Market Wrap: 28/09/2017 (17:00)
NSE-NF (Oct):9785 (+13; +0.13%)
(TTM PE: 25.44; Abv 2-SD of 25; TTM Q1FY18 EPS: 384;
NS: 9769; Avg PE: 20; Proj FY-18 EPS: 418; Proj Fair Value: 8360)
NSE-BNF (Sep):24050 (+178; +0.75%)
(TTM PE: 27.07; Abv 2-SD of 25; TTM Q1FY18 EPS:
887; BNS: 24008; Avg PE: 20; Proj FY-18 EPS: 961; Proj Fair Value: 19220)
For 29/09/2017:
Key support for NF: 9750-9695
Key resistance for NF: 9825-9865
Key support for BNF: 23900-23700
Key resistance for BNF: 24100-24300
Hints for positional trading:
Technicals
indicate that, NF has to sustain over 9825 area for further rally towards
9865-9915 & 9975-10050 area in the short term (under bullish case
scenario).
On the flip side, sustaining below 9805 area, NF may fall
towards 9750-9695 & 9645-9585 area in the short term (under bear case
scenario).
Similarly, BNF has to sustain over 24100 area for further rally
towards 24300-24550 & 24750-24850 area in the near term (under bullish case
scenario).
On the flip side, sustaining below 23850 area, BNF may fall
towards 23700-23600 & 23450-23250 area in the near term (under bear case
scenario).
Nifty Well Off The Day Low & Snapped 7 Day Losing Streak On FNO Exp
Short Covering:
Indian market (Nifty Fut-Oct/India-50) today closed around 9785, edged up by
almost 13 points (+0.13%) after making an opening session low of 9729 and closing
hours high of 9813 in a moderate day of FNO exp volatility.
Indian market snapped seven day losing steaks on short covering
as Nifty achieved its short term technical target of 9695 in Nifty Fut-Sep amid
swift correction from 10200 level on hawkish Fed, strong USD, concern of FII
outflows coupled with NK geo-political tensions & domestic concern of economic
slowdown and fiscal slippages.
Premium differences (Roll over analysis) in Nifty Spot & Fut
may be indicating a subdued long rollover or tepid value buying (bargain
hunting) as market may be still in dilemma over extent of economic slowdown
& nature of the stimulus drugs. Actually, institutions (FII/DII/Prop) may
have created big short rollover against longs by retails/HNI.
Govt may be also pressurizing the PSUS for ramping
up capex to stimulate growth and at the same time asking for fabulous dividends
for revenue or for its own capex; PSUS may feel the brunt of Govt’s stimulus package
now. Govt may be also asking RBI for a special DeMo dividend (?), but that may
be virtually impossible as of now.
Govt may also issue special Banks recap fund for recapitalization
of the PSBS. Govt (DEA) has also assured that there will be no change in Govt’s
borrowing plan till Dec’17 and expressed confidence to meet the FY-18 deficit
target. No additional borrowing by the Govt may be positive for the banks, especially
PSBS and thus they may have rallied today.
Nifty was today supported by HDFC, HDFC Bank, ITC,
Kotak Bank, Maruti, Bharti Infratel, Axis Bank, DRL IOC & SBI by combined
66 points while it was dragged by RIL, Asian Paints, Bosch, TCS, Tata Motors,
Auro Pharma, Eicher Motors, Infy, Yes Bank & IBULLS HSG cumulatively by
almost 41 points.
Overall banks & financials has supported the
market today as it recovered by over 400 points from the day low amid huge
short covering and Nifty fell almost 1.6%, while Bank Nifty lost around 1.3%
for the Sep series. Today NSE FNO segment clocked the highest ever turnover of
Rs.15 lakh cr till date.
Indian Market
Closed Almost Flat Tracking Subdued Global Cues & Concern Of Domestic
Slowdown:
Indian market (Nifty Fut) closed almost flat after
some early panic amid slow down fears; but may have covered some shorts from
the positional vital support zone of 9695 in Nifty Fut (Sep) today.
Govt may be also concerned about GSTN fiasco and
low number of return fillings for Aug amid subdued GST collections. Thus Govt
is engaged itself with the concerned GST stakeholders, especially the
exporters, SMES and small traders, for which proper GST implementation may be a
big challenge.
Govt may be also under immense pressure to “do
something” for the economic revival after DeMo & GST disruptions, which is
now become a “hot political issue” for both the Govt/BJP & Oppositions/INC;
but an immediate or even short term relief through a credible fiscal stimulus
package may be very limited as the core issue may be of structural in nature.
