Nifty closed the week almost flat ahead
of long weekend, marked by GST concerns, RBI minutes, hopes for a quick NPA resolution
by IBC/RBI mechanism and prospect of better monsoon.
Market Wrap: 23/06/2017
(17:00)
NSE-NF (June): 9592
(-41; -0.43%) (TTM PE: 23.73; Near 2 SD of 25; TTM EPS: 395; NS-9375)
NSE-BNF (June): 23537 (-192;
-0.81%) (TTM PE: 29.61; Near 3 SD of 30; TTM EPS: 795; BNS-23543)
For 27/06/2017:
Key support for NF: 9560/9530-9495/9450
Key resistance for NF:
9655-9705/9725
Key support for BNF: 23500-23400/23300
Key resistance for
BNF: 23825-23900/24000
Time & Price action suggests that,
NF has to sustain over 9675 area for further rally towards 9705/9725-9775 &
9825-9865 in the short term (under bullish case scenario).
On flip side, sustaining below 9655
area, NF may fall towards 9580/9560-9530 & 9495-9450 area in the short term
(under bear case scenario).
Similarly, BNF has to sustain over
23825 area for further rally towards 23900-24000 & 24115-24250 area in the
near term (under bullish case scenario).
On the flip side, sustaining below 23775-23600
area, BNF may fall towards 23500-23400 & 23300-23200 area in the near term
(under bear case scenario).
Nifty
Fut (June) today closed around 9592, slipped by almost 0.43% after making an
opening minutes high of 9640 and mid-day low of 9574. Nifty
Fut (June) today opened around 9640, almost flat tracking subdued global/Asian
cues Amid China Crack Down on Its Banking NPA & high leverage
lending for oversees assets of certain big Chinese corporations.
Indian market may have
under some stress today ahead of GST blues as implementation day is coming very
close on 1st July and overall preparedness may not be enough. Indian
market today was also focused on NPA resolution (RBI/IBC); but market may be
increasingly concern about efficacy of the overall resolution process and
reservation about huge hair cuts by the Banks & certain policy decisions/restrictions
by the Govt/RBI.
Incidentally, most of
the big stressed asset belongs to steel/metals, telecoms & power projects
apart from some textile companies. Some of the steel, telecoms and also power
projects have questions of viability and moreover some policy paralysis and
judicial activism (2G & coal mines license cancellation) may also be
responsible for the present NPA mess; affected companies may have to invest
huge fund for such license cancellation & rebidding process.
On the broader market
midcaps were under visible selling pressure and corrected more than 1% today;
overall advance/decline ratio was at 1:4; in Nifty, out of 51 scrips, only 12
were in green today. Initially, Pharma & IT gave some support amid optimism
about passage of US health care act and NAMO’s visit to US on Monday. Indian PM
may discuss the contentious issue of H1B Visa with US Prez Trump directly;
market may be looking for some relief on that front.
Today, Nifty was
supported by Sun Pharma (Taro open offer issue), Auro Pharma (US FDA product
approval; although some inspection is still running in one of its plant),
Powergrid, INFY & RIL to some extent. RIL was in limelight for the last few
days as the company has withdrawn the arbitration case against the Indian Govt
along with its partner BP, which may pave the way for getting the market price
of its produced gas (NG) in India.
Nifty was dragged by
BOB, SBI, HDFC Bank, Tata Motors & TCS. As par some reports, Tata Tele has
asked the Govt/Telecom Authority & its lender (SBI) for some bailout
packages and this may be one of the reasons today behind sudden sharp fall of
the scrip apart from other IT related issues.
PSBS were under severe
pressure today after reports that Govt may not recapitalize some of them further
and they have to approach the capital market for their fund raising issues (PNB,
BOB, Canara Bank, Indian Bank, Syndicate Bank, Vijaya Bank etc).
