Market Wrap: 13/01/2017 (19:00)
What's Next ?
What's Next ?
Looking at
the chart, Nifty Fut (Jan @8421) has to sustain over 8485-8545 area for further
rally towards 8585-8645 & 8685-8800 zone in the short term (under bullish
case scenario).
On the other
side, sustaining below 8460-8405 zone, NF may further fall towards 8360-8290 &
8205-8120 area in the near term (under bear case scenario).
Time &
Price action and EW analysis suggests that 8485-8545 zone may be a big hurdle
for NF next week.
Next week
may be eventful as Trump will take charge of America; Trajectory of USD, Oil,
domestic Q3 earnings may be vital to gauze the demonetization impact; EC decision
about budget day, capital market & FII taxation issues and political
direction in UP may also matter.
Nifty Fut (Jan) today closed around 8421 (+3
points), almost flat after a choppy day of trading, in which NF made an opening
session high of 8457 and day low of 8388.
Domestic market today opened in a positive tone on
the back of better than expected IIP data for Nov & fall in CPI in Dec and
recent set of upbeat Q3 numbers from Indusind Bank & TCS. But market could
not sustain the initial positive momentum and soon came under pressure from
selling in TCS & Infy (IT counters).
Q3FY17 show of Infy was also good but Q4 guidance
of both TCS & Infy may be tepid. Moreover, sudden (?) promotion of Chandra
to Tata Sons Chairman from TCS helm may have dented the confidence of the
investors as he was seen as an experienced veteran directly involved in various
large deals, having an excellent relationship with the valuable clients. Thus,
the sales pitch with large clients may be affected in future as Chandra may not
be involved in day-to-day operations of the company, which is the largest “cash
cow” for the entire Tata Sons.
Although, investors may get some relief from
Chandra’s appointment as Tata Sons Chairman after the acrimonious exit of
Mistry, market may also watch keenly about the deleveraging & other
strategy under Chandra & Tata team without any emotion as employed by Mistry,
which was mainly responsible for the turnaround of various group companies in
his short tenure.
Also, there may be renewed legal battle and “war of
words” in the days ahead between Tata & Mistry, which may be an overhang
for the overall image of the Tata group (symbol of trust), despite Chandra’s
high reputation not only in India, but also globally.
Domestic market may also focus on the political
front as SP (Akhilesh) and Cong may be forming an alliance, which may be
negative for BJP’s poll prospect in UP, despite tussle between the Yadav
family.
Also, EC may deliver his final verdict about
budget day shortly and if there is any postponement or severe restriction to
announce any tax cut packages, it may be negative for the market.
Govt has to get its act together and should not
sound contradictory in various taxation issues with the FPIS. The present
controversy of “triple taxation” issues (DDT) and many other similar issues
including P-Note, GARR etc may cause “Triple Talaq” for the Indian market by
the FPIS, if not properly addressed by the Govt.
Already, FPIS are very cautious for the last few
years after proposal of GARR and any misadventure at this point of time may be
costly for the Indian market. FPIS are not adverse for paying taxes, but what they
want a consistent, predictable & fair tax regime comparable with the rest
of the DM & EM.
Also, any definition change for the LTCGT from one
to three year for “greater contribution” from the capital market may also be
negative for the DII(s) apart from the FII(s). This may be one of the reasons
beside overbought market; DII(s) are actively selling for the last few days at
higher level. DII(s) also need to churn their portfolio actively for better
return to the investors.
It’s may also partially true that P-notes is one
of the mechanism of Indian/global “black money” for round tripping & money
laundering in Indian market. But any action against it at this point of time to
launch another “surgical strike on the black/unaccounted money” may be counterproductive
for our market, which is not in a position to withstand so many disruptions in
a short period of time, despite the intention is quite right.
Globally, China PBOC may be now trying to give
support to the Yuan in a bid to make Chinese manufactured products more
competitive as an excessive weak Yuan is negative for the raw materials price.
PBOC is now controlling Yuan outflow contrary to the earlier action/perception
of USD outflow. This may be one of the reasons behind recent fall in USD/US
bond yields, beside “Trump Tantrum”. Today’s trade data from China indicates
sharp fall in export in the last two years despite weaker Yuan while import
rose marginally in a tepid way.
USD is now again gaining strength after upbeat
comments from Yellen and in line US retail sales.
Oil fall to some extent today after renewed
concern of actual implementation of the recent OPEC & Non-OPEC deal and
supply glut. Also, the overall OPEC production cut deal at this point of time
may looks quite like a “seasonal” factor, when due to Winter season or
production constraint, it’s a normal phenomenon; i.e. even without any formal
deal, there should have been such production cuts at this point of time. The
whole OPEC & Non-OPEC production cut deal may be proved as a “big bluff” in
the coming days & looks “impossible” in a free market regime.
Looking ahead, it will be very interesting if this
OPEC “production cut” accord will be ultimately adhered beyond March’17 or not.
SGX-NF
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