Market Wrap: 17/07/2017 (17:00)
NSE-NF (July): 9934 (+34; +0.36%) (TTM PE: 25.10;
Near 2 SD of 25; Avg PE: 20; TTM EPS: 395; NS: 9916)
NSE-BNF (July): 24040 (+63; +0.28%) (TTM PE: 30.21;
Near 3 SD of 30; Avg PE: 20 TTM EPS: 795; BNS: 24015)
For 18/07/2017:
Key
support for NF: 9870-9760
Key resistance for NF: 9985-10005
Key support for BNF: 23900-23700
Key resistance for BNF: 24125-24250
Time & Price action suggests that, NF has to sustain over
10005 area for further rally towards 10050-10115 & 10195-10250 in the short
term (under bullish case scenario).
On the flip side, sustaining below 9985-9955 area, NF may fall
towards 9890/9870-9790/9760 & 9715-9670 area in the short term (under bear
case scenario).
Similarly, BNF has to sustain over 24125 area for further rally
towards 24250-24350 & 24450-24600 area in the near term (under bullish case
scenario).
On the flip side, sustaining below 24075 area, BNF may fall towards
23900-23700 & 23600-23450 area in the near term (under bear case scenario).
Nifty Fut
(July) today closed around 9934, almost 34 points up (+0.35%) after some
closing session value buying / forced P-Notes FNO short covering tracking mixed
global cues and reports that Gujarat HC has rejected the Essar steel petition
seeking relief from RBI IBC/NPA case, which is being seen as a big victory for
the NPA laden Indian Banks against big defaulters and may hasten the overall
resolution process; although logically, the case may be dragged on to the SC,
killing more times.
Indian market
(Nifty-Fut) today opened around 9926, almost 26 points gap up tracking mixed global/Asian cues; but soon after opening
succumbed to some selling pressure on concern of stretched valuations and made
an opening session low of 9906 to fill the overnight gap and then made a late
day high of 9943 supported by value buying/short covering and Q1FY18 earning
optimism.
Although Indian market is now
at a striking distance to conquer the 10k Nifty Mt’ Everest on the back of
positive global cues, power of liquidity, hopes of an Aug cut by RBI, forced
short covering by P-notes FNO, good monsoon, incremental reforms by the Govt,
ultimately earnings need to catch up with the stretched valuations, which is
being elusive for the last few years despite various green shoots narratives.
Some, market participants may be also worried for India’s tepid
banking credit growth around 6%, slow private capex and poor capacity
utilizations of around 70% due to subdued demand/consumer spending and on top
of it the unresolved legacy issues of India’s twin B/S (banks & corporates),
which is still marred with regulations & red tapes and actual resolution
may take significant time, if any.
Nifty was today supported by Oil & Gas, IT, some Private
Banks, RIL (R-Jio optimism), Grasim & Ultratech (listing of Aditya Birla
Capital) and Wipro (buy back proposal).
But, Nifty was dragged by FMCG, Pharma (pessimistic outlook by
the US rating agency S&P) and PSBS (consolidation buzz from the Govt may be
bad for big PSBS); but PSBS was later reversed due to favourable Essar verdict;
Coal India, Yes Bank and Axis Bank were also under pressure.
Notably ITC is now down by around 3.65% dragging the Nifty
significantly after news that Govt may impose cess on the Cigarettes after recent
optimism about favourable GST rates on it. ICICI Bank is up today (+1.27%)
after buzz of IPO for its insurance subsidiary (ICICI Lombard deleveraging).
On the broader market Fortis & Religare were under severe
pressure after reported news of NCD interest payment default by the
parents/promoters (Singh Brothers).
Looking ahead, Nifty Fut (July) has to sustain above 9985-10005
area for any further rally; otherwise it may came down.
Most of the major Asia-pacific markets except
Hong-Kong & India were trading in red today tracking slump in China market
amid concern of ongoing de-leveraging and prudent & neutral monetary policy
by PBOC. On the weekend, there was some reports that China Prez (Xi) wants to create
a new cabinet level committee to coordinate financial oversight in the just
concluded high profile and once in a five year National Financial Work Conference
Meeting (NFWC).
