Market Wrap: 24/10/2016 (17:30)
Nifty
Fut (Oct) today closed around 8723 (+0.26%), after making a session low &
high of 8690-8748.
Looking at the chart, for tomorrow (25/10/2016), NF has to
sustain over 8755-8775* area for target of 8800-8840 & 8890-8930 zone in
the immediate to short term.
On the downside, sustaining below 8705-8685* area, NF may
fall further towards 8660-8620* & 8580/8545*-8500 zone in the immediate to
short term.
Today's
early morning Asian cues were flat following similar closing of Friday's
overnight US market. But, "risk on" sentiment improved a bit after
release of PMI data of Japan & EU/EZ, which was better than expected by the
market. Also, Japan's trade data was better than expected.
EZ
PMI came at 53.7 (prior 52.8) on a composite basis, which may be an indication
that EZ economic activity are not so tepid as previously thought and the fact
that all the other PMI (s) are also well above the boom/bust line of 50, may be
also suggesting that the growth in EZ is continuing at a steady pace despite
various geo-political headwinds & banking stress in EU.
Markit
survey for EZ may also suggests that demand may be outstripping supply after
many years, which may start the much awaited virtuous cycle of investment, led by
private capex. Although, today’s surprise PMI may also be seasonal, but ECB/Draghi
should be happy that at least, some positive effect of the QQE may be visible.
On the other side, it may also provide some space for the ECB to remain on the
sideline, which may be also not good for the "stimulus addicted"
global market (risk assets).
Globally,
all eyes will be on the slew of US earnings & various Fed speakers and UK & US GDP to be released later this week.
Indian
market sentiment was also helped today significantly by some banks like ICICI
& SBI, which is a beneficiary to the recent M&A between Essar &
Rosneft of Russia, as significant amount of provision may be reversed for the
debt laden Essar group for these banks. Also, there was some report that RBI
may cut 0.50% by Feb & April'17.
India may be in a
"sweet spot", primarily for the rare combination of higher
growth & lower interest rate, despite pain of twin balance sheets. But, at
the end of the day, this lower RBI repo rate need to be transmitted to the
bottom of the economy and only then we can see some real "green
shoots".
Lately, FPIS are net sellers for the Indian bonds after many
months and this may be due to strength in overall dollar index and bottoming of
US & other G-10 bond yields (??). Another reason may be likely divergent
monetary policy between Fed & RBI, while Fed is preparing itself for Dec'16
rate hike and subsequent 1/2 yearly rate hikes in order to adjust its decade
old ZRIP policy to normal (??), RBI is exploring various options for further
rate cuts after one more rate cut, most likely in Feb'17.
Steel
sectors were in some type of pressure before FM meet with the banks, to discuss
the overall stressed assets situation, specially, the ballooning NPA/NPL for
the steel sectors despite they are showing good result because of MIP
protection & rising domestic demand. Also, FM may discuss NPA situation of
power & infra sector with the banks.
As
par some reports, Govt is preparing for divestment/stake sale &
privatization for a number of PSU(s), even for unlisted firms based on FCF or
discounted cash flow valuation method. It remains to be seen, how successful it
will be, considering the lack of political consensus, opposition by the trade
unions and most importantly the likely tepid response from the investors.
Today,
some sections of the market may have also watched the political drama (crisis??)
in the UP ruling party (SP). The growing family feud is turning to be quite
serious now and the present CM may also resign, just ahead of the state
election. Although, it may be positive for the NDA/BJP and the market
apparently, any political crisis in UP may also invite an early election, which
may also jeopardize the much awaited April'17 roll out of the GST smoothly.
Also, a divided SP may do more harm for the NDA & RS equation rather than
the united SP.
All eyes will be also on the progress of GST, where as par some
reports, apart from GST rate fixation issues, dual control mechanism may be
another vital area, which may face some political & administrative hurdles
for lack of consensus.
Some analysts also do feel that, despite huge Govt capex, private investments are still tepid. This may be because of pain of twin balance sheets, especially public sector banks (PSBS) are in doldrums. PSBS need to be well capitalized soon, otherwise who will fund the India "growth story”? Too much Govt capex may also cause significant imbalance in the fiscal deficit math.
Apart from the huge stressed assets headwinds for the Indian
banks, various other regulatory, administrative & taxation issues may be
also hurting the confidence of the investors, especially FII(s), as they expect
some predictability & continuity of Govt policies. It’s very easy to put
money in India as Govt is very "investor friendly", but it may not be
so easy to "exit" out of India (recent Tata-Docomo issue may be an
example). So, significant FDI will come only after FII(s) got their necessary
confidence that "entry" as well as "exit" is not an issue
for any Indian venture.
Apart from ICICI, SBI, today Nifty got good support from ONGC
(bonus issue). Auto stocks were in good demand, specially M&M and Tata
Motors (reports of various new models launch in India & stake buy for a
UBER like shared mobility service provider).
Telecom stocks were in pressure today, after TRAI has proposed
penalty for Rs.3050 cr on them for R-JIO interconnection issues. Wipro &
HCL Tech was down for the tepid H2FY17 guidance as usual for the IT stocks.
In a surprise development, news just flashing that Cyprus Mistry
is out as TATA SONS Chairman and the legendary Ratan Tata is again come back
(as interim Chairman).
Tomorrow may be a volatile day for Tata group of shares and this
move may be negative for the sentiment of Tata scrips, at least in the short
term; although leadership of Mistry is not affected for the individual Tata
companies as of now. Mistry may be very instrumental for regaining the lost
investor confidence on the Tata groups in the recent months. Investors may not
be quite amused for Mistry's sudden exit from the holding co (Tata Sons), whatever be the actual reasons.
NSE-NF
No comments:
Post a Comment