Market Mantra: 27/09/2017 (09:00)
SGX-NF: 9895 (+39)
For the Day:
Key support for NF: 9860/9825-9775/9745
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 9845/9825-9775/9745 & 9695-9645 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 9895,
up by almost 39 points tracking positive momentum in HK market and mixed global cues amid renewed concern
of a NK ICBM retaliation after Trump imposed more sanctions on Kim’s & other
NK individuals’ foreign assets/financial networks.
Trump also commented that although US is perusing its diplomatic
effort to “peacefully” denuclearize NK, US is also “totally prepared to use
devastating military forces” against NK!! As par Trump, previous political
regime in US should fix this NK issue 25 years ago rather than allowing it to
at the current nuke enabled ICBM stage and thus he is “seeing” how to fix this
legacy problem now.
Although, China is actively “cooperating” to impose US/UN led
sanctions on the isolated nation (NK), China may be also against any “regime
change” idea in NK. As par some military experts, it’s very doubtful for NK’s
technical ability to strike down a US bomber plane. But market may be anxious
about any miscalculation from either side amid escalation of hot rhetoric
between Kim & Trump, although market is still cool assuming that diplomacy
will prevail over war hysteria.
USD yesterday got some boost after partial disclosure of RNC tax
plan involving individual tax rate; market may be now waiting for the corporate
tax plan slated to be released later in the day today; as par some reports it
may be fixed around 20-22.5% against Trump’s wish of 15%.
USD bulls also got some boost yesterday after Yellen sounds “modestly” hawkish
advocating for a Dec’17 rate hike even if US CPI stays subdued for concern of
overheating of the economy coupled with her comment that “uncertainties strengthen
case for gradual rate hikes”.
Yellen believes that as US job market is going tighter, the
resultant wage inflation may cause sudden surge in the inflation and in that
scenario, if Fed does not go for gradual rate hikes now, it may found itself
behind the inflation curve and may have to hike abruptly later causing more
pressure on the economy, even another recession.
Thus, now it seems that Yellen is determined to hike in Dec’17
just for the credibility of Fed’s dot-plots irrespective of the trajectory of
US inflation & other economic data except any terrible geo-political events
and subsequently market (FFR) is now showing almost 70% of a Dec rate hike
significantly up from around 40% few weeks ago, before Fed meet.
Yellen & her team (FOMC) thus planning for a Dec’17 rate
hike as par Fed’s 2017 projections of three hikes in 2017 and may left the rest
of 2018 rate hikes (another three ?) to the next Fed team under a new
leadership as Yellen may not get the extension from Trump this time.
Thus, although a Dec’17 rate hike looks certain as of now,
market may be doubtful Fed’s 2018 dot-plots credibility & subsequent rate
hikes. In that scenario, it may be looked tough for the USDJPY to sustain above
115 amid ongoing NK-US “war of words” despite a hawkish Fed, optimism about US
tax reform.
A higher USD may be good for export heavy Asian as well as EU
markets, but may not be good for the US market & its economy. Despite a
hawkish Fed eager for normalization and some visibility of Trumponomics/US tax
reform, USD may be within the defined range of 108/110-115 in the coming days
as NK jitters is helping it to come down “time to time” in line with Trump’s
talk down effort/preference to keep the USD lower for the benefit of US.
The surge in US defence capex & exports is not only acting
as a fiscal stimulus for US economy, but also for the SK & JP economy as
they are also on a defence spending spree to “counter NK attack (rhetoric)”.
Thus, the legacy NK geo-political tension may be a permanent feature of the financial
market as it’s helpful for the great “volatility” and market is also finding it
as an “opportunity”.
Overnight, US market closed almost flat tracking disappointment of US health care
bill; but some bargain hunting in the battered down techs/FANG stocks has
helped the market along with healthcare (failure to repel Obamacare) and banks
& financials (higher US bond yields).
Both DJ-30 and S&P-500 closed almost flat, while NQ-100
gained around 0.20%; US stock future
(SPX-500) is now also trading almost unchanged around 2495 tracking mixed Asian
cues ahead of EU market opening.
Back to home, after opening is positive territory, Indian market (Nifty Fut) slips again
and is now trading around 9825, down by almost 0.40% on dilemma of Govt’s fiscal
stimulus & fiscal discipline to revive the slowing economy ahead of general
election in late 2018 or early 2019 along with series of state elections.
Sudden slowdown of the economy after DeMo & GST along with
ongoing effort of deleveraging & credit tightening, war against NPA may be
also affecting the overall employment situation in the country, which in effect
may be a significant political risk & source of social instability for the
Govt, facing the next general election, despite no credible opposition
party/leader as of now.
Indian market sentiment may be also affected today after a
Reuters poll of economists predict that RBI will not only hold rates in Oct,
bit may also on hold for rest of the FY-18; economists has also slashed their
GDP projections for FY-18 with upwards projection of CPI above RBI 4% target
for this FY.
SGX-NF
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