Market Wrap: 09/08/2017 (17:00)
NSE-NF (Aug):9912 (-87; -0.87%) (TTM PE: 25.08; Abv
2 SD of 25; Avg PE: 20; TTM EPS: 395; NS: 9908)
NSE-BNF (Aug):24435 (-259; -1.05%) (TTM PE: 30.66;
Abv 3 SD of 30; Avg PE: 20 TTM EPS: 795; BNS: 24375)
For 10/08/2017:
Key support for NF: 9890/9870-9825
Key resistance for NF: 9940-10020
Key support for BNF: 24400/24250-23900
Key resistance for BNF: 24650/24800-25150
Hints for positional trading:
Time & Price action suggests that, NF has to sustain over
10020 area for further rally towards 10065-10115 & 10155-10205 in the short
term (under bullish case scenario).
On the flip side, sustaining below 10000-9940 area, NF may fall
towards 9890/9870-9825 & 9765-9705 area in the short term (under bear case
scenario).
Similarly, BNF has to sustain over 24800 area for further rally
towards 25050-25150 & 25250-25500 area in the near term (under bullish case
scenario).
On the flip side, sustaining below 24750-24650 area, BNF may
fall towards 24400-24250 & 23900-23750 area in the near term (under bear
case scenario).
Nifty Fut (Aug) today closed around 9912,
plunged by almost 87 points (-0.87%) after making an opening session high of
9989 and closing minutes low of 9912 on renewed NK geo-political tensions &
some unconfirmed market buzz that SEBI may soon notify another list of nearly
600 cos in its “Shell” list.
Although, Govt (FMO) has tried its
best to pacify the market by saying that about a dozen of the cos under the
present “Shell list” may be permitted to resume normal trading in the bourses,
once they will submit their official explanations supported by relevant
documents, the whole matter is now at SAT and an extensive legal battle is also
expected.
As par the Govt, some of the
suspected Shell cos may have indulged in money laundering during the period of
DeMo and also have various allegations from the Income Tax Dept ranging from
sudden spurt in trading during the time of note ban; MCA has already done their
homework before identified such cos as “Shell”.
Thus, although the 12 front line “multi
baggers” cos may be permitted to resume their trading after satisfactory
explanation, given the fact that a significant amount is blocked there by HNI
investors & institutions, rest of the suspected Shell cos may be continued
as “multi beggars” instead of prospective “multi baggers”.
Indian market (Nifty Fut) today opened around 9978, almost down
by 26 points tracking
subdued global cues amid escalation of NK-US geo-political tensions. Most of the Asian markets except Australia are
trading in moderate to deep red amid escalation of
NK-US geo-political tensions.
As par some intelligence reports from both US & Japan
yesterday, NK may have acquired a miniature nuke head technology compatible
with its ICBM; i.e. it may have now a nuke capable ICBM/missile, which is able
to hit the mainland US.
Following this NK report, Trump has also threatened the nation
with “Fire & Fury, the world has never seen before” and in response, NK may
have also indicated to attack a US military base at Asia-Pacific Island (Guam).
Thus, all these ongoing NK geo-political tensions has made the risk-on
sentiment adverse, USD has gone lower despite an upbeat JOLTS job openings
report yesterday; JPY, Gold & also EUR has seen some safe heaven flows and
subsequently Equities gone lower.
On economic front, today’s China CPI came bit disappointed at
1.4% for July against estimate of 1.5% (prior: 1.5%) on YOY basis; on MOM basis
it flashed as 0.1% against estimate of 0.2% (prior: -0.2%) and PPI came as
expected as 5.5% (est/prior: 5.5%).
Although, today’s subdued China CPI/PPI numbers did not have a
great impact on the early Asian market bogged down by renewed NK-US
geo-politics, overall tepid trade balance (export/import) and subdued PPI may
be also disappointed for the reflation savvy world/DM.
A lower CPI in China may also induce PBOC to go for more deleveraging & tighetning, which is not good for risk assets also.
Overall, Trump’s “Fire & Fury” comments may be exaggerated
as being a Nuke nation, US may not attack NK without any careful strategic
planning and thus credibility of Trump’s warning to NK may be also
questionable; but the ongoing NK jitters may be also a wonderful weapon in the
hands of Trump to simply talk down the USD without any Fed QQE.
Thus, this NK rhetoric may continue to go on in the days ahead
amid escalating “war of words” rather than “war of bullets” without any real
resolution or military conflicts (black swan event).
US market (DJ-30) closed lower (-0.15%) yesterday and SPX-500
also closed 0.24% down, the most in the last 30 days as a result of NK
geo-political jitters, coupled with pressure on Netflix after Disney decides to
ditch the company to broadcast its contents directly.
Although, EU market yesterday closed upbeat, well off the
evening lows after EUR tumbled as a result of solid US economic data (JOLTS)
and some buzz of an early resolution of the Trumpcare fiasco; but EU futures
are now trading lower amid escalation of NK tensions & some rebound in EUR.
Indian market may have tried hard today to cover some shorts
after opening lower today; but failed after renewed concern of more cos may
come under SEBI Shell list. Subsequently, unwinding of leveraged positions in
small & midcaps space may have also affected the Indian market sentiment
today; financials & health care stocks were hit most today.
