Market Wrap: 28/07/2017 (19:30)
NSE-NF (Aug): 10039 (-24; -0.24%) (TTM PE: 25.35;
Abv 2 SD of 25; Avg PE: 20; TTM EPS: 395; NS: 10015)
NSE-BNF (Aug): 24934 (-58; -0.23%) (TTM PE: 31.20;
Abv 3 SD of 30; Avg PE: 20 TTM EPS: 795; BNS: 24811)
For 28/07/2017:
Key
support for NF: 9955-9870
Key resistance for NF: 10075-10115
Key support for BNF: 24800-24650
Key resistance for BNF: 25050-25150
Hints for positional trading:
Time & Price action suggests that, NF has to sustain over
10075 area for further rally towards 10115-10150 & 10205-10275 in the short
term (under bullish case scenario).
On the flip side, sustaining below 10055 area, NF may fall
towards 10000-9955 & 9870-9800 area in the short term (under bear case
scenario).
Similarly, BNF has to sustain over 25050 area for further rally
towards 25150-25275 & 25485 -25695 area in the near term (under bullish
case scenario).
On the flip side, sustaining below 25000 area, BNF may fall
towards 24800-24650 & 24350-24200 area in the near term (under bear case
scenario).
Nifty Fut (Aug)/India-50
today closed around 10039, down by almost 0.24%, but well off the opening
session low of 9990 and it made a late day high of 10053; Nifty Spot almost
closed flat around 10015 (-0.06%).
Indian market (Nifty-Fut/India-50)
today opened around 10011, almost gap down by 60 points tracking
subdued global cues and some blue chip earnings disappointments; but it recovered
quite smartly on brisk buying of Infy & HDFC in the last hour of trade.
Also, optimism from LIC about
Indian equity market and its commitments of higher investments flashed in the
last hour may have also supported the market today. LIC may be very interested
to invest in bitten down PSBS as bargain hunting; as par LIC, PSBS now may have
made full provisions for the stressed assets; thus the worst of NPA crisis may
be over.
Indian Govt (commerce
minister) today also announced that Govt may soon release a foreign trade
policy review in Sep to stimulate the sluggish Indian product export and as par
the Govt, GST is helping a lot for competitive exports.
As par the Dy FM, there is no
evidence of any inflation due to implementation of GST and India’s tax base is
also expanding rapidly after the GST. All these news/developments may have
helped the Indian market today in the last hour of trade despite some muted
report card published during the market hours.
After opening gap down,
Indian market today covered some short and stabilized to some extent, but again
came under sudden selling pressure, when news of removal of the Pak PM by the
SC there came in; a politically unstable Pak and high probability of next
military regime there may not be good for the ongoing Ind-Pak geo-political
tensions at LOC.
Also, the suspended Pak PM
may have cordial diplomatic relation with NAMO despite so much geo-political tensions
and his removal may have also blocked the back channel diplomacy between the
two warring neighbors and thus going ahead, we may see more war of bullets
rather than words.
Overall, today Indian market was dragged by Pharma, select
private banks & infra stocks, while broader market outperformed with midcap
& small cap stocks.
Today
Nifty was supported by HDFC (earning optimism & demerger/IPO buzz of its
Life Insurance subsidiary), Infy (buy back buzz ?), Yes Banks (earning
optimism/ stock split), Idea (imminent merger with Vodafone and worst R-Jio
impact may be over on the telecom sector), Kotak/Indusind Bank (analysts
optimism as a prime beneficiary of DeMo-financial savings), ITC & ONGC. IT
counters also recovered from day’s low tracking some recovery in USDINR and on
bargain hunting.
Nifty
was dragged by DRL (thumbs down by analysts after poor report card citing US
pricing pressure and domestic issues of GST-destocking) & other Pharma counters
such as Lupin, Sun/Auro Pharma, ICICI Bank (poor report card & elevated
stressed assets), Axis Bank (in line report card, but acquiring a start up Free
Charge with all cash transactions for customer data mining), L&T, HDFC
Bank, Hindalco/Tata Steel (metals) and Infratel (adverse NSE observation regarding
financial reporting regulations).
Looking
ahead, al the eyes mat be on RBI next week as market is expected a 0.25% hike,
which may have already discounted by the Banks & other rate sensitive
sectors. But if there is no hike of RBI tone is very hawkish, then expect
another sell off (hawkish cut).
Banks
were in huge rally for the last few weeks; apart from earning optimism, hopes
for a quick NPA resolution and RBI rate cuts, Govt’s plan to enhance the limit
for FPIS in the corporate bond market and allowing it as collaterals against
the RBI repo window borrowing (?) may be also responsible for this huge rally.
