Samvat 2073: Where Nifty Will Go First ? Either Towards 11350 Or 6550 ?? But High Volatility May Be Name Of The Game----Watch 8465-8850 In NF For Short Term

Despite India being a "sweet spot" in global economy, various geo-political events and global jitters may be the biggest headwinds for Indian Market.  

Thus volatility will be there and it may be a trader's paradise (both bulls & bears). For investors, contra play may yield more rather than chasing the market in the mid to long term.

Technically, as of now, probability of going towards 8000*-6800-6550 area may be more rather than 8850/9075*-9200-11350 zone on 2073.

One may watch 8465 & 8850 for any definitive movement in the short term on either way.

Have a very happy & prosperous Diwali for all of you---- 

 SGX-NF

Nifty Adds 14 Points After A "Mini Diwali Rally" Amid Tepid Global Cues Ahead Of US GDP

Market Wrap: 28/10/2016 (17:30)

Nifty Fut (Nov) today closed around 8669, almost flat (+0.16%) after a brief swing (Diwali) rally from the opening session low of 8605 to day high of 8682. On a weekly basis, Nifty closed almost 55 points down marked by the "Cyexit" event.

Looking at the chart, for next week, NF need to sustain above 8695-8725* area for further rally towards 8760-8800/8830*-8875 zone in the immediate to short term.

On the other side, sustaining below 8665-8625* area, NF may further fall towards 8600-8540*-8500/8465 zone in the immediate to short term.

Indian market today opened lower (-43 points) on the back of weak global cues marked by mixed/poor earnings (especially Amazon) and blood bath in bonds. USD was strong amid upbeat US economic data ahead of US GDP today. 

Market is expecting US GDP as 2.5% (prior 1.4%) and anything above this may make USD more strong and in that scenario, dollar index can break the level of 99 towards 101 level, which may make "risk trade" more vulnerable. On the other side, if US GDP will print around 2%, then USD can fall good and we may have a brief "relief rally" too.

Although, some analysts are attributing higher US GDP this time on the back of consumer spending and capex, some experts do also believe that tepid consumer sentiment and retail sales has a significant downside risk for the same.

Another important global event was that, a Northern Ireland High Court today declined to interfere in the Brexit issue citing that such "high policy matters are out of their judicial review", which practically paves the way for a smooth real Brexit. The next legal hurdle will be at the British High Court, but it’s now widely expected that the British High Court may also take the same view. As a result, GBP dropped well and that's made the USD stronger. & global market may not be fully discounted yet for the "Real Brexit too !!

Early morning Asian sentiment was further subdued today as BOJ-Kuroda preferred some hawkish script in his testimony before Japan parliament and emphasized for more structural reform from the Govt rather than too much dependence on monetary stimulus. As par some reports, Kuroda may not get extension after his terms ends this year.

Overall, apart from the high probability of Dec rate hike by Fed, USD is getting stronger across G-10 currencies because of divergent monetary policy and various geo-political risks in EU (Brexit, French/German/Denmark election, Scottish referendum, EU/Italian banking crisis and Grexit). This may be one of the primary reason for increasing spreads between German & US bond yields despite recent set of upbeat economic data (EU).

Oil was also down as market is not so confident about OPEC's ability for the proposed production cut/freeze in reality. Also, as oil is now hovering around $50, many "offline" oil producers are coming "online", specially Shell oil cos, on which OPEC has no control either, which may make the rebalancing in demand & supply more tough in the days ahead.

All eyes will be on the technical meeting this weekend among OPEC & Non-OPEC countries (Russia) to work out the final modalities scheduled to take concrete shape next month.

As par latest Russian jawboning, they may "freeze" the production at the present level only (almost at life time high), but not "cut" the same.

Among all these "usual global headwinds", Indian market today opened lower, but it covered almost instantly and gave a "Mini Diwali" rally of around 75 points from the low of the day, primarily inspired by some short covering or value buying (??) for the "deep discounted" Tata group of shares, specially Tata Motors & Tata Steel and some incremental reforms buzz by the Govt (in FDI space).

After huge public spats over the "Cyexit", which has caused nearly Rs.26000 cr of notional wealth of the investors in the last few trading days of blood bath, Tata group today decided for some damage control.

Tata today assured the market that the present deleveraging strategy in Tata Steel UK is intact and they are also calling for a "Global Investor Meet" (Tata Day) shortly to convince the investors about the "letter bomb" & $18 bln "hotspots" as thrown by disgruntled Mistry.

