Market Wrap: 29/03/2017
(19:00)
NSE-NF: 9151 (+41
points; +0.45%)
NSE-BNF: 21411 (+176
points; +0.83%)
For 30/03/2017:
Key support for NF:
9115-9075
Key resistance for NF: 9195-9235
Key support for BNF: 21350-21150
Vital resistance for
BNF: 21500-21675
Time & Price action suggests that,
Nifty Fut (March)/Nifty Spot has to sustain over 9195 area for further rally towards
9235-9275 & 9350-9425 BY tomorrow / in the short term (under bullish case
scenario).
On the other side, sustaining below 9175
area, NF/NS may fall towards 9115-9075 & 9035-8980 area by tomorrow / in
the short term (under bear case scenario).
Similarly, BNF/BNS has to sustain over
21500 area for further rally towards 21675-21750 & 21850-21950 area by
tomorrow / in the near term (under bullish case scenario).
On the other side, sustaining below
21450 area, BNF/BNS may fall towards 21350-21150 & 20950-20700 zone by
tomorrow / in the near term (under bear case scenario).
Nifty
Fut (March) today closed around 9115, rallied by another 0.45% after making a
last minute high of 9151 and an opening session low of 9119. Domestic market
today opened in a positive zone after overnight rally in US market (+0.73%)
amid better than expected & upbeat US consumer confidence data. Also, there
was renewed optimism about passage of the health care bill in some modified form
as a compromise by Trump with his DNC oppositions & RNC dissidents. Market
is also very hopeful that tax reform bill being a different issue altogether,
eventually Trump will be able to pass it.
Amid
positive US cues and some concern over “Real Brexit”, Indian market today got
support from the ongoing talk of an effective & quick resolution about the
huge banking NPA. The market is basically looking for a big bang announcement
by the Govt for a super ARC or bad bank to address the NPA issue.
But,
going by different commentary of the policymakers, Govt may initially focus on
the big 40-50 corporate stressed accounts (NPA/NPL) primarily in the infra
sector involving around Rs.4.80 tln NPA (i.e. around 70% of the present
declared NPA by the banks) and will try to address the same by either some bad
bank idea or by some modification of the existing CDR rules. A decision may be
arrived at the scheduled meeting between bankers & policymakers by this
week. Most probably, Govt may not go for a big bad bank creation at this point
of time and instead may modify the current CDR norms as par suggestions by the
banks to lower the NPA provision requirements and repair the stressed banking
balance sheet of the PSBS. Govt may also encourage the inevitable M&A not
only within PSBS, but may also permit with some private bankers having “animal
spirit”.
Govt’s
response for the “too big to fall” NPA issues involving the maximum stressed
accounts may benefit SBI, PNB & Axis, ICICI bank, if the same is resolved
in a meaningful way; otherwise it may be the same “band aid” treatment and not
a “big surgery”.
Although,
today after market hours, Kotak Bank promoter delivers nothing against huge
market expectation of a M&A “bazooka”, some of his post presser comments
may also be very interesting about M&A consolidation in the banking space.
Apart from eyeing the Axis Bank SUUTI stake sale from the Govt in the coming
days, Kotak may be also interested for some fragile PSBS M&A with itself or
some other strong private banking group as beside huge capital, a good
management is also required for most of the ailing PSBS. As Govt is now has
huge political support, it may think such strategy to integrate some of the
fragile PSBS with some private banks as next banking reform (privatization of some of the PSBS) after cleaning up of the stressed
assets to a bad bank !!
Indian
market today also got some support after Govt tabled the GST bill for
discussions & passage in the LS, being a money bill. As expected, the bill
will be passed and GST may be also implemented from July’17; but some experts
and stakeholders are still not so much confident about a smooth July’17 roll
out and considering all the pros & cons, they are advocating for a Sep’17
roll out of the same. A hurried launch from July’17 may be more disruptive,
considering the final shape of GST will be ready only by May’17 after fixation
of rates of the different products and in that scenario, time & IT preparedness
may be a challenge for its proper implementation; business/industry & also
the administration may not be prepared for such hurried launch of the GST.
Considering
all the uncertainties, Govt may also confirm a “firm date” of 1st
Sep’17 in lieu of 1st July’17 for GST roll out for the time being.
Govt may even prefer for further debates & discussions about GST structure
among the stakeholders and may also defer it to 1st April’18, considering
so many regulations & complexities.
Indian
market sentiment was affected today by some extent after SC gave a “jolt” to
the automakers on the BS-III vehicles issue. No BS-III vehicle will be sold
& registered after 31st March’17 and auto manufactures has huge
stock of around 8 lakh vehicles (4W+3W+2W) lying unsold ether at company or
dealer ware houses. It seems that apart from Bajaj Auto and to some extent
Maruti, most of the auto cos may be severely affected, some of them equivalent
to one QTR PAT. Today’s SC verdict may have also far reaching implications on
the auto industry as a whole, considering their unpreparedness about BS-IV/V upgradation
and also lack of corresponding fuel availability in India. But SC gave a
priority to clean public health (less pollution) over inventories/sales issues
of BS-III vehicles (auto co’s loss). After 2G & Coal/mining case, it may be
another jolt to the concerned auto industry, although they were aware of the
dead line of BS-III. Govt may also have to ensure adequate availability &
supply of BS-IV fuels.
Globally,
all eyes now may be on the official EU response after UK triggered the “Real
Brexit” button today as expected. As par some leaked version, initial EU
response may be soft (conciliatory) rather than a hard one; but lots will
depend upon the actual negotiation process later. Both UK & EU need to
soften their respective stance on the issue; otherwise it may be a hard Brexit
for UK rather than a soft one.
Initially,
the market may react according to the EU’s stance of granting a free trade zone
for UK in the EZ for these two years of negotiations and the issue of a “Brexit
Fee”. Much will depend upon the UK’s stance of allowing other EU nationals
(immigrants) in UK, which may be the core theme apart from the economic independence
theme behind the Brexit referendum last year.
UK, being
the 2nd largest economy in the EU universe and the financial capital
of the same, its importance may be immense and market is basically expecting
for a compromise solution beneficial both for the UK & EU at this point of
time. Thus the market is calm hoping for soft Brexit stance from the EU &
UK. But it’s still too early and if the trend of future negotiations will
indicate for a hard Brexit, then GBP will further weaken, which may not be good
for the UK economy as a whole, considering incremental inflationary pressure on
account of a weak currency despite some other benefits and weak wage growth,
tepid consumer confidence & GDP; it will be a stagflation like scenario.
Technically, GBPUSD (LTP: 1.2443) has to
sustain over 1.24 area for further bounce back towards 1.28-1.31 & 1.35-1.40
area under soft Brexit; otherwise sustain below 1.2365 area, it may again fall towards 1.21-1.18 & 1.14-1.10
zone in the short to midterm in the event of a hard Brexit negotiations.
For
the Indian cos having significant exposure in UK, like Tata Motors, apart from
general Brexit related uncertainties, cross currency headwinds may be a bigger
challenge in the coming days.
Oil
is another factor, which is supporting the “risk on” trade today on the talk of
an extension of the OPEC & Non-OPEC production cut agreement beyond June’17.
GBPUSD
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