 to end at $1.6269 and HIPPO VALLEY ESTATES traded $0.2059 weaker at $13.7500. CASSAVA SMARTECH  also decreased by $0.1686 to settle at $4.0659 and MEIKLES was $0.1360 lower at $15.1500.

Losses were offset by gains in AFDIS which added $0.6242 to $17.0000, SEEDCO  which rose by $0.5000 to $16.5000 and BINDURA  traded $0.1779 firmer at $3.6000. Other counters to advance include AMALGAMATED REGIONAL TRADING  which was up by $0.0900 to $2.2900 and DAWN PROPERTIES traded $0.0200 stronger at $0.7000. 

Global Currencies & Equity Markets

South Africa

South African rand flat before inflation data, budget speech

South Africa's rand was little changed on Wednesday, ahead of the release of monthly inflation data and a mid-term budget speech by Finance Minister Tito Mboweni.

(Reuters) - South Africa's rand was little changed on Wednesday, ahead of the release of monthly inflation data and a mid-term budget speech by Finance Minister Tito Mboweni.

At 0645 GMT, the rand ZAR=D3 traded at 16.2175 versus the U.S. dollar, near the previous session's close.

Consumer price index data ZACPIY=ECI, due at 0800 GMT, is expected to show inflation stayed flat at around 3% year-on-year in September, reflecting weak demand in Africa's most industrialised economy.

Mboweni's budget speech will start around 1200 GMT and lay out high-level spending priorities for the next three years.

A Reuters poll last week predicted the minister would announce a marginally wider budget deficit forecast than the one that featured in June's emergency coronavirus budget.

Mboweni is also expected to unveil more bailouts for ailing state-owned companies, such as South African Airways, which have been a long-term drain on stretched public finances.

Government bonds were also flat, with the yield on the 2030 instrument ZAR2030= at 9.25%.

 <mailto:info at bulls.co.zw> 

India

Rupee drops by 16 paise to over 1-month low on strong dollar demand

he rupee depreciated by 16 paise to settle at more than one-month low of 73.87 against the US currency on Wednesday due to month-end dollar demand from importers and the greenback''s gains against major currencies.

Losses in domestic stock markets and uncertainty ahead of expected fresh stimulus measures also weighed on the investor sentiment.

At the interbank forex market, the rupee opened on a positive note at 73.70 against the greenback, but soon pared gains to touch an intra-day low of 73.93. 

The local unit finally settled at 73.87, registering a decline of 16 paise over its previous close of 73.71. This is the lowest closing level since September 24 when the rupee had settled at 73.89.

The dollar is strong versus major peers on month-end portfolio rebalancing, with investors focusing on the next week''s US presidential election and the global rise in virus infections, he added. 

Gupta further said that the spot is not breaking the psychological level 74 but the odds of spot going beyond 74 remains high as market volatility has started to rise.

Meanwhile, the dollar index, which gauges the greenback''s strength against a basket of six currencies, rose 0.41 per cent to 93.31.

On the domestic equity market front, the 30-share BSE benchmark Sensex ended 599.64 points or 1.48 per cent lower at 39,922.46. The broader NSE tanked 159.80 points or 1.34 per cent to close at 11,729.60.

Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 3,514.89 crore on Tuesday, according to exchange data.

Brent crude futures, the global oil benchmark, fell 3.16 per cent to USD 39.30 per barrel. 

According to Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services: "Market participants are now waiting for more clarity on the stimulus package which is under consideration for quite some time now. For the next couple of sessions, we expect the rupee to quote with a negative bias and quote in the range of 73.40 and 74.05."

Moreover, greenback purchases by state-run banks, likely on behalf of importers also weighed on the local unit, Iyer said adding that uncertainty over the outcome of the US Presidential election and U.S. stimulus impasse also weighed on the domestic unit.

Investors trod with caution amid concerns about presidential elections.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold prices today fall, down ₹5500 from record highs; silver rates drop

Gold and silver prices in Indian markets continued to struggle as the precious metals slipped in global markets. On MCX, December gold futures were down 0.2% to ₹50,860 per 10 gram while silver rates fell 0.5% to ₹61,978 per kg. In the previous session, on MCX, gold futures had ended flat while silver edged up 0.6%. MCX gold prices are in a consolidation range with lack of directive trades and a rise above ₹51,200 could boost prices higher, Geojit Financial Services said in note.