In brief, policymakers at NFWC stressed for more
regulations & powers to PBOC to stem systemic risks in the economy and will
strengthen the Communist Party’s leaderships in the financial sector (political
interference?).
Today’s China GDP data was blockbuster this morning, which
flashed as 6.9% for Q2CY17 against estimate of 6.8% (prior: 6.9%). For full
CY-17, China GDP is supposed to be come around 6.5% as par previous estimates.
Also, China IIP came upbeat at 7.6% (EST & prior: 6.5%) and
retail sales were also good at 11% (EST: 10.6%; prior: 10.7%).
Although Chinese official economic data always lacks some credibility,
nevertheless, today’s data may be indicating steady & improving momentum of
the economy supported by robust industrial production, consumer spending & exports.
PBOC today also strengthen the Yuan band from around 6.78 to
6.75 following tepid US economic data on Friday (CPI & Retail sales).
Market may be also apprehending that, after today’s upbeat China economic data,
PBOC may maintain its prudent neutral monetary policy to deleverage the China
economy in the foreseeable future.
Market may be also surprised by sudden injection of huge
liquidity of net CNY 140 bln by the PBOC today just before the release of China
GDP data, sparking some apprehension about the underlying health of Chinese economy;
something must be wrong!!
Thus, China market (SSE) was under some pressure today and that
may be dragging the Asian market sentiment to some extent; Japan was closed
today.
After today’s upbeat China economic data, PBOC may tighten
further or maintain its present prudent neutral monetary policy to deleverage
the China economy in the foreseeable future; thus today’s good news from China
may be viewing as bad news for the stimulus hungry risk-on market.
China market (SSE) was trading around 3176, almost down by 1.40%
in a volatile day of trading and also being dragged by spate of IPO approvals
recently.
Elsewhere, Australia (AX-200) was closed almost flat around 5762
(-0.10%), amid some pull back in AUDUSD & upbeat China economic data; but
being dragged by Banks after mixed results from their US counterparts on
Friday. Also, recently a spate of federal & state taxes was imposed on the
big AU banks. AU market may be also being helped by metals/commodities today
after upbeat China GDP/IIP data.
Although Japan was closed today, Nikkei-225 Fut is trading
almost flat around 20119 (+0.09%) on strength in Yen after weekend slump in the
USDJPY tracking subdued US CPI & retail sales and a dovish Fed.
Overnight US market (DJ-30) was closed at another record
breaking levels (+0.39%) celebrating a dovish Fed after subdued US economic
data, which may force Yellen to stay on the side line till Dec’17; but Fed may
start its QE tapering from Sep’17. On Friday, mixed results from the banks
& poor NIM & guidance dragged the US market to some extent.
Oil (WTI) is up today around 46.60 (+0.19%), extending rally of
around 5% last week tracking subdued growth in the US oil-rig count on Friday
(Baker Wages report) and shut down of a Nigerian oil pipeline.
Technically, Crude Oil now need to sustain above 47.05 area for further
rally towards 47.30/47.50-48.00/48.25 & 50.00-52.00 zone; otherwise,
sustaining below 46.40, it may again fall to 45.80/45.60-43.70 & 42.00 area
in the coming days.
Gold is up around 1231 (+0.23%) tracking weakness in USD; Gold now
need to sustain over 1235 area for more up move; immediate positional sup is
around 1214.
Elsewhere, European market was also flat after inline EZ CPI
data ahead of ECB & BOJ later in this week; EZ CPI at 1.3% and core CPI at
1.1% for June may be indicating a tepid pace of expansion of the economy in the
inflation starved DM; but helped by upbeat China GDP data (commodities/miners
space).
FTSE is trading around 7405, almost up by 0.35% as GBP came down
from Friday’s rally being an export heavy index and ongoing squabbling about
Brexit negotiations.
DAX is now trading around 12585, down by almost -0.40% with
CAC-40 & MIB-40 almost unchanged.
Overall, as global market capitalization exceeds the global GDP
(around 102%) based on few words from Yellen without support of underlying
fundamentals or valuations, market may be entering well in a bubble zone.
SGX-NF
BNF
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