Market Wrap: 08/08/2017 (17:00)
NSE-NF (Aug):10004 (-87; -0.87%) (TTM PE: 25.26;
Abv 2 SD of 25; Avg PE: 20; TTM EPS: 395; NS: 9979)
NSE-BNF (Aug):24705 (-293; +0.61%) (TTM PE: 30.94;
Abv 3 SD of 30; Avg PE: 20 TTM EPS: 795; BNS: 24599)
For 09/08/2017:
Key support for NF: 9940-9890
Key resistance for NF: 10065-10115
Key support for BNF: 24500-24250
Key resistance for BNF: 24900-25150
Hints for positional trading:
Time & Price action suggests that, NF has to sustain over
10065 area for further rally towards 10115-10155 & 10205-10275 in the short
term (under bullish case scenario).
On the flip side, sustaining below 10045 area, NF may fall
towards 10000-9940 & 9890-9825 area in the short term (under bear case
scenario).
Similarly, BNF has to sustain over 24950 area for further rally
towards 25050-25150 & 25250-25500 area in the near term (under bullish case
scenario).
On the flip side, sustaining below 24900 area, BNF may fall
towards 24700-24500 & 24250-23900 area in the near term (under bear case
scenario).
Nifty Fut (Aug) today closed around
10004, virtually “shell shocked” by yesterday’s SEBI directive about freezing
of a long list of so called shell cos and slumped by almost 87 points (-0.87%)
after making an opening session high of 10105 and day low of 9958; overall
market sentiment got affected severely as there may be wider probes into other
clean cos also and above all valuations may be quite stretched.
The surprised SEBI move may be a
logical follow up by the Govt’s clampdown on black money/corruption (DeMo)
suspected on illegal offshore transfers & tax evasion; although the
regulator did not specify the charge details.
Indian market today opened around 10085, almost flat, tracking mixed global cues; but soon after opening it fall into
severe selling pressure after SEBI decision to
bar nearly 331 suspected “shell companies” from regular trading and further
strict action, if allegation proves right.
Apart from various small companies, there are also so called
“multi baggers” & “quality names” in that list, which may be very shocking
to the investors/traders and may also, destabilize the overall market mechanism
and it may be a serious question of credibility. These “shell cos” data has
been compiled by MCA (Govt OF India), may be with the help of other
investigating agencies in an ongoing fight against corruption by the Govt.
But, as Govt may also need a vibrant Indian capital market to
keep its disinvestment target intact, one may expect some soothing
clarification from the Govt/FMO soon and if there is any wrong communication,
SEBI may also admit that and will hopefully rectify it soon.
Nifty was today supported by Hindalco (upbeat report card from
Novelis & optimistic outlook), Tata Steel (upbeat results/guidance & optimistic outlook for the domestic
industry, thanks to the huge infra spending by the Govt), Cipla (new product
approval from US FDA), GAIL (OMC optimism), Bajaj-Auto (new model launch) &
HUL (optimistic outlook & near normal monsoon with little probability of an
EL-Lino even by 2018 Spring as projected by the IMD).
Nifty was today dragged by RIL, PSBS (tepid credit
growth) & Infratel (stake sale by Bharti Airtel to reduce debt), DRL,
Lupin, Sun Pharma, ITC, ICICI & Axis Bank.
Globally, most of the major Asian markets except
Hong-Kong were trading in negative tracking
mixed global cues after USD softened more amid subdued China export/import
(trade balance) data. There is also some buzz that China may widen its USDCNY
trading (fixing) band in its ongoing effort of currency reform ahead of Trump’s
visit in Oct-Nov. A lower USD is generally not good for export heavy Asian
indices/markets.
Today China trade data for July flashed disappointed and may
have raised some question mark over the narratives of global reflation trade
based on China; on YOY basis, export grew by 7.2% against estimate of 10.9%
(prior: 11.3%); similarly import grew by 11% against estimate of 16.6% (prior:
17.2%), leaving the headline trade balance at $46.74 bln vs estimate of 46.08
(prior: 42.77).
Overall, global market may have great faith on the Chinese
reflation, being the manufacturing power house & growth engine of the
world, but a tepid export & import figure for July may be also a big
disappointment, although a strong Yuan over the last few months may be also
responsible for the subdued export data to some extent.
