Market Wrap: 18/07/2017 (17:00)
NSE-NF (July): 9852 (-81; -0.81%) (TTM PE: 24.88;
Near 2 SD of 25; Avg PE: 20; TTM EPS: 395; NS: 9827)
NSE-BNF (July): 24069 (+32; +0.13%) (TTM PE: 30.21;
Near 3 SD of 30; Avg PE: 20 TTM EPS: 795; BNS: 24022)
For 19/07/2017:
Key
support for NF: 9810-9715
Key resistance for NF: 9875-9960 & 9985-10005
Key support for BNF: 24000-23850
Key resistance for BNF: 24250-24350
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 9875-9810 & 9770- 9715/9670 area in the short term (under bear case
scenario).
Similarly, BNF has to sustain over 24250 area for further rally
towards 24350-24500 & 24700-24875 area in the near term (under bullish case
scenario).
On the flip side, sustaining below 24200-24150 area, BNF may
fall towards 24000-23850 & 23600-23450 area in the near term (under bear
case scenario).
Nifty
Fut (July) today closed around 9852, dragged by almost 0.81% after making an
opening session high of 9905 and late day low of 9832. Indian market today opened around 9873, almost 60 points gap down tracking
Govt’s GST flip-flops on Cigarettes (ITC) and subdued global cues after US
healthcare bill got further delayed and EUR got strength ahead of ECB meet day
after tomorrow.
After opening weak,
Indian market today covered a bit as some short covering/value buying emerges
at lower levels and was also being helped by the Banks to some extent after
yesterday’s favourable HC verdict on the Essar Steel IBC/NPA cases.
But in the closing session, Banks were also came under pressure
on some reports that they need an amount of around Rs.18000 cr ($8 bln) as
extra provision for the NPA/IBC cases as par latest RBI directives. Also, there is some strong buzz about an imminent consolidation
(merger) among strong & weak PSBS.
Q1FY18 report cards from cement majors although looked
apparently good and as par or slightly above market estimates, fine print may
not be so rosy with tepid EBITDA margin and too much dependent on Govt’s capex
(affordable housing, infra, rural spending etc) and thus cement majors were
also succumbed to the bear pressure and dragged the market along with Banks in
the closing session.
Today, Indian market sentiment have also affected by Govt’s flip
flops on effective GST rate on Cigarettes.
Today
Nifty was dragged most by ITC & RIL; ITC was down by nearly 15% at the
opening, but later recovered to some extent and closed down by 12.50%; there was
some reports that RIL was asked by the Govt to pay a combined arbitration
penalty of $3 bln along with Shell & ONGC over PMT oil field dispute.
Apart
from ITC & RIL, Nifty was pulled down by Auro Phrma, Idea, Gail, SBI, BOB
& Indusind Bank. But it was today supported by Eichermotor, Asian Paints,
Sun Pharma, HCL Tech, Axis Bank, ONGC & Tata Steel.
Looking at the chart, Nifty Fut (July) now need to stay above
9810 area; otherwise expect more correction towards 9760 zone in the coming
days.
Almost all the major Asian markets were in red
today tracking subdued global cues after US healthcare bill got
further delayed and EURUSD get some strength amid virtual death of “Trumpcare”
ahead of ECB meet day after tomorrow.
Overnight, US market (DJ-30) also closed almost flat (-0.04%) on
mixed earnings and lack of any meaningful cues; but some gains in utilities
& consumer stocks were substituted by declined in healthcare.
The present flip flops & repeated failures of US healthcare
bill may be significant in Trump’s ability to pass his agenda of other
important bills like tax reform & fiscal spending as there are growing
oppositions within his own party (RNC) and in that scenario, the whole
narratives of Trumponomics & Trumpflation trade may be in doubt.
Thus, Fed may be also in the sideline at least still Dec’17 and
consequently USD is getting weaker across the board and JPY, EUR is getting
stronger, pulling down the risk-on sentiment across the Asia/global market.
Overall, a recent survey shows that although most of the
Americans are happy about their jobs & US economic prospect, almost 60% of
them disapprove Trump and his handlings of the US administration.
Elsewhere, Australia (ASX-200) was closed around 5682, down by
almost 1.30% after jump in AUDUSD following surprised hawkish & upbeat
comments of RBA minutes, which has argued for a neutral nominal rate of 3.50%;
thus risking for another 2% hike by RBA in the quarters ahead.
Australian markets were also being affected by some big banks
for the last few days; looking ahead, 5580-5450 may be the nearest positional
support for the index (SPI/ASX-200).
Japan (Nikkei-225) also closed around 20000, down by almost
0.50% as Yen is getting strength following weak US economic data on Friday and
fall in USD due to death of US healthcare bill; Nikkei is an export heavy
index. Japanese insurers are also in pressure as JGB bond yields fall on
expectations of a dovish script from BOJ day after tomorrow; immediate support
for the Nikkei-225 is is now around 19930 area.
Market may also apprehend that any hawkish rhetoric (?) from ECB
on Thursday may hurt USD more and subsequent strength in JPY may also affect
the JP stocks more. Also in that scenario, JP & EU bund yields spread may
widen more, making it more difficult for the BOJ to maintain its dovish stance.
China (SSE) closed today consolidating around 3175, almost flat
(-0.01%) after yesterday’s sharp sell off on regulatory & financial
tightening concern by the Govt. Today, PBOC again injected a huge liquidity of
170 bln Yuan to stem the crisis.
The Chinese deleveraging story may be significant in the sense
that be it a black swan event or a Gray Rhino (a high probable, high impact
threats that people should see coming, but often don’t’), it may affect the
global reflation & asset bubbles directly or indirectly.
As a result of China’s credit boom, overseas investments in
various asset classes including real estate’s has grown in an abnormal rate and
any serious deleveraging effort by PBOC may also cause severe meltdown.
European market also came under pressure from the overnight
Trump fade and subsequent strength in EUR and slump in Auto major (Volkswagen)
after guidance warning and dragged the Indian market further. Stoxx-50 was down
by almost 1%, dragged by techs & consumption stocks, but helped by health
care & utilities.
DAX was trading around 12412, almost down by 1.39%, dragged down
by EUR & telecom major Ericson on terrible earnings; DAX is also an export
heavy index; thus a strong EUR may be negative for it and looking ahead
12340-12300 may be a good support for DAX-30.
FTSE was almost flat around 7396 (-0.10%), but off the lows
after fall in GBP tracking lower than expected CPI today.
CAC-40 & MIB-40 were also down by around 0.90% & 0.59%
respectively on strength of EUR, which is now trading above 1.15 at multi
months high on soft US economic data and repeated failure to pass the US
healthcare bill, doubting about the whole narratives of Trumponomics itself.
SGX-NF
BNF
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