There was also a positive news/confirmation about Tata Steel that Quebec Gov is taking 18% stake in its Canada Iron Ore project (although it was previously known).

Another report was that, Govt is planning to relax the FDI rules in several areas, including retail, information & broadcasting sector for more capital inflows and "ease of doing business" in India, which may also helped to improve some market sentiment today.

But, increasing tension at Ind-Pak border may have also dented the market sentiment as its now turning quite serious & provocative and may be described as a "virtual mini war" just before Diwali Festival and US election in two weeks. As the nation is preparing for a blistering "Diwali" with fire crackers, soldiers at the border are playing with “real fires”.

Also, the ongoing Q2 result season may have failed to convince the market so far as most of the results are “at par/slightly above market expectation” coupled with similar types of guidance. As the mid-cap valuation is quite expensive, market may not be so much enthusiastic for fresh long from here as there are no fresh domestic drivers.

Apart from the ongoing global cues and geo-political issues, Indian market may now focus more on the current earning session, progress of GST (finalization of rate) and budget preparations.

 SGX NF

 

Nifty May Be Subdued Today Amid Tepid Global & Domestic Cues--Increasing Tensions On The Ind-Pak Border May Drag--Watch 8540-8665 In NF

Market Mantra: 28/10/2016 (08:30)

As par early SGX indication NF may open around 8600 (-65 points) following fall in US stock fut and tepid global/Asian cues.

Technically, sustaining below 8630*-8590 zone, NF may fall towards 8560/40*-8500/8480-8450 & 8425/05* area for the day in the moderate bear case scenario.

For any strength, NF need stay above 8665-8705* area for further rally towards 8750-8790-8815 & 8850/75* zone as the day may progress under extreme bullish case scenario.

Similarly for BNF (LTP: 19593), immediate support is around 19500-19450* zone and sustaining below that it may fall towards 19350-19200* & 19150-19050*-18950 area for the day.

For any meaningful strength today, BNF has to trade above 19600-19650* area for further rally towards 19700/19800*-19950 & 20050* zone as the day may proceeds.

Overnight US market was weak amid theme of strong USD supported by upbeat economic data and bond yields & mixed earnings.

Early morning Asian sentiment was further subdued today as BOJ-Kuroda preferred some hawkish script in his testimony before Japan parliament and emphasized for structural reform rather than too much dependence on monetary stimulus. As par some reports, Kuroda may not get extension after his terms ends this year.

Overall, apart from the high probability of Dec rate hike by Fed, USD is getting stronger across G-10 currencies because of divergent monetary policy and various geo-political risks in EU (Brexit, French/German/Denmark election, Scottish referendum, EU/Italian banking crisis and don't forget about Grexit also). This may be one of the primary reason for increasing spreads between German & US bond yields despite recent set of upbeat economic data in EU/Germany.

Globally, all eyes will be on the US GDP today for further assessment of the underlying strength of the world's largest economy to handle the likely Fed rate hike in Dec'16 and further 1/2 hikes in 2017.

Apart from ongoing Q2 result & Tata fiasco, Indian market may also take cues from the increasing tensions at the Ind-Pak border, where an virtual "mini war" may be happening right now, just before Diwali Festival, which may take a serious turn with US elections just two weeks left.

After 'Cyexit" debacle, there is some positive news for Tata Steel (Qubec will take its 18% stake in Canada mine) and it also reaffirmed about its strategic restructuring plan in UK/EU. Though these news are noting new, it will be very interesting to see, how the market react to the news.

 

SGX-NF

Nifty Closed The Oct Exp At 8615 After After A Volatile Day Marked By Tata-Mistry Duets---What's In Store For Nov?

Market Wrap: 27/10/2016 (17:00)

Nifty Fut (Oct) today closed around 8615, almost flat after a wild day of swing and made a session low of 8547 and late day high of 8624. 

For the Oct Exp, Nifty also finished almost flat after making "Surgical Strike" induced low of around 8505 and later marked by "Cyexit".

Technically, NF-NOV (LTP: 8655) has to close above 8700 zone for at least three consecutive days for target of 9000-9200 in Nov-Dec in extreme bull case scenario.

On the other side, consecutive closing below 8480 zone for at least three days, NF may fall towards 8000-7925 area by Nov-Dec in the worst bear case scenario.

