Market Wrap: 28/08/2017 (17:00)
NSE-NF (Aug):9915 (+42; +0.42%) (TTM PE: 25.29; Nr.
2 SD of 25; Avg PE: 20; TTM/FY-17 EPS: 392; NS: 9913)
NSE-BNF (Aug):24364 (+33; +0.14%) (TTM PE: 30.66;
Abv 3 SD of 30; Avg PE: 20 TTM/FY-17 EPS: 795; BNS: 24377)
For 29/08/2017:
Key support for NF: 9880-9840
Key resistance for NF: 9940-9980
Key support for BNF: 24300-24200
Key resistance for BNF: 24550-24675
Hints for positional trading:
Time & Price action suggests that, NF has to sustain over
9940 area for further rally towards 9980-10030 & 10075-10155 area in the
short term (under bullish case scenario).
On the flip side, sustaining below 9920 area, NF may fall
towards 9880-9840 & 9790-9700 area in the short term (under bear case
scenario).
Similarly, BNF has to sustain over 24525 area for further rally
towards 24575-24675 & 24775-24875 area in the near term (under bullish case
scenario).
On the flip side, sustaining below 24475 area, BNF may fall
towards 24300-24200 & 24000- 23900 area in the near term (under bear case
scenario).
Indian market (Nifty Fut-Aug) today closed around 9915, surged by almost 42
points (+0.42%) after making an opening session low of 9884 and mid day high of
9939, tracking Infy & China border optimism coupled with another small dose
of Govt’s reform push in terms of revised consolidated FDI policy to attract
& promote FDI from NRI & certain other categories with some
restrictions of citizens from Pak & Bangladesh.
Indian
market today opened in positive territory around 9906 (+26 points) tracking
mixed global cues & Infy optimism, after
Nilekani appointed as executive chairman as expected with a new board after
market hours on 24th Aug.
Technically, Infy (CMP: 940) now has to sustain over 955-985 for
1040 zone in the days ahead; but some legal challenges (filling of class action
suits in US) and the core question of growth in the changing world of techs may
continue to hunt the scrip also apart from overall issue of succession in
corporate India & conflicts of founders/promoters & professionals
(corporate governance).
As par reports, India & China has reached a “disengagement”
agreement at “face-off” sites at Doklam LOC; i.e. troops of both the country
will go back to their previous status co position. Thus it may be a major step
for the two nuke countries to de-escalate their recent border stand-offs from
Doklam to Leh and may be positive for the Indian market sentiment
(risk-appetite).
Both the countries has reached this breakthrough “disengagement”
agreement ahead of the BRICS meet in China next week and more importantly,
China Govt has got a face saving resolution for this Doklam border stand-off
ahead of its party congress.
Looking ahead, despite current consensus on border, both the
countries may need to write a definitive Ind-China border map (demarcation)
agreement for long term resolution of this issue; otherwise it may continue to
haunt both the nations in the days ahead.
Just after Indian statement, China has issued some contradictory
statement that Indian troops have already withdrawn from Doklam, but Chinese
troops will continue to patrol there!! Thus Ind-China Doklam border squabbling
may continue in the days ahead.
Also, PSBS may be in focus after Govt’s plan of merger &
consolidation, which may not resolve the core issues of NPA and may also face
some tough political/bank union’s oppositions; i.e. it may take considerable
time for a concrete shape.
Apart from muted Q1FY18 earnings, market may also focus on
upcoming auto sales, PMI & GDP data to have an idea about underlying trajectory
of the Indian economy after DeMo & GST disruptions ahead of festival
season.
Today Nifty was supported by IOC, Infy (official announcement of
Nilekani as executive chairman), ICICI Bank, Yes Bank, Adani Ports (clearance
by DRI against all allegations of FEMA violations & optimism about AU
operations); together these cos has contributed around 33 points in Nifty.
IOC was up by around 3% after it settled its tax incentive
issues for Paradeep refinery with the Odisha Govt.
FMCG (HUL, ITC) was also in demand after reports of upbeat rural
income due to good monsoon this year and increasing shift to branded FMCG from
unbranded ones for the rural consumers. But overall monsoon in India may fall
short of earlier estimate by IMD and may be down by around 6% from LPA; also
distribution and widespread floods in different parts of the country specially
may not be good for the rural economy there.
NTPC was upbeat on OFS buzz by the Govt; Sun Pharma was up by
over 2% after UK health regulator has given clean chit to its Hallol plant,
which is its legacy problem from the Ranbaxy era.
But, Indian Govt has also announced significant capex for most
of the flood affected states (aid) and that may also act as stimulus for the
rural economy, although may not be healthy for the Govt’s fiscal health.
Nifty was today dragged by Tata Motors, Power Grid, TCS, DRL (class
action suit filling by some US investors), Maruti, SBI, Indusind Bank, RIL
(mixed news of BP JV & sudden stoppage of its R-Jio phone pre-booking amid
crash of the website) & Tata Steel; altogether they have dragged Nifty by
around 10 points. Overall, Banks were also under pressure today.
Globally, most of the
major Asian markets barring Australia & Japan were trading in deep to
moderate green amid mixed global cues
marked by an “un-dovish” Draghi & “un-hawkish” Yellen (neutral) coupled
with Cohn’s talks of US tax reform passage by 2017 and the devastating &
catastrophic unprecedented Harvey flood in US Texas, Huston area, hubs of oil
refineries.