In global markets, gold prices were marginally lower today amid ebbing hopes of US stimulus before the elections. A stronger US dollar also weighed on gold. Spot gold fell 0.1% to $1,905.51 per ounce while the dollar index was up 0.22% against rivals, making bullion expensive for those holding other currencies.

Among other precious metals, silver fell 1% to $24.30 per ounce while platinum was down 0.1% at $878.15.

ETF flows remained volatile as investors remained cautious ahead of the US elections. Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund or gold ETF, rose 0.23% to 1,266.72 tonnes on Tuesday.

Equities markets were under pressure today as concerns lingered about the impact of the worsening pandemic on economic activity in some parts of the world. Analysts said the new wave of virus infections and lingering uncertainty over the US vote would mean equities face a wobbly few days.

After hitting a record high of ₹56,200 in August, gold prices in India have lost momentum, tracking a global trend. Gold prices in India include 12.5% import duty and 3% GST.

Gold investors are also keeping an eye on EU-UK trade talks. Brexit negotiating teams have started intense daily talks, and these are likely to continue as both sides push to finalize a deal by the middle of November. Also, Bank of Japan and the European Central Bank have monetary policy decisions tomorrow while first reading of U.S. third-quarter GDP Thursday is also due.

Silver Price Forecast – Silver Markets Rally But Pull Back

Silver markets tried to rally for the trading session on Tuesday but pulled back from the 50 day EMA to form a less than impressive candlestick.

Silver markets rallied a bit during the trading session on Tuesday only to find resistance near the 50 day EMA. By pulling back from that moving average, it shows that we are going to continue to struggle in general, and it looks like we are going to reach down towards the $24 level. If we can break down below there, then the market is likely to go looking towards the $22 level. Underneath, the 200 day EMA is going to offer quite a bit of support as well. In other words, I do think that it is only a matter of time before the buyers return. Having said that, I have no interest in trying to get too cute with this and I recognize that this is a market that is on edge.

You could make an argument that we are forming a little bit of a “rounding top”, but I would not read too much into it. With central banks around the world throwing liquidity into the marketplace, it is likely that we are going to eventually see people buying “hard assets.” I would love to get an opportunity to buy silver based upon some type of supportive daily candlestick, or even better yet, a weekly candlestick. As we have the election next week, I suspect that the markets in general will probably go back and forth overall, and silver will probably continue to be the same way. Ultimately, this is simply a matter of looking or value and taken advantage of it.

INVESTORS DIARY 2020

Company

Event

Venue

Date & Time

Falgold

EGM

1st Floor, KPMG Building, 133 Josiah Tongogara Avenue, Bulawayo

29/10/2020 | 10:00 am

Bindura

AGM

Virtual

05/11/2020 | 14:00

Natfoods

AGM

Royal Harare Golf Club

09/11/2020 | 8:45am

Afdis

AGM

virtual

13/11/2020 | 12:20pm

Zimbabwe

National Unity Day

Zimbabwe

22/12/2020

Christmas Day

25/12/2020

Boxing Day

26/12/2020

New Year’s Day

01/01/2021

Invest Wisely!

Bulls n Bears 

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DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of Faith Capital (Pvt) Ltd for general information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy or subscribe for any securities. The information contained in this report has been compiled from sources believed to be reliable, but no representation or warranty is made or guarantee given as to its accuracy or completeness. All opinions expressed and recommendations made are subject to change without notice. Securities or financial instruments mentioned herein may not be suitable for all investors. Securities of emerging and mid-size growth companies typically involve a higher degree of risk and more volatility than the securities of more established companies. Neither Faith Capital nor any other member of Bulls ‘n Bears nor any other person, accepts any liability whatsoever for any loss howsoever arising from any use of this report or its contents or otherwise arising in connection therewith. Recipients of this report shall be solely responsible for making their own independent investigation into the business, financial condition and future prospects of any companies referred to in this report. Other  Indices quoted herein are for guideline purposes only and sourced from third parties.

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