Now, market regulator SEBI need to come forward and clarify the
“Shell cos” fiasco clearly as almost Rs.9000 cr may have been stuck by the
investors & institutions in those scrips; in any way, even if SEBI
clarified about this “Shell cos”, the credibility of the overall market,
specially mid & small cap cos may be in disarray in the days ahead as Govt
may continue its ongoing war on corruption/black money ahead of 2019 general
election and may not show any undue softness.
Various banks may be also in focus because some of these so
called “shell cos” may have also significant exposure to the banks; otherwise
the fund transfers across geographies & enteritis (money laundering) may
not be possible at all.
Looking ahead, apart from earnings, all eyes may be on the China
border issues, which may turn serious in the days ahead amid escalation of “war
of words” between the two countries. Also, concern of stretched valuations
(mixed Q1 earnings), slow pace of RERA implementations & GST return
fillings (adverse effect on indirect taxes revenue) and QT by Fed/ECB may be
some of the other major headwinds for the Indian market.
Nifty was today supported by Hindalco (optimistic outlook on
metals & upbeat earnings by Novelis), HDFC, NTPC, ONGC, Asian Paints, Kotak
Bank, INFY & TCS (some rebound in USDINR, despite overall weak dollar).
Nifty was dragged by Sun Pharma (terrible report card from Taro)
and other Pharma stocks on weak earnings, pessimistic outlook bogged by
increasing concern of US FDA & pricing pressure, cross currency headwinds and
domestic GST blues coupled with NPPA overhang.
Also, Tata Motors, Bajaj-Auto, Axis/ICICI/Yes
Bank, LT, Maruti, HUL, ITC, SBI & RIL has pulled the Nifty today; RIL
reversed the earlier gain today; apart from buzz of Tata Tele M&A with RIL,
market may be also concerned over its huge debt for the R-Jio.
A
weak EU market tracking NK political jitters and mixed earnings may have also
affected the Indian market sentiment in the closing session and it closed
almost at the low of the day.
Elsewhere,
Australia (ASX-200) is closed in green around 5765 (+0.40%) tracking a lower
AUDUSD today after subdued AU consumer confidence, home loan & China
CPI/PPI data. Also, banks & metals/miners are helping the AU market today
after upbeat earnings/guidance by CBA, which was earlier in pressure due to
cash deposit related regulatory issues.
Metals/miners
are also upbeat after surge in various metals, especially in Aluminum, which
may be also a primary barometer of global growth apart from the Copper; but
most of the gains of the metals may be also due to supply related issues amid
ongoing crack down in China to stem excess capacities and stop the overnight
jumbo companies to distort the market & further to prevent the serious
problem of China air pollution. Also, subdued trade data from China may be
negative for the metals/miners in the days ahead.
Japan
(Nikkei-225) is closed in deep red around 19739, down by almost 1.29% as Yen
got stronger for NK related safe haven flows affecting the sentiment of export
heavy Japanese market. Despite Japan is at striking distance of a NK
missile/Nuke, Yen is getting stronger at times of such regional conflicts
because there is a perception that Japan being the biggest creditor of the
world, investors will repatriate funds (Yen) back to Japan in times of real
crisis.
Japanese
market is also being affected by a M&A news between Sumitomo & Yahoo
Japan; both of the shares are down today; but it’s being helped by Toshiba to
some extent after reports of truce with its Auditors (PWC), which is expected
to sign off its annual report card, but may be with a negative view about its
internal controls.
China(SSE)
is also trading almost flat around 3276 (-0.15%) amid renewed NK geo-political
tensions, a subdued CPI & PPI and a strong Yuan with neutral PBOC, which
fixed the USDCNY at 6.7075 vs 6.7184 yesterday; at lowest since Oct’16. A
strong Yuan may be also negative for the Chinese exports.
Hong-Kong
(HKG-33) is also trading in slight red around 27760 (-0.30%) amid increasing NK
jitters as China shares a vast border with the nation. HK market is also being
affected by mixed earnings & some deleveraging news (possible asset
restructuring) of one of the debt laden developers (Wanda).
Meanwhile,
South-Korean market (Kospi) fell by around 0.7% and its currency (Won) dropped
by 0.50% against the USD tracking NK tensions; it’s also being affected by
Samsung, which constitutes almost 20% of the index; Samsung fell by 1.8% today
along with some other blue chips; although a weak Won may be a blessing in
disguise also for the export heavy SK market.
Gold
is up by around 0.55% tracking a weak USD and NK related safe heaven flows;
it’s also being seen as an inflation hedge as wage inflation/CPI may be slowly
making its ground in US/EU and even in Japan. Technically, now sustaining above
1275 area, Gold may rally further for 1295-1310 zone; near term positional
support may be now around 1245.
A
weak EU market tracking NK political jitters and mixed earnings may have also
affected the Indian market sentiment in the closing session and it closed
almost at the low of the day.
Asian session update:
FX update:
Asian session update:
FX update:
SGX-NF
BNF
GOLD
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