Nifty May Soared By Almost 59 Points At Open Amid Upbeat Global Cues As Kim Celebrated The NK Independence Day With His Nuke Scientists Instead With A Real Nuke/ICBM And Less Damage In US By Irma Hurricane Than Expected

Market Mantra: 11/09/2017 (09:00)

SGX-NF: 10005 (+59)

For the Day:

Key support for NF: 9980/9940-9905/9885

Key resistance for NF: 10050-10090

Key support for BNF: 24300-24200

Key resistance for BNF: 24525-24675

Hints for positional trading:

Time & Price action suggests that, NF has to sustain over 10050 area for further rally towards 10090-10160 & 10205-10250 area in the short term (under bullish case scenario).

On the flip side, sustaining below 10030 area, NF may fall towards 9980/9940-9905/9885 & 9830-9750 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 area, BNF may fall towards 24300/24200-24000 & 23850-23700 area in the near term (under bear case scenario).

As par early SGX indication, Nifty Fut (Sep) may open around 10005, up by almost 59 points tracking positive global cues after NK’s Kim “surprised” the world/market by celebrating the much awaited NK independence (celebration) day with his core team of nuclear scientists & techs personnel involved in the latest H-bomb test rather than testing another Nuke/ICBM.

Global risk-appetite further boosted by some reports that China is imposing some restrictions on NK based banks and NK officials may also start some types of official diplomatic talks with US; there was increasing political pressure on NK leadership to come to the negotiation table and US is also planning for an UN sanction of oil supply cut and freeze of Kim’s personal financial assets outside NK.

Although, such US sanction against NK will be highly objected by China & Russia, especially for the oil supply cut, both China & Russia are doing their best to defuse the Korean tensions by adopting a balancing approach, so that US could not attack NK preemptively. But, there is every possibility that NK may again test a Nuke or an ICBM in the days ahead to demonstrate its defence/attack capability.

Global risk sentiment also boosted this morning after Irma hurricane hits US with less than expected intensity and thus the overall damage may be much less than earlier expected; although it may be still huge for the US economy, which may also give Fed another excuse to be on hold in Dec’17.

Also, PBOC (China) regulatory action on the weekend to slash the extra margin requirements for trading in offshore CNY forward contracts may be positive for the USDCNY and PBOC is also trying to gradually making Yuan a complete free float currency after it made it stronger for the last few months; USDCNY was today fixed just below 6.50 mark, whereas USDCNH has strengthen above 6.52 in the morning trade today.

Overnight, on Friday weekend, US market closed mixed on forecast of less intensity of Irma coupled with earlier plunge of USD, after Trump tries to dump the US debt limit regulations and dovish Fed speak; market is now almost certain that Fed is not going to hike in Dec’17. USD/US bond yields was also under pressure for US policy & political paralysis, despite some temporary boost of US debt limit extension legislative win by Trump.  

DJ-30 was up by 0.06%, while S&P-500 lost 0.15% to 2461 and NASDAQ dragged by almost 0.59%; insurance cos helped the US market on forecast of less damage out of Irma; but it was dragged heavily by Equifax on data breach and some gun makers/retailers.

Also, passage of US debt limit & Harvey relief find by the US house have boosted the US market sentiment on Friday, although it was on expected line. A lower USD may be also good for the US economy (export & imported inflation), corporate warnings and the market.

US stock future (SPX-500) is now trading around 2474, up by almost 0.48% tracking global risk-appetite after Kim’s inaction over the weekend and less damage from Irma. Looking ahead, SPX-500 has to sustain above 2485-2505 level for further rally; otherwise expect some correction.

Indian Market May Focus On High GST Input Tax Claim Figure:

Back to home, after opening in upbeat mood tracking positive global cues, Indian market (Nifty-Fut) may focus on EU reaction on NK inaction coupled with some domestic issues like stretched valuations, NPA resolution, auto sales numbers from SIAM, ongoing Govt’s war on black money, extension of trading hours controversy by SEBI and CPI report later in the week.

But, some reports that out of 95k cr GST collections in July, almost 35k cr was made as input tax claims (ITC) by the industry/trade as VAT/ED drawback (paid) amount for the transitional period. Although, Govt is examining the huge ITC claims, it may be negative for the GST collection (fiscal math) amount, if comes true. Also, GSTN glitch and subsequent delay in return filling & processing may be negative for cash-flow of the states and also for the central Govt.

Also, ongoing squabbling about frequent GST rate tinkering for various products, especially for the automobile sector may not be good for the overall economy & GST mechanism.

SGX-NF