Market Wrap: 27/06/2017
(17:00)
NSE-NF (June): 9514
(-76; -0.79%) (TTM PE: 24.08; Near 2 SD of 25; TTM EPS: 395; NS-9511)
NSE-BNF (June): 23220
(-326; -1.39%) (TTM PE: 29.20; Near 3 SD of 30; TTM EPS: 795; BNS-23216)
For 28/06/2017:
Key support for NF:
9475/9440-9400/9340
Key resistance for NF:
9530/9560-9590/9630
Key support for BNF: 23000-22700/22450
Key resistance for
BNF: 23350-23550
Time & Price action suggests that,
NF has to sustain over 9590 area for further rally towards 9630/9655-9700/9735
in the short term (under bullish case scenario).
On flip side, sustaining below 9560-9530
area, NF may fall towards 9475/9440-9400/9340 area in the short term (under
bear case scenario).
Similarly, BNF has to sustain over
23350 area for further rally towards 23550-23750 & 23850-24000 area in the
near term (under bullish case scenario).
On the flip side, sustaining below
23300-23250 area, BNF may fall towards 23000-22700 & 22450-22300 area in
the near term (under bear case scenario).
Nifty
Fut (June) today closed around 9514, almost 76 points down (-0.79%) after
making an opening minutes high of 9617 and day low of 9480 amid concerns of GST
disruptions and higher provisioning norms for the banks under IBC NPA cases.
Indian
market (NF) today opened around 9616, almost 26 points up tracking mixed global cues. Overnight/weekend US market
(DJ-30) was mixed amid some rebound in oil (talk of an impending geo-political
tensions in GCC/Qatar/Saudi/Iran & Syria issues), banks (Italian bail out
for two regional failed banks & prospect of higher NIM for US banks and
hopes of some relief in Dodd Franck rules); tech shares were under pressure
yesterday after brief rally on Friday following renewed concern of Trump’s visa
rule and Google’s EU antitrust fine.
Indian market was under
severe stress today on concern of GST disruptions and an unexpected RBI
directive on the weekend to the Banks for requirement of higher provisions for
the IBC NPA cases and ongoing farm loan waiver; this time from MH for Rs.34000
cr (approx).
Indian banks may be
required to provide higher provisions for NPA cases under IBC and may also be
required for around 60% of hair cuts to settle the large NPA (unviable
projects); normally Banks in India can settle 40-50% or even 25% of the write
off NPA, depending on various factors. Banks in India may have to also provide
more provisions (+30%) for NPA as par changing accounting rules from next year
(IND-AS).
The ongoing farm loan
waiver in different states after UP election may be another headwind for the
overall Indian Banking & NBFC space as it may affect the overall credit
discipline of the system.
India is now on a
Pre-GST clearance sale mostly for consumer durable goods (CG) with heavy
discounts to avoid any input tax credit and MRP variation issues after
implementation of GST; although the bumper sale may inflate the top line for
Q1FY18, bottom line or EBITDA may be very subdued for heavy discount.
Thus, market may be
extremely concerned about tepid earnings not only for Q1, but also for
subsequent quarters (Q2-Q4) as GST compliance costs may be also significantly
high apart from general fear of GST disruptions for lack of adequate
preparations & poor IT network for the country, especially in the remote places.
As par some channel
check, sales of most of the CG products may be closed for the first two weeks
of July (15th July) for required transitions to the new GST regime,
which is quite complex as par general traders feedback. Govt, today on its part
tried its best to convince the market for the benefits of the GST; but it seems
that the Govt may be also not so much confident and they are also expecting
some GST disruptions for at least 3 months (Q2FY18). Also, there is some
apprehension of the efficacy of the GSTN network itself.
In additions of this
GST concerns, Indian market may be also worried that Govt is going to change
the FY from Jan-Dec from next year and for that general budget may be presented
as early as Nov’17. This sudden change of FY, accounting norms may be also
uncomfortable for the industry & traders.
On the top of all
these concerns, there is also some report that, Govt may go for general
election in 2018, one year earlier along with various state elections and may
also ensure that Indian center & state elections will occur at the same
time (election reform); clearly the Govt has an eye on the RS majority by
2018-19 to start a “New India” along with GST and a Jan-Dec FY in line with
global standard.
Today Banks,
especially those banks which are under IBC/NPA resolution process
(SBI/BOB/AXIS/ICICI) were under immense pressure today due to higher
provisioning norms of the RBI, which may affect their credit costs and
earnings.
Almost 70% of the
Nifty stocks were in red and on the broader market around 80% of the stocks
were in negative zone today with some deep corrections.
