Market Wrap: 20/06/2017
(17:00)
NSE-NF (June): 9676
(+1; +0.01%) (TTM PE: 24.44; Near 2 SD of 25; TTM EPS: 395; NS-9653)
NSE-BNF (June): 23670
(-29; -0.12%) (TTM PE: 29.81; Near 3 SD of 30; TTM EPS: 795; BNS-23698)
For 21/06/2017:
Key support for NF: 9650/9615-9580
Key resistance for NF:
9725-9775
Key support for BNF: 23650-23450/23300
Key resistance for
BNF: 23875-24000
Time & Price action suggests that,
NF has to sustain over 9725 area for further rally towards 9775-9825 & 9865-9950/10050
in the short term (under bullish case scenario).
On flip side, sustaining below 9705
area, NF may fall towards 9650/9615-9580 & 9530/9505-9470 area in the short
term (under bear case scenario).
Similarly, BNF has to sustain over
23875 area for further rally towards 24000-24115 & 24250-24435 area in the
near term (under bullish case scenario).
On the flip side, sustaining below
23825-23750 area, BNF may fall towards 23650-23450 & 23300-23100 area in
the near term (under bear case scenario).
Nifty
Fut (June) today closed around 9676, almost unchanged after making an opening
minutes high of 9690 and mid session low of 9662; the gain in tech shares were
more offset by lose in banks & FMCG. Indian market today opened slightly
higher following mixed global cues. Overnight US
market/DJ-30 closed in positive (+0.68%) amid rebound of FAANG/Tech shares on
renewed optimism about the sector following Trump’s meet and some unexpected
hawkish comments from Fed’s Dudley, advocating for another hike in Dec’17,
brushing aside subdued US inflation. Both USD/US bond yields were higher,
helping the Banks & financials.
But, in the morning today, stance of another influential FOMC
member Evans was slightly dovish and opposite to that of Dudley/Yellen and
preferred to hike in Dec’17 depending upon actual (higher) trajectory of the US
CPI; Evans does not oppose any tapering of Fed’s B/S either.
Amid all these puzzling comments by different FOMC members,
market may be also confused about Fed’s rate hike trajectory in 2017; but FFR
is now showing below 50% probability of a Dec’17 rate hike; i.e. market may not
be emphasizing too much weight on Fed’s ongoing drama (jawboning) and may focus
more on incoming US economic data & trajectory of Trumponomics apart from
US political jitters.
Looking ahead, speech from Fischer later in the day today may be
important (if he actually offer any US monetary policy comment) and market may
focus on these three most influential US policy makers within Fed
(Yellen/Fischer/Dudley).
Oil
prices flirted with this year's lows as market is concerned over supply glut
and more signs that rising crude production in the US, Libya and Nigeria
undercut OPEC-led efforts to support the market with output curbs. Safe-haven
gold hit a one-month low of around 1243 on strength of USD as risk-on sentiment
improved.
Overall,
Asia shares were trading near two-year high as U.S. hi-tech rebound boosts
mood. Elsewhere, Japan's Nikkei rose more than 1% to a near two-year high on
Tuesday, encouraged by rebound in U.S. hi-tech shares & USD (lower Yen) as
investors bet on solid growth in the economy and corporate profits globally.
Market may be also focused on a high probable inclusion of
China-A shares in the MSCI index, which is so far remained elusive for three
previous occasions. Incidentally in the morning today, Fitch downgraded China’s
GDP growth to 6.5/5.9/5.8% for CY-2017/18 & 2019 citing higher levels of
leverage. Some comments from PBOC Gov were also cautious & dovish citing
about global geo-political uncertainties, trade protectionism & financial
instability. China’s MSCI inclusion may pave the way for easy access of FII(s),
but that may be also negative for another big Asian Market, India. The
blue-chip CSI300 index of mainland China stocks was down 0.2% may be due to
neutral MLF/OMO operations by PBOC today and slightly higher USDCNY.
After
firm EU opening on the back of rebound in US market (tech shares & USD/US
bond yields), European market also came under some pressure due to soft
EU/German economic data, UK political concern/Brexit negotiations and a ghost
of investigation on Barclays for a 2008 issue with Qatar fund raising.
Elsewhere
in UK, Cable tumbled following Carney’s dovish stance at his Mansion House
speech advocating for a no rate hike in the foreseeable future amid Brexit
uncertainties, tepid wage growth, subdued consumer spending & private
investments despite some hawkish views from other MPC members regarding higher
trajectory of inflation. BOE Gov will wait for further evidences of UK
inflation, which may be a by-product of a weaker currency (GBP); clearly,
Carney will wait for more incoming UK economic data and realities of Brexit
negotiations before any rate move (hike).
