Market Wrap: 20/06/2017
(17:00)
NSE-NF (June): 9658
(-17; -0.17%) (TTM PE: 24.39; Near 2 SD of 25; TTM EPS: 395; NS-9634)
NSE-BNF (June): 23685
(-7; -0.03%) (TTM PE: 29.82; Near 3 SD of 30; TTM EPS: 795; BNS-23709)
For 22/06/2017:
Key support for NF: 9615-9580
Key resistance for NF:
9675-9725
Key support for BNF: 23600-23450
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 9705-9675
area, NF may fall towards 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 23600-23450 & 23300-23100 area in
the near term (under bear case scenario).
Nifty
Fut (June) today closed around 9658, down by 0.17% in another day of
consolidation marked by tepid global cues and in absence of any meaningful
domestic/global triggers; NF made an opening session low of 9616 and late day
high of 9668.
Indian
market today opened almost 32 points down tracking
subdued global cues. Overnight, US market/DJ-30 also closed lower (-0.29%) amid
selling in energy & retail shares following plunge in oil for ongoing
concern of supply glut and concern for Amazon’s aggressive marketing &
inorganic growth strategy (deflation).
After nearly three
years of squabbling, MSCI today announced to include China-A shares into its EM
index; as par reports, initial inflow may be around $18 bln; but if China can
reform its stock market as par global standards, net inflow may be around
$350-400 bln over next few years; it may take as high as 5-10 years for full
inclusion of China-A shares into MSCI EM index (0.73% weightage) for nearly 222
companies.
China was trading
almost flat in slight negative tone as the MSCI inclusion this time may have
been largely discounted by the market & currency (CNY); but it may be a big
positive for the overall China stock market in the mid to long term. Actual
inclusion may start from April’2018 onwards. Stretched valuation of Chinese
shares & political influence may be some of the concerns of the China
market.
Japan (Nikkei-225) was
trading in negative zone & backs off 22 month high as Yen got some strength
and USDJPY fall yesterday from one week high after US TSY secretary (Mnuchin)
commented that USD may be too strong for America’s export competiveness. Market
may be also looking for some real progress on US tax reform from Mnuchin &
Ryan (US Speaker) yesterday; but they offered no new comments, which market
does not know.
Overall, comments by
various US Fed speakers may be also indicating that Fed may be in no rush for a
Sep hike and instead may wait for more US economic data till Dec’17 to see
actual wage & inflation growth, which warranted any rate hike or not.
Moreover, BOJ minutes in the morning today shows some tapering thought among
BOJ members and all these are causing USDJPY weakness and risk-off mode; USDJPY
is now trading around 0.17% lower at 111.25.
The sudden news of
Saudi king replacement & shake up of the royal family may have also
affected the risk-on sentiment across the region as it may ignite further
instability in the GCC after Qatar diplomatic issues and thus commodity
currencies were in some pressure apart from factor of plunge in oil, which is
now trading almost flat (+0.24%) after better than expected crude stocks
drawdown report from US API this morning and this Saudi Kingdom development.
As a result of China’s
inclusion in MSCI index, all the concerned EM (s) may see some rebalancing of
funds and India may also see some outflow; total FPIS investment in India now
may be around $350 bln including bond market, which is equivalent to the
country’s FX reserve of around $375 bln.
European cues were
also negative amid slide in energy related shares (oil) and concerns of UK
political jitters & Brexit uncertainty. Looking forward, global market may
focus into coalition Govt announcement from Conservative & DUP. There is
also some speculation that Theresa may resign and UK may also exit EU without
any deal at all; although a majority of the Tories may not approve “no Brexit
deal”. All eyes will be on the Queen’s speech today and Theresa will have 5
more days to form a negotiated coalition Govt with DUP; otherwise the minority
Conservative Govt may fall. All these political jitters are taking a toll on
global/EU market sentiment along with recent sad incident of London fire &
repeated terrorist attacks, for which Theresa Govt may be under immense
pressure now.
Amid all these ongoing
global concerns, Indian market also ended in red (-17 points); looking forward,
Indian market may focus on IBC/NPA resolution effectiveness and issues of GST
disruptions amid poor IT infrastructure and preparedness among the
stakeholders. The present format of GST may be termed as a modified version of
VAT (“old wine in new bottle”) and may not be the ideal & simple concept of
“one tax one nation”, originally thought.
Indian market today
recovered from deep intraday loses after FM/Govt announced that Kerala is
passing the SGST bill through an ordinance and the nation is ready for GST
rollover on 1st July except the state of J&K, which may also
join later. Although, there may be considerable apprehensions about the GST
disruption, market may be also in some type of dilemma ahead of the key event
amid divergent views of the experts.
Domestic market was
also cautious today ahead of key RBI minutes of June policy meet later in the
day to gauze RBI/MPC’s thinking about future trajectory of rate stance; market
may be expecting a rate cut in Aug’17 amid consistent fall in headline CPI and
sudden fall in Q4FY17 GDP.