For tomorrow (28/10/2016), NF has to sustain over 8680-8720* area for further rally towards 8760/8790*-8815/8850 zone in the immediate to short term.

On the flip side, sustaining below 8660-8620* area, NF may further fall towards 8600/8540*-8500/8480-8450/8425 zone in the immediate to short term.

Overnight US market recovered from negative to close flat on the back of robust earnings of Boeing and rally in Oil amid surprise inventory draw down by a Govt report, contrary to earlier Pvt Report. But, eventually, Crude was not able to sustain above $50, because of skepticism about OPEC's plan of production cut or even freeze.

Indian market today opened lower (gap down) following tepid global cues and most of the days traded in deep negative amid "Cyexit" jitters, which have not only affected some of the Tata Group shares significantly, but also affected the sentiment of the overall market. 

Also, largely "in line with estimates" earnings, but tepid guidance may have failed to convince the market and along with that, the continuing uptrend of the NPA woes of the banking sector may have also made the market jittery to some extent.

Market sentiment was improved today in the last hour, after Govt announced its plan to sale its stake for 17 PSUS (although there is no definitive time line). If sold successfully, then it may help the Govt to reduce the burgeoning fiscal deficit because of high infra capex & defence expenditure and 7-CPC/OROP pay outs. Govt today announced another "Diwali Gift" to the central Govt employees in the form of 2% DA.

Also, Tata Sons response to the "Letter Bomb" by Mistry helped to calm the nerves of the market/Tata shares by some extent. Although, the verbal duel will go on for some days, it has already dented shareholder's worth by a huge amount and already damaged the reputation of brand "TATA" for various reasons.

Now, regulators (SEBI), stock exchanges (NSE/BSE), various rating agencies and also banks are getting concerned and seeking clarifications regarding alleged write down probability of $18 bln in various group cos, corporate governance, cash flow issues etc. SBI may also review its total exposure of more than Rs.70000 cr with the Tata groups shortly.

From the overall flow of events, it seems that no big name (like Indra Nooyi), outside Tata family may be willing to act as a "Lame Duck" TATA SONS chairman, and in that scenario, Noel Tata may be an ideal candidate (being half brother of R.Tata, he may be an “Yes man”). But, Noel Tata has also married the sister of Mistry and it may be very doubtful also for him to be the next Chairman of TATA SONS.

Thus, in this board room war & family saga, R. Tata may continue for another 1-2 years as interim Chairman till they found any "suitable" big name, who can act as a "Lame Duck" Chairman and also be a global ambassador of brand/image “TATA”. 

Eventually, moral & confidence of key people in the group may deteriorate and investors may lose faith in the Tata groups as public spat between Tata & Mistry gets uglier day by day.

The main concern for the market may be the continuation of the present strategy of deleveraging employed primarily by Mistry, irrespective of “passion & emotion” attached with a non-viable business for Tata ("Hotspots" like Tata Steel UK/Corus, Tata Motors PV/Nano, Tata Power/Mundra, Indian Hotels, Airline ventures/Air Asia & Vistara).

Overall, sentiment of the global market was subdued in the early Asian session today after some verbal jawboning by BOJ-Kuroda, which made the Yen stronger.

But, later in the EU session, better than expected UK GDP data helped the "risk on" sentiment and Indian market also rebound from the days low.

Although, UK's GDP data may be revised later, but it also showed a "resilient" economy supported by dual benefit of a weaker currency and EZ/EU trade access. It does not capture the likely fall out of a "Real Brexit", be it "soft" or "hard" and did not alter the high probability of invocation of Article-50 in the coming months (March'17 or by Dec'17) and uncertainty with it.

Moreover, the better than expected UK GDP data came on today largely on the back of service sector & consumer spending and going forward, because of rising inflation (weak currency) & weak earnings growth may reduce the consumer's spending power and subsequent growth of the economy.

Thus, US election risk (Trump is now getting closer to Clinton as par latest poll), Fed hike (Dec'16) and subsequent dot-plots (1-2 hike in 2017), Real Brexit, China Yuan devaluation & credit concerns, EU/Italian banking crisis may be some of the global head winds, which may affect the market in Nov-Dec, despite India being a "sweet spot" in the global economy.

Domestically, all eyes will be on the Q2FY17 earnings, current spate of Tata saga, progress of GST & budget and ongoing geo-political tensions with Pakistan which is taking the shape of a virtual "Mini War" amid daily incidence of cease fire violations.