Coal India got some
boost, after reports of coal allocation policy and delay of CPSE-ETF fund
launch. SBI was under pressure after reports that Indian home ministry has
objection of Essar Oil-Rosneft deal for the Vadinar port strategic location issues;
this deal may be vital for NPA resolution for a host of Indian banks like SBI,
PNB, ICICI, IDBI, Axis, LIC, Syndicate & IOB for their huge exposure in
debt laden Essar group.
Due to concern for an
effective & quick NPA resolution mechanism, Electrosteel Steels Ltd slipped
as much as 7.9%, while Bhushan Steel Ltd fell as much as 10% after reports that
lenders have decided to start insolvency proceedings against the companies along
with Essar Steel.
Fortis Healthcare Ltd
slumped as much as 15%, its lowest in more than six months, after IHH (Malaysia)
confirmed that it is not engaged in any negotiations with Fortis currently due
to concerns of legal issues for the Daichi-Singh brothers’ case for erstwhile
Ranbaxy.
Global Market Wrap:
Meanwhile
European market is now trading in a softer tone after subdued/mixed PMI data
from France and Germany & EU. After the Indian market close, EU market
drifted lower tracking some reports that ECB is finding it increasingly
difficult to buy eligible bonds; i.e.; there is scarcity of eligible QE bonds
and thus ECB may think of some tapering in the days ached.
In
UK, it’s “Brexitversary” today as UK voters decided quite surprisingly in
favour of Brexit on 23rd June’ 2016 on the belief that an exit from
EU may be good for UK’s health, currency & economic independence. But, now reality of
Brexit & UK political uncertainty may be forcing the Britons for a 2nd
thought as UK may also lose the status of EU financial capital soon.
In
UK, political tensions may be increasing day by day as DUP is refusing for a
quick 36-hrs negotiations with Theresa May’s Conservative party for a coalition
Govt. As par some reports, DUP is demanding for a GBP 2 bln fiscal stimulus
package for spending in health care & infrastructure in support for their
10 seats.
Although,
a negotiation may happen by today or by this weekend, given the political
compulsion of both the parties, going forward such political troubles may
translate into UK’s economic chaos between Brexit uncertainty and a hung
Parliament or a fragile coalition Govt at the best. Thus, BOE may be compelled
to stay neutral for the foreseeable future despite some MPC member’s hawkish
jawboning.
Elsewhere,
US stock futures were also indicating of a flat opening after Fed stress
results on the Banks showed all of them has passed through minimum thresholds
except Morgan Stanley on account of excessive leverage. Looking ahead, market
may focus on further developments of Trumpcare & Muller’s investigation
issues over Trump apart from US PMI, new home sales data and speech from Fed’s
Mester.
Meanwhile
lower than expected Canadian CPI has made the USDCAD higher (+0.50%); CPI for
May flashed as 0.1% against estimate of 0.2% (prior: 0.4%) on MOM basis. On YOY
basis, CPI came as 1.3% against estimate of 1.5% (prior: 1.6%). The tepid CPI
data may also force the BOC to rethink their hawkish strategy as it’s now
increasingly difficult for the central banks to meet their inflation/growth/jobs
equation in the changing world of structural dynamics & technology
(automation).
Asian Market Wrap:
Globally, China market
was under pressure today after PBOC drained out almost CNY 50 bln by reverse
repo and a report that China’s banking regulator has increased its scrutiny on
the banks for some of the nation’s high profile corporate borrowers for
acquiring overseas assets. But China market was closed flat today as Govt may
have intervened in the market as par some reports.
The Chinese crack down
on high leverage borrowings & NPA has affected the overall China &
Asian/Global market sentiment as market may be concerned that it’s just a
beginning and going forward, increasing regulatory tightening may affect
China’s financial markets.
Chinese Govt may be
also under pressure from MSCI to reform its market to the global standards and
market may be also concerned about China’s political influence on overall
Chinese economy & the financial market ahead of its Communist Party
meeting.
