Market Wrap: 27/10/2017 (17:00)
NSE-NF (Nov):10360 (-0.30; +0.00%)
(TTM PE: 26.74; Abv 2-SD of 25; TTM Q1FY18 EPS: 386;
NS: 10323; Avg PE: 20; Proj FY-18 EPS: 418; Proj Fair Value: 8360)
NSE-BNF (Nov):24990 (-91; -0.36%)
(TTM PE: 28.20; Abv 2-SD of 25; TTM Q1FY18 EPS: 881;
BNS: 24840; Avg PE: 20; Proj FY-18 EPS: 961; Proj Fair Value: 19220)
For 30/10/2017:
Key support for NF: 10325-10270
Key resistance for NF: 10450-10505
Key support for BNF: 24800-24600
Key resistance for BNF: 25100-25250
Trading Idea (Positional):
Technically, NF has to
sustain over 10450 area for further rally towards 10505-10575 & 10625-10675
zone in the short term (under bullish case scenario).
On the flip side, sustaining below 10425-10395 area,
NF may fall towards 10325-10270 & 10195-10150 zone in the short term (under
bear case scenario).
Technically,
BNF
has to sustain over 25100 area for further rally towards 25250-25500 &
25600 zone in the near term (under bullish case scenario).
On
the flip side, sustaining below 25050 area, BNF may
fall towards 24800-24600 & 24450-24300 area in the near term (under bear
case scenario).
Indian market (Nifty Fut/India-50)
today closed around 10360, almost unchanged (-0.30) after making an opening
session high of 10390 and mid-day low of 10346 in a choppy day of trading; but Nifty spot today made another milestone high at 10366 in the
opening trade itself!!
Indian market today basically consolidated after stellar rally for the last few
days following Govt’s mega stimulus move to recapitalize (bail out) the ailing
PSBS by a proposal of Rs.2.11 tln booster in combination of direct cash
injection and support of recap bonds along with another Rs.6.93 tln for road
infra stimulus. Nifty closed the week almost 1.7% higher on the Govt fiscal
stimulus bazooka of Rs.9.04 tln.
But overall market may be quite cautious about actual mechanism
of the PSBS recap bonds and its ultimate result on resolution of NPA, economic
activity, private capex, credit growth, boost in GDP and earnings. & Govt’s
fiscal deficit.
Market may be quite concerned the whole process of recap bonds
may be quite complex and will take significant time to take a complete shape.
Thus, its positive effect on economic activity & eventually on earnings of
the PSBS, if any, may be also a long term issue. The whole idea of bailing out
the big corporate defaulters through PSBS recaps indirectly by taking larger
hair cuts may be also a big political & systemic risk for the Govt/BJP.
The real reason of muted corporate/MSME credit growth &
tepid private capex in India may be now huge stressed assets, high lending
costs, unviable projects/business and over & above all, lack of eligible
& quality borrowers; liquidity or B/S among most of the PSBS is not an
issue at all, especially after DeMo led low cost deposit surge to the banks.
Market may be also concerned about mixed earnings trajectory so
far in Q2 after muted Q1 and repeated NPA divergence issue of private banks
with RBI, which may be also creating an
atmosphere of trust deficit over their accounting practices and tendency to
hide the potential NPA under carpet. Thus, high valuation multiple of the private
banks may be also rerated by the market going forward as credibility of the
management will be in question.
Market may also focus on GSTN meet on the weekend, especially
for the MSME sector and inclusion of petro products & real estate in the
GST. But frequent changes in GST rates along with overall complex & costly
compliance structure are some of the headwinds for the MSME/small traders.
Today Nifty was supported by Bajaj Fin, Adani Ports, Tata
Motors, TCS, ONGC, Sun Pharma, ICICI Bank, HDFC, Kotak Bank & ZEEL by
around 31 points altogether, while it was dragged by IOC (muted results),
Bharti Infratel, RIL, Yes Bank (huge NPA divergence), HPCL, SBI, Bharti Airtel,
VEDL, HUL & HDFC Bank by around 60 points cumulatively.
Overall, today Indian market was supported by NDFC, Tata Group
of stocks, while it was dragged by energies/OMC, metals, telecoms, techs,
banks/PSBS (-4%); Maruti & ITC close with marginal gain after reported
inline report card.
A strong EU market amid fall in EUR after dovish QE tapering by
Draghi yesterday may have also supported the Indian market sentiment to some
extent and it closed almost unchanged.
Europe Set To Trade Higher Tracking Positive Global Cues Amid Lower EUR After Dovish QE Tapering By ECB:
Asia Continues To Make Fresh Milestone Highs Amid Positive Global Cues On Higher USD After Dovish QE Tapering By Draghi & Earnings Optimism:
USD Tumbled Amid Ongoing Fed Chair Squabbling & Upbeat, But Hurricane Distorted US GDP:
SGX-NF
EURUSD
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