Market Mantra: 01/09/2017 (09:00)
SGX-NF: 9935 (-7)
For the Day:
Key support for NF: 9940-9905/9865
Key resistance for NF: 9980-10030
Key support for BNF: 24200-24000
Key resistance for BNF: 24400-24575
Hints for positional trading:
Time & Price action
suggests that, NF has to sustain over 9980 area for further rally towards
10030-10075 & 10155-10200 area in the short term (under bullish case
scenario).
On the flip side, sustaining below 9960 area, NF may fall
towards 9905-9865 & 9800- 9750 area in the short term (under bear case scenario).
Similarly, BNF has to sustain over 24400 area for further rally
towards 24525-24575 & 24675- 24775 area in the near term (under bullish
case scenario).
On the flip side, sustaining below 24350 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 start the month almost unchanged amid positive
global/Asian cues tracking an upbeat China Mfg PMI, but a terrible Indian
Q1FY18 GDP released yesterday.
Overnight US market closed
in positive helped by techs & healthcare stocks coupled with some fall in
USD & month end portfolio/fund flow adjustment which may be positive for US
economy & market to some extent; DJ-30 closed almost 0.30% higher, while
gained around 0.57% to close at 2472 and NASDAQ rallied almost 0.95% higher at
another life time high.
Overall, USD was under
pressure on concern of a subdued Aug US NFP job data to be released later in
the NY session today coupled with mixed US economic data and some dovish
comments from US TSY Sec, advocating for a weaker USD for benefit of US exports
(trade) and month end fund flow adjustments.
Historically, Aug US NFP
data may be on the weaker side at least for the preliminary release due to
seasonal (summer holiday) factor; although market is expecting a headline NFP
of 180k on back of blockbuster ADP job data day before yesterday, there may be
high probability that it may miss the figure by at least 54k as par some past
historical trends; thus today even if NFP flash at around 180k or above with average
hourly earnings at 0.3% on MOM basis against estimate of 0.2%, USD may rally.
Market is expecting an US
unemployment rate at 4.3% for Aug; but overall market may not be concerned
about absolute number of NFP figure, but it’s concerned about the US wage
growth, which is vital for discretionary consumer spending and subsequent
reflation of the economy. As of now, market has already discounted no rate hike
by Fed in Dec’17 as FFR is now below 30%.
Back to home, Indian market may today focus on the
Mfg PMI for Aug after terrible GDP released yesterday to gauze the extent of
recovery in the Post-GST & DeMo period. Mfg PMI is expected to come around 49.3,
still below the boom/bust line of 50 against prior figure of 47.9,which was
affected by Pre-GST disruptions & destocking, one of the primary factors
behind yesterday’s shocking GDP numbers at 5.7%, almost at 3 years low and
stripped the tag of fastest growing global economy to China (6.7%).
Apart from the GST blues,
adverse effect of DeMo, stressed corporates & Indian households BS and huge
banking NPA, lack of private investments may be also responsible for the consistent
lower trajectory of Indian GDP for the last few quarters.
Although, unfavorable WPI
deflator may be also one of the reasons behind the tepid trend of GDP, it may
be also notable that when inflation of an economy is hovering around 2% over
the last few quarters, the GDP can’t grow by over 6% consistently; thus there
may be serious discord between the Indian CPI & GDP calculation methodology
and either one of them is wrong.
Also, Indian corporate profit
is not growing as par assumed/projected GDP growth of over 7%; in that
scenario, Nifty EPS should grow above 15-20%, which is not the case. In any
way, a combination of lower inflation & lower GDP growth may be ideal for
another rate cut by RBI to stimulate the economy; but considering the overall
situation of stressed twin BS, it may be very doubtful that RBI will listen to
the Govt/domestic audience this time.
Another worrying factor
may be that for the last few years, Indian GDP may be heavily dependent on Govt
capex as private capex is still very subdued for various reasons. But this
trend may be also affecting the fiscal math of the Govt, which is committed for
3.2% fiscal deficit in FY-18. As the Govt already exhausted almost 92% of its
budgeted fiscal deficit by July’17, its fiscal math may be in strain now.
Thus, Govt is not ready
to sacrifice any types of revenue and moreover, still perusing the RBI for any
DeMo related windfall gain!! Thus, we may see more war on black
money/corruption for better tax compliances & revenue collection in the coming
days to counter the adverse DeMo report from RBI.
Indian market may also
closely watch the big cabinet rejig by the Govt in the weekend to do more on
policy & reform front; but lack of credible names (heavyweights) may be
another headwind for the NDA Govt since it took office in 2014 and thus,
maximum workloads may be limited to few big names within the Govt, hampering
the overall pace of reform, which may be now on the slower track; it need to be
on the fast track.
Just now, Indian Mfg PMI
for Aug flashed at 51.2, much above the 50 mark and the market estimate of
49.3; this is definitely a good news after the shocking GDP yesterday, but may
be bad news for the stimulus addicted market as rate cut hopes may have
diminished as economy is limping back to the new normal.
SGX-NF
No comments:
Post a Comment