Japan (Nikkei-225) was
also closed almost flat (+0.11%) as Yen got some strength amid upbeat Mfg PMI
data & economic assessment. Japanese preliminary PMI for June came at 52
against estimate of 53.4; (prior: 53.1). Although the PMI is bit lower, it’s
still above boom/bust line of 50 for the last few quarters and the underlying
composition may be also indicating some inflation pressure on Japanese economy,
which was so far elusive for the BOJ.
South Korean market
was upbeat after the country’s President requested China to lift its
restrictions against the nation’s business after US installed the anti-missile
defense system (THAAD) which was uncomfortable to China and it has stopped
South Korean firms to do business with China. Also, China had stopped tours of
high spending Chinese visitors to South Korea.
Australian shares were
also closed flat amid pressures on banks & financials following a new tax
imposed on them by the South Australian Govt in addition to some levy already
imposed on them by the Australian Federal Govt last month; but health care
& telecoms has helped the market today.
USDJPY lost some
ground early in the morning today tracking upbeat Japanese economic assessment repot
and Mfg PMI data; market may not be convinced with Yellen’s optimism about US
economy and may focus on her speech in London on 27th June. Also
subdued US bond yields may be affecting USD apart from most of the FOMC speakers’
stance so far for a slow pace of rate hike.
The
two Fed Presidents who spoke yesterday, Powell did not touch on monetary but
Bullard (who is a non-voter this year) felt that the projected path of rates
was unnecessarily aggressive. Looking ahead, Markit economics'
manufacturing and service sector PMI reports will be released today along with
new home sales in US. Also, Fed President Mester is scheduled to speak
today, who is known hawk and market may keenly watch these data/events.
Meanwhile
European market opened in a softer tone after subdued/mixed PMI data from
France and Germany & EU. After the Indian market close, EU market drifted
lower tracking some reports that ECB is finding increasingly difficult to buy
eligible bonds; i.e there is scarcity of eligible QE bonds and thus ECB may
think of some tapering in the days ached.
US market update:
USDJPY
is trading almost unchanged after mixed US economic data today; PMI for June
(preliminary) came as quite subdued and new home sales printed as slightly
upbeat, supported by all time high median home prices (+16.8% YOY).
Today,
US MFG PMI (June) flashed as 52.1 against estimate of 53 (prior: 52.7); Service
PMI came as 53.0 against estimate of 53.7 (prior: 53.6). PMI tumbled to
9-months low and may be now catching down the collapse of hard data, which is
now at 13-month low.
Overall,
subdued PMI data from China to Europe & USA may be indicating China’s
financial tightening and risk of an imminent stagflation (higher inflation
& lower growth). As par PMI data, Q2 US GDP is now expected to come around
1.5%% (annualized) or 0.4% at quarterly run rate or just over 2% with allowance
while there may be some upward pricing pressure on goods & services.
Market
may be expecting the Q2 US GDP at around 3% this time; as par PMI survey data,
NFP for June may come around 170k; overall this PMI data may not be good news
for Yellen scrambling for another hike in 2017.
New
home sales for May came at 610k against estimate of 597k (prior: 593k) with
record median prices for new home at $345800 against $296000 in May’16. This is
a good number and may be indicating high demand for housing.
USDJPY is now around 111.27, almost
flat and looking ahead 111.75-112.25 may be a big hurdle for the pair with
support at around 110.50-109.15 ahead of Feds’s Mester, a
known hawk. Any indication of dovish stance from Mester can cause the USDJPY to
drift lower and break the 110.50 barrier.
Meanwhile,
EURUSD is now catching the bid and trading higher around 1.12 (+0.45%) on optimistic
view of Draghi about EZ economy and news of ECB QE bond scarcity due to eligibility
criteria; ECB may think of some gradual tapering. For EURUSD, 1.12080 is now the immediate hurdle and sustain above
that 1.13 area may come as the day proceeds.
SGX-NF
BNF
EURUSD
USDJPY
Article Courtesy: frontiza.com
No comments:
Post a Comment