Market Mantra: 17/10/2017 (09:00)
SGX-NF: 10250 (-5)
For the Day: updated at 09:10
Key support for NF: 10220/10190-10150
Key resistance for NF: 10275-10305/10325
Key support for BNF: 24500-24300
Key resistance for BNF: 24875-24950/25050
Hints for positional trading:
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 & 10060 -10015 area in the short term (under bear case
scenario).
Similarly, BNF has to sustain over 25050 area for further rally
towards 25250-25585 & 25795-25975 area in the near term (under bullish case
scenario).
On the flip side, sustaining below 25000-24950 area, BNF may
fall towards 24875-24500 & 24300-24000 area in the near term (under bear
case scenario).
As par early SGX indication, Nifty Fut (Oct) may open edged down around 10250 tracking mixed global cues on renewed NK
rhetoric & Fed chair uncertainty and
domestic earnings optimism, which is so far stable/mixed. Asian market is mixed
amid higher USD and upbeat commodities for China optimism.
USD got some temporary boost in late NY session yesterday on
conflicting news that NK may be interested for dialogue (negotiations) with SK
& US; but soon another reports confirm that in a Russian summit, NK-SK envoy
has exchanged some pleasantries and there is no such dialogue. Later NK also
confirmed that they are not ready to “barter” or negotiate their Nuke arsenals
and go for dialogue unless “war rhetoric” from US completely stops; Nuke is essential
for the NK for their self-defense.
NK has also warned that an all out “Nuke war” may break out at
any time due to US stance of “war mongering” with NK. Although, such NK
rhetoric is nothing new, SK is now on high alert as NK may test another Nuke
enabled ICBM over Pacific ocean to demonstrate its capability to hit US main
lands amid another joint naval exercise involving SK-US. As par another report,
NK envoy may soon travel to SK for dialogues.
There was also some reports that Trump may nominate Taylor, a
known super hawk and a Stanford University economist for Fed chair; as par
Taylor rule, Fed rate should be now around 5.75% instead of 1.25% and he argued
for it many times. But going by the unusual hawkishness, it’s doubtful that
Trump will nominate Taylor for the Fed chair, if he sticks to his academics
(Taylor rule), because in that scenario USD will jump, much to the discomfort
of Trump, who is eager to keep USD down for America’s benefit.
There was another report that Trump is also considering another
candidate Malpass, an economist, who was advisor during Trump election
campaign. Trump is also slated to interview Yellen for the next term!!
Thus all these NK & Fed Chair headlines are affecting USDJPY, which is now trading around 112.10,
almost flat (-0.06%); it has made a high of 112.31 yesterday late NY session on
hopes of NK peace talks and hawkish Fed Chair (Taylor ?); previous Trump
favourite Warsh & Powell may be now out of race. A higher USD may be good
for Asian & EU export savvy equities.
Overnight, US market has gained to close in another trifecta of record highs on
hopes of decent earnings growth in Q3 coupled with some surge in US bond
yields, which is beneficial for US banks & financials. Also, hopes for some
compromise between RNC & DNC for the healthcare & tax reform bill may
have also boosted the market sentiment yesterday after Trump-McConnell meet.
DJ-30 rose almost 0.37% around 22957, just shed of the 23k milestone;
S&P-500 gained by almost 0.18% to close around 2558, while NQ-100 gained by
almost 0.28%. Overall, US market yesterday was helped by banks &
financials, techs (upbeat earnings & guidance by Netflix), while it was
dragged by healthcare (end of insurers subsidy proposal by Trump).
US market is now eagerly waiting for Trump’s corporate tax rate
cut proposal as it may be a primary driver for the recent rally in the stock
market. As par some estimates, if corporate tax brought down to 20-25%, then it
may positively affect the earnings of the corporates by 0.50-1.00%; but
retroactive treatment from Jan’17 may be also a big uncertainty.
US stock Fut (SPX-500) is now trading around 2558, almost flat (+0.04%) ahead of EU
market openings. Looking ahead, SPX-500 now has to sustain above 2565-2575 area
for 2595-2620 zone; near term support is now around 2550-2540 zone followed by
2530.
EURUSD is now trading around 1.1776, edged down by almost 0.17% on
Catalonian political uncertainty as by day after tomorrow, the pro-independence
leadership (Prez) has to clear his stance officially. Although the Catalonian
issue is not good for the Spanish equity, it may be good / mixed for Dax-30/other
EU markets as EUR is getting lower.
GBPUSD is now trading around 1.3255, almost unchanged (+0.02%) on
Brexit squabbling (hard of soft); a lower GBP is also good for UK export heavy
FTSE-100.
Back to home, after opening edged down, Indian market (Nifty-Fut/India-50) is now consolidating around
10250, almost flat and made another fresh record high in Nifty Spot at 10252
before EU market opening. & ahead of earnings dump.
Indian market may focus on Q2 earnings, which is so far mixed
& stable and largely in line with expectations. But, considering the
present stretched valuation at TTM PE of over 26.50, Nifty EPS need to catch
the surging PE.
Since March’14, Nifty has rallied by almost 53% till day (from
6704 to 10250 now), but Nifty EPS has grown by only around 8.45% over the same
period (from 355 to 385 till Q1FY18-TTM); thus earnings need to catch up the
rally, otherwise the market may face harsh reality despite power of domestic
liquidity and pockets of good earnings growth & some green shoots in the
economy.
Market may be running much ahead of the reality in this global
rally of “goldilocks” (decent growth with little inflation).
SGX-NF
SPX-500
No comments:
Post a Comment