Overall, Nifty can break the present trading range amid various geo-political events & domestic cues and can move significantly in either way (500 points) by Nov-Dec'16.

SGX-NF

Nifty May Expire (Oct) Around 8560-8500 Today Amid Neutral Gloabl Cues And Cyrus "Letter Bomb" Of $18 bln "TATA Hotspots"

Market Mantra: 27/10/2016 (08:30)

As par early SGX indication, NF may open around 8590 (-21 points) following flat US stock Fut and neutral global cues.

Technically, for NF, immediate support may be around 8560-8530* zone and sustaining below that, NF may expire around 8500*-8465 area in the bear case scenario.

On the other side, for any strength, NF need to stay above 8640-8670* area for an expiry of around 8690-8720* zone in the bullish case scenario.

Similarly for BNF (LTP: 19500), immediate support may be around 19450-19350* zone and sustaining below that it may further fall towards 19200*-19000 area for the day.

On the other side, for any meaningful strength, BNF need to stay above 19600-19700* area for further rally towards 19800-19900* zone as the day may progress.

Overnight US market recovered from some loses to close flat on the back of better earnings of Boeing and rally in Oil amid surprise inventory draw down by a Govt report, contrary to earlier Pvt report. But, eventually, Crude was not able to sustain above $50, because of skepticism about OPEC's plan of production cut or even freeze.

Globally, all eyes will be on the UK GDP & US jobless claims & pending home sales today. Although, GBP got some strength day before yesterday because of Carney's calculated hawkish jawboning, yesterday it again fall as the Dy. BOE GOV popped up with some dovish scripts.

Whatever be the incoming US economic data, Fed may be now determined to raise rate in Dec'16, if there is no nasty election outcome and FFR is now hovering around 72-74%. 

Back to home, Tata group of stocks will be in focus because of yesterday's "Letter Bomb" by Cyprus Mistry, alleging himself as a "Lame Duck" Chairman, who was basically controlled by the former Chairman (Ratan Tata). There were various allegations regarding the viability of certain group cos/divisions and risk of $18 bln write downs. Some of the legacy business decision like Corus & Nano is hurting the group significantly, which need to be closed immediately to prevent further loses, but it was not possible because of Tata's passion & emotion associated with it.

Now it seems that regulators (SEBI) and stock exchanges (NSE/BSE) are now quite serious and seeking clarification for the $18 bln write down probability. Also, various rating agencies may review ratings of Tata cos, because of cash-flow issue.and corporate governance.

Though, institutional investors did not show any panic till now and may be accumulating Tata stocks at lower level, institutional concern can't be ruled out in the days ahead because of various issues raised by the Mistry.

Yesterday's tepid result & volume growth of FMCG cos (HUL & Dabur, except ITC) may be also an indication that Indian consumers are not in great mood (both urban & rural).

Also continuing NPA woes may hurt the sentiment of the market today.

 NSE-BNF

 

Nifty Sheds Another 90 Points Amid Tepid Global Cues Coupled With Poor Earnings and Mistry's Allegations Of Various TATA "Legacy Hot-Spots"

Market Wrap: 26/10/2016 (18:30)

Nifty Fut (Oct) today closed around 8611 (-1%), after trading choppy most of the days and in the process, made an opening high of 8669 and late day session low of 8599 (the opening minute low of 8585 may be an act of fat finger).

Technically, for tomorrow (26/10/2016), immediate support may be around 8560-8530* and sustaining below that, NF may expire around 8500/8465*-8430/8405 and further towards 8380*-8315 area in the worst case scenario.

On the other side, for any strength, NF need to stay above 8640-8670* area for an expiry of around 8690/8705*-8750/8775 and further towards 8800-8840* zone in the extreme bullish case scenario.

Considering the overall structure of the technical chart as of now, probability of NF expiry may be more around 8500 area for tomorrow.

Indian market opened today 35 points lower around 8662 in NF following tepid global cues after overnight/morning fall in US stock Fut (-0.50%) and subsequent weak Asian market sentiment and fall further.

Overnight US market was weak following mixed earnings and economic data. US consumer sentiment was weak, apparently for lack of suitable job openings just ahead of election. Result as well as guidance given by Apple was tepid and that's also dented the early Asian sentiment.

