Market Wrap: 24/05/2017
(17:00)
NSE-NF (May): 9375 (-16;
-0.17%) (TTM PE: 23.76; Near 2 SD of 25; TTM EPS: 394; NS-9361)
NSE-BNF (May): 22544
(-30; -0.13%) (TTM PE: 30.96; Above 3 SD of 30; TTM EPS: 728; BNS-22536)
For 25/05/2017:
Key support for NF: 9330-9280
Key resistance for NF:
9455-9515
Key support for BNF: 22450-22300
\
Key resistance for
BNF: 22675-22800
Time & Price action suggests that,
Nifty Fut (May) has to sustain over 9475 area for further rally towards 9515/9535-9575/9600
& 9680-9770 in the short term (under bullish case scenario).
On flip side, sustaining below 9450
area, NF may fall towards 9360/9330-9280 & 9240-9205 area in the short term
(under bear case scenario).
Similarly, BNF has to sustain over 22675
area for further rally towards 22800-22900 & 23000-23075 area in the near
term (under bullish case scenario).
On the flip side, sustaining below
22625 area, BNF may fall towards 22450-22300 & 21950-21800 area in the near
term (under bear case scenario).
Nifty
Fut (May) today closed around 9375, almost flat, but well of the day high of
9440; session low was at 9340 after news of PAF deploying its fighter jets at
LOC/Siachen area hit the bourse. Indian market today opened around the day high
of 9440 (+32 points) itself following mixed global
cues. Overnight US market closed in slight positive (+0.22%) supported by
optimism over Trump’s overseas tours & various business deals and strength
in oil ahead of OPEC meeting.
Although, US economic data was subdued yesterday, USD got some
strength ahead of FOMC minutes later today and June rate hike expectations
despite recent spate of soft economic data coupled with US political turbulence.
Market will also focus on Fed’s plan of any balance sheet tapering (QE bond)
and the overall tone (hawkish or dovish) of the FOMC members, if their
projections of 3 rate hikes is still intact or not for 2017.
As of now, Fed has done nothing to tamper any rate hold stance
for June and thus, FFR is still projecting 75% of rate hike probability next
month. Thus, any dovish or even not so much hawkish script today may affect the
USD & risk-on trade adversely. Looking ahead, Fed may take its rate decision
depending upon Trump’s fate next week (impeachment probability) and thus
politics may take bigger role than economics for FOMC this time.
In the morning today, Moody’s downgrade China’s sovereign debt
rating to A1 from Aa3; Outlook revised to Stable from Negative, which has put
some pressure on the CNY & Chinese/Asia-Pacific market & industrials
and metals; it’s the first rating downgrade of China since 1989. But, as rating
agencies actual action always comes late, the downgrade of China may be already
discounted by the market given its slow rate of GDP (still around 6.5%) and
ongoing war on debt in the last few quarters; China market has already
corrected good by around 10% from its recent high.
Although, being long term in nature, today’s China downgrade may
not matter to the market in the short term; but if the country’s GDP rate falls
below 6% towards 5.5-5% in the months ahead, then it may be another serious
China jitters for the global market & risk-on trade. Today, MSCI has also
indicated that China has to address its various headwinds properly before its
share got included in its EM index.
Among all these mixed global cues, Indian market today opened in
an upbeat mood after yesterday’s sell off due to official news of another mini
surgical strike by the Indian army on PAK army base at LOC on 13th
May. Although, this new surgical attack may be very small & limited, market
mood is very cautious for high probabilities of such frequent surgical strike
in the future also as strategy of the Indian Govt under strong political
leadership of NAMO may have changed to “attack is the best defence” rather than
defending itself for decades.
Thus, the Indian market suddenly came into selling spree as soon
as the report of Pak fighter jets hovering around LOC/Siachen flashed in the
media. Also there was report that PAF has activated all its forward air force
base and market swiftly fall to the day low of 9340 from around 9430 in a 90
point swing (News:Jet fighters of Pakistan Air Force made flights near Siachen
Glacier today, forward operating bases made operational claims Pak media). Pak
army today also published similar videos of destruction of army bunkers on the
Indian side as published by the Indian army yesterday.
Later, IAF denial of any such PAF jet intrusion on the Indian
airspace over Siachen may have calmed the nerve of the market to some extent
and it covered 35 points from the day low to close almost flat at 9375; (News:India
Air Force categorically rejects Pakistan's claims of flying jet fighters over
Siachen on the Indian side-Media).
Domestic market, especially midcap space was already under
pressure today even before the Pak air force story because of mixed Q4 earnings
trend, lack of clarity for the NPA policy & GST. Also, market may be
concerned over any steep hair cut (complete waive off) by the banks as a result
of RBI pressure to settle the NPA & clean the balance sheets in the near
term.
Thus, despite mixed Q4 earnings and indications of an early
& good monsoon this year and incremental policy reforms by the Govt, Indian
market may be turned cautious in the days ahead due to concerns of stretched
valuation, NPA policy, GST disruption, Ind-Pak border tensions apart from
various ongoing global geo-political headwinds.
Today Nifty was supported by Tata Motors, Adani Ports (upbeat Q4
report card), TCS, Gail & BPCL.; but dragged by Bhel, LT, PSBS (BOB/SBI),
Pharma & metals (China concern).
On the broader market, Videocon industries again came under
severe pressure for its NPA issues with different banks including Dena Bank,
ICICI Bank, SBI etc. RCOM again fall today along with all the ADAG shares due
to its ongoing concern over debt/ USD bonds after Moody’s recent downgrade and
buzz of default. But the ADAG management today came forward and assured the investors
that there is no probability of a default either for its interest or principal
payments. Being a large group and well connected to China banks and Indian
policy makers, ADAG may be “too big to fail” and thus eventually it may not
default and will keep its current deleveraging effort to come out of the
present crisis.
Looking ahead, Oil may be an interesting space ahead of OPEC
meeting; 9 months extension with some deeper production cuts (?) may be already
discounted. In such scenario, a 12 month (bullish) or 6 month (bearish) extension
may move the oil more from here.
Technically, Crude Oil
(51.47) has to sustain over 52.50 for target of 53.75-55.35 & 56.75 and
further 60-65 area in the near to mid-term; otherwise it may come down and
sustaining below 50, target may be around 45.50-43.75 zone in the coming days.
Despite OPEC cut optimism, consistent supply glut & slowing China and US
may be the prime concern.
For India, oil above $60-65 may not be good for its overall
economy and the market.
SGX-NF
BNF
CRUDE OIL
Article Courtesy: frontiza.com
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