Market Wrap: 20/07/2017 (17:00)
NSE-NF (July): 9887 (-32; -0.33%) (TTM PE: 24.99;
Near 2 SD of 25; Avg PE: 20; TTM EPS: 395; NS: 9873)
NSE-BNF (July): 24243 (+35; +0.14%) (TTM PE: 30.46;
Near 3 SD of 30; Avg PE: 20 TTM EPS: 795; BNS: 24213)
For 21/07/2017:
Key
support for NF: 9870-9820
Key resistance for NF: 9960/9985-10005
Key support for BNF: 24250/24150-24000/23900
Key resistance for BNF: 24350-24500
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 9985-9960 area, NF may fall
towards 9905/9870-9820 & 9760- 9715 area in the short term (under bear case
scenario).
Similarly, BNF has to sustain over 24350 area for further rally
towards 24500-24700 & 24875-25050 area in the near term (under bullish case
scenario).
On the flip side, sustaining below 24250 area, BNF may fall
towards 24150/24000-23900 & 23700-23500 area in the near term (under bear
case scenario).
Nifty Fut (July) today closed around
9886, almost 32 points down after making an opening minutes high of 9929 and
late day low of 9866 in a range bound day of trading; but it underperform the
Asian/Global market today as almost all of them were in green tracking
overnight positive US cues and some fall in EUR & JPY.
The
primary reasons for this underperformance may be subdued earnings from some
pivotal companies and concern of stretched valuations. Kotak bank & Bajaj
Auto report card today me be below market estimate.
Also, there was some report that Govt may
forecast far lower inflation than earlier RBI estimate citing various macro
economic factors and good monsoon and might also blame the central bank for its
consistent failure of inflation forecasting and more rate cuts opportunities.
It’s clear that, now Govt may put more
pressure on the RBI to cut drastically, more than the token 0.25% once or twice
in a year; expectations may be that, in line with the underlying CPI, which is
hovering now around 1.54%; at 1.25% RRI (neutral rate), the RBI repo rate should
be around 3-5% (assuming average CPI 2-4%) instated of the 6.25% or 6% (if RBI
cut 0.25% in Aug).
But, any drastic cut may devalue INR
more and may also bring blood bath in the Indian high yield bond markets,
paving panic exit for the FPIS both from bond as well as EQ market.
Another factor may be the ongoing
Ind-China tension at Sikkim LOC, which may turn serious at any point of time
despite best effort being made by India for a diplomatic solution; but China is
firm in its stand that until & unless India removes its soldiers from
there, there will be no fruitful talks. All these may have kept the Indian
market sentiment in depress today.
Indian
market (Nifty Fut), today opened around 9928,
almost unchanged tracking flat global/Asian cues ahead of BOJ Kuroda’s presser;
BOJ has hold its monetary policy (unchanged) as expected with a virtual
admission to defeat in deflation.
Indian market may now focus on RIL & other Q1 earnings
trajectory and also on the ongoing legal tussles of NPA/IBC cases, which may
take significant time frame for any actual resolution.
As par some report, TTSL (Tata Tele Services), which has already
a loan of around Rs.40000 cr including Rs.8000 cr of telecom spectrum deferred
payment, is now seeking another Rs.5000 cr fresh loan to fund its capex
requirement; but the banks are now refusing to grant fresh loans and planning
for some CDR (corporate debt restructuring); corporate stressed B/S may be a
major issues for Indian economy and private capex; only Govt capex is now
stimulating the economy.
Indian banks now need huge capital as excess provisions &
hair cut (waive off) obligations for this mammoth NPA and thus, there is
significant risk of future equity & EPS dilution on poor visibility of the
underlying credit growth.
Today Nifty was supported by Axis Bank (digital
push & search for a new CEO, who may be more pro-active), ONGC (favourable
merger with HPCL), HDFC Bank (deleveraging push).
Nifty was today dragged by metals (Tata Steel), Pharma,
IT (INFY) FMCG (ITC), PSBS (SBI/BOB) & RIL (ahead of result today, which
came slightly above estimates after market hours); overall nearly 80% of the
Nifty constituents were in red today.
Looking ahead, Nifty Fut (July) has to sustain above 9870-9820
area; otherwise expect more fall. For any rally from here, it need to break
above 9960-9985 & 10005 zone.
Elsewhere, Australia (ASX-200) was closed in moderate green at
around 5761 (+0.50%) as AUDUSD retraced from the 0.80 levels after an upbeat AU
jobs report today. Apart from some drops in AUD, upbeat guidance from an oil
& gas co (Santos) has also helped the market today.
Japan (Nikkei-225) closed around 20145, up by 0.63% as Yen
slipped against USD; also an upbeat export data (+9.7% gains for June) and some
optimism about energy related shares may have supported the JP market today.
China (SSE) closed around 3240, almost up by 0.30% after PBOC
today injected a net 60 bln Yuan; apart from PBOC support, upbeat metal/iron
ore prices because of strong China GDP data may be also supporting the overall
market sentiment.
Hong Kong (HKG-33) closed around 26740, up by almost 0.30%
following overall positive global cues amid some drop in EUR & Yen.
EURUSD Is
Blasting Above 1.16 And Marching Towards 1.18 As Market Does Not Believe In
Draghi’s Dovish Script; Stocks Plunged After Surge In EUR Combined With
Increasing US Political Risks:
EURUSD is now trading around 1.1635, almost up by
0.90% after making a HOD of 1.1661 so far (23 months high) on signal of QT talk
by Draghi, who indirectly hinted that ECB will discuss the future of the QE at
one of its next two meetings.
Today ECB stayed pat as expected; it has also made
no change in its official statement that ECB is ready to increase the size
& duration of QE, if required. Earlier there was some speculation that the
reference of this “size & duration” may be omitted, but it was not and thus
initially EURUSD plunged to almost 1.1487.
But at the presser (Q&A), although Draghi may
have tried his best to sound like a dove, keeping in mind the strength of EUR,
the overall statement, Q&A may be enough for the market to believe that a
gradual ECB QE tapering signal is indeed coming, be it at the next month’s
Jackson Hall Symposium or at the next Sep’17 meeting; basically, market today
does not believe in Draghi’s dovish script despite his best effort.
Draghi basically encourages more structural reforms
in EZ to keep the economy going rather than through excessive dependence on
monetary stimulus (QE).
Overall, it seems that Draghi/ECB may be preparing
itself to signal a coordinated QE tapering in the Aug Jackson Hall Symposium
along with Fed and other major G-10 central banks to avoid a disorderly market
movement.
Technically,
EURUSD may now face some resistance around 1.17090-1.17465 and beyond that the
area of 1.1810 is now clearly visible; immediate support is now around
1.16240-1.16090.
Meanwhile stocks are plunging as a result of
strong EUR, Draghi’s indirect QT hint and some adverse report that US special
prosecutor (Muller) may extend his probe into Trump business & financial
transactions apart from the Russian link investigations; US political jitters
may turn ugly in the coming days and that may be the only excuse for the Fed
and also ECB to scale back/delay their QE tapering talk.
SGX-NF
BNF
EURUSD
EURUSD
FOR MORE
https://www.iforex.in/news/eurusd-blasting-above-116-and-marching-towards-118-market-does-not-believe-draghi%E2%80%99s-dovish-script-39017
https://www.iforex.in/news/asia-trading-upbeat-strength-usd-after-boj-stays-pat-lowers-inflation-projection-expected-38959
https://www.iforex.in/news/usd-got-boost-amid-confused-neutral-boj-thriving-elusive-inflation-38975
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