Market Mantra: 31/07/2017 (09:00)
SGX-NF: 10040 (+1)
For the Day:
Key support for NF: 10000-9955
Key resistance for NF: 10075-10115
Key support for BNF: 24800-24650
Key resistance for BNF: 25050-25150
Hints for positional trading: Strategy-SELL ON RISE
Time & Price action suggests that, NF has to sustain over
10115 area for further rally towards 10150-10205 & 10275-10325 in the short
term (under bullish case scenario).
On the flip side, sustaining below 10095-10055 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).
As par early SGX indication, Nifty Fut
(Aug) may open around 10040, almost flat tracking mixed global cues amid
renewed NK geo-political tensions in the weekend (another ICBM test), poor US
economic data and on-going Trump political drama.
Overnight US market was also closed
mixed; but D-30 closed almost flat (+0.15%) at another record high on mixed
earnings and fall in USD, which may be positive for US export earnings and
economy (imported inflation).
Although, US GDP came in line with
estimates at 2.6% for Q2, the fact that Q1 figure was further revised down to
1.2% from prior 1.4% and the internal components of Q2 GDP were not also very
upbeat, specially the employment/wage index portion.
Overall, average Q1 &
Q2 GDP is now stands around 1.9%, which may be far below than Trump’s rhetoric
of 3% and also much below than average street estimates of around 2.5%; after
tepid Q1 & Q2 GDP, almost all the economists has lowered their Q3 estimate
by around 0.3%.
Moreover, NK has tested a long range
ICBM as planned on Friday, which may be capable of hitting US main lands and
all these along with on-going US political entertainment, various reshuffling
in WH has made the USDJPY lower, which in turn has also affected the risk-on
sentiment to some extent.
But, upbeat Mfg PMI data, indicating PPI
price pressure has made the China & Hong-Kong market to trade in positive
(reflation trade) with surge in iron ore & metals. Thus, most of the Asian
markets are now in positive.
Back to home, Indian market is now
trading in positive tracking risk-on Hong-Kong market, which is generally drive
the regional market sentiment. Looking ahead, all eyes of the Dalal Street may
be on the Mint Street (RBI) apart from the on-going Q1FY18 report cards, which
may be termed as mixed so far.
Market may be already discounted a
0.25% rate cut by RBI this time, considering the lower headline CPI for June
& also for the last few months. Looking ahead, RBI statement may be also closely
watched as it may be a “hawkish one off cut” for CY-2017 to accommodate the
growing rate cut chorus from various quarters.
But, RBI may be quite hawkish this
time, even if it may cut as various channel checks suggest that food inflation
is surging back in the last few weeks as seasonal factors has been priced in
and we have heavy floods in different parts of the country, affecting both
production & transportation of vegetables.
Food inflation & favourable
base effect may be one of the few primary drivers behind recent fall in India’s
headline CPI, although core CPI is hovering around 4% & is still sticky.
Also, in Q2FY18, we may have some GST
disruptions as channel checks suggest that most of the small & medium
retailers, dealers are not GST registered till now and old stocks are relinquishing
fast; there may be also some de-stocking issues in Q2.
SGX-NF
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