Market Mantra: 17/08/2017 (09:00)
SGX-NF: 9915 (+8)
For the Day:
Key support for NF: 9900/9860-9825
Key resistance for NF: 9930-9980
Key support for BNF: 24475-24375
Key resistance for BNF: 24600-24725
Hints for positional trading:
Time & Price action suggests that, NF has to sustain over
9930 area for further rally towards 9980-10030 & 10095/10115-10160 area in
the short term (under bullish case scenario).
On the flip side, sustaining below 9900 area, NF may fall
towards 9860-9825 & 9775/9760-9705 area in the short term (under bear case
scenario).
Similarly, BNF has to sustain over 24525 area for further rally
towards 24600-24725 & 24900-25025 area in the near term (under bullish case
scenario).
On the flip side, sustaining below 24475 area, BNF may fall towards
24375-24275 & 24090-23950/23850 area in the near term (under bear case
scenario).
As par early SGX indication, Nifty Fut
(Aug) may open around 9915, almost flat (+8) tracking muted global cues after
Trump dissolves all his business advisory council in an epic turn of US
politics & the tragic VG incident following resignation of all the leading
members (prominent business heads & CEO) amid an environment of intolerance,
racism & violence and Trump’s stance on the whole VG affairs.
This may be a huge blow to Trump &
his narratives of Trumponomics as these business councils were one of his
strength despite daily political drama. These councils were formed with much
fanfare after Trump took charge of the oval office to guide the administration
in areas of trade, tax reforms, deregulations, investments in US to help US
employment etc to “make America great again”.
Thus, this disbanding of Trump’s strategy
& policy council may be a serious blow to his presidency and eventually, he
may resign coupled with rising pressure on his alleged Russian links
investigation. Although, a resignation or an impeachment of Trump may be a temporary
black swan event for the marker (risk assets), it may be positive in the long
term as an element of daily political entertainment & uncertainty may be
removed in his resignation from WH.
Also, yesterday’s FOMC minutes may be
termed as dovish as several members are concerned over lower trajectory of US
inflation for not only short/midterm, but also for longer term (2 yrs), which
is a surprise as Fed thinks the current subdued inflation is transitory &
also idiosyncratic.
Fed has also concerned over rising
asset (stock) prices as it has eased financial conditions despite multiple rate
hikes by 3 times in the last 6 months. But, FOMC minutes yesterday also
virtually confirmed a gradual BS tapering in the “upcoming” policy meets, most
probably from either Sep or Dec’17, starting with no reinvestments of the
matured bond amount principle and then gradually selling un-matured bonds in
the market.
Thus, Fed may not take the risk of dual
QT (both rate hikes & BS tapering) in Dec’17 and will go for gradual QE/BS
tapering first, which may be also equivalent to a rate hike for the US economy
as bond yields will surge on the back of greater US TSY bond supplies and if
everything from economics (inflation, GDP, employment/wage growth etc) to
politics (Trump & Co) are fine, then Fed may go for further 3 rate hikes in
2018 starting from March (Q1).
All these US economics & politics
has made the USD lower despite some hawkish effort from Fed’s Mester later in
the day arguing for another 2017 rate hike inspite of lower inflation and ECB’s
dialing back of Draghi’s QE signal talk at the Jackson Hole Symposium next
week.
A lower USD may be now bad for global
markets, most of which are dependent on exports, but it may be also good for US
market & economy. Thus, despite so much US political headwinds, US market
(DJ-30) yesterday closed almost flat around 22024 (+0.12%); SPX-500 is now
trading AROUND 2465, almost flat (-0.05%) on weaker USD ahead of ECB minutes
today.
Back to home, Indian market may today
focus on RBI/Govt sops for some categories of farm loan (discounts in interest
rate), which may be positive for PSBS and also some selected private banks
having relevant farm loan portfolio.
But, muted Q1FY18 Nifty earnings, down
by almost 8.5% (YOY) due to adverse report cards from PSBS, Pharma, IT for
various reasons including a common Pre-GST disruption may be highly
disappointed as Nifty EPS continue to be under the 400 mark for several years
despite so called green shoots.
Also, a hawkish RBI minutes released
yesterday may have dashed the hope of any further rate cuts by RBI in 2017 and
coupled with that, US political risk, Trump’s NK narratives to divert attention
from his political drama, ongoing border tensions with China-India and an
eventual Fed/ECB QT from 2018 may be some of the headwinds for the Indian
market despite power of domestic liquidity, which may be also in question amid
Govt’s war on black money, eyeing for the 2019 general election.
A higher EUR may not be also good for
EU as well Indian market later in the day today.
SGX-NF
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