Overnight US market (DJ-30) closed almost flat, but at another
record high around 22118 (+0.12%) supported by techs/semi conductor stocks
& consumer staples and some M&A buzz; but energy related shares dragged
the market to some extent in a relatively light day of trading amid ongoing
summer holiday season.
Overall, US market may be quite complacent nowadays due to
upbeat earnings (thanks to a lower USD), dovish Fed (lower interest rate) and
an environment of low inflation despite lingering US political jitters &
poor visibility of Trumponomics.
Technically, SPX-500 (Fut) which is now trading around 2475 (-0.11%)
need to stay over 2495-2505 area for further rally from here; otherwise
2445-2400 zone may come in the days ahead.
Overall, AU economic data may be quite good in the
recent times, but RBA talk down effort may be also a major headwind for the
currency at this moment although it may also be not working as much expected by
the RBA itself.
AUDUSD is being controlled by carry trade flow in search of
better & attractive yields from a stable commodity country like Australia
and as long as this attractive bond yield differential remains, AUD can’t go
down significantly.
ASX-200 today is being dragged by banks &
financials amid lingering regulatory concern about CBA money laundering probe;
also materials & commodities (energy) were in pressure today.
Japan also closed in negative around 19996,
(-0.30%) tracking a stronger Yen; but it was supported by some upbeat earnings
& guidance from Soft Bank.
Today another influential Ex-BOJ Dy Gov (Iwata)
again called for a gradual BOJ QE tapering to JPY 40 tln from JPY 80 tln/year
to contain financial bubbles as 2% BOJ inflation target is increasingly looking
elusive; even 1% CPI target may be now difficult to sustain on longer term
basis; JGB may be also suffering from acute scarcity amid huge BOJ buying,
which may be also distorting the Japanese market. Iwta may be is also a
potential next BOJ chief after Kuroda’s term expires in April’17.
China (SSE) is also trading around 3277, almost
flat (-0.02%), but off the low amid subdued China trade data and a buzz that
PBOC may widen the USDCNY band. Today PBOC fixed USDCNY a little lower at
6.7184 vs 6.7228 and remained neutral on the money market today. PBOC has also
made the China FX reserve quite stable in the last few months amid effort of
deleveraging from acquiring foreign assets apart from the general devaluation
of USDCNY.
Hong-Kong (HKG-33) is trading around 27810, up by
almost 0.60% amid earning optimism and tepid China trade data and is the only
major Asian market, which is in green today being also helped by energy sector.
Oil (WTI) is in green now, trading around 49.55,
almost up by 0.25% ahead of OPEC-NOPEC production cut compliance meeting and
hopes of further boost up in the same after tepid compliance report card in
July on production squabbling from Libya, Nigeria and also some other key oil
producing nations.
Elsewhere, European
market was also came under pressure after yesterday’s tepid German IIP &
today’s subdued China & Germany trade data coupled with mixed earnings
report and a stronger EUR hovering around 1.18; thus Indian market also sold
off in the close after some attempt of failed short covering today.
Exports for June from EU’s economic power house Germany fell by
2.8% against estimate of -0.3% (prior: 1.5%-R); similarly imports gone down by
4.5% against estimate of 0.2% growth (prior: 1.3%-R), resulting a headline trade
balance of 21.2 bln against estimate of 21 bln (prior: 20.3 bln).
Overall, subdued German IIP & trade balance data may be an
adverse effect of s stronger EUR and a weaker GBP, as UK may be a prime
beneficiary of devalued currency, which is aiding its export at the cost of
Germany.
Gloomy China trade data has also made the EU miners & metal
producers lower as China is a major consumer of industrial metals & iron
ore.
Also, consumer stocks (Jewelry, Hotels, Financial services) are
down today due to weak earnings & guidance/outlook.
DAX-30 is now trading around 12185, down by over 0.50%; FTSE-100
is almost flat around 7523 (-0.11%) on weak GBP, helpful for Britain’s export
heavy index, but being pulled by Leisure & miners and also financials
(tepid earnings), while CAC-40 is down by almost 0.20% around 5197 amid mixed
earnings
Asian session update:
FX update:
Asian session update:
FX update:
SGX-NF
BNF
SPX-500
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