Nifty May Open In Deep Red Amid Tepid Global Cues & Some Earning Disappointments; L&T Result & Guidance May Be Closely Watched Today, Being The Barometer Of Indian Core Economic Story

Market Mantra: 28/07/2017 (09:00)

SGX-NF: 9995 (-75 points)

For the Day: 

Key support for NF: 9955/9930-9890/9860

Key resistance for NF: 10055/75-10115/150

Key support for BNF: 25000-24800

Key resistance for BNF: 25150-25275

Hints for positional trading: Strategy-SELL ON RISE

Time & Price action suggests that, NF has to sustain over 10075-10115/150 area for further rally towards 10205/10275-10325 & 10380-10455 in the short term (under bullish case scenario).

On the flip side, sustaining below 10055 area, NF may fall towards 10000-9955/9930 & 9890/9860-9800 area in the short term (under bear case scenario).

Similarly, BNF has to sustain over 25150 area for further rally towards 25275-25485 & 25695-25865 area in the near term (under bullish case scenario).

On the flip side, sustaining below 25100-25050 area, BNF may fall towards 24800-24600 & 24400-24200 area in the near term (under bear case scenario).

As par early SGX indication, Nifty Fut (July) may open around 9995, almost gap down by 75 points 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).

Yesterday, broader US market came into pressure after a well known & widely followed quant analyst predicted that VIX may be at the bottom; 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 disappointed, which may have also affected the US market sentiment amid ongoing political jitters. As NASDAQ rallied almost 20% YTD, stretched valuation may be also a great concern.

Although, USDJPY is down, Yen is up against almost all the G-20 currencies, affecting the export heavy Japanese market as well as 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. 

Yen also got some strength after July BOJ minutes show discussion of QQE tapering among the BOJ policy makers.

Back to home, Indian market may cover some shorts after gap down opening today amid mixed set of Q1FY18 earnings so far; although most of the new generation private banks are now showing upbeat report cards & an almost sacrosanct growth of 25-30%, old generation private banks (ICICI/AXIS) are being left far behind due to their legacy NPA; HDFC Bank may be an exception due to their different management strategy & policy.

Also, adverse effect of Pre-GST disruptions may be clearly visible on report cards of some of the blue chips from Pharma (DRL) to automakers (even Maruti) apart from various consumer durables.

Technically, NF need to close above 9955 area; otherwise expect some more corrections in the coming days amid increasing QT tunes by the global central banks.

L&T result & guidance may be closely watched by the market today, being the unofficial proxy of Indian economy, like CAT in US.

SGX-NF