Market Wrap: 07/08/2017 (17:00)
NSE-NF (Aug):10086 (-23; -0.23%) (TTM PE: 25.46;
Abv 2 SD of 25; Avg PE: 20; TTM EPS: 395; NS: 10057)
NSE-BNF (Aug):249981 (+151; +0.61%) (TTM PE: 31.33;
Abv 3 SD of 30; Avg PE: 20 TTM EPS: 795; BNS: 24906)
For 08/08/2017:
Key support for NF: 10065-10010
Key resistance for NF: 10155-10205
Key support for BNF: 24900-24700
Key resistance for BNF: 25150-25275
Hints for positional trading:
Time & Price action suggests that, NF has to sustain over
10205 area for further rally towards 10275-10325 & 10380-10455 in the short
term (under bullish case scenario).
On the flip side, sustaining below 10185-10155 area, NF may fall
towards 10065-10010 & 9965-9915 area in the short term (under bear case
scenario).
Similarly, BNF has to sustain over 25150 area for further rally
towards 25275-25500 & 25695 -25865 area in the near term (under bullish
case scenario).
On the flip side, sustaining below 25100-25050 area, BNF may
fall towards 24900-24700 & 24600-24450 area in the near term (under bear
case scenario).
Nifty Fut (Aug) today closed around
10086, down by almost 23 points (-0.23%) in some brisk selling at the closing
minutes after making an opening session high of 10119 and closing session low
of 10079 in a lackluster day of trading marked by mixed set of Q1 earnings, GST
squabbling/confusions on luxury cars/SUV and subdued global cues and lack of
any meaningful domestic cues.
Indian market today opened around 10099; almost flat tracking mixed
global/Asian cues. Most of the
major Asian markets except Hong-Kong & Australia were in red amid a blockbuster US NFP report on Friday, relatively higher
USD coupled with ongoing geo-political tensions over NK-US, political drama
over Trump’s alleged Russian links and even a buzz of a high probable small
scale conflict between China & India over the Doklam LOC (Sikkim) issue.
Market may be also anxious over any further NK missile/ICBM test
in retaliation over the US sponsored UN sanction of its $1 bln export of
various minerals & iron ore, which accounts for nearly 33% of its overall
export revenue ($3 bln).
Overnight, on Friday weekend, most of the EU markets were closed
with handsome gains amid mixed earnings, but fall of EUR/EUR bund yields to
some extent as USD soared after the upbeat job report coupled with renewed
hopes of an impending US tax cut/reform legislation after WH economic adviser
Cohn has indicated for the same.
US market (DJ-30) also closed higher (+0.30%) supported by
upbeat economic data coupled with solid report card from some of the banks
& financials. But a higher USD may also affect the US market sentiment in
the days ahead as a weak USD may be one of the primary drivers of the US stock
market coupled with upbeat earnings; over 72% of the S&P companies may have
produced results better than market estimate in Q2.
A lower USD because of overall soft economic data, subdued
inflation and an apparent dovish Fed seems to be good for US corporate bottom
line (exports income) and may be also good for the imported inflation in the US
economy; overall it looks like a goldilocks types of economic situation, where
job market is quite tight and producing jobs with decent earnings/wage growth
without any runaway inflation in the economy; i.e. not sufficient enough to
create an unabated wage inflation.
Overall, USD reaction from the upbeat US job report on the
weekend may be muted as the surge in jobs is primarily for the low wage
temporary workers and this job report does not guarantee for a Dec’17 rate hike
by Fed; but a QE (B/S) tapering may be well on the card, either from Sep’17 or
from Dec’17, followed by ECB in Jan’18.
Back to home, Indian market continue to haunt by the concern of stretched
valuations amid mixed Q1 report cards despite Friday’s closing hours euphoria
about Govt’s move to list a mega ETF (Bharat-22) comprising of the CPSE, SUUITI
& PSBS trim its holdings gradually in those companies.
Govt may be also very concerned about non-transmission of input
tax credit (ITC) to the consumers by small retailers/traders across the line
and various channel checks may be also indicating that in Q2 also, there may be
some GST disruptions as most of the small retailers or traders are not ready
for a GST registration at all.
A strong INR even after hawkish cut by RBI last week may be also
not good for the Indian market (Nifty), being an export heavy index, although
it may be good for the overall import oriented Indian economy.