US market closed almost
flat, but well off the highs on Friday weekend after basically a
non-event Jackson Hole speech by both Yellen & Draghi; but overall, both
have not touched any specific monetary policy or BS/QE unwinding. Yellen was
un-hawkish, didn’t mention anything about the high probability Sep’17 Fed BS
tapering and Draghi not tried to talk down the EUR and on the contrary sounds
quite optimistic about global/EU growth prospects.
Thus EURUSD jumped to almost 1.1952, at multi-month high in the
early Asian session today, pulling down the global equities as market knows,
despite silence about ECB QE, Draghi may have no other option but to taper the
same sooner rather than later after Dec’17 and may also indicate further
normalization of ECB monetary policy as the changing & improving prospects
of EZ economy does not warrant such monetary stimulus (QQE/NRIP/ZRIP) further.
Most of the other influential ECB policymakers are also making this point
repeatedly for the last few months, which may be a signal for a major policy
change just like Fed.
BOJ may be also trimming down its JGB purchase as in a scarce
market, even a less amount of buying (intervention) is causing the JGB yields
to go lower, which is now Kuroda’s ultimate goal, despite his addiction to the
QQE; BOJ is bound to follow Fed & ECB in trimming down their QQE gradually
in the days ahead. As par some estimates, total global QE may be now around 40%
of cumulative global GDP!!
Before those Jackson Hole speeches, US market got some boost
over an interview of Gary Cohn, the CEA of Trump’s NEC and the chief architect
of US tax reform policy, promising passage of the tax bill by Dec’17. Both
DJ-30 & SPX-500 closed around 0.14% higher, while NASDQ dropped by 0.09%.
Telecoms & energy supported the US market on Friday, while techs &
healthcare dragged it by some extent.
As we all know, Texas & Houston areas of US are now under
devastation flood caused by Harvey cyclone; the area is a major production hubs
of US gasoline and thus its now at 2 yrs high as the tropical storm has caused
almost 25% of gasoline production cut from the Gulf of Mexico. But crude oil is
trading lower because of concern of further glut as nearly all the US
refineries in the Harvey affected areas are closed now for the last few days
and they are not in a position to take deliveries of crude oil to refine it
into gasoline, heating oil etc.
Although, this Harvey flood may be catastrophic to US economy
and negative for the USD/EQ by some extent in the short term with insurance,
airlines may be worst affected; in the long term, this may also prompt Trump to
pass a major infra spending plan for the worst flood affected area and thus it
may be also positive for the US market/USD (Govt capex/fiscal spending).
On the weekend, NK has also fired three small range ballistic
missiles after US secretary’s optimism about a diplomatic solution for the
Korean crisis; but as all the three missiles has reportedly failed, it may not
have caused any major risk aversion yet; although some concern remains.
US stock future (SPX-500) is now trading around 2440, almost down by 0.16%, facing
resistance around 2455 zone and targeting 2425 area as of now. Looking ahead,
Sep may be a crucial month for the market after Aug summer holiday season doldrums;
US NFP in the next week may be in focus ahead of Fed & ECB meet apart from
US debt ceiling drama & suspense.
Elsewhere, Australian
market (ASX-200) closed around 5710, down by almost 0.60% on higher/flat
AUDUSD and dragged by financials and basic materials & energies (lower
metals & oil).
Japan (Nikkei-225) is also closed around 19450, almost unchanged amid higher Yen
as USDJPY is now trading around 109, down by almost 0.30%.
China (SSE) is trading around 3363, up by 0.93% on upbeat brokerages, but being
dragged by a leading hotel property developer (Wanda) on reports that its
Chairman had been prevented from leaving the country, although denied by the
co.
Today PBOC fixed USDCNY higher at 6.6353 vs 6.6579, at one year
high and drained 100 bln Yuan. China industrial profits for Q1CY17 was up by
16.5% against prior 19.1%; upbeat industrial profits may have been supported by
Govt’s targeted stimulus effort, strong property/construction sectors, capacity
cuts (rebalancing) and higher commodity prices.
Hong-Kong (HKG-33) is now trading around 27875, up by almost 0.20%, but off the
high tracking a weak EU market for higher EUR and pressure on oil (energy
shares). HK market is being boosted by property shares (Evergrande Gr) ahead of
its quarterly report card, which is expected to be upbeat after co’s guidance
upgrade in July.
HK market may be also getting supports from solid H1 results
from some blue chips like AAC Tech (component suppliers of Apple), which has
reported almost 57% YOY rise in PAT; AAC is up by almost 10% and is basically
driving the regional market sentiment.
Meanwhile Crude Oil (WTI)
is trading around 47.45, down by almost 0.90% on concern of glut amid shut down
of Houston refineries due to the tragic cyclone Harvey in US; immediate support
now around 47.20; below that 46.45 may be quite visible.
EU market was also under pressure after EURUSD got strong most in the
last two years (Jan’15) as a strong EUR may be negative for export & tourism
heavy EU economy and the market. Also energy sector is under pressure as a fall
out of Harvey cyclone & flood in US Houston area, a major hub of oil
refineries along with exporters.
EUR get strength as Draghi didn’t tried his talk down tactics on
Friday Jackson Hole speech as widely expected. The devastating Harvey may cause
catastrophic damage to the energy infrastructure in the area of Houston &
Gulf of Mexico.
Stoxx-50 is almost flat, down by 0.06%, while DAX-30 is down by
0.11% and CAC-40 is almost flat (-0.02%). Overall, today may be a light EU
trading day amid holiday for UK market; but GBPUSD is in upbeat mood today amid
buzz of an early fruitful Brexit talks.
NF
BNF
CRUDE OIL
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