Technical & Macro Analysis Of Indian & Global Market----: Nifty Closed Almost Flat Amid Tepid Global Cues & Mixed Q4FY17 Earnings And Finished The Exp By Around 1.8% Higher; What’s Next For May Series ?

Market Wrap: 27/04/2017 (19:00)

NSE-NF (May): 9352 (-11 points; -0.12%)

NSE-BNF (May): 22285 (+74 points; +0.33%)

For 28/04/2017:

Key support for NF: 9335-9295

Key resistance for NF: 9425-9510

Key support for BNF: 22150-22000

Key resistance for BNF: 22425-22525

Time & Price action suggests that, Nifty Fut (May) has to sustain over 9425 area for further rally towards 9475-9510 & 9550-9600 in the short term (under bullish case scenario).

On flip side, sustaining below 9405-9385 area, NF may fall towards 9335-9295 & 9245-9200/9175 area in the short term (under bear case scenario).

Similarly, BNF has to sustain over 22425 area for further rally towards 22525-22675 & 22800-23000 area in the near term (under bullish case scenario).

On the flip side, sustaining below 22375 area, BNF may fall towards 22250-22150 & 22000-21750 area in the near term (under bear case scenario).

Nifty Fut (May) today closed around 9352, almost flat with a negative bias (-0.12%) after making a session high of 9378 and day low of 9343 in a narrow range of exp day trading. Indian market today opened almost flat following Trump’s disappointment over his tax vision. China market was also under pressure due to increasing regulatory issues. Although, Chinese market is under pressure in sharp contrast to the euphoric global market, it’s not affecting the other markets as before due to tight control over its currency; Yuan is surprisingly stable, thanks to PBOC’s direct & indirect controlling measures.

US market is also stable more or less despite Trump tantrum because it’s being supported by mixed economic data & strong corporate earnings, which may also be helped by favourable FX (cross currency) movements. After disappointment from Trump’s one pager tax vision, market is now pinning hopes on AHC (Trumpcare) & repel of Obamacare. But eventually, this hope & reflation rally must be supported by Trumponomics and an inordinate delay into that, market may also lose its patience.

Back to home, market is also keeping great hopes on earnings recovery, an effective NPA resolution policy, a smooth implementation of GST and a near normal monsoon this year despite an impending threat of El-Nino (50%). Q4FY17 report cards are so far termed as mixed, but not great in comparison to the stretched valuation multiple; with TTM PE of Bank Nifty around 30.65 (+3 S.D) and that of Nifty around 23.73 (+2 S.D) now, Bank Nifty is really in the bubble zone on the hopes of PSBS earning recovery & resolution of the NPA mess.

In the last few months, a strong INR; (i.e. a weak USDINR) may also cause some earning downgrades for the Nifty as almost 50% of the Nifty components have primarily export income. INR has gained considerable strength over the last few months because of a hawkish RBI, stable macro for the Indian economy, huge FPI inflows (after massive win by BJP in the UP election) and political stability coupled with Trump’s effort to talk down the USD & various geo-political tensions (Syria/NK etc).

Today Maruti reported its Q4FY17 numbers, which may be in line with market expectations; but not great as rate of growth dipped most in the last few quarters. Technically, Maruti (LTP: 6374) has to sustain over 6600 for further rally towards 6750-6950 & 7200-7475 and 7725 area in the short to mid-term; otherwise it may correct and sustaining below 6350 may further fall towards 6280-6200 & 6000-5750 and 5500 zone in the days ahead.

Globally, as expected Draghi today delivered a dovish script by expressing concern over tepid trajectory of EU inflation (core CPI). Subsequently, EURUSD dropped to some extent. Technically, EURUSD (LTP: 1.0856) has to sustain over 1.0965-1.1135 zone for any further rally towards 1.18-1.20 area; otherwise it may correct and sustaining below 1.09 zone, may fall towards 1.05-1.03 & even 1.00-0.97 in the months ahead.

As EURUSD gained considerable strength for the last few weeks due to upbeat EU economic data (except CPI) and decreasing EU political risks coupled with geopolitical issues of NK/Syria (as safe heaven currency), Draghi may not allow it to appreciate further, thus jeopardizing the prospect of EU economy, which may be a great beneficiary of weak currency (EUR).