Market Wrap: 11/01/2017 (19:00)
Looking at
the chart, Nifty Fut (Jan @8386) has to sustain over 8405-8425 area for further
rally towards 8485-8510 & 8545-8585 zone in the short term (under bullish
case scenario).
On the other
side, sustaining below 8375-8340 zone, NF may further fall towards 8255-8190
& 8140-8105 area in the near term (under bear case scenario).
Nifty Fut (Jan) today closed around 8386 (+92
points) after making an opening session low of 8324 and a late day high of
8400.
Domestic market today opened in a positive note
despite tepid global cues on the back of “spectacular” Q3FY17 numbers by one of
the Pvt Bank yesterday (Indusind) and better poll prospect of BJP in the
upcoming UP election amid no sign of real truce between the Yadav families.
Various upbeat comments about India, despite demonetization concerns in the ongoing
Vibrant Gujrat Global Summit and “raining” of investment commitments by various
high profile investors may be also supporting the market, at least till this
week, when the summit will close.
The sentiment of the market was further boosted by
some reports that China is going to curtail some of its excess steel producing
capacity. China will close all of its medium frequency furnaces, equivalent to
around 9% of its overall capacity by June’17.
Also, yesterday’s upbeat PPI data from China was
positive for metals and along with that perception of “Trumponomics” and hopes
for an imminent announcement of stimulus by Trump today has ignited metals
scrips (incremental infra spending in US may increase the demands of metals in
the coming days).
But, global market is also cautious about Trump’s
1st official presser today as it may be used primarily to defend his
stand against a reported personal scandal in a 2013 Mrs. Universe show in
Moscow. The Russian agency may be compromising this information with some
credible proofs against Trump/USA; although this was vehemently denied by
Russia today.
Again, if Trump devoted himself to this scandal
episode more rather than divulging any specific details about his plan to
rebuild “America” by incremental fiscal spending, tax cuts, deregulation etc,
market may disappoint and both USD/US bond yields and EQ market may further
correct.
Already market is quite anxious about Trump’s ongoing
“Twitter Tantrum” for various issues, which is causing some unexpected
volatility. Thus, politics & scandal may be in the forefront for Trump
rather than economics and market is cautiously waiting for his presser today.
Indian market sentiment was further boosted today
after South Bank Q3 result today after yesterday’s upbeat Indusind bank
numbers, which may be an early indication that despite concerns of
demonetization, banks are not suffered so much as expected and all the other
banks are rallied quite significantly today after recent under-performance.
But, the apparent stability in asset quality and
some other parameters & NIM may be coming on the back of huge demonetized
deposits. As par some reports, an unexpected amount of around Rs.88000 cr has
been deposited in cash (old demonetized notes) in various loan repayments,
NPA/NPL/write off cases. This windfall gain for sudden loan recovery will not
be there in Q4FY17 and subsequent quarters and going forward, Govt (IT/ED) may
also take some action as it’s being seen as “black/unaccounted money”;
necessary tax may be required to be paid on it.
Also, benefit of lower cost of funds because of
demonetization may not be there in the next few quarters, when withdrawal
restriction will go off. Banks are now trying their best to lure it borrowers,
specially retails & SMES to take more loans like in 2010-12 periods and
this may be one of the concern for future stressed assets (high leverage).
Technically,
BNF (LTP: 18830) now need to sustain over 19000-19200 area for further rally
towards 20350-20650; otherwise will come down again towards 18000-17600 level.
SGX-NF
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