Market Wrap: 11/05/2017
(17:00)
NSE-NF (May): 9437 (+18
points; +0.19%)
NSE-BNF (May): 22812
(-49 points; -0.21%)
For 12/05/2017:
Key support for NF: 9390-9340
Key resistance for NF: 9475-9550
Key support for BNF: 22700-22550
Key resistance for BNF:
2300-23075
Time & Price action suggests that,
Nifty Fut (May) has to sustain over 9475 area for further rally towards 9510-9550
& 9600-9680 in the short term (under bullish case scenario).
On flip side, sustaining below 9450
area, NF may fall towards 9390-9340 & 9295-9245 area in the short term
(under bear case scenario).
Similarly, BNF has to sustain over
23000 area for further rally towards 23075-23200 & 23405-23475 area in the
near term (under bullish case scenario).
On the flip side, sustaining below
22950 area, BNF may fall towards 22825-22700 & 22550-22450 area in the near
term (under bear case scenario).
Nifty
Fut (May) today closed around 9437, another record high and almost 0.19%
higher, but off the day high of 9464 to close almost flat near the opening low
of 9432. Indian market today also opened almost flat following mixed global cues and
better prospect of monsoon this year as predicted by IMD (although SKYMET is
cautiously optimistic, predicting just normal rainfall of 96% of LTA against
IMD’s 100-106% LTA).
Overnight, US market also closed almost flat, but off the lows
amid rebound in oil due to surprised US inventory drawdown. Also weak US TSY
auction (better yield) and some hawkish comments from an influential Fed member
calling for 3 more hikes may have influenced the USD/US bond yields & risk
trade. Yesterday’s US export & import index was also looks upbeat/better
than expected and together with that some dovish stance of Draghi may have also
made the USD stronger.
Despite serious political concerns over Trump’s alleged Russian
link, market is relatively calm may be because even if Trump will be impeached
in future, RNC members are full in control of the US House (senate/congress)
and thus, there may not be any serious political deadlock, even if Trump is
impeached. In any way, growing US political risks may be serious headwinds for
Trumponomics as Trump will be busy with such political & administrative
mess rather than US economic/structural reform.
China/Hong Kong market came under some late pressure today due
to concern over increasing regulatory tightening over leverage trading and
slump of iron ore futures.
Indian market although today traded in some upbeat mood after
flat opening due to optimism about the IMD’s prediction of a normal monsoon,
this year, the market soon came under some pressure (profit booking/long
unwinding/fresh shorts at record high level) in private banks (except Kotak
bank for QIP), oil & gas (Gail/ONGC) & telecom (Bharti Airtel). As
almost all the “good news” may have been priced in, domestic market may be
consolidated today on the back of tepid global cues & mixed Q4 earnings so
far.
USD (risk trade) came under some renewed pressure today after EU
market opening as another influential Fed member (Dudley) called for a gradual
rate hike, a tapering of Fed’s balance sheet (QE bond holdings) by Dec’17. He
also warned that USA may suffer significantly due to Trump’s trade protection
policy.
Later in the day, BOE (UK) came with a “hawkish hold” stance,
warning about inflationary pressure & a hard Brexit effect on Britain’s
economy. All these may have affected global market (risk on) sentiment today
and Indian market also affected towards the closing session. But, despite
apparent hawkish scripts, GBPUSD nosedived, may be because none of the BOE
members today voted for a rate hike and moreover, Carney’s apprehension about a
hard Brexit. In any case, BOE may not hike till there is clarity about Brexit modalities
(hard or soft) and despite higher inflation & lower real wage
growth/consumer spending in UK; BOE is expected to be neutral till Brexit uncertainty
is over. Thus, GBPUSD is getting some
weakness and is unable to break the resistance of 1.30 and targeting the area
of immediate support of 1.27-1.25.
Indian market may be also very optimistic about a good monsoon and
its effect on the overall rural economy, favourable effect on inflation and
subsequent RBI rate cut (?). Although, a good monsoon may be always supportive for
the rural economy, the overall macro picture may have also changed quite a lot
in the last few years due to various steps like thrust on irrigation, some modern
approach in agriculture (farming) etc. Also, proper/even distribution &
timing of rainfall all over the country is more important than the absolute
amount of rains, may be it +/- 5% of LTA.
Also, considering overall scenario & macro economic
situation and global (Fed) factors, RBI is expected to be on “neutral mode”
till late FY-18, solely on the fact that there is very limited scope for the
banks to transmit further rate cuts, unless small savings rate in India is cut
drastically. Going forward, RBI may focus more on NPA & currency (USDINR)
management. For the Govt, bond market may be more important to fund its deficit
and thus RBI may not cut aggressively in the months ahead to weaken the INR and
the Indian bond yields, forcing the FPIS to exit.
Indian market today was supported by autos & 2W (better
monsoon prospect and IMD’s confirmation that monsoon will hit Andaman Islands
as par schedule). Hero Motors rallied by also 4% despite tepid Q4 report card
on the back of upbeat commentary by the management in the post result con-call.
ZEEL also rallied by more than 5% for better than expected Q4 result and ad
revenue despite DeMo blues.
Today, Indian CEA also came heavily on the global rating
agencies for “double standards” in their approach for rating India & other
peers (China). But, rating agencies may have also their own rating parameters
like GDP/income per capita, tepid private investments, huge banking stress,
implementation of various reform policies & its result, issues of twin
balance sheet and overall doubt about India’s methodology over the new GDP
series.
But, despite just above junk international rating, India is now
one of the most favored investment destination globally, just because of “Modinomics”
& appeal of 4-D (demand, demography, democracy & deregulation). Moreover,
after recent block buster win in the state elections (UP) and subsequent
perception of a political risk free stable democracy till at least for next ten
years, rating agencies may began to upgrade India in 2018 (after smooth GST
implementation, some result of ongoing NPA reform and improvement in consumer
spending/disposable income etc) and only after then we may have the “mother of
all bull run”.
SGX-NF
BNF
GBPUSD
Article courtesy: frontiza.com
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