Market Wrap: 18/10/2017 (17:00)

NSE-NF (Oct):10247 (-7; -0.07%)

(TTM PE: 26.52; Abv 2-SD of 25; TTM Q1FY18 EPS: 385; NS: 10211; Avg PE: 20; Proj FY-18 EPS: 418; Proj Fair Value: 8360)

NSE-BNF (Oct):24391 (-264; -1.07%)

(TTM PE: 27.69; Abv 2-SD of 25; TTM Q1FY18 EPS: 878; BNS: 24314; Avg PE: 20; Proj FY-18 EPS: 961; Proj Fair Value: 19220)

For 23/10/2017:

Key support for NF: 10190-10150

Key resistance for NF: 10275-10325

Key support for BNF: 24400-24000

Key resistance for BNF: 24600-24950

Hints for positional trading:

Technicals indicate that, NF has to sustain over 10325 area for further rally towards 10380 -10455 & 10495-10585 area in the short term (under bullish case scenario).

On the flip side, sustaining below 10305-10275 area, NF may fall towards 10190-10150 & 10125/10060 -10015 area in the short term (under bear case scenario).

Similarly, BNF has to sustain over 24600 area for further rally towards 24855-24950 & 25050-25250 area in the near term (under bullish case scenario).

On the flip side, sustaining below 24550 area, BNF may fall towards 24400-24300 & 24100-24000 area in the near term (under bear case scenario).

Indian market (Nifty Fut/India-50) today closed around 10247, almost flat (-0.07%) in another day of consolidation after making an opening session low of 10195 and late day high of 10252.

Indian market today opened gap down around 10229 (-0.29%) on mixed global/Asian cues amid China Party Congress & Fed Chair uncertainty coupled with terrible report card from Axis Bank published yesterday, which may be indicating that India’s NPA woes is far from over.

Market was further dragged by banks on concern of bad loans, but recovered quite smartly on stable EU market amid lower EUR and supported by rally in RIL, which soared by over 4.5% and contributed to Nifty by almost 38 points today.

Oil to telecom & retail giant (RIL) today surged to life time high of almost 918 on $1.4 bln JV (with BP) investment plan for NG from KG-D6 in Bay Of Bengal (satellite gas field) after recent meeting with PMO to shore up private capex in India’s energy infra to make the nation self reliant.

Apart from this NG capex story, overall optimism about energy (higher oil prices), telecom & even retail (festive season) may have boosted the stock (RIL) today and save the overall market from plunging further in the last day of “Samvat 2073” and helped Nifty to close the “Samvat” year (Hindu Calendar) with over 16% gain.

Axis bank report card published yesterday after market hours is clearly showing that India’s NPA fiasco is far from over and it may be a structural problem in power, iron & steel; telecom sector may be also going for another sectoral stress, if not intervened by the Govt over policy front; Axis Bank today closed over 9% lower today and dragged Nifty 29 points alone.

Overall market may be also cautious about stretched valuation ahead of long weekend Diwali holiday from tomorrow (after a short evening trading session) amid various important geo-political events like Catalonian issues, JP election outcome on Sunday and ongoing NK tension.

Also, dual combination of higher USD & higher oil is not good for the import savvy Indian economy, although a higher USD may be good for export savvy Nifty index.

Today Nifty was supported by RIL, HDFC Bank, ITC, Power Grid, Kotak Bank, IBULLS HSG, ONGC, Wipro, NTPC & Tata Motors while it was dragged by Axis Bank, ICICI Bank, Bharti Infratel, SBI, Yes Bank, HUL, HDFC, Infy, HPCL & IOC.

Overall, Indian market was today supported by energies, power, mixed FMCG , while dragged by banks, telecoms, healthcare, techs, consumer durables, metals & auto.

Elsewhere, Australia (ASX-200) closed almost unchanged at 5890 after touched a five month high; it was helped by exporters, utilities, health care, industrials, financials/smaller banks while dragged by “big four” banks, telecoms, metals today.

