Indian Market May Continue To Focus On PSBS Recaps
Mechanism & Earnings Trajectory; Yes Bank NPA Divergence Fiasco May Cause A
Sense Of Trust Deficit On The Whole Pvt Bank Space & The Sector May Be
Rerated
Market Mantra: 27/10/2017 (09:00)
SGX-NF: 10395 (+38)
For the Day: updated at 09:10
Key support for NF: 10325-10270
Key resistance for NF: 10450-10505
Key support for BNF: 24800-24600
Key resistance for BNF: 25250-25500
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 area, NF may fall towards 10375-10325 &
10270-10195 zone in the short term (under bear case scenario).
Technically,
BNF
has to sustain over 25250 area for further rally towards 25500-25600 & 25775-25950
area in the near term (under bullish case scenario).
On
the flip side, sustaining below 25200 area, BNF may
fall towards 25000-24800 & 24600-24450 area in the near term (under bear
case scenario).
As par early SGX indication, Nifty Fut (Nov) may open around 10395, up by almost 38 points
tracking positive global cues amid lower EUR after dovish QE tapering by ECB yesterday as highly expected
coupled with renewed hopes for a hawkish Fed leadership and US tax reform
optimism; USD is higher and a dual
combination of lower EUR & higher USD is good for export savvy Asian &
EU markets.
EU markets were also upbeat yesterday on lower EUR after dovish QE
tapering scripts by Draghi coupled with signs of truce in Catalonian tensions;
but that may be short lived as Catalan leaders has decided not to go for an
immediate snap election in lieu of separation; Barclays was also in pressure
for muted earnings. FTSE-100 has also gained on lower GDP amid Brexit
uncertainty.
Also, EUR may bounce
back later today on another trial balloon floated by ECB that after Sep’18,
they may end the QE purchase (APP) completely by a short tapering from Oct’18
to Dec’18 @20/10/5 BLN EUR/pm, subjected to satisfactory inflation & other
economic conditions.
USD was also higher amid
reports that Trump may have finally chosen two candidates for Fed (Taylor &
Powell) and Yellen, Warsh, & Cohn are completely out of race now. Although
it’s not final as Trump is changing his mind almost every day, a possible dual
combination of Powell (Fed Chair) & Taylor (VC) may be more hawkish than
Yellen/Warsh. Market is expecting that Trump will end this Fed suspense before
3rd Nov, his long Asia trip.
USD got further boost yesterday, after US house
clears a step (budget bill) towards the tax proposal by a narrow margin, paving
the way for the US senate to pass easily the tax reform bill later with a
simple majority, instead of 60 votes; now the text of the draft bill will be
released on 1st Nov by a senate committee.
Overnight, US market closed mixed on earnings push & renewed optimism about US
tax reform legislation, a dovish QE tapering by Draghi and guidance boost by Twitter
& Du-Pont. But higher USD/US bond yields, hovering above 2.46%, may have
also affected the overall US market sentiment yesterday along with some
Biotechs & Healthcare names due to renewed concern of Amazon led
disruptions & some muted report cards.
There were some reports that Amazon has got distribution
licenses for pharma products in a number of US districts. Also, Trump’s tough
stance regarding increasing drug addiction in US (opioid crisis) and declaring
the same as “national public health emergency” has affected the overall
healthcare sector yesterday.
DJ-30 closed almost 0.31% higher, S&P-500 edged up by almost 0.13% to close at around 2560, while
NQ-100 edged down by 0.11%. Market
may be also concerned for earnings trajectory amid mixed Q3 tend so far and
already stretched valuations; so far EPS growth in Q3 is around 5.3% vs
estimate of 8%; prior: double digit growths in Q1/Q2.
US stock future (SPX-500) is now trading around 2562, almost flat, after post market
earnings boost by tech trifecta (Amazon, Microsoft, Google parent Alphabet).
Back to home, Indian
market (Nifty Fut/India-50) is now trading around 10350, edged down by
around 0.10% after opening around 10371; market is basically consolidating ahead
of EU market opening, which may open around +0.3% in DAX-30 on lower EUR &
Catalan truce optimism.
Market may focus on PSBS recaps mechanism as the whole process
may be quite complex and will take significant time to take a complete shape
and its positive effect on economic activity & eventually on earnings of
the PSBS, if any.
Market may also focus of deluge of Q2 earnings; buy repeated NPA
divergence issue of Yes Bank & certain other private banks may also be
creating an environment 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 relooked by the market.
SGX-NF
No comments:
Post a Comment