Globally, almost all the major Asian markets are
in moderate to deep red tracking subdued global
cues. Overnight US market (DJ-30), although closed 0.39% up on the strength of
Verizon earnings, NASDAQ & broader market came into
severe pressure; NASDAQ tumbled by almost 0.63% (- 40 points after recovering
from -100 odd points). Verizon closed 7.7% higher yesterday and helped the
DJ-30 to finish in green.
Yesterday,
broader US market came into pressure after a well known & widely followed
quant analyst predicted that VIX may be at the bottom & pointed out very
low VIX volatility, which may be a similar sign of 1987 market crash;
consequently tech & transportation shares were came under huge pressure and
NASDAQ nosedived by more than 1%, before recovering almost half at the closing
hours.
Almost
all the JPY crosses except USDJPY came into significant selling pressure,
affecting the narrative of Yen carry trade, which may be a good contributor of
risk-on trade.
Also,
some of the tech report card from US yesterday may be disappointing, which may
have also affected the US market sentiment amid ongoing political jitters. As
NASDAQ has already rallied by almost 20% YTD, stretched valuation may be also a
great concern. Amazon is in pressure after reporting slump in profits; the
scrip is up by almost 40% YTD.
Although,
USDJPY is down, Yen is up against almost all the G-20 currencies, affecting the
export heavy Japanese market as well as the overall Asian market sentiment;
Hong-Kong is also down due to plunge in tech shares. Also, growing political
issues in Japan may be affecting the market sentiment there; today Defence
minister resigns due to some alleged cover up of military documents related to
UN peace keeping force.
Japanese
Yen also got some strength after July BOJ minutes show discussion of QQE tapering
among the BOJ policy makers and some upbeat economic data from Japan today; JP
household/consumer spending, job application & unemployment and even retail
sales data came strong; but inflation & core CPI is still subdued.
Recently,
an influential Abe adviser is trying to downplay the rhetoric of 2% inflation
targeting by BOJ and emphasizing that job creation, wage growth may be far more
important than stimulating higher inflation in the economy. In that sense, Abenomics
may be quite successful. Thus, we may expect BOJ/Abe to also go for the global
QT tunes in the months ahead to keep parity with USD & EUR.
USDJPY
is almost flat ahead of US GDP report today on hopes of an upbeat figure
(consensus 2.6% for Q2/QOQ) after strong durable goods order, trade balance
& inventories data released yesterday.
Almost
all the analysts including Atlanta Fed has revised their GDP estimate by around
0.3% from 2.5% to 2.8% on an average; someone even predicting as high as 3.2%.
A better than expected US GDP today may be good for USD (hawkish Fed
narrative), but may not be good for risk trade.
Elsewhere,
Australia (ASX-200) was closed around 5700, almost down by 1.50%, most probably
on increasing political jitters there despite some fall in AUDUSD today. A key
Govt coalition senate member has resigned today due to some dual citizen issue,
which may be a bad news for the present AU Govt, as it enjoyed only 1 seat
majority in the senate (AU parliament).
Also,
overnight tech panic in US market may be affecting the AU market today. Today’s
PPI report from AU may be also negative for the AUD ahead of RBA meeting next
week. RBA is expected to be neutral with some dovish comments about the
strength of the currency, aiming to talk down a bit.
Japan
(Nikkei-225) also closed in moderate red around 19955 (-0.60%), tracking broad
strength in Yen after upbeat JP economic data & some hawkish stuffs in the
BOJ minutes. Tech shares are also in pressure today in Japanese market.
China
(SSE) also closed almost unchanged around 3250, following increasing concern of
regulatory tightening & a strong Yuan; but being helped by China Next small
caps to some extent on bargain hunting.
Hong-Kong (HKG-33) closed in moderate red around
27000 (-0.440%) tracking slump in tech shares and also driving the overall
Asian sentiment including Indian market down.
Crude Oil (WTI) was almost flat around 48.95
(-0.18%) ahead of US oil rigs data later in the day today; recently oil is
holding ground around $50 on OPEC/Saudi jawboning about reduction in exports
& production, buzz of Venezuela supply reduction/US sanctions, hopes of
faster rebalancing amid dips in US shale production and increasing demand from
China, India, EU & USA.
As par some reports, US shale production may be
unviable at oil near $45 and thus we may see less US shale oil with price
hovering around 45-50$; but due to superior technology, even a $40 oil may be
turned viable in the days ahead.
Technically,
whatever be the narratives, oil has to sustain over 49.75-50.00 area now for
next leg of rally towards 52 zone; otherwise it may come down towards
48.15-47.25 & 46.65-45.50 zone again in the coming days.
SGX-NF
BNF
CRUDE OIL
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