AUDUSD edged down today and is now trading around 0.7837 (-0.16%) on subdued Westpac Leading Index, indicating below trend momentum; overall RBA minutes were less dovish yesterday and coupled with that China optimism is also supporting the AUD broadly, although a lower AUD is helpful for AU export savvy market. But as par Fitch survey, China slowdown, global QT and domestic housing bubbles are now the main concerns for AU economy.

Japan (Nikkei-225) edged up by almost 0.13% and closed around 21363 on mixed exporters (drops in Yen), energies, health care but dragged by automakers, Kobe steel fiasco, banks & financials.

China (SSE) closed around 3382, up by almost 0.29% after a long opening address by China’s Prez Xi in the twice a decade party congress today, in which he batted for market economy by commenting that “let the market play a decisive role in resource allocation”; i.e. China will deliver further policy reforms as market is expecting.

China Prez further stressed for “one China principle”, zero tolerance for corruption within the party and for deeper reforms in financials (market oriented FX rate, interest rate & relaxation for FPI/FDI) with ongoing effort of deleveraging & cutting of overcapacity).

Today PBOC fixed mid-point of USDCNY at 6.5991 vs 6.5883 yesterday with net injection of 270 bln Yuan in order to keep liquidity at reasonable level during the party congress in order to keep the market stable. PBOC is committed to keep Yuan at stable level without much depreciation. Market is concerned about China’s debt bomb & over leveraging, industrial over capacity and all focus may be now on tomorrow’s China GDP.

Today, China market was helped by banks & financials, utilities, consumers, health care, while dragged by property developers after comments by Xi that the 1^st house is for living & not for speculation and trading, which is seen as an attempt by China to contain its housing bubble.

Hong-Kong stock future (HKG-33) is now trading around 28670, almost unchanged on China’s attempt to contain its rising housing bubble. HK market was today dragged by property developers, techs/internet stocks (Tencent), Apple suppliers, while it was helped by China based banks & financials, insurers and overall China reform optimism.

Meanwhile, Crude Oil (WTI) is now trading around 52.07, up by around 0.37% on Kurdish-Iraq conflict and some concern of lower outputs or supply disruption from that area coupled with drop in US crude stockpiles in the API report overnight (bigger than expected draw in US crude inventories). All eyes may be now on the official EIA data with concern for US oil supply glut.

European Stocks Are In Goldilocks Rally On Lower EUR, China & Earnings Optimism; German Market Surged To Record High

EU stocks are upbeat today including Spain on lower EUR and earnings & growth optimism shrugging off the simmering Catalonian tensions; it’s like a ‘goldilocks” rally with decent economic and earnings growth but not a runaway inflation, thus ensuring a modest but steady consumption. Also a well thought & balanced speech by China’s Prez today in the party congress may have boosted the overall risk-on sentiment on hopes of further financial reforms by the 2^nd largest economy in the world.

EUR was lower on talks of dovish QE tapering coupled with ongoing EU political concern and a German constitutional verdict in favour of ECB QE. Stoxx-600 is up by almost 0.36%, while DAX-30 gained by also around 0.37%, CAC-40 gained by almost 0.45%, FTSE-100 is up by 0.40% and IBEX-35 rallied by almost 0.60%. Export heavy DAX-30 scaled a record high of 13087 today on lower EUR, China optimism and mixed earnings

Overall, EU market was today helped by exporters (lower EUR), consumer goods, healthcare, while dragged by banks & financials (muted earnings, Catalonian tensions and concern for Italian NPA), energies & telecoms.

All eyes may be now on Spain/Catalonia tomorrow as Spanish deadline looms amid reports of a symbolic declaration of independence by Catalonian CUP party. Catalonian based banks are on the back foot and some cos are already considering shifting their base/HQ out of the region amid simmering political tensions & uncertainty.

Overall Q3 earnings & guidance is mixed so far in EU, which is expecting a decent YOY growth of 4.5% amid recent strength of EUR.

FTSE-100 was supported by some drops in GBP on muted UK job data (real wage growth) coupled with ongoing Brexit squabbling. As par latest report, UK may prefer to exit without any deal rather than a bad deal, whereas EU is still unsure of UK’s negotiation stance!!

Overall UK market was helped today by exporters, retailers, media/publishers, while materials/miners were mixed and airlines were down along with Reckitt on muted guidance.