Slow down in India started long before DeMo with
an environment of very high real rate of interest/bank lending rate, stressed
twin balance sheets and lack of private investments. Also, legacy issues of
very high inflation/price instability may be hampering real wage growth and
eventual discretionary consumer spending & GDP.
But drastic cut in RBI repo rate like 1% may not
be possible for India right now because of bond market factor/high &
attractive Indian bond yields for FPIS and USD/INR equation. Unless Indian
banks lend to the corporates & SMES at a comparable rate with its DM/EM
counterpart like China around 4-6%, it may be very difficult for them to
sustain the increasing competition from overseas cos.
It now seems that due to GSTN malfunctioning, over
regulations for GST refund rule and some liquidity crisis both within Govt
& business circle, exporter’s organizations (FIEO) has expressed their
inability to pay further taxes/GST, if previous refunds do not some by 20th
Oct.
Overall, it appears that Indian FM is also under
immense political pressure from various stakeholders including some of his own
party stalwart (Swami) and previous BJP FM (Yaswant Sinha) for alleged
mishandling of the Indian economy including poor plan & implementation of
DeMo & GST; if the current Indian FM will resign for such pressure tactics,
then it may be another black day for the Indian market. Market also does not
like any such political, economical or administrative uncertainty.
Overall banks & financials has supported the
market today as it recovered by over 400 points from the day low amid huge
short covering and Nifty fell almost 1.6%, while Bank Nifty lost around 1.3%
for the Sep series. Today NSE FNO segment clocked the highest ever turnover of
Rs.15 lakh cr till date.
Globally, most of the major Asia-Pacific markets except Japan are trading almost flat points tracking subdued
global cues after an “unimpressive” Trump tax reform/cut plan without any
retrospective effect and very little on details about deficit funding. Regional
Asian market (HK/China) is also under some pressure on rating downgrade of a
blue-chip Chinese property developer (Wanda) by S&P coupled with
forthcoming long holiday season in China (Golden week).
USD got some boost yesterday after upbeat durable goods order,
pointing towards a higher inflation for the US economy. But core portion of the
same was not so much impressive and tepid pending home sales figure may be also
distorted by Harvey & coupled with that some disappointments for the Trump
tax reform proposal, USD dropped a little bit along with risk trade.
But US stock market got some boost after dovish jawboning by
Fed’s Bullard, an influential known dove, advocating for no rate hike in Dec’17
for inflation “mystery”; he also doubted about credibility of Fed’s dot-plots
in the financial market; a lower USD may be good for US stocks/exports earnings
& imported inflation perspective.
Also, a tax cut is a “tax cut” be it retrospective or not and
thus US stocks got some late boost yesterday along with long term 30YTSY &
also10YTSY yields; thus the old Trumpflation trade may be again coming back for
the US market. US small caps (Russel-2000) may be benefited most from Trump’s
tax plan and as par US comm. Sec (Ross), US GDP may be boosted by 1% for this
long awaited tax reform.
But, the
retrospective effect may also be significant for US corporate earnings this
year (CY-17) and was one of the reasons for so much US stock market optimism;
previously market was expecting that all cuts of the Trump’s tax proposal may
be effective from Jan’17 irrespective of their date of legislative passage
& implementation.
Market may be also concerned about Trump’s ability
to pass his tax reform plan by the US congress amid deep divisions within his
own RNC party and a hostile DNC as this tax plan is basically aimed to slash
taxes on corporates & the riches. Market may be also disappointed because
the US tax reform proposal may be far less than Trump’s campaign promise.
Elsewhere, although, NK tension seems to be cooled down a bit,
as par latest report SK is apprehending some NK ICBM or even a Nuke test around
10-18th Oct coinciding with the anniversaries of NK Communist Party
and also China’s Party Congress time!! Thus market may be also concerned about
any fresh NK provocations in the days ahead.
Overnight
US stock market closed in
green, supported by US tax cut optimism, banks & financials on higher bond
yields and bargain hunting in tech/FANG stocks, while dragged by utilities,
consumer staples and real estate investment trusts; DJ-30 closed around 0.20%
higher, while S&P-500 was up by around 0.40% and closed at 2508 after
hitting an all-time high of around 2510; NQ-100 rallied by almost 1.2%.
US stock
future (SPX-500) is now trading
almost unchanged at around 2505 (+0.04%) on subdued Asian cues ahead of EU
market opening. Looking ahead, SPX-500 need to sustain above 2415 zone for
further rally; otherwise it may come down again.
