Nifty finished the May Exp almost 1.80%
higher; what’s for June?
Is the market expecting some rating
upgrade of India?
Market Wrap: 25/05/2017
(17:00)
NSE-NF (June): 9492 (+119;
+1.27%) (TTM PE: 24.14; Near 2 SD of 25; TTM EPS: 394; NS-9510)
NSE-BNF (June): 23000
(+506; +2.25%) (TTM PE: 31.86; Above 3 SD of 30; TTM EPS: 728; BNS-23191)
For 26/05/2017:
Key support for NF: 9495-9430
Key resistance for NF:
9550-9600
Key support for BNF: 23200-23075
\
Key resistance for
BNF: 23300-23500
Time & Price action suggests that,
Nifty Fut (May) has to sustain over 9550 area for further rally towards 9600-9680
& 9770-9865 in the short term (under bullish case scenario).
On flip side, sustaining below 9530-9495
area, NF may fall towards 9430-9330 & 9280-9240 area in the short term
(under bear case scenario).
Similarly, BNF has to sustain over 23300
area for further rally towards 23500-23650 & 23875-24000 area in the near
term (under bullish case scenario).
On the flip side, sustaining below
23250-23200 area, BNF may fall towards 23075-23000 & 22900-22700 area in
the near term (under bear case scenario).
Nifty
Fut (June) today closed around 9492, almost 1.27% up against Nifty Spot closing
of 9510 (+1.57%) in a day marked by bull rampage and sudden expiry day short
covering/value buying taking advantage of the last few days fall for lingering
Ind-Pak border tensions. Buoyed by FOMC’s dovish minutes and cautious/gradual
approach in US rate hike & Fed’s balance sheet tapering and coupled with
positive global cues, Indian market today shrugged off the LOC/Pak tensions on
the eve of 3rd year anniversary (official) of Modinomics. Market
sentiment may be also boosted by Skymet’s prediction of a good June monsoon
coupled with an imminent NPA resolution policy (RBI framework for haircuts etc
for large NPA). NF (June) today made an opening session low of 9387 and late
day high of 9507.
Today’s
typical large caps buying including private banks may be an indication of big
institutional value buying (DII/MF/FII), which were looking for some opportunities
and dips in the market for fresh entry (long only fund). This may be also
because MSCI is now not in a hurry to include China-A-50 shares in its EM
index, citing lack of various pending reforms and thus, with Brazil in deep
political crisis, angel investors may be finding few EM countries to invest and
thus India is one of the prime & favourite destination having appeal of 4-D
(development, demand, demography & deregulation) under strong political
leadership of NAMO (Modinomics).
There
was also some buzz of an imminent sovereign rating upgrade for India by the
global rating agencies after China’s downgrade yesterday; but that may be tough
proposition, considering various reasons already cited by the rating agencies,
despite best efforts by the Govt/policy makers.
Except
Pharma, nearly all the sectors has participated in today’s huge rally of the
Indian market. Nifty was boosted by LT, Banks (ICICI/Indusind/Yes/BOB/SBI/HDFC
Bk), Cements (ACC/Ambuja). But, Pharma (Lupin, DRL, Cipla/Sun) was laggard
today with double whammy of subdued earnings & “ghosts” of US FDA.
Looking
ahead, although Indian market now catches up the global market (SPX-500) after
last few days fall, considering stretched valuation, market may also
consolidate in the next few days before a decisive movement. Market may watch
further developments in the Ind-Pak cross border tensions; GST disruption probabilities
and any postponement of the 1st July roll out day due to industry
representations to the FM over anomalies of various GST rates and lack of preparedness.
Technically,
Nifty needs to sustain over 9600 area for target of 9865-10100 in the short to
mid-term; otherwise it may again come down.
Globally,
overnight, US market closed in positive (+0.36%) as
investors cheers (??) Fed’s stance of gradual tapering of Fed’s balance sheet
(QE bonds) and gradual rate hikes depending on incoming US economic data.
Overall, FOMC minutes may be termed as quite dovish and June rate hike
probability may be also in doubt (although FFR now indicating 80% rate hike
probability, up from 75% before FOMC minutes). As a result, USD/US bond yields
doomed; but SPX-500 is showing divergence (risk-on mode); may be because of
short covering ahead of testimony by Comey for Trump’s alleged Russian
connection issue.
Also, today Chinese Yuan (CNY) made a sudden surge, causing some
risk-on sentiment across the Asian market; some China Govt/PBOC intervention is
highly suspected. EU market sentiment was tepid after below expected GDP
numbers from UK. Market is anticipating that something is brewing on China
after its rating downgrade yesterday.
Technically, SPX-500
(2407) need to close consecutively above 2410-2420 area for target of 2480-2495
zone; otherwise it will come down.
SGX-NF
BNF
SPX-500
Article Courtesy: frontiza.com
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