Market Wrap: 13/04/2017
(19:00)
NSE-NF (April): 9180
(-43 points; -0.47%)
NSE-BNF (April): 21750
(+40 points; +0.18%)
IN 10Y G-SEC: 6.820
(+0.56%)
USDINR (Apr): 64.52
(-0.40%)
For 17/04/2017:
Key support for NF: 9160-9115
Key resistance for NF: 9235-9280
Key support for BNF: 21640-21500
Key resistance for BNF:
21775-21875
Time & Price action suggests that,
Nifty Fut (Apr) has to sustain over 9280-9315 area for further rally towards 9375-9425
& 9465-9505 in the short term (under bullish case scenario).
On the other side, sustaining below 9260-9235
area, NF may fall towards 9160-9115 & 9085-9035 area in the short term
(under bear case scenario).
Similarly, BNF has to sustain over
21825 area for further rally towards 21875-21975 & 22050-22150 area in the
near term (under bullish case scenario).
On the other side, sustaining below
21775 area, BNF may fall towards 21640-21500 & 21340-21150 area in the near
term (under bear case scenario).
Nifty
Fut (Apr) today closed around 9180, down by 0.47% after making a day high of
9222 and late session low of 9177. Indian market today also opened gap down on
the back of ongoing geopolitical tensions with NK/Syria & USA. Risk trade
was off also after Trump’s comment yesterday that USD is “overvalued” and his
intentions for a lower Fed rate & dovish sets of FOMC members. Trump also
commented that US will not officially level China as a “currency manipulator”
in exchange of China’s help to diffuse NK issues and a better trade deal with
US (Trump is truly a hardcore businessman !!). All these geopolitical issues
& Trump’s effort to talk down the USD has made the risk trade off and USD
is being sold across the board, being a reflation/risk currency as of now.
Amid
all these ongoing global concerns, domestic market also turned cautious after
Infy delivered another poor set of earning numbers for Q4FY17. Although,
overall result of Infy may be at par with market expectations, the guidance for
FY-18 was slightly below consensus and thus it failed to convince the market
today despite probable buy back of shares in the coming days. The stock
corrected further by around 4% on top of last few days decline & closed
around 930 today. Looking ahead,
technically 900 zone may act as a strong positional support for Infy;
otherwise it may correct more as the overall macro picture for the Indian IT
outsourcing co may be quite gloomy now on the back of various headwinds like a
weak USDINR, technological obsolesce, Trump’s policy of “America First” and similar
nationalistic politics elsewhere, such as in UK.
Indian
market sentiment was further affected due to poor IIP & CPI data released
yesterday after market hours. Also, actual implementation of GST scheduled from
July’17 with so many categories of taxes, regulations & complexities may be
also proved as a short term disruption for the Indian economy, especially large
portion of the trading & business community may be underprepared with time
& IT constraint.
There
is also some apprehension about El-Nino effect on Indian monsoon this year and
all such headwinds including probability of another quarter of tepid earnings
& overall growth (GDP) may be affecting the market sentiment adversely. As
par Nomura, Q4FY17 GDP may have fallen below 7% at 6.7%.
Apart
from Infy & some other IT scrips, Nifty was also dragged today by metals,
telecoms & cement counters; but supported to some extent by PSBS, RIL &
BPCL.
The
recent rally in Nifty may be supported largely by RIL, LT & Tata Steel and
some PSBS apart from market optimism about some big bang reforms by the Govt
amid huge political support. Also, better than expected Q3FY17 GDP figure and some
other soft & hard economic data, despite DeMo blues may have supported the
market to a great extent. But all these need to be reflected in the report card
(earnings), which is so far not as optimistic as the rapid expansion of
valuation multiples. Thus, reality of the earnings may catch the market off
guard, which is rallying relentlessly for the last few months, basically on the
hopes of earnings upgrade in FY: 18-19. For Nifty, average CAGR of EPS for the
last few years may be below 7%, where as valuation multiples (PE) has expanded
quite rapidly over the last few months as market is assuming an EPS growth of
15-25% for Nifty over FY: 18-19; for this Q4FY17 & Q1FY18 earning growth
visibility may be vital; otherwise we may again see a typical mid-year
downgrade of earnings on the back of some excuses.
At,
9300 Nifty and consensus FY-17 Nifty EPS of 395-410 (against actual FY-17 EPS
of 370 & Q3FY17 EPS of 385), TTM PE may be around 23.55-22.68, which may be
still on the higher side & quite stretched.
Technically, whatever be the narrative,
Nifty has to sustain over 9315 area for further rally towards 9500-9550 in the
coming days; otherwise it may correct towards 8725-8650 area, if closed consistently
below 9000 zone.
SGX-NF
BNF
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