Market may be also
concerned that due to inclusion of China in MSCI EM index, India may see around
$220 mln outflow; although the amount is not significant, overall sentient may
be affected today.
Indian market today
may be also supported to some extent by IMD forecast of more intensified rains
in the days ahead and an Australian weather report that threat of El-Lino may have
receded significantly for the time being.
Nifty metal index
(down 1.2%) was the leading sectoral loser, led by losses in Hindalco;
initially some metal stocks were in demand (Tata Steel, JSW Steel) for hopes of
consolidation in the debt ridden metal/steel sector under RBI IBC Act among so
called dirty dozen. Market is expecting some M&A as a result of NPA
resolution mechanism; although it’s viability may be at doubt.
Oil explorers fell
after global oil prices hit seven-month lows, with ONGC falling as much as 2.5%
and Oil India down as much as 1.9%.
FMCG stocks were the
best performers. HUL, Colgate Palmolive, Britannia, Emami gained between 1-3%;
ITC also recovered from loss on hopes of favourable GST rates and better
monsoon this year.
Among other gainers,
aviation companies were in focus with all the three airliners SpiceJet,
InterGlobe Aviation and Jet Airways adding in the range of 2-3% in an otherwise
weak market after good growth in passenger traffic and lower crude oil prices. Price
of aviation fuel is the biggest cost factor for low-budget carriers; in
addition Govt’s deregulation move to privatize Air India may be also supporting
the airline sector; Tata group may be buying Air India as par some market
reports despite huge debt of Rs.55000 cr.
Amtek Auto hit an
upper circuit limit of 10% at Rs 28.15 on media reports that 21 investors
showed interest to buy a stake in the debt-ridden company. Monnet Ispat rallied
by nearly 17% on news that JLF has forwarded the case to NCLT under IBC (hopes
of another M&A?).
LT was in limelight
initially after reports that ABB may buy its electrical division; later the
stock fall to some extent from day high after Govt confirmed that it sold 2.5%
of its stake through SUUTI and garnered around Rs.4000 cr in the process; SBI
is the buyer of the stake. Thus it basically some sort of stake transfer
between the Govt itself.
Today, Nifty was
supported by HUL, Sun Pharma & DRL (USFDA approval for product), RIL (fall
in crude oil & R-Jio optimism), SBI, HDFC Bank & LT.
Nifty was dragged by Hindalco, ONGC, Tata
Motors (unfavorable GST concern for automobile sector) Lupin & TCS (earning
concern) overall market breadth may be quite negative today with
advance/decline in Nifty was at 17/34.
Meanwhile, RBI policy
minutes just flashed and overall, it may be termed as quite hawkish and most of
the MPC members are cautious on inflation & growth with “wait & see”
approach; RBI may be also very concerned about huge NPA, its resolution and PSBS
recapitalization. Any rate cut hopes for Aug may be shattered now, as RBI may
also want to watch any significant fund outflow due to consistent hawkish
stance from Fed.
Elsewhere, in UK a
diluted speech from the UK Queen, suggesting a softer tone of Brexit contrary
to earlier rhetoric of Theresa and some hawkish tone from BOE economist Haldane
advocating for an immediate rate hike has supported the GBPUSD and its trading
now 0.65% up, recovered quite smartly from earlier loses. But FTSE dropped
further by 0.25% as a strong GBP may not be good for UK’s export. Also, overall
political uncertainty is still significant in UK despite hawkish tone from some
MPC members and going forward, politics may take greater role than economics.
WTI-Oil
yesterday plummeted below $43 handle due to increasing concern of supply glut
& Russian oil minister’s comments that they will not meet US hale oil
producers for a production cut. But today better than expected US API drawdown
of crude stocks may have supported oil in the Asian/EU session; although the API
report was basically mixed as gasoline & distilleries stocks surged. But,
oil may have also under some pressure from today’s Saudi Kingdom shaking.
But,
it got some boosts and now trading near the vital trend line resistance of
43.75, which was the earlier support after Iran oil minister commented that
they are consulting the OPEC members for further production cut; although it
may be quite difficult. The Iran oil minister also admitted that they have
underestimated the potential of the US shale oil production capacity &
viability. OPEC-NOPEC committee sees oil market rebalancing in Q2CY18.
Overall,
it seems that various OPEC producers are now in some type of panic mode, as oil
is hovering around $43 with very high probability of going below $40 in the
near future, which may affect their fiscal budget significantly. Previously,
OPEC & also Russia are actively advocating for sub $45 oil as they may have
assumed that US shale oil may not be viable below $45 handle. But, latest
technology may be making the difference for US shale oil and it clearly shows
that OPEC may not be in control of the oil price at all. Looking ahead, today’s
official EIA oil storage data may be highly focused by the market for the next
move of oil.
In any way, technically for Crude oil, 43.75-44.25 may be now
vital resistance; a similar capitulation in oil after Fed hike in Dec’15. This
may be a reminder and also not good for the risk-on sentient, if oil breaks 42-40
this time.
SGX-NF
BNF
Article courtesy: frontiza.com
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