Elsewhere, Australian
market (ASX-200) closed almost flat around 5670 (+0.10%); it was helped by
banks & financials, utilities, healthcare and consumer discretionary while
resources & metals dragged the market. AUDUSD
is down today around 0.78240 (-0.35%) on fall in commodities amid concern of
China slowdown ahead of Golden week holiday coupled with S&P downgrade of
Wanda, a leading Chinese property developer. Technically, 0.7808550 may be a
big support for AUDUSD.
Today RBNZ
hold rates at 1.75% as expected, but with a more dovish stance concerned for a
strong NZD on the economy; it also gave a hint to lower its GDP expectations
amid an environment of political uncertainty in NZ. Subsequently NZD falls
after RBNZ.
Japan
(Nikkei-225) closed around
20363, up by almost 0.47% bucking the regional trend on lower Yen as USDJPY is hovering around 113 on US tax
optimism & hopes of Trump trade; yesterday JP stocks were dragged after
ex-dividend related issues but today most of them are trading normally. JP
market was today helped by banks & financials on higher US bond yields;
also exporters & manufacturers has helped the market, while automakers were
mixed.
China
(SSE) edged down by around 0.17
% today & closed around 3340 on S&P downgrade of a leading property
developer (Wanda), while overall market may be also in light mood ahead of Q3
data & a long holiday from 1st Oct (Golden week). Overall,
market may be cautious of a China slowdown story after mixed Q2 economic data,
but also optimistic about various Q3 economic indicators amid construction
boom.
Today China market was helped by retail/consumer
stocks on hopes of higher discretionary consumer spending (shopping &
entertainment) in the forthcoming Golden week (Chinese festival season), but
dragged by energy, property & financial shares.
PBOC today fixed mid-point of USDCNY a little
higher at 6.6285 vs 6.6192 with neutral OMO operations today (injection matched
maturity) ahead of Golden week; thus China money market may be remained tight
ahead of holiday related cash demand (deleveraging), which may be little
negative for the overall market sentiment today. Some analysts are projecting a
wide range of USDCNY in the coming days (6.40-7.20) for Yuan flexibility in
line with PBOC’s new policy for a market oriented gradual shift of Yuan.
Hong-Kong
(HKG-33) future is now trading
around 27340, slumped by almost 1.10% affecting the regional market sentiment
including India. HK market was today dragged by S&P downgrade of Wanda, a
prominent China based property developer and also by capital out-flow concern
on higher USD (US tax reform optimism and hawkish Yellen; FFR is now showing
above 70% of a Dec rate hike by Fed).
Today HK market was dragged by absence of Chinese
buying ahead of Golden week and China based banks & insurance cos are
affecting the market sentiment, while internet & online gambling stocks are
helping it to some extent.
Overall, a dual combination of higher USD & higher US
interest rates (bond yields) coupled with an attractive US tax system may not
be good for the EM, including HK & India.
Meanwhile, Crude
Oil (WTI) is now trading around 52.25, up by almost 0.20% on geo-political
(Syria-Iraq pipeline) and OPEC optimism coupled with mixed inventory report
yesterday (higher Crude production & gasoline stock and higher Crude
drawdown on recent hurricane distortions).
EU stocks
were also upbeat on US tax optimism and banks & financials on higher bond
yields favorable for their business model:
Elsewhere,
EU market is trading almost
unchanged in Stoxx-600, while DAX-30 is up by around 0.37%, CAC-40 almost flat
(+0.13%) and FTSE-100 edged down by 0.05%. EU
stocks were upbeat on US tax optimism and helped by banks & financials on
higher bond yields favorable for their business model; global bond routs
continue today.
Apart from banks, EU market is today helped by
energies, while dragged by some retailers (H&M on muted earnings) and utilities.
But overall, a higher EUR may be also affecting the EU market sentiment as of
now.
FTSE-100 is also being affected by a higher GBP
today tracking some hawkish jawboning from BOE/MPC, but being supported by
banks & financials on prospect of rate hikes not only in UK, but also in
US. Overall, UK market is also supported by industrials, infra while it’s
dragged by tobacco related & FMCG cos.
USDJPY Flirting Below 113 On Fed's Dot-Plots Credibility Despite An
Upbeat US GDP & More Details About Trump's Tax Reform And A Hawkish
Yellen:
SGX-NF
BNF
EURUSD
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