As par early SGX indication, NF may open around 8785, almost flat.
Technically, NF has to sustain over 8805-8825*
zone for further rally
up to 8875-8900/25*-8975/95 area in the immediate to short
term.
On
the flip side, sustaining below 8765-45* zone, NF may fall
towards
8705-8675/50*-8550/30 area in the immediate to short term.
BNF (CMP: 19706) has to sustain over 19750-950* area for further rally up to 20000-350* and 20750*-950 area in the immediate to short term.
On the downside, sustaining below 19700-650* area, BNF may fall towards 19500-300* and 19040*-18550 zone in the immediate to short term.
Overnight US market closed by (-)0.30% after recovering by some extent from the lows. Overall US economic data was positive yesterday and coupled with that morning jawboning by BOJ (Kuroda) has inspired some rally in the USDJPY.
Yesterday's US IMS MFG PMI & vehicle sales data was good/above expectation, but there was some disappointment in the construction data. Also, vehicle sales growth was supported by heavy discount.
On the political front, Clinton & Trump are running almost neck to neck despite advantage of the 1-st debate in favour of Clinton.
As par some reports, Wikileaks may publish some "secret documents/information" about Clinton today, which may end the present Presidential campaign of Clinton abruptly !!
Yen is getting weaker in the Asian session today, after some reports that BOJ has tapered purchase of 10Y+ JGB on Friday. Also, Kuroda is in some types of testimony before Japan Parliament today and as par him, NRIP is not bad for Japan's banks & financial sector, at least for the short term and will be an advantage for the overall Japanese economy and there are some talks by a Abe advisor that because of "doing all the stupid things", chances of Kuroda getting a 2-nd term looks very thin.
All these BOJ drama is helping USDJPY to get some traction and Yen is getting some weakness as Japanese economy desperately required that at this point of time to get back some of its lost export competitiveness as a result of recent strength of the currency.
Back to home, all focus of the Dalal St today may be on the "Mint St", where RBI/MPC is discussing about Indian economy and likely policy decision, which will be published today at 14:30 instead of traditional 11:00.
Although any rate cut expectation may be very low, considering the recent divergence of CPI & WPI and issues of previous rate cut transmissions, some analysts are also very hopeful for a 0.25% "Diwali Gift" to the nation this time by the new RBI Gov/MPC as CPI fall (suddenly) by almost 1% in a month !!
Considering the price action of the BNF for the last few days (after surprise "Surgical Strike"), market may also expecting some rate cut/dovish RBI this time and any disappointment, may also result in a last hour extreme volatility today.
While, the brand new MPC & its two day meeting may looks like a Fed meet, what India lacks a proper sets of incoming economic data like US or any advanced economy. Only inflation, GDP, IIP, Core Sector Output data is not sufficient; we need relevant job data, housing and retail sales data as well in order to gauze the proper strength of the Indian economy. Hopefully, once "Digital India" get some traction, economists/policy makers may get more incoming economic data to transform India into "maximum employment with minimal inflation/reasonable price stability" like US-Fed.
Yesterday sentiment of the Indian market was further buoyed by the
Nikkei Markit MFG PMI data (Sep), which came at 52.1 (against
expectation of 52.4; prior: 52.6). Although the PMI data came lower and
may be an indication of lower demand, RBI may look at it for a rate
decision. But, it's still above the 50 boom/bust line for 9 consecutive
months.
As par McKinsey's latest report, India is
poised for incremental growth now and by 2030, may be the 3-rd largest
economy in the world in terms of absolute GDP (After US & China).
The huge opportunities for India are being supported by rapid
urbanization, a rising middle class and increasing consumer spending.
Also ongoing effort of "Digital & Make In India" and implementation
of GST will make India one of the super power in economy globally.
India's huge population and favourable demography will also help a lot.
While these are some of the tailwinds, uneven monsoon and external
global shocks are also some of the headwinds as par the report.
But,
another headwind may be the lack of proper jobs for India's huge young
demographic (demographic division). As par some report, almost 33 lacs
people are entering job market in India every month (close to 4 cr
people every year) and fresh job creation by the Govt/Pvt sector is much
below that. Also, in a city like Mumbai, average fixed per capita
income may be 50k/month which is almost equivalent monthly fixed
expenditure for a small middle class family living outskirt of the main
city area. So, unless there is visible improvement in real income, scope
of incremental growth in discretionary spending may be very limited
except from some of the pockets (like Govt employees/beneficiary of the
7-CPC).
Another point is that India traditionally is an
economy of "black/unaccounted" money and presently its transforming to
"white/accounted" economy. India's subdued capacity utilization and
tepid consumer demand may be an indication of this transformation
process for the last few years.This may be also one of the reason for overall tepid EPS for Nifty which saw only 3% YOY growth in Q2FY17 and now stand around 375 in spite of all the so called "green shoots" in the Indian economy.
The recent IDS declaration of around Rs.65250
cr and an expected tax collection of around Rs.30000 cr by FY:17-18
(@45%) indicates that its the common people on the street (mainly
businessman & forced declaration may be around Rs.52000 cr), who has
declared in the IDS under immense pressure from the Income Tax Dept;
where as there are no big/small politicians, Govt servant, or big
business name.
Any way, the huge success of this IDS
may be another reason of improved market sentiment (Govt revenue
collection buoyancy), but in the short term, it may also affect the
consumer sentiment of the so called "black money holders".
Analytical Charts:
SGX-NIFTY
NSE-BNF
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