Today Nifty was
supported by Grasim, Idea, Bharti Airtel, Infratel, Gail, ONGC, Tata Steel,
ITC, RIL & Adani Ports to some extent.
Asian market wrap:
Elsewhere, Australian
stocks (ASX-200) closed almost flat (-0.10%) due to pressure in utility,
industrials & mining (metal) stocks. Japan (Nikkei-225) closed slightly
higher today (+0.36%) on weaker Yen; but pressurized by tech stocks following
overnight pressure in the US market. Apart from Trump tantrum, Google is
slapped a huge fine from EU antitrust regulator. Air bag maker, Takata is in
selling freeze after it filed bankruptcy and is scheduled to be delisted on 27th
July. The stock is already lost 67% till last week.
China (SSE) closed
little higher today (+0.20%) amid some optimistic yet cautious comments from
its Premier at Davos summer speech and some suspected intervention by PBOC in
the currency market to control the USDCNY around its preferred zone of around
6.80. Also, some reports shows that due
to ongoing deleveraging effort by PBOC, China’s long inverted yield curve has
reversed and that may be also supporting the sentiment by some extent today.
European market was in
pressure today after unexpected guidance warning from a German auto supplier
(Schaeffer) due to slow down in US auto sales. Also some surprised hawkish
comments from Draghi (ECB) indicating for a neutral monetary policy stance in
lieu of present accommodative and talk of gradual tapering (QT) may have
affected the EU/global market sentiment and Indian market plunged more before
recovering towards closing minutes (short covering) tracking similar global
trend.
European market update:
EURUSD surged to
1.1263 following Draghi’s unexpected hawkish script, considering that only
yesterday he was sounded quite dovish calling for more duration for the ECB QE.
As par Draghi, subdued inflation in the EZ is transitory and a by-product of
lower oil price.
Draghi sounded very
optimistic on the overall economic prospect of EZ and commented that the threat
of deflation has gone and reflationary forces are at play, although at present
the inflation (core CPI) may be very muted and not yet very durable or
self-sustaining. Thus although, ECB monetary stimulus support may be still
need, the policy may be changed to a more neutral stance. The market
interpreted as an indication of a gradual QE tapering (QT) in line with German
FM’s comments yesterday.
Subsequently, EURUSD
jumped to two weeks high and EU bund plunged along with stocks on assumption
that easy money policy of the ECB may be also ending along with Fed, which is
also on the QT (Quantitative Tightening) path regardless of incoming US
economic data & trajectory of inflation. All focus now on Yellen’s speech
to see, if she continues her hawkish script or not.
Suddenly all the major
global Central Banks are now talking hawkish including Fed, ECB, PBOC, BOC and
even some MPC members of the BOE. Looking ahead, if BOJ Kuroda also sounds
similar hawkish in his speech in order to maintain the present policy parity
with USD & EUR, then “risk-on” trade may be in some risk itself.
EURUSD is now trading
upbeat around 1.12873 (+0.95%), eyeing the much elusive 1.13 level ahead of
Yellen, who can only change the trajectory, if she sounds quite hawkish and
talked about Fed’s B/S tapering from as early as next month. The days of QE may
be over.
US market update:
USDJPY
surged above 112 and now trading around 0.19% higher after an upbeat US
consumer confidence (June) data, which flashed as 118.9 against estimate of 116
(prior: 117.6). Also Richmond Mfg Index for June came good at 7 against estimate
of 4 (prior: 1).
Overall
US economic data today may be pointing towards some optimism of US consumers
despite earlier narrative of poor visibility of “Trumponomics” and helping the
USD ahead of Yellen today, who is expected to continue her hawkish script and
may even indicate an early QE tapering.
In
another development, IMF today downgraded US GDP for 2017-18; it forecasted
2017 GDP at 2.1% against earlier estimate of 2.3% and 2018 GDP at 2.1% against
earlier estimate of 2.5% on poor visibility of US economic reform (tax cut, infra/fiscal
spending) & tepid wage inflation/income growth.
IMF
advised that Fed should continue to hike in a data dependent way, just echoing
Fed’s own view. The overall view of IMF may be indicating a subdued growth of
US economy at around 2% for 2017-18, where as it should be around 3% and that
may be very disappointing despite all the earlier rhetoric of “Trumpflation”.
In any way, whatever is the narrative,
USDJPY now need to sustain over 112.35 area for next leg of rally; otherwise it
may come down again ahead of Yellen.
NF
BNF
USDJPY
Article courtesy: frontiza.com
No comments:
Post a Comment