Also,
buzz of S&P downgrade of UK on Brexit & political uncertainty and
ongoing Fed squabbling about US rate trajectory may have affected the EU/global
market sentiment later on.
Back to home, Indian market today continue its focus on IBC/NPA
resolution progress & actual result and also on the GST implementation
& probable disruption issues despite some exceptions being provided by the
Govt. Also, Punjab Govt’s yesterday action of farm loan waiver & other
populist measures may have affected the overall market (banks/NBFC) sentiment
as it can affect credit discipline of the system. But, some experts do also
feel that problems of the farmers may be genuine as the DeMo move may have
itself destroyed the rural agri economy & pricing power of the farmers
despite good monsoon for the last two years and most probably, also this year.
IT stocks were in upbeat mood today following rebound in US tech
shares; but Indian market came under sudden mid-day selling pressure today
after FM confirmed about GST roll out day on 1st July
and at the same time asked all the stakeholders to prepare for a probable short
term disruption; clearly the Govt may be also very concerned about GST
disruptions, considering the lack of full preparedness and complexities of the
present form of GST itself.
Although,
originally GST was being seen as pro-growth reform, supposed to contribute
around 1.5% of India’s GDP growth because of formalization of the economy and
overall tax buoyancy & better consumption as a result of lower prices of
product & services (?), now considering the present complex format, the
same may be in doubt.
Banks
were under pressure also because of doubt for IBC act effectiveness on the
actual resolution of stressed assets. As par some reports, Govt may not go for
full liquidation of the stressed assets and instead may allow the
founders/promoters to have minority stake in the company and the rest may be
controlled by the banks; thus it may be an indication that Govt/Banks also have
less confidence to put the stressed assets on sell or find an alternative management.
On the other side, some of the identified companies for IBC Act may not contest
at all at the NCLT and may voluntarily hand over the assets to the Banks; thus
commercial viability of the project may be itself in doubt, which may be the
core issue of the NPA.
Today Nifty was supported by Tata Power (IPO buzz by its subsidiary),
Tata Motors (IPO buzz by JLR-UK), IT stocks (INFY/TCS/TECHM/HCLTECH) for
rebound in US techs and hopes for some soft stand from Trump), Tata Steel (deleveraging
for Tata Motors share); there was also some market talk of an immediate buy
back offers from INFY.
Nifty was dragged by Pharma (Lupin/Sun Pharma due to renewed US
FDA & future guidance/earnings concern), HDFC twins, Axis Bank, BOB,
Automobiles & FMCG (GST concern & discount selling) & LT to some
extent.
Subdued GDP forecast by Fitch may have also affected the Indian
market sentiment today. Overall, technically, Nifty now need to sustain over 7725
area for its next positional target of 7865-10050 in the short term; otherwise
expect some time corrections.
Elsewhere,
Oil today suddenly plunged in heavy volumes after Russian oil minister’s
comments that they have no plan to meet US shale oil producers to discuss any
production cut & current market situation. He has also confirmed no plan
for an extraordinary meeting with OPEC.
Oil
is also being affected by ongoing over supply glut condition and it fall today
to around $43, thus crashed by almost 17% since last OPEC-NOPEC production cut
agreement extension few weeks ago; it has peaked to almost $52 at that time.
Oil
was trading higher at the start of this week; but it has began to fall again
late day yesterday after data showed that number of oil storage tankers had
risen to the highest for this year. Today, it came under renewed pressure after
reports of production resumption from two Libyan oil fields and overall record
high oil production from Libya & Nigeria, which are not under any OPEC
production cuts.
Looking
forward, market may focus on US API inventory data later in the day; high
supplies of gasoline are a major headwind for oil.
Technical Analysis: Daily/Short Term
Crude
Oil: 43.27 (LTP)
Key Technical Levels:
S1:
42.00
S2:
41.00
S3:
39.90
S4:
38.15
PIVOT: 43.75-44.25
R1:44.95-45.50
R2:
46.25
R3:
47.95
R4:
49.05
Time & Price action, chart pattern & momentum oscillator
suggests that, CL has to sustain over 44.25 area for further rally towards 44.95/45.50-46.25
& 47.95-49.05 zone in the short term (under bullish case scenario).
On flip side, sustaining below 45.75 area, CL may fall towards
42.00-41.00 & 39.90-38.15 area in the short term (under bear case
scenario).
SGX-NF
BNF
CRUDE OIL
Article Courtesy: frontiza.com
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