Market Mantra: 22/09/2017 (09:00)
SGX-NF: 10090 (-47)
For the Day:
Key support for NF: 10070/10040-10000
Key resistance for NF: 10160-10205
Key support for BNF: 24650-24500
Key resistance for BNF: 24950-25075
Hints for positional trading:
Technicals
indicate that, NF has to sustain over 10205 area for further rally towards
10250- 10325 & 10385-10455 area in the short term (under bullish case
scenario).
On the flip side, sustaining below 10185-10160 area, NF may fall
towards 10070/10040 & 10000-9960/9915 area in the short term (under bear
case scenario).
Similarly, BNF has to sustain over 25075 area for further rally
towards 242150-25250 & 25350 -25585 area in the near term (under bullish
case scenario).
On the flip side, sustaining below 25025-24950 area, BNF may fall
towards 24800-24650 & 24500-24250 area in the near term (under bear case
scenario).
As par early SGX
indication, Nifty Fut (Sep) may open around 10090, down by almost 47 points
tracking renewed Korean geo-political headlines after a morning SK news agency
report that NK may soon test an “unprecedented” strength of H-Bomb in the
Pacific ocean in response to US sanctions & Trump’s “dog barking” threat at
UN to Kim terming him as a “rocket man, ready for his own suicide mission”.
After yesterday’s string
of latest US sanctions on NK banks, individuals, financial institutions,
180-day ban on NK shipping which may disrupt NK economy, Kim responded by
terming Trump a “mentally deranged US dotard” and his UN speech “demonstrated
US insanity & inhumanity”.
As par Kim, Trump’s UN
address confirm that the NK nuke mission is on the right path and it will
continue until the final success of a nuke enabled ICBM; NK views Trump’s
comments as “war declaration” and will consider “corresponding highest level of
hard-line measures in history” against US. Kim further said that “ I will
surely & definitely take the mentally deranged US dotard with fire”.
Although, we may have no
idea about how NK is able to test a H-Bomb in the Pacific over JP, these “war
of words” between Kim & Trump has again ignited the geo-political
risk-aversion move in the financial market in the weekend after some Fed related
pause; coupled with that rating downgrade of China & HK, although may be “toothless”
in real terms has made the overall market mood as “risk-off”. USD is getting
sold across the board ignoring an “unusually hawkish” Fed.
Looking at the scale of
present “war of words” between NK & US, market may be concerned that any
miscalculation by any of them may convert it into “war of bullets if not nukes”;
the ultimate solution lies in diplomacy, but it may be tough for US to accept
NK as a “nuke nation” and invite it to the negotiation table.
For NK, this “nuke &
bomb” rhetoric is an insurance for decades after decades against any pre-empted
US strike and thus they may also no abandon this nuke program for any Iran
style diplomatic deal.
In any way, this legacy
NK tensions may be a “blessings in disguise” for US economy as it’s helping its
defence industry immensely and also helping overall US export competitiveness by
forcing USD lower despite a “hawkish Fed” and some visibility of US tax reform.
NK may be also helping JP & SK for stimulating their economy as both the
countries are now on huge defence spending spree to “combat” NK threat.
Thus, US have no real issue
with NK except some rhetoric unless NK really launches an ICBM towards Guam/US
or attack JP & SK, which is very unlikely at this stage. NK is also now an
element of “great volatility” for the global financial market just like Trump’s
tweeter handle and central banks!!
Overnight US market closed
in negative on concern of higher USD on earnings, stretched valuations coupled
with latest US sanctions on NK; DJ-30 closed down by almost 0.24%, S&P-500
lost 0.30% and NASDAQ dragged by around 0.525. Overall techs, telecoms,
consumer & healthcare stocks dragged the US market yesterday.
US stock future (SPX-500) is now
trading around 2496, down by further 0.24% ahead of EU market openings on NK’s
latest threat report of H-Bomb.
Back to home, Indian Market (Nifty Fut) is now
trading around 10040, dragged by almost 0.95% on latest NK provocations coupled
with domestic concern of a slowing economy, Govt’s fiscal stimulus talks of
around $7.7 bln and subsequent fiscal slippages on account of subdued revenue
collections (both direct & indirect taxes) and GSTN network disruptions.
As par some reports, Govt
may have miscalculated the GST input tax credit (ITC) aspects vis-à-vis old
duty draw-back mechanisms and thus it’s now facing a huge bill of exporter’s
ITC, which may seriously choke the liquidity not only for the exporters, but
Govt may also find it quite difficult to cope with such ITC every month. This
may be a serious blow for the Indian economy, unless properly resolved.
Meanwhile, USDINR jumped
above 65 on concern of Indian fiscal math mismatch, slowing economy coupled
with a hawkish Fed, eager to hike in Dec’17 again along with BS tapering. A
higher USD may be good for export savvy Pharma, IT cos and may be also good for
overall Nifty earnings as almost 60% of earnings are in USD, but may not be
good for the overall Indian economy, its CAD & also fiscal deficit.
SGX-NF
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