Market Wrap: 17/05/2017
(17:00)
NSE-NF (May): 9535 (+13;
+0.13%) (TTM PE: 24.17; Near 2 SD of 25; TTM EPS: 394)
NSE-BNF (May): 22918
(-23; -0.10%) (TTM PE: 31.50; Above 3 SD of 30; TTM EPS: 728)
For 18/05/2017:
Key support for NF: 9495-9425
Key resistance for NF:
9600-9680
Key support for BNF: 22825-22720
Key resistance for
BNF: 23000-23075
Time & Price action suggests that,
Nifty Fut (May) has to sustain over 9600 area for further rally towards 9640-9680
& 9770-9865 in the short term (under bullish case scenario).
On flip side, sustaining below 9580-9560
area, NF may fall towards 9495-9445 & 9400-9355 area in the short term
(under bear case scenario).
Similarly, BNF has to sustain over
23000 area for further rally towards 23075-23200 & 23325-23450 area in the
near term (under bullish case scenario).
On the flip side, sustaining below
22950 area, BNF may fall towards 22825-22720 & 22625-22450 area in the near
term (under bear case scenario).
Nifty
Fut (May) today closed around 9535, almost flat (+0.13%) after making a day
high of 9538 & low of 9494 in a day of consolidation. Indian market today
opened almost flat following tepid global cues
amid US political chaos and a spate of softer economic data. US stock Futs were
down in the morning Asian session after report that Trump has instructed his
former (sacked) FBI director to not proceed further into alleged Russian links
of one his close aide (former NSA). All these ongoing political tuurmoil may be
serious or may not be, but one thing is clear that it’s enough to distract the
core theme of Trumponomics itself. As a result, USD/US bond yields are drifting
lower and USDJPY is trading below the 113-112.50 area for further “risk off”
mode.
As par some political
experts, the current crisis may be turn into a serious issue of “obstruction of
justice” and may also be an “impeachable offence” for Trump in the coming
days!! Thus the latest “Trump Tantrum” for the issue of FBI director over
investigation with Russian link and alleged sharing of “classified information”
with Russia may bring Trump into a serious political crisis and thus USD is
under pressure across the board, causing some “risk off” sentiment across the globe.
After yesterday’s “NAMO”
celebration rally on its 3rd anniversary of “Modi Sarkar”, Indian
market was also under some stress, following tepid global cues. Although,
European market opened in a subdued tone today, it got some support from upbeat
CPI no (Apr) for EZ, which flashed as 1.9% against estimate of 1.9% (prior: 1.9%).
The figure is close to ECB’s price/inflation target of 2%. Thus some rebound in
EU & global market after noon today also supported the Indian market
sentiment to gain some ground from red and close almost flat in slight green.
As valuations are quite high at Nifty 9500, domestic smart money (DII) may be continued
to be in the side line; some FII buying is supporting the market in a
stock/sector specific story.
Apart from global
issues (US political turmoil, China jitters) & stretched valuation concern,
Indian market may be also concerned for any GST related business disruptions in
the coming days, if the Govt indeed go for the 1st July
implementation day of the same with barely 45 days in hand and almost all the
laws, rules & regulations, product & service specific GST rates are
still in the drafting mode; all the stakeholders now has to work very hard,
almost 24/7 for its smooth implementation from July’17 as overall preparedness
may be still at very early stage.
Today, Indian
market sentiment may be also supported by some news that Govt may permit 100%
FDI in single brand retail under “Make In India” category. Also, Govt approved
coal linkage policy today, which is positive for CIL & some power cos.
Nifty today was
supported significantly by Tata Steel, which closed by over 8% on the back of
upbeat Q4FY17 numbers; strong EBITDA growth and less concern for its UK pension
liability (?). But going ahead, huge debt, doubt over ongoing JV talk with the
German co and moreover still huge UK pension liability & subsequent issues
for its deleveraging effort may also be some of its headwinds.
Apart from Tata
Steel, Nifty was also supported by Tata Motors, SBI (better result prospect),
Infratel, ICICI Ban; but dragged by Cement counters (after below expected
result from Shree Cement and price cut by ACC), Yes Bank (NPA divergence issue)
and some PSBS.
Overall, sustaining
above 9600-9680 area, Nifty may further rally towards 9865-10100 area in the
coming months, provided earnings (EPS) catch up with the fast expanding valuation
multiple (PE); market is expecting a CAGR of 20-25% for FY-18. Apart from
earnings, market may also focus on the modalities of GST implementation &
any disruption there of (because of lack of input tax credit clarity, both manufacturers
& traders may keep the stock at minimal level in the coming months
affecting the revenue).
All eyes may be
also on the forthcoming monsoon, currency movement (INR), Govt’s policy push
and above all the fund inflows (FII/DII/ retails), which may be the sole reason
for such rally of over 20% in Nifty for the last five months.
Some analysts are
expecting an EPS of around 430 & 510 for FY-17 & FY-18 against actual
FY-16 EPS of around 370 for Nifty; i.e. market is expecting a CAGR of 16% &
19% for FY-17 & 18. But considering the actual run rate for previous 5
years and average single digit growth of 7% the consensus of 16-19% growth in
EPS may be little on the higher side. As par this run rate, Nifty EPS for FY-17
may be around 394 & 418 (at 6.26% projected CAGR) in the normal scenario.
NIFTY
|
Mar '16
|
Mar '15
|
Mar '14
|
Mar '13
|
Mar '12
|
FY-12-16
|
FY-15-16
|
AVG
|
AVGR
|
SGR
|
PROJ(%)
|
FY-17
|
FY1-8
|
NIFTY
|
7738.4
|
8491
|
6704.2
|
5682.55
|
5295.55
|
46.13
|
-8.86
|
6543.33
|
18.26
|
10.64
|
7.89
|
8349.30
|
9008.42
|
PE
|
20.89
|
22.7
|
18.86
|
17.89
|
18.74
|
11.47
|
-7.97
|
19.55
|
6.87
|
3.26
|
1.26
|
21.15
|
21.42
|
EPS
|
370.44
|
374.05
|
355.47
|
317.64
|
282.58
|
31.09
|
-0.97
|
332.44
|
11.43
|
6.80
|
6.26
|
393.62
|
418.26
|
AVG PE
|
20
|
20
|
20
|
20
|
|||||||||
FAIR VALUATION
|
7409
|
7481
|
7872
|
8365
|
|||||||||
ACTUAL EPS CAGR(%)
|
-0.97
|
5.23
|
11.91
|
12.41
|
SGX-NF
BNF
Article Courtesy: frontiza.com
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