Market Wrap: 30/08/2017 (17:00)
NSE-NF (Aug):9880 (+81; +0.83%) (TTM PE: 25.21; Nr.
2 SD of 25; Avg PE: 20; TTM/FY-17 EPS: 392; NS: 9884)
NSE-BNF (Aug):24311 (+204; +0.85%) (TTM PE: 30.58;
Abv 3 SD of 30; Avg PE: 20 TTM/FY-17 EPS: 795; BNS: 24309)
For 31/08/2017: (For Aug Exp/Spot)
Key support for NF: 9845-9790
Key resistance for NF: 9905-9950
Key support for BNF: 24200-24000
Key resistance for BNF: 24400-24575
Hints for positional trading:
Time & Price action
suggests that, NF has to sustain over 9950 area for further rally towards
10030-10075 & 10155-10200 area in the short term (under bullish case
scenario).
On the flip side, sustaining below 9930 area, NF may fall
towards 9885/9845-9790 & 9750-9700 area in the short term (under bear case
scenario).
Similarly, BNF has to sustain over 24400 area for further rally
towards 24525-24575 & 24675- 24775 area in the near term (under bullish
case scenario).
On the flip side, sustaining below 24350 area, BNF may fall
towards 24200-24000 & 23850-23700 area in the near term (under bear case
scenario).
Indian market (Nifty Fut-Aug) today closed around 9880, surged by almost 81
points (+0.83%) after making an opening minutes low of 9846 and late day high
of 9919, thus erasing most of the loss of yesterday triggered by NK missile
panic.
Indian market today opened gap up around 9850, almost 58 points
higher tracking similar rebound in global markets after both Trump & Kim
sounded quite muted in their rhetoric. Soon after opening higher, domestic
market also gone further high quite smartly and soared to the day high of 9919
after positive opening of EU market coupled with some drops of EUR; Indian
market covered their short ahead of Aug FNO exp tomorrow.
But, Govt’s push for additional GST cess on various mid/large
size automobiles (luxury cars/SUV), OBC quotas in PSBS & Army coupled with
news of renewed tensions at Ind-Pak LOC may have also dampened the Indian
market sentiment today in the last hour of trade and Nifty closed well off the
day high.
A higher cess on certain category of automobiles may be very
disappointing as it shows that Govt is not prepared to sacrifice any revenue
even for the sakes of industry growth. A push for OBC reservation in various
Govt jobs including PSBS & Army may be also an indication of political opportunism
ahead of 2018-19 state & general elections at the cost of the exchequer.
Also, disruption of normal life in Mumbai due to yesterday’s
flood and less attendance of traders at brokerage offices may have affected the
overall market sentiment and volume.
Although, Indian market is quite optimistic about incremental
pace of reforms being undertaken by the Govt, market may be also worried about
stretched valuations and earnings recovery, which is so far elusive despite all
the narratives of green shoots in the economy.
Looking ahead, Indian market may also focus on fresh list by the
RBI for NCLT/IBC corporate big NPA and its actual resolution; ultimately both
Govt & Banks also want a meaningful resolution rather than liquidation of
the stressed cos.
Apart from corporate NPA, retail NPA for the banks may be now
growing abnormally, especially after DeMo & GST blues, where small
business/SMES are finding it more difficult to sustain by paying full
compliance costs of his business. Also, home loans and other personal secured
& unsecured loans are becoming stressed on the back of growing insecurity
about jobs & uncertainty in self-employment/professionals.
Today Indian Parliamentary committee has also expressed adverse
views on job cuts in informal sector because of DeMo disruptions and at least
1% negative effect on the Indian GDP. As par RBI report on the controversial
DeMo published today after market hours may be also indicating a total failure
and an economic blunder by the Govt, although the “shock therapy” was intended
for “war against black money/corruptions” in the system and designed as a “political
weapon” to “fight for the poor”.
Now, Govt may also intensify its war on black money & shell
cos, which may be negative for the Indian market, although it may be morally
& ethically right; the overall DeMo intention by the Govt may be quite
correct, but the procedure may be quite controversial.
An upbeat GST collections for July’17 at around Rs.93000 cr may
be a good news for the FMO, but more time may be needed to see, if India’s tax
compliance (tax/GDP ratio) has improved significantly amid ongoing war against
unaccounted/black money (DeMo/GST/UID-PAN linkage etc).
Although, Indian market is broadly consolidating now around
10200-9700 range in Nifty (500 points) on the back of huge domestic liquidity
support and hopes for a double digit earnings growth of around 15-20% in the
coming years, market may focus on actual earnings trend, Govt’s war on black
money coupled with GDP, PMI & Auto sales nos in the coming days along with
various geo-political events & Fed/ECB actions of QT.
Nifty was today supported most by IOC (ramp up of production by
a capex of Rs.32000 cr due to higher demand of petro products), RIL (buzz of
Rs. 2500 cr NCD), HDFC twins, VEDL, BOSCH & ITC; together these counters
has contributed almost 60 points in Nifty.
Nifty was dragged most by M&M (additional GST cess), TECHM,
HCL TECH, INFY, SBI, Cipla & NTPC (OFS at discounted prices by the Govt).
Metal stocks were in demand today due to upbeat GDP forecast of
China & EU by Moody’s, for China it forecasted 2017 GDP as 6.8% vs 6.6%
earlier, while for 2018, it sees 6.4% vs 6.3% earlier. For EU, Moody’s sees an
average 0.3% higher GDP for 2017-18. Also, recent devastating floods in various
parts of India may be positive for metals & cements for rebuilding work in
the coming days.
