Nifty Closed By 0.31% Higher Led By Bargain Hunting In IT & PSBS; But Dragged By Some Private Banks; Positive EU Cues (Favourable French Election Opinion Poll) & Buzz Of NPA Policy By The Govt/RBI Also Helped

Market Wrap: 20/04/2017 (19:00)

NSE-NF (April): 9163 (+28 points; +0.31%)

NSE-BNF (April): 21574 (-43 points; -0.20%)

IN 10Y G-SEC: 6.878 (+0.35%)

USDINR (Apr): 64.60 (-0.06%)

For 21/04/2017:

Key support for NF: 9115-9060

Key resistance for NF: 9200-9255

Key support for BNF: 21450-21250

Key resistance for BNF: 21675-21775

Time & Price action suggests that, Nifty Fut (Apr) has to sustain over 9200 area for further rally towards 9255-9310 & 9375-9425 in the short term (under bullish case scenario).

On flip side, sustaining below 9180 area, NF may fall towards 9145/15-9085/60 & 9025/05-8970 area in the short term (under bear case scenario).

Similarly, BNF has to sustain over 21775 area for further rally towards 21875-21975 & 22050-22150 area in the near term (under bullish case scenario).

On the flip side, sustaining below 21725-675 area, BNF may fall towards 21550-21450 & 21300-21150 area in the near term (under bear case scenario).

Nifty Fut (Apr) today closed around 9163, up by 0.31% after making a session low of 9120 & high of 9170. Indian market today opened almost flat following mixed global cues. Overnight US market was closed in red (-0.55%) amid slump in oil and below expected result from GS. Oil was down for concern of supply glut and growth in US despite some squabbling about further extension of OPEC cut to H2CY17. But some upbeat comments by Fed’s VC (Fischer) about strength of US & global economy to withstand gradual Fed tightening and positive commentary in the Beige Book release by Fed yesterday may have made helped the USD gaining some lost strength and global “risk on” sentiment.

Today, Japanese trade balance data also came positive with upbeat growth in both exports & imports, which also helped the global market. In the EU session, the latest opinion poll suggests convincing win for the centrist candidate in the Sunday’s French election, which has also helped the global as well as the Indian market sentiment. But, overall wafer thin margin between various candidates (ultra left, centrist, ultra right) may keep the market cautious tomorrow, ahead of Sunday’s election.

Indian market sentiment was further boosted today after some reports of an imminent NPA policy announcement by the Govt; PSBS rallied quite smartly on the buzz. But, later RBI Dy Gov confirmed that it may take some more time for a definitive new NPA policy; meanwhile RBI will do more oversight or implementation of various existing NPA resolution mechanism. The main issue of NPA hair cut policy/quantum may be suggested by the RBI in consultation with the finance ministry.

But, there are already such hair cut policies in the system formulated by the RBI for years and implemented by the banks, where banks generally does not accept any hair cut below the book/principal value of a loan as on NPA date. Thus, it will be interesting to see, if RBI’s new NPA haircut policy permit banks to accept haircut below NPA book value or not; specially for big stressed assets cases. Now after reorganization process of NPL, thanks to RBI AQR, actual resolution is most vital, which is so far may be termed as very tepid to the tune of 10% in FY-16 for overall NPL.

Today, Nifty was supported by HDFC duo, BOB, Grasim, Infy, TCS, and Maruti; but was dragged by Yes Bank, ICICI Bank, Axis Bank on concern of sudden surge in corporate NPL as a result of Mini AQR by RBI.

HDFC Bank will publish its Q4FY17 report card tomorrow; market is expecting 20% PAT growth on YOY basis.  

Technically, HDFC Bank (LTP: 1462) has to sustain over 1480-1500 zone for further rally towards 1550-1595 zone; otherwise it may correct and sustaining below 1425-1400 area, may further fall towards 1375-1340 & 1300-1275 zone in the short to medium term. The stock has rallied quite a lot recently on the back of FII limit issues.

                                                             SGX-NF

 BNF