Overall, recent sets of good economic data in EZ/Germany, coupled with some hawkish script by BOE yesterday put the USD in some kind of pressure. Also, as par some reports, approval rating gap between Clinton & Trump is again narrowing with US election just two weeks away.

But, despite dip in US consumer sentiment in yesterday's data, overall incoming US economic data including the consumer sentiment itself is well above Fed's red line on an average and FFR is now indicating almost 75% probability of Dec'16 rate hike.

Yesterday, dollar index briefly breached 99 and then some profit booking may happen with US yields falling.

Crude oil slipped to around $49 amid various squabbling by OPEC production cut/freeze and a private report shows sudden build in inventories, especially gasoline and more Nigerian supply is coming to the oil market after some geo-political stability there.

Also, better than expected Australian CPI data and an apparent "Soft Brexit" stance taken by British PM has made the USD lower and dampened the sentiment of Asian market, because of strong Yen.

A buzz was also there that BOJ may abandon the quantum target of QE (Yen 80 bln bond purchase) to steepen the JGB yield curve, which also made the JPY stronger in the early Asian/EU session.

There was also some report that the ailing Italian Bank, Monte Paschi scrip was down by nearly 10% for some restructuring issues and trading halted, which caused the global sentiment as well as the Indian market more gloomy.

There was also a report that London real estate prices may fall by around 6% next year because of Brexit uncertainty and along with that the present BOE Gov's (Carney) confusion over continuation for the job beyond 2018 has made the global market more unstable.

As par some reports, a real Brexit can cause almost $102 bln deficit in UK's public finance over the next five years and GBP can depreciate by another 10% simply on the notion of current A/C imbalances, which made the FTSE/EU market lower.

Among all these global chaos, Indian market sentiment was further deteriorated after string of tepid earnings (either below or inline expected with no big surprise) & guidance from several corporate, especially some banks (Axis & Canara), where there are significant increase in stressed assets.

Notably, HDFC result was good/above expectation, as it was able to sell significant NPL/NPA to ARC.

Some analysts do also believe that on the back of falling bond prices (G-SEC), trading gains for the Indian banks may be muted in the coming days. For the last few years, treasury gains were an effective way for the Indian Banks to compensate for the NPA provision losses. 

Also, as banks were unable to transmit RBI repo rate cuts or even benefit of bond yields to its corporate borrowers by lowering bank lending rate (MCLR) correspondingly, corporate borrowers are increasingly shunning Indian banks for funding and going to the bond market for its finances. Thus, going forward, growth in business/corporate loan savvy banks may be tepid, especially for the PSBS & some selected Pvt Banks (Axis/ICICI/Indusind). Also, PSBS may face incremental pressure on Pension liabilities and together all these news caused the BNF tumbled by around 1.75%.

Thus Indian banks, especially PSBS may be now on the “House of Cards” and the pain of twin balance sheet may not be over yet, despite some early signs of “green shoots”.

Market sentiment was also affected in the last half an hour today, especially for the Tata group of shares after reports of a Mistry's letter addressing the Tata Sons board came in the lime light.

Mistry actually tried to defend his position by stating that various over leveraged Tata groups are in the "Legacy Hot Spots", specially Tata Steel-UK/Corus, Tata Motors-Nano project, Various hotels (Indian Hotels), Tata Com, Air Asia Airlines etc, just because of Rata Tata's passion.

It’s very clear that overall morale of key people may be affected further for this "war of words" between Tata & Mistry and the board room battle may ultimately go to court room, which may further damage the brand "TATA" and investors may not be quite amused. 

As par Mistry, Tata group may face the risk of nearly $18 bln in write downs in the months ahead.

Deleveraging effort by Mistry was one of the prime reason for expensive valuation premium enjoyed by various Tata cos in the recent past and any deviation from that may cause significant corrections for those cos.

Also, confusion over various (multiple) GST rates and cess may be casting some doubts about the effectiveness of the GST itself, if implemented in a hurry by April'2017 and that is also negative for the market sentiment.

As valuation is already high on the back of "expected" super growth in earnings by FY: 17-18 or even by FY-19, any below expected or even in line with expectation Q2 result is resulting significant selling pressure in those scrips.

Only those scrips are rallying (although briefly), which has reported "well above expectation" earnings as of now.

Overall, watch the level of SPF (LTP: 2131), which may touch 2105 level, if sustained below 2120 and in that scenario, we may have gap down opening tomorrow as well in Nifty around 5560 level itself.

 

NSE-NF