Market Wrap: 26/05/2017
(17:00)
NSE-NF (June): 9569 (+73;
+0.77%) (TTM PE: 24.35; Near 2 SD of 25; TTM EPS: 394; NS-9595)
NSE-BNF (June): 23245
(+212; +0.92%) (TTM PE: 32.09; Above 3 SD of 30; TTM EPS: 728; BNS-23362)
For 29/05/2017:
Key support for NF: 9550-9490
Key resistance for NF:
9600-9680
Key support for BNF: 23200-22950
Key resistance for
BNF: 23375-23500
Time & Price action suggests that,
Nifty Fut (May) has to sustain over 9600 area for further rally towards 9680-9770
& 9865-10000/10100 in the short term (under bullish case scenario).
On flip side, sustaining below 9580-9550
area, NF may fall towards 9490-9450 & 9410-9330 area in the short term
(under bear case scenario).
Similarly, BNF has to sustain over 23375
area for further rally towards 23500-23650 & 23875-24000 area in the near
term (under bullish case scenario).
On the flip side, sustaining below
23325 area, BNF may fall towards 23200-22950 & 22800-22600 area in the near
term (under bear case scenario).
Nifty
Fut (June) today closed around 9569, almost 0.77% higher after making an
opening session low of 9475 and late day high of 9586; Nifty Spot & Sensex
was able to scale the historic milestone of 9600 & 31000 on this 3rd
anniversary of BJP/NAMO Govt in the office.
Since
May’2014, Nifty has rallied by over 30% in this 3 years supported by huge fund
flows, stable macro economy & INR, incremental reforms, huge public
investments (Govt capex) in infrastructure & rural economy/social sector, a
corruption free Govt despite challenges of various global jitters, DeMo, tepid private
investments and legacy issues of huge banking NPA and subdued earnings. Despite
stretched valuation, appeal of 4-D & Modinomics combination may be
attractive enough for the huge fund flows both from the FPIS & DII and
domestic retail investors.
Indian
market today opened in almost flat following mixed global cues.
Overnight US market closed in positive (+0.34%) in another record high buoyed
by upbeat earnings by some retail giants and optimism about tech & consumer
discretionary sector. Oil was in roller coaster mode and eventually fall below
50-49 mark as OPEC-NOPEC production cut agreement of 9 months may be already
discounted by the market, going by the recent rally (another typical example of
buy on rumour & sell on news/fact). Also, some section of the market may be
expecting a deeper cut which has not happened at all. Fall in Oil below $50 is
also helpful for the Indian market.
But, USD/US bond yields were subdued as market is slowly
realizing that Fed may not hike in June amid soft US economic data &
political turbulence; instead Fed is now talking about gradual tapering of its
B/S (QE bonds), which may be more adverse effect than a rate hike.
In the early morning Asian session, USD (risk trade) came under
renewed pressure after news that, Trump’s son-in-law is under FBI scanner for
the alleged Russian involvement issue in the US election. USDJPY, which may be
a key indicator of risk trade, came under further pressure after Trump’s
comment about NK issue. Also, some dovish comments by Fed’s Bullard today has dampened
the USD sentiment (“Fed is very close to where it needs to be on policy rate”).
Elsewhere, Japan was trading lower following strength in JPY and
less than expected core CPI. But China market was upbeat despite recent rating
downgrade on suspected Govt/PBOC intervention in currency & stock market
(Chinese Govt may be buying China stocks!!).
A weak USD may be also good for the overall Indian economy, but
may not be as good for Nifty as almost 40% of the Nifty components have
significant export income.
EU markets were in some pressure today as a result of Trump’s another
comments about German carmakers (“too many” sales in US) which he is “going to
stop”. But, FTSE was trading in positive today amid some fall in GBPUSD after
latest opinion poll has shown declining approval rate for the British PM (May).
Overall, dovish FOMC minutes this week may be an indication that
Fed will not hike in June and going forward, it may not hike further at all in
2017, if the incoming US economic data do not surprise on the upside. Also, US
political turmoil may be another prime factor behind Fed’s dovish tone going
forward; the whole idea of Trumponomics may be in doubt now. Thus, USD/US bond
yields are going lower and investors (FII) are again flocking an attractive EM
destination like India (sell the DM & buy the EM idea may be again
gathering strong momentum).
Nifty was today supported by Tata Steel (optimism about JV with
German co) & other metals space (Chinese rebound in iron ore), Oil &
gas (RIL/BPCL for fall in crude oil), ITC (upbeat Q4 results), Private Banks,
cements, autos.
Nifty was dragged by Pharma (tepid earnings & guidance along
with US FDA issues), PSBS & TCS (weak USD & end of buyback offer).
PSBS were in pressure today after reports that Govt may ask them
to increase lending/exposure to the socially backward sections and all the
social sector schemes. Govt may also ask them to increase their retail lending,
housing loan and a definitive plan for NPA resolution and credit growth.
As par some reports, Govt may also go for general election in
2018, one year in advance, so that it coincides with the state elections. Thus,
Govt may be readying itself for the 2018 election by focusing more on social
sectors.
Meanwhile, US Q1 GDP (2nd revision) just flashed as 1.2%
from 0.7% (expectations 0.9%) supported by stronger spending/capex; but dragged
by corporate profits (-2.5%; prior: 2.3%).
Also, core durable goods order (Apr-MOM) came as -0.4% (estimate
0.5%; prior: -0.2%) dragged by lack of new orders. Overall, these mixed economic data is slightly positive for USDJPY
(111.25), which rebounded from the 110 level; but may not be strong enough to
break the 112.50-114.50 zone.
SGX-NF
BNF
Article Courtesy: frontiza.com
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