Market Mantra: 25/09/2017 (09:00)
SGX-NF: 9964 (-9)
For the Day:
Key support for NF: 9960-9910/9870-45
Key resistance for NF: 10005-10050
Key support for BNF: 24300-24050
Key resistance for BNF: 24575-24675
Hints for positional trading:
Technicals
indicate that, NF has to sustain over 10050 area for further rally towards
10105- 10160 & 10205-10250 area in the short term (under bullish case
scenario).
On the flip side, sustaining below 10030-10000 area, NF may fall towards 9960-9910
& 9870/45-9800 area in the short term (under bear case scenario).
Similarly, BNF has to sustain over 24575 area for further rally
towards 24675-24775 & 24900-25100 area in the near term (under bullish case
scenario).
On the flip side, sustaining below 24525 area, BNF may fall
towards 24300-24050 & 23850-12700 area in the near term (under bear case
scenario).
As par early SGX
indication, Nifty Fut (Sep) may open around 9964, almost flat (-9 points)
tracking subdued global cues after
less than expected margin of victory in both German (Merkel) & NZ (English)
election yesterday. Market may be more concerned about Germany as a far right
wing anti-establishment party (AfD) wins around 13% of votes, far more than
expected while Merkel’s party has won 32% against estimate of around 40% and
main opposition Social Democrats (SD) has won 20%.
Although, a coalition
Govt was expected in Germany this time, the surprised strength of AfD coupled
with anti-soft Brexit approach for UK by the SD may force Markel to rethink
about her pro-immigration & soft Brexit stance once again. Thus, the
overall EU political uncertainty may again gain some momentum, which was somehow
stabilized after Macron win in France few months ago. But, so far EURUSD has
not reacted too much as the overall impact out of German election may be very
limited.
Market may be also
concerned about political uncertainty of Japan, going for a snap poll next
month; although Abe is slated for a victory after his “cool” handling of the NK
ICBM threat so far despite some recent allegations of corruption involving his
close family members for a land related scandal. The margin of victory and
forming of a coalition Govt may matter most also for the JP election as with
German & NZ.
Ahead of official
announcement of the JP election scheduled to be held on 22nd Oct,
Abe may announce a fiscal stimulus package 2 tln Yen shortly for the “real
street” (economy) as the QQQ is failed to stimulate the same so far although it
may be working fine for the “wall street”.
Market may be also concerned
about escalating “war of words” between Kim & Trump and their daily dose of
“entertainment” because a missteps by either of them may be proved as fatal not
only for the financial market but may be also for the entire region and world;
it’s like a “dooms day scenario”!!
Apart from politics,
market may be also concerned about China’s ongoing regulatory tightening in
real estate markets as it was traditionally a major source of growth (economic
activity) for the country; a slowing China may be more bad than a slowing US or
EU; recent S&P downgrade, although may be “toothless” and came very late,
is also an eye opener not for China, but may be also for the entire region
including India.
Overnight, on Friday weekend, US market also closed almost unchanged on NK jitters & US policy squabbling;
US healthcare bill (Trumpcare) may not be passed by this month and thus the
previous Obamacare bill may continue for the time being. This is positive for
the US healthcare (Pharma) cos and thus they have helped the market along with
energies as oil is continuing to hover above $50 on hopes of a quicker
rebalancing.
Telecoms also helped the US
market in the weekend for ongoing M&A buzz between Sprint & T-Mobile
and subsequent consolidation & cost cutting measures in the sector. Banks
also supported the market on higher US bond yields, favourable for their
business models. But Techs/FANG stocks including Apple dragged the market.
Overall, US market may be
now waiting for Trump’s tax reform proposal scheduled to be announced today (corporate
tax may be fixed around 20-22.5%) along with trend of Q3 corporate earnings.
But market may be also concerned about overall impact of Fed BS/QE tapering on
the real economy & the financial market being unknown so far & never
tested before along with escalated levels of “childish” rhetoric between the “little
rocket man” (Kim) & the “deranged dotard man” (Trump).
US stock future
(SPX-500) is now trading around 2500, almost unchanged amid EU political &
NK “earthquake” concern and hopes for tax reform policy details later in the
day today.
Back to home, after
opening almost flat, Indian market
(Nifty-Fut) further fall to the low of 9863 so far on dilemma of Govt’s fiscal
slippages and stimulus to revive the economy from its deepest slumps in the
last three years since NAMO took office.
Indian Govt may be also
concerned about the impact of overall slowing down of the economy after DeMo
& GST and its adverse effect on the employment situation in the country especially
in the informal sector ahead of series of elections next year and also the
general election in the early 2019.
Market may be concerned
that in case of fiscal slippages because of additional Govt stimulus to the
tune of almost $7.7 bln (?), rating agencies may further downgrade India, which
is now just above the junk rating level; if that happens, FPIS may be forced to
trim their investments in the bond & equity market despite hopes of a
widespread recovery from 2019-20.
FIIs are now already in
the selling mode on concern of stretched valuation, political populism by the
Govt ahead of the general election, earnings downgrade for H2FY18 coupled with
fiscal slippages & a slowing economy (falling GDP), despite some “green
shoots” in the economy.
Market may be also
concerned about the effectiveness of Govt’s fiscal stimulus package which may
be too little & too late and may not improve the overall consumer spending
dramatically, because the issue may be structural. The transition from “black
money” oriented economy to “white money” may take another few years to complete
and traditionally almost 30% of India’s consumption may be dependent on the “black
money”. Thus, 30% slump for the Indian GDP since DeMo days may be quite
natural.
SGX-NF
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