Market Wrap: 21/04/2017
(19:00)
NSE-NF (April): 9130
(-32 points; -0.35%)
NSE-BNF (April): 21554
(-3 points; -0.02%)
IN 10Y G-SEC: 6.923
(+0.65%)
USDINR (Apr): 64.65
(-0.05%)
For 24/04/2017:
Key support for NF: 9115-9060
Key resistance for NF: 9145-9200
Key support for BNF: 21450-21300
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 & 9025/8970-8845 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 21575-21450 & 21300-21150 area in the
near term (under bear case scenario).
Nifty
Fut (Apr) today closed around 9130, down by 0.35% after making an opening
minutes high of 9208 & day low of 9090 and closed the week almost 0.5%
lower. Indian market today opened in positive zone following upbeat US cues
& mixed Asian market. Overnight US market closed almost 0.85% higher amid
better than expected results some US corporates and renewed optimism about
Trump’s tax cut plan. Also, some dovish statement by Kuroda (BOJ) about
continuing of Japan’s present QQE policy until the target of 2% CPI has made
the USDJPY to spike some extent and that also helped the SPX-500 (US) &
Nikkei (Japan).
But,
a terrorist attack in Paris yesterday ahead of election on Sunday also made the
sentiment gloomy and raised political risks for the French election, because these
types of attack may be helpful for the extreme anti EU & nationalistic
candidate (Li Pen) for the 1st round of election, day after
tomorrow. There will be 2 candidates out of 4 to be elected from this 1st
round of election to the 2nd to be held on 7th May and
market is so far discounting a convincing win for the centrist candidate,
Macron followed by Li Pen. Although, 2nd round of the French
election will be more vital, any surprise for Li Pen, because of yesterday’s
terrorist attack and some other factors may also cause some volatility in the
market on Monday.
Technically, SPX-500 (LTP:2350), need
to sustain above 2355-2375 area for more rally towards 2405-2445 zone;
otherwise it may correct and sustaining below 2340-2315 area, may fall towards
2295-2245 zone in the short to medium term.
Indian
market may have also turned cautious today ahead of French election on Sunday,
keeping in mind the unexpected results from Brexit referendum & Trump’s
election, which may be termed as a “black swan event”. Although every time
market recovered from such “dooms day” low, courtesy institutional &
central banks support, it’s not sanguine, especially the market is now at
stretched valuation after relentless rally for the last few months and thus
investors may have turned cautious today.
Indian
market sentient may have also affected today after RBI/MPC minutes revealed
hawkish stance for the members due to concerns of higher trajectory of core
CPI. Also, two of the members had actually voted for a 0.25% hike in the last
MPC meeting for the 1st time after formation of MPC and thus some
economists are also predicting a probability of 0.50% rate hikes in FY-18 and
most of them are now forecasting no probability of a rate cut in the foreseeable
future. As RBI is quite hawkish on inflation & upbeat on growth, the
combination of these two factors may not call for any rate cut in FY-18.
RBI
may focus now more on NPA resolution & reorganization (AQR) and further
transmissions of existing rate cuts to the actual borrowers (transmission from
MCLR to base rate). Although, banks has reduced their MCLR quite significantly
after 31st Dec’16 (PM’s speech), the same may not be transmitted
fully to the base rate at which borrowers are actually linked.
Also
there were some reports that Govt/RBI may review the telecom loans
restructuring mechanism and may hike the standard lending rate by 0.35% on next
renewal with an extension for 15-20 years from the present norm of 10 years.
This may have also made some banks having high exposure in telecom into
pressure today on lingering concerns about health of telecom sector.
There
were also some reports that IMF has warned about India’s debt, which is among
the highest in the EM universe due to environment of growing protectionism (US
& some other DM) & adverse risk premiums, which may have also limited
the initial euphoria in the market today.
Market
also turned cautions as Q4FY17 earnings so far may be termed as mixed to tepid
so far in comparison to the high expectations & current stretched valuation
multiples (PE). HDFC bank today reported stable earnings (slightly above
estimates) & asset quality with a 18% growth in PAT, helped by higher NII;
but higher provisions also limited the PAT growth. Going forward, banks may
need to keep the standard RBI prescribed PCR of 70-75% on an average, which is
hovering now around 55-60%. HDFC Bank today closed around 1499 (+2.38%) its
life time high after the upbeat report card and helped the market to a great
extent.
Nifty
was today also supported by RIL amid optimism about its energy project
execution and better earnings hope for Q4 (result to be published on 24th
Apr next week).
Market
was dragged today by Sun Pharma (ghosts of US FDA), BOB, Wipro (retrenchment of
a significant number of employees for cost cutting/automation) and other IT
counters (concerns for H1B visa issues), FMG counters (concerns for deficient
rains this year?)
Next
week, apart from RIL result, market may also focus on host of other important
results from Axis Bank, Kotak Bank, Wipro, Maruti & Ultratech Cement. At a
glance, ACC’s result released today after market hours may not be termed as
upbeat.
SGX-NF
SPX-500
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