Govt may now reconsider to bring the petro products (petrol
& diesel) in the GST with a reasonable tax component as overall tax
collections & compliances from other sources is now gradually improving
after DeMo, UID & GST; a lower gasoline price in line with the
international prices may also act as a stimulus for the Indian economy, which
is historically high for decades, being one of the easiest tax revenue source
for the Govt.
Overall, tax component on petro products in India may be around
75% on an average, which is far greater than global average of around 25%.
Another factor, which may have affected the Indian market
sentiment today, is SEBI’s new regulations to report immediately any types of
debt defaults to the exchange compliance mechanism. Stressed assets may be now
on e of the primary headwinds for the Indian market; although the new
Bankruptcy law/NPA-IBC process may be easier for the company to wind down and
go for faster liquidation, in most of the cases, even a liquidation may not
result in the actual resolution of the NPA; Banks also do not want liquidation,
but actual resolution and they are also taking a coordinated action.
A tepid credit growth around 5-6% may not be good for the overall Indian banking system, specially the PSBS.
A tepid credit growth around 5-6% may not be good for the overall Indian banking system, specially the PSBS.
Domestic market may be also confused
today after reports that Govt may bring an ordinance to increase the GST/cess
on luxury cars from the present 15% to 25%; for a truly successful GST
implementation, the multiplicity of taxation rates may be a tough challenge.
In another development, India’s Skymet
today commented that overall monsoon this year might be just normal (95-96% of
LPA); whatever be the rest of the monsoon, recent abnormal surge in prices of
some vegetables (tomato, onion and milk products) may make the inflation hawk
RBI unhappy.
Today Nifty was supported by Tata
Steel, which soared by over 4% to touch the 600 milestone on hopes of a dream
Q1 show later in the day; apart from that, SBI also helped the index immensely
on earnings optimism; result to be out by this week. Nifty was also helped by
BPCL (OMC optimism), Adani Ports, ICICI Bank, BOB and L&T.
Nifty was dragged by RIL (buzz of
M&A with Tata Tele) HDFC duo, Infratel, NTPC, Tata Motors (subdued JLR
sales), Pharma & IT (strong INR), FMCG & Axis Bank.
Elsewhere, Australian market (ASX-200) closed around 5774, up by
almost 0.93%, on some strength in AUD after AU construction PMI for July
flashed as 60.5 vs 56 (prior) and an upbeat energy, materials and banks &
financials.
Banks in AU, including the CBA reversed some loses of the
weekend, after CBA indicated that a software coding error may be responsible for
some unauthorized cash deposits above the AUD 10K limit in some of its cash
deposit machine. On the Friday weekend, AU banking regulator has accused the
CBA under anti money laundering act.
Japan (Nikkei-225) is also closed lower around 19952; down by
almost 0.38% tracking muted USD in liquidity starved early Asian session.
Today, a former well known BOJ dove (Kiuchi) commented that BOJ is playing a
riskier game with QQE without any serious focus on the QE tapering; ongoing JGB
scarcity and various other limits/factors may force BOJ to normalize its policy
well before the elusive 2% inflation target.
Toshiba has helped the Nikkei-225 to some extent today after
reports that trouble with its auditor may end soon.
China (SSE) was in negative around 3262, (-0.33%) on concerns of
NK geo-political tensions, tech valuation & outlook and ongoing tightening
by Chinese regulator. Today, PBOC again drained out around 60 bln Yuan and made
USDCNY relatively stronger at 6.7228 vs 6.7132 tracking as an upbeat US jobs
report on the Friday weekend.
Hong-Kong (HKG-33) was trading around 27665, up by almost 0.30% and
South Koran Kospi was up by almost 0.5% on some moderation in USD this morning;
a weaker USD is generally positive for the export heavy Asian indexes.
Subdued EU market after tepid German IIP data amid ongoing NK
geo-political tensions may have also affected the Indian market sentiment today
in the closing session and it sold off to some extent after a trading in a
narrow range for most of the days.
Overall, mixed earnings and upbeat miners (rally in iron-ore)
may be also affecting the EU market today with Stoxx-50 now around 3500
(-0.19%); DAX is trading around 0.46% lower on tepid economic data, earnings
and some rebound in EUR; but FTSE-100 is up by 0.14% as GBPUSD gone lower amid
ongoing Brexit squabbling and a dovish BOE.
Asian market update:
FX market update:
Asian market update:
FX market update:
BNF
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