Market Mantra: 06/09/2017 (09:00)
SGX-NF: 9925 (-50)
For the Day:
Key support for NF: 9895/9875-9825/9800
Key resistance for NF: 9980/10000-10050
Key support for BNF: 24200-24000
Key resistance for BNF: 24525-24675
Hints for positional trading:
Time & Price action
suggests that, NF has to sustain over 10000 area for further rally towards
10050-10090 & 10160-10205 area in the short term (under bullish case
scenario).
On the flip side, sustaining below 9980-9960 area, NF may fall
towards 9895/9875 & 9820/9800-9750 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 24475-24400 area, BNF may
fall towards 24200-24000 & 23850-23700 area in the near term (under bear
case scenario).
As par early SGX
indication, Nifty Fut (Sep) may open around 9925, deep in red (-50 points)
tracking muted global/Asian cues after overnight plunge in 10YUSTSY yields
coupled with renewed domestic concern of Govt’s war on black money/shell cos.
10YUSTSY yields plummeted
to almost 2% yesterday NY session, causing similar risk-off sentiment in USD
& Equities; USDJPY also slumped to almost 108.47, resulting in another
fresh wave of risk aversion movement across the asset classes.
The reasons for such USD
risk aversion movement may be various ranging from NK jitters to dovish Fed
talks & US policy paralysis. There was renewed talk of NK ICBM/Nuke
tensions as NK is supposed to test another nuke enabled ICBM with higher
payloads later this week on its foundation day amid fresh round of “war of words”
between NK & US.
Yesterday NK ambassador
at UN commented that the recent self-defence measures (tests) are a “gift
package” for the US and US will receive more such gift packages from NK as long
as US relies on reckless provocation and futile attempts to put pressure on NK.
In response, Trump
approved selling of highly sophisticated US military equipments to both SK
& JP to “counter growing threat” from NK; thus US defence industry may be
the most beneficiary out of this legacy tension of NK, which is running now for
almost 25 years!! It seems that NK tension is also good for SK & JP fiscal
stimulus apart from US, as both the countries has increased their defence
spending significantly.
Although, the new SK Prez
is trying his best to resolve this NK tensions through diplomatic negotiations
and is taking the help of Russia (Putin), it seems that Trump is unhappy about
this aspect too!! As par Putin, NK will not abandon its right of self-defence
(Nuke), unless it get guarantee of a no US attack in its soil.
USD also got some jolt
from dovish scripts by two known Fed doves and market may be also concerned
about long list of US legislative agenda in Sep-Oct; considering the present
state of US political jitters & policy paralysis, market may be concerned
that timely extension of US debt limit may be an issue and there may be even
some types of US shut down drama, which may strip the coveted US sovereign
ratings.
Another factor may be
that the Norwegian sovereign fund, which has recently expressed its desire to
abandon the EM bond market due to lack of appropriate liquidity & some
other risks and has also expressed more interest in DM bond market like US
& EU, which has not such type of risk. So, Norwegian sovereign fund may be
also buying or planning to buy more 10YUSTSY, resulting in steep falls of
yields.
Overnight US market also
closed in deep red; DJ-30 was down by almost 1.07%, while S&P-500 was
dragged by around 0.76% to close at 2458 and NASDAQ was in 0.93% red; fresh concern
of another strong Cyclone IRMA may have also affected the overall US market
sentiment yesterday after recent havoc damage caused by Harvey.
US stock future (SPX-500) is now
trading around 2459, almost flat (-0.07%) ahead of ECB meet & Draghi presser;
if Draghi sounds less dovish than market is expecting, then expect some rally
in EUR, which may not be good for the EU/global stocks.
Back to home, Indian
market (Nifty Fut) after opening deep in red (gap-down) tracking muted
global/Asian cues and some drops in metals may try to recover (short covering)
and may also watch the EU market volatility closely ahead of Draghi &
ongoing NK tensions.
But fresh concern of Govt’s
war on black money/shell cos and reported direction by the PMO to the IT dept
to look into the DeMo money slashed in various bank accounts may also affect
the overall market sentiment.
Apart from this,
yesterday’s adverse SC verdict on the Jaypee Infratech NCLT/IBC issues may be
also a jolt on the overall NPA resolution process; in any way, even if a
stressed co goes to the NCLT way, there are two options; i.e. actual resolution
(repayment/change in management/ownership) or liquidation.
Both the Govt & banks
are now preferring the resolution process rather than liquidation. But
viability issues of most of the stressed assets may be a huge challenge for the
banks for a meaningful resolution, even with a large hair cut.
SGX-NF
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