Market Wrap: 26/04/2017
(19:00)
NSE-NF (April): 9344
(+50 points; +0.54%)
NSE-BNF (April): 22224
(+229 points; +1.04%)
For 26/04/2017:
Key support for NF: 9295-9215
Key resistance for NF: 9385-9510
Key support for BNF: 22150-22000
Key resistance for BNF:
22305-22400
Time & Price action suggests that,
Nifty Fut (Apr) has to sustain over 9385 area for further rally towards 9435-9475
& 9510-9550 in the short term (under bullish case scenario).
On flip side, sustaining below 9365
area, NF may fall towards 9295-9255 & 9215-9180/9115 area in the short term
(under bear case scenario).
Similarly, BNF has to sustain over
22305 area for further rally towards 22400-22500 & 22675-22800 area in the
near term (under bullish case scenario).
On the flip side, sustaining below
22250 area, BNF may fall towards 22150-22000 & 21900-21725 area in the near
term (under bear case scenario).
Nifty
Fut (Apr) today closed around 9344, rallied by almost 0.54% after making a
session low of 9298 & day high of 9357. Indian market today opened in
positive tone following upbeat global cues amid hopes for a “huge” tax cut plan
by Trump later today and better than expected Q1CY17 earnings from most of the
US corporates.
Domestic
market sentiment may be also boosted today after huge win for BJP in the Delhi
MCD polls, although it was on expected line. The win in Delhi MCD by BJP with an
emphatic margin may be an indication that people are shunning
anti-establishment regional political parties and increasingly keeping their
faith on the BJP & NAMO’s brand of politics & Modinomics.
BJP
lost badly in the last Delhi assembly election just after 2014 general election
despite so much “Modi Wave” at that time, just because people has given a
chance to the AAP’s brand of politics. Now, that trend of experimentation may
be over and people are once again keeping their faith on the main stream political
parties. Thus, there should not be any apprehension of political risks for
India in the foreseeable future because of so called anti establishment
political forces; at the end of the day people want a clean administration with
thrust on development; not drama.
For
the last few trading sessions, apart from talks of NPA resolution policy, there
was also some idea being floated that, Govt may tax the agricultural income.
Although if implemented, this might be one of the bold reform; but Govt (FM)
today denied it altogether, terming this as “personal view” of some advisor of
the Govt. Meanwhile, EU market today opened in a tepid tone and consequently Indian
market also slumped from the day high.
One
of the reasons behind sudden intraday fall may be also for the “short rollovers”
ahead of FNO exp tomorrow and thus NF touched the day low of around 9298. In
the fag end, Nifty recovered quite smartly to close above 9350 level in the
spot. As par FNO data, both FII(s) and DII(s) may be hedging their long
portfolio (cash) with shorts in FNO and considering the stretched valuation for
Nifty (TTM PE: 24.30; FY-17 FWD PE: 23.67), they may be also rolling their
short positions for the next month.
Apart
from no negative budget, no DeMo blues (?), hopes for Trumponomics & huge
unexpected win for BJP in UP, liquidity may be the primary reasons for the
stupendous market rally of more than 18% in Nifty in just 4 months since late
Dec’16. Along with FPIS & DII(s), domestic retail investors are also
pumping huge liquidity, especially after DeMo as investments in physical gold
& real estate is increasingly tougher & less attractive too. Thus, it
may be a case for demand supply mismatch in the domestic equity market, where
too much liquidity is chasing limited quality names/scrips. This situation may
turn towards normal; once more quality companies make their debut in the market
(IPO).
Although,
the market is making records high almost regularly, earnings are not catching
up similarly. Overall economy may also be not turning up as quickly as market
is expecting (as par different high frequency economic data) and private
investment cycle may also be very tepid. Thus, there may be clear disconnection
between this liquidity driven hope rally and realities of slow growth &
tepid corporate earnings; valuation multiples are expanding more rapidly than
actual growth in EPS.
Although,
the current strength of INR may be good for the overall Indian economy, it may
be bad for Nifty earnings as a significant proportion of Nifty constituents
primarily have export income. Despite huge political support, NAMO’s biggest
challenge may be creations of enough quality jobs for the vast pool of educated
Indian young demography; so far job creation may be termed as tepid and with
increasing thrust on automation in the private sector, the Indian economy may
be heading for a jobless growth in the days ahead.
Looking
forward, apart from the ongoing Q4FY17 earning session, market may also focus
on the GST implementation from July or Sep’17 (?) and many experts feel that it
may also cause some short term disruption for the economy and subsequently
Indian corporates may also report tepid earnings in FY-18. The last 200-300
points rally in Nifty may be largely fuelled by RIL, L&T, HDFC Bank &
ITC and among these, except evergreen HDFC Bank, actual growth in EPS for the
others may not be so great. Thus, optimism (hope) may be playing a significant
role for the Indian as well as global market (hopes for Trumponomics) along
with huge liquidity support.
Today
after market hours, Axis Bank has flashed its Q4 report card and at a glance, although
PAT & NII were above estimates, overall asset quality may not be so upbeat. Technically, Axis Bank (LTP: 517) need to
sustain above 530-536 area for target of 545-555 & 585 zone; otherwise it
may correct towards 495-475 area and sustaining below that 440-425 zone may be
on the card in the short to mid-term.
As
global market is anxiously waiting for Trump’s tax reform plan, some
indications are being made by his TSY Sec and most probably it may be 15% tax
for US SMES and not for the “rich US corporates”. Trump may be also planning to
tax one time 10% of the US corporates overseas profit. We have to wait for
Trump’s statement for his tax reform vision; but it may be proved as another
reason for “sell the fact” also later today.
NF
BNF
AXIS BK
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