Market Mantra: 26/09/2017 (09:00)
SGX-NF: 9865 (-15)
For the Day:
Key support for NF: 9860-9825/9780 & 9745-9695
Key resistance for NF: 9920-9970/10000
Key support for BNF: 24050-23850
Key resistance for BNF: 24300-24600
Hints for positional trading:
Technicals
indicate that, NF has to sustain over 9920 area for further rally towards
9970-10000/10050 & 10105-10150 area in the short term (under bullish case
scenario).
On the flip side, sustaining below 9900 area, NF may fall
towards 9860-9825 & 9780/9745-9695 area in the short term (under bear case
scenario).
Similarly, BNF has to sustain over 24350 area for further rally
towards 24525-24600 & 24700-24875 area in the near term (under bullish case
scenario).
On the flip side, sustaining below 24300 area, BNF may fall
towards 24050-23850 & 23700-23600 area in the near term (under bear case
scenario).
As par early SGX indication, Nifty Fut (Sep) may open around 9865,
edged down by around 15 points tracking subdued
global cues after another round of NK “war” rhetoric last night. In an unscheduled presser, NK foreign minister has
termed UN & weekend speeches/comments of Trump, threatening NK as a “declaration
of war” and thus NK has the right to shoot down any US strategic bombers in the
LOC between NK & SK, even if they are not in actual NK airspace, as it’s
the US which first declared war on NK.
On the weekend, US also flies its strategic
bombers over NK-SK LOC air space (neutral zone) as a show of force to the
“little rocket man”, who earlier has promised for “rockets deep inside the US
mainland”. Although US has termed the latest NK narrative as “absurd”, it also
said that “war” is an option. As par latest SK reports, NK has strengthened its
military assets along its east coast border, where US has demonstrated a
strategic bomber plane on the weekend.
Thus, we have some risk aversion move in USD despite some optimistic Fed talks
yesterday amid “mystery” of inflation coupled with hopes of an imminent US tax
reform draft proposals; EUR was also under pressure for renewed EZ political
risks after disappointed election outcome from Germany, which may force Merkel
for a much compromised “Jamaican coalition” Govt or even call for a 2nd
election in the months ahead.
Market may be skeptical that although a lower EUR because of EZ political jitters may
prompt Draghi to announce the much awaited ECB QE tapering plan, it may also
force ECB to be on the neutral side with present accommodative policy. But a
lower EUR is also good for EZ export & the overall EU economy.
Overnight US
market closed in negative amid
escalated “war of words” between NK & US; it was further dragged by
Techs/FANG stocks as a hawkish Fed and subsequent global QT is a bad news for “easy
money availability” and subsequently for the start up/tech cos. Also new
i-Phone 8 model disappointment is dragging Apple & the whole tech sector.
US market was further dragged by Banks &
Financials as bond yields drop following renewed NK jitters yesterday, while helped
by energies (higher oil because of Turkey-Kurdish issue) and some retails (Walt
Disney). DJ-30 was dragged by 0.20%, while SPX-500 has lost 0.20% and closed
around 2496, while tech heavy NASDAQ slumped by almost 0.90%.
US stock
future (SPX-500) is now trading
around 2494, almost flat (-0.15%) on muted Asian cues amid renewed saber
rattling by NK.
Back to home, Indian
market (Nifty-Fut) is now trading around 9840, down by almost 0.40% ahead of
EU market opening; market may be trying to figure out anything positive from
the “Power Stimulus” announced by the Govt yesterday for providing “free
electricity” to certain eligible people, which may cost around Rs.16320 cr to
the exchequer as “subsidy”. Govt has also formed a new PM-EAC to prescribe the
PMO some “stimulating drugs” to stimulate the economy.
But market may not be convinced so far, considering
the nature of fiscal stimulus and its real effectiveness to treat the “disease”
and coupled with that concern of fiscal slippages, stretched valuation, muted
Q1 earnings, expected earnings downgrade for H2FY18 and ongoing NK tensions may
have made the FIIs jittery and it seems that they are on selling rampage. Market
may be also concerned that Govt will be in a populist mode ahead of state &
general elections next year.
As a part of reform measures, Govt may make the
INR fully convertible and ensure that India have a fair amount of relevant
economic data like a DM, so that policy makers or even the new PM-EAC can take
policy decisions based on such data (like monthly retail sales, employment
report, housing report etc). So far Indian policy makers are driving the
economy like “driving a car without headlights in the night” in absence of sufficient
“leading” economic indicators in India, which is a legacy problem.
SGX-NF
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