Market Mantra: 25/10/2016 (08:30)
As par SGX indication, NF may open around 8725, almost flat following the same trend of overnight US market and morning Asian cues.
Technically, NF has to sustain above 8755-8775* area for further rally towards 8800-8840 & 8890-8930 zone for the day.
On the flip side, sustaining below 8705-8685* zone, NF may further fall towards 8620-8580* & 8545-8500 area as the day progress.
Similarly, BNF (LTP:19829) has to sustain over 19900-19950* zone for further rally towards psychological level of 20000-20120* & 20200*-20350 for the day.
On the downside, sustaining below 19800-19750* area, BNF may further fall towards 19600-19500* & 19400-19250* zone as the day proceeds.
Overnight US market rallied by around 0.70% & almost closed at the same level, when our market closed yesterday. US market was buoyed by better than expected earnings & PMI data, but pressure on oil & strength in USD capped the gain to some extent. The overall theme was strength in dollar index on the back of better than expected overall US economic data and hawkish scripts by various Fed speakers. FFR is now expecting around 70% probability of Dec rate hike by the Fed.
Oil was under some pressure, because at around $50, various non-OPEC taps are opening again and there is some skepticism about effectiveness of the OPEC's proposed production cut plan as Iraq is raising some objection.
Back to home, apart from the ongoing Q2FY17 earnings, market will focus on the Tata group shares today as yesterday, in a surprise move, after market hours Tata says "TATA" (goodbye) to the Tata Sons Chairman Cyrus Mistry. Although there are much "mystery" about "Mistry"s" sudden removal and various theories are hovering, ranging from under performance at the overall group level to TATA-DOCOMO legal fiasco & his deleveraging effort on various Tata Cos (specially Tata Steel, UK) and most importantly lack of good relation ("EYE TO EYE") with Ratan Tata.
But, whatever may be the actual reason, sudden removal of Mistry may impact the present strategy of group deleveraging efforts amid huge debts at various group cos and better utilization of capital. Various Tata group cos are now enjoying significant market (valuation) premium for this deleveraging strategy primarily employed by Mistry and those cos (Tata Steel, Tata Chemicals, Tata Comm, Indian Hotels) may be affected significantly. Even the cash cow TCS may be affected as market may presume that going forward, TCS has to pay more dividends to its shareholders (Tata Sons). Sentiment of Tata Motors may also be affected, specially for the domestic operations and existing huge debt in the consolidated books, despite good show by JLR. Though, core operations may not be affected for Tata group cos, sentiment of the investors may be affected quite significantly.
Yesterday, FM hints that going forward, Indian Banks (PSBS) may take over the ailing cos, which have defaulted and some other PSU(s) may take over the management for effective operations and bring those ailing cos back on to their feet; i.e. backdoor nationalization, as there is no taker.buyer of stressed assets after banks take over those assets.
If this idea holds true, then market may not take it quite positively.
NSE-BNF
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