Adani ports today rallied by around 1.5% on its AU coal mine
related optimism. Overall, out of 51 Nifty stocks, 38 were in green and
advance/decline ratio was 2:1 in the broader market.
Globally, almost all the major Asian markets were
trading in green erasing almost all the yesterday’s
loses as Trump threatens no “fire & fury” to Kim and the Nuke Armageddon
between US & NK cools off. Also Kim’s rhetoric towards Trump was much more
measured and thus USDJPY shrugs off
an imminent “war of nukes” between US & NK and covered its short from the
vital support zone of 108 triggering a corresponding risk appetite in the US
& global market in NY trading session yesterday.
Market may be also optimistic about US tax reform as Trump is
scheduled to start his campaign to convince the US public about the benefits of
his tax plan intended for the middle class and ongoing obstruction by some of
his own RNC members coupled with the opposition DNC.
Thus, Trump may be trying to “kill two birds with one stone” by
a political campaign on US tax reform; if it’s passed by the US congress, then
he will take credit for it; otherwise he will pass all the blames to his
political oppositions, “obstructing US development”.
Market may be also slowly being convinced about Trump’s growing
political maturity; if he has the support of US public, then everything may be
easy for his “Trumponomics” narratives. But, still then, a significant risk is
there for Trump in his Russian links investigations by Muller.
Thus, market may be hopeful for passage of US tax reform bill by
Dec’2017 as promised by Cohn few days ago, overcoming the present environment
of US policy paralysis at WH. But, ongoing rehabilitation focus at Harvey
affected area may also undermine Trump’s political effort (tax reform) at this
point of time.
Also, as par some market buzz, BOJ/Kuroda hand is suspected to
pop-up USDJPY for such a surprised sharp rally.
Overnight US market also closed higher, shrugging off NK missile tensions,
reversing all the pre-open fall; DJ-30 closed 0.26% higher, while S&P-500
was up by 0.08% and NASDAQ was in 0.30% green, helped by FANG (Tech) &
defence stocks and also some airlines, but dragged by insurance & power
sectors with a low volumes market still under summer holidays.
Although tragic & devastating Harvey flood is negative for
the US economy in the short term, considering the huge damage bill of around
$100 bln, in the long term the reconstruction Govt capex may stimulate the
economy, while it may also force US congress to abandon the path of debt
ceiling drama and sanction the required fund quickly.
US stock future (SPX-500) is now trading around 2452, up by almost 0.23% and looking
ahead, it has to sustain above 2455-2465 zone for further strength; otherwise
it may again come down. Market may focus on EUR strength, while it’s
consolidating around 1.20 in EURUSD
coupled with US GDP & payroll data in the coming days apart from ongoing
US-NK geo-political tensions and Trump’s political woes.
It now seems that Fed should not be concerned about any unusual
USD strength, while it will gradually normalize its BS, because US political
risk & NK’s missile games may be some of the perfect weapons to keep USD
depressed despite a hawkish Fed, the only major G-10 central bank, thinking
about dual QT.
Elsewhere, Australia
(ASX-200) closed almost unchanged at around 5770, while AUDUSD is also trading almost flat
around 0.7962 (+0.06%), flirting with the 0.80 mark after better than expected
AU economic data (building approvals, construction works), despite general strength
in USD today on risk appetite. AU market today was dragged by telecoms on some
disappointing deleveraging news but helped by techs & a consumer staple,
thus recovered from earlier loses.
Japan (Nikkei-225) closed around 19507, up by almost 0.74% on lower Yen as USDJPY
recovered from 108.35, the panic low after NK missile game over JP airspace
yesterday and made a smart rally to almost 110.10 till now. Additionally,
automakers & techs are helping the JP market today, while an upbeat retail
sale may have also boosted the risk-on sentiment, but subdued household
spending may be affecting the JPY sentiment. Toshiba was down today for some
news of delay in its deleveraging effort.
China (SSE) is trading almost flat around 3364 (-0.05%) on strength in
airlines shares amid better than expected earnings by China Eastern Airlines
boosted by a strong Yuan, helpful for the overall airlines space on lower fuel
costs (imported ATF/Crude).
PBOC today fixed USDCNY at 6.6102 vs 6.6293, a little lower and
at over 1 year high with a net drain of 100 bln Yuan in its ongoing effort of
deleveraging ahead of China party congress.
Hong-Kong (HKG-33) is trading quite upbeat around 28135, up by almost 1.50% helped
by the China airlines shares.
Meanwhile, Crude Oil
(WTI) is trading around 46.20, down by almost 0.25% on surprised surge in
gasoline storage in the US API report coupled with the ongoing concern of glut
due to US refiners shut down for Harvey; it was boosted to some extent early
yesterday after news of Libya-Nigeria related production disruptions and a
Russia- Saudi production cut planning.
Gold is trading almost flat around 1310, but well of the highs of
around 1326 amid games of chickens between Trump & Kim (US-NK).
Elsewhere, EU market
is in green, up by almost 0.60% in Stoxx-50 as NK tension ebbs after controlled
reactions from Trump coupled with some fall in EUR over US tax reform optimism
& mixed EU inflation reports. Overall, EU market is today being supported
by telecoms (buy back news from Telenor), gold miners & biotechs, while it
is dragged by some miners.
DAX-30 & CAC-40 are up by around 0.60%, while FTSE-100 is
higher by around 0.40% as of now. FTSE is also being helped by some fall in GBP
coupled with upbeat financials & media stocks, while energies &
precious metals & miners are on the back foot. Media stocks are higher
today for renewed optimism about earnings after yesterday’s sell off.
NF
BNF
USDJPY
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