Nifty May Open Gap-Down On Cautious Global Cues Amid China Party Conf & Fed Chair Uncertainty And Terrible Report Card From Axis Bank, Which May Be Indicating That India’s NPA Woes Is Far From Over

Market Mantra: 18/10/2017 (09:00)

SGX-NF: 10220 (-36)

For the Day: updated at 11:10

Key support for NF: 10190-10150

Key resistance for NF: 10275-10325

Key support for BNF: 24500-24300

Key resistance for BNF: 24875-24950/25050

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 around 10220, gap-down by almost 36 points on mixed global/Asian cues amid China Party Congress & Fed uncertainty coupled with terrible report card from Axis Bank yesterday, which may be indicating that India’s NPA woes is far from over.

Overnight US market edged up on mixed earnings report card and lower USD after reports that Trump may not appoint Taylor, an ultra hawk for the Fed chair as earlier speculated by the market, simply because Trump want to see USD lower for the benefit of US economy, export competitiveness, corporate profit and imported inflation. 

As par latest report, Yellen may be now the front runner for the post for her inflation dove stance, experience, Fed policy continuity, political acceptance and her balancing jawboning act. Also under Yellen, US stock market is at record high, much to the comfort of Trump and thus he may not take any undue risk at this fragile moment of time amid ongoing NK geo-political tensions and his own political headwinds.

US market also got some boost from healthcare yesterday after reports that RNC & DNC has made a deal for the affordable health insurance issues for the average Americans and thus the same may continue; earlier this was disapproved by Trump as a part of Obamacare.

DJ-30 edged up by almost 0.18% to close at 22997, after making a fresh milestone high of 23002; S&P-500 closed almost flat at 2559 (+0.07%), while NQ-100 edged down by around 0.01%. 

Overall, US market was helped by healthcare (upbeat report card & guidance from United Health and J&J along with hopes for Obamacare affordable/subsidized insurance continuation) while dragged by banks & financials (lower USD bond yields & muted guidance from Goldman Sachs despite better than expected earnings), mixed techs (Netflix was down, but IBM surged in post closing trade on upbeat earnings) & Airlines (Boeing was down marginally after rival Airbus took a 50% stake in Bombardier).

USDJPY is now trading around 112.20, almost flat as Yellen may be ultimately preferred by Trump to continue as Fed leader, who is seen less hawkish than other frontline contenders like Taylor or Warsh. All eyes may be now tomorrow on Yellen’s “interview” with Trump; as par reports, Trump may end this Fed Chair suspense before starting his long Asian tour on 3^rd Nov.

USDJPY got some support in the morning Asian session today after BOJ’s Sakurai supports current accommodative monetary policy framework of BOJ to support overall JP economic activity and the elusive 2% inflation goal. 

Although overall US economic data was good yesterday (import/export price index, IIP, NAHB home index), USDJPY could not sustain the 112.50 level on concern of lingering NK tensions & Fed Chair suspense; today market may focus on Fed’s Beige book and housing data. Although Dec’17 rate hike is almost certain now, Fed dot-lots for 2018 is clearly uncertain, despite yesterday’s Harker hawkish jawboning of 3 rate hikes in 2018.

EURUSD is now trading around 1.1761, edged down by 0.04% on simmering Catalonian tensions & muted EU economic data yesterday coupled with buzz of a dovish ECB QE tapering @30-40 bln EUR till Sep’18 from present 60 bln EUR/pm. All eyes may be on Draghi today at Frankfurt convention. 

As par some reports, Catalonian CUP party (pro-independence) may declare the “independence” formally within days as Spanish Govt deadline to denounce the same nears tomorrow.

Also, political tensions in Germany (coalition Govt formation with Merkel), changing political landscape in Austria, five star anti-EU movement in Italy and NPA fiasco also in the Italian banking system is affecting the EUR at this point of time. But, a lower EUR is good for EU stocks despite Catalonian headwinds.

GBPUSD is also edged down by 0.08% and now trading around 1.3180 on less than expected hawkish scripts from various BOE policymakers including Carney and in line with expectations UK CPI at 3% yesterday. As par BOE, the 3% CPI may be the top for UK economy.

Overall it seems that BOE is ready for the Nov’17 rate hike as being highly expected by the market, but beyond that 2018 rate hike projections & QE tapering (QT) may be doubtful on Brexit uncertainty. A lower GBP is good for the export savvy UK stock market despite Brexit & Political squabbling. 

Back to home, Indian market (Nifty Fut/India-50) is now trading around 10210, down by almost 0.40% tracking cautious Asian market (China Party Congress) ahead of EU opening and muted report card from Axis Bank yesterday coupled with Wipro (subdued guidance) & Bajaj Auto.

SGX-NF