Market Wrap: 20/10/2016 (17:30)
Nifty
Fut (Oct) today closed around 8709 (+0.50%), after making a session high of
8728 and low of 8676 in another day of consolidation for lack of any meaningful
domestic cues, but positive global sentiment inspired by the higher probability
of Clinton win.
Technically,
for tomorrow (20/10/2016), NF has to sustain over 8735-8755* area for further
strength towards 8775/8800*-8840-8890 & 8925-8995*-9015/9075 zone in the
immediate to short term.
On
the downside, sustaining below 8680-8660* zone, NF may further fall towards
8615-8580/8545*-8490 & 8455-8400*-8360 territory in the immediate to short
term.
Overnight US market closed in positive tone yesterday after
mixed housing reports, better earnings momentum, rally in oil and some
optimistic/mixed tone in the Fed Beige book. FFR is now indicating around 69%
of rate hike expectation in Dec'16 by Fed.
Yesterday, Oil was
supported by big surprise of US inventory draw down and some Saudi comments
about OPEC production cut/freeze. But, the unexpected inventory data may be aided by some seasonal factors like demand of heating oil for the forthcoming
winter season and the recent cyclone.
Global sentiment was further improved today early morning, after the 3-rd & last US election debate, in which Clinton scored away. As of now, implied probability of Clinton being the next US President is around 85%, but "Trumpism" can't be also entirely ruled out because of the factors of "undecided" voters, a promise of "election day suspense" by Trump camp and an wave of anti-incumbent (just like Brexit referendum ??).
But, later in the day, weaker job data from Australia & retail sales figure from UK dampened the sentiment to some extent and global market retreated from the early Asian session gain. Below expected AU labor data also affected the commodity currencies to some extent, which have also a negative effect on metals.
Global sentiment was further improved today early morning, after the 3-rd & last US election debate, in which Clinton scored away. As of now, implied probability of Clinton being the next US President is around 85%, but "Trumpism" can't be also entirely ruled out because of the factors of "undecided" voters, a promise of "election day suspense" by Trump camp and an wave of anti-incumbent (just like Brexit referendum ??).
But, later in the day, weaker job data from Australia & retail sales figure from UK dampened the sentiment to some extent and global market retreated from the early Asian session gain. Below expected AU labor data also affected the commodity currencies to some extent, which have also a negative effect on metals.
Globally, all eyes
will be on the ECB & Draghi today. Although there is virtually no
probability for any real policy action today, market will keenly watch Draghi
press conference and Q&A session amid various speculation about probable
ECB action in the coming months; i.e. Tapering /Twisting or Extension of QE.
Although, Draghi has expressed his strong optimism about improving fundamentals of EU/EZ in his last meeting, core inflation is still muted and growth is very tepid. The current QE programme is scheduled to be end by March'17 and in that scenario, Draghi has to outline his plan of next "Bazooka" now.
If Draghi choose to ignore the address of the QE issue today, market may take it as an implicit confirmation of tapering as par the recent speculation, which may make the EURUSD soar and "risk trade" lower.
Although, Draghi has expressed his strong optimism about improving fundamentals of EU/EZ in his last meeting, core inflation is still muted and growth is very tepid. The current QE programme is scheduled to be end by March'17 and in that scenario, Draghi has to outline his plan of next "Bazooka" now.
If Draghi choose to ignore the address of the QE issue today, market may take it as an implicit confirmation of tapering as par the recent speculation, which may make the EURUSD soar and "risk trade" lower.
In any way, both ECB & BOJ are not expected to take any real
policy action as of now or even issue an appropriate guidance until Dec'16
(Fed action) and also expected to maintain a dovish accommodative stance as
always.
By Dec'16, ECB's
official economic projection will be ready and then Draghi may give some definitive
guidance about the QE.
In the absence of any meaningful domestic cues, Indian market also today largely danced to the global tune.
Yesterday, there was no consensus for GST rates and GST council will again meet in 1-st & 2-nd Week of Nov to finalize it just before winter session of Parliament. Thus, time may be running out fast for smooth April'17 roll out schedule as there will be Budget preparations & state elections.
Also, with the proposed multiple numbers of GST rates for different products along with extra cess to compensate the states, the basic concept of GST may be well compromised.
In the absence of any meaningful domestic cues, Indian market also today largely danced to the global tune.
Yesterday, there was no consensus for GST rates and GST council will again meet in 1-st & 2-nd Week of Nov to finalize it just before winter session of Parliament. Thus, time may be running out fast for smooth April'17 roll out schedule as there will be Budget preparations & state elections.
Also, with the proposed multiple numbers of GST rates for different products along with extra cess to compensate the states, the basic concept of GST may be well compromised.
It may be also not possible to be "revenue neutral"
for the states to meet their budget requirements and at the same time to be
"less tax burdening" on the economy/public for the present structure
of GST being planned, despite benefit of tax credits. One has to be compromised
in either way.
Today's overall market sentiment may be also affected to some extent due to reported Debit Card/ATM data breach issues (hacking) for several leading Indian Banks.
Today's overall market sentiment may be also affected to some extent due to reported Debit Card/ATM data breach issues (hacking) for several leading Indian Banks.
At a glance, today's earning reports are also just above/at par market estimates for Yes Bank, LICHSGFIN & RIL so far. But, as the valuation is already high, tomorrows & next few days price action will confirm how much upside is still left and how much is already discounted by the market.
SGX-NF
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