Market Wrap: 03/10/2017 (17:00)
NSE-NF (Oct):9867 (+66; +0.68%)
(TTM PE: 25.67; Abv 2-SD of 25; TTM Q1FY18 EPS: 384;
NS: 9859; Avg PE: 20; Proj FY-18 EPS: 418; Proj Fair Value: 8360)
NSE-BNF (Sep):24132 (+66; +0.27%)
(TTM PE: 27.17; Abv 2-SD of 25; TTM Q1FY18 EPS:
887; BNS: 24103; Avg PE: 20; Proj FY-18 EPS: 961; Proj Fair Value: 19220)
For 04/10/2017:
Key support for NF: 9860-9810
Key resistance for NF: 9925-9975
Key support for BNF: 23900-23700
Key resistance for BNF: 24300-24600
Hints for positional trading:
Technicals
indicate that, NF has to sustain over 9925 area for further rally towards
9945/9975-10015 & 10050-10115 area in the short term (under bullish case
scenario).
On the flip side, sustaining below 9905 area, NF may fall
towards 9860-9810 & 9760-9695 area in the short term (under bear case
scenario).
Similarly, BNF has to sustain over 24300 area for further rally
towards 24600-24750 & 24850-25050 area in the near term (under bullish case
scenario).
On the flip side, sustaining below 24250-24100 area, BNF may
fall towards 23900-23800 & 23700-23600 area in the near term (under bear
case scenario).
Indian market (Nifty Fut/India-50) today closed around 9867, surged by around
66 points (+0.68%) after making an opening minutes high of 9896 and closing session
low of 9838 on mixed auto sales nos for Sep despite another subdued Mfg PMI ahead
of RBI tomorrow; market today was under some selling pressure in the last hours
of trade may be because of renewed concern on Govt’s war against black
money/shell cos as news of countrywide crackdown on innumerable bank A/C (s) of
such shell cos flashed.
After opening upbeat around 9895, catching positive global cues
after yesterday’s holidays, Indian
market basically consolidated today ahead of RBI tomorrow, which is expected to
be on a “hawkish hold”, considering overall macroeconomic scenario and stance
of global central banks (Fed/ECB), on their path of QT/monetary policy
normalization. Banks & rate sensitive scrips
were also under pressure ahead of RBI policy tomorrow. Market will focus on RBI/MPC statement along with Patel’s
Q&A (hawkish/dovish/owlish) along with GDP & CPI projection.
RBI may also express concern over inflation due to higher
commodity/oil prices, impact of GST, especially service tax and HRA arrears and
also on food inflation due to uneven distribution or even less than normal
(-5%) monsoon this year.
Today Nifty was supported by RIL, Tata Motors, HDFC, IOC, ITC,
Bharti Infratel, Bajaj Finance, VEDL, Adani Ports & HPCL collectively by
around 52 points, while it was dragged by Power Grid, Maruti, SBI, L&T,
Bharti Airtel by around 10 points altogether. Overall today’s market was
supported by mixed auto sales data for Sep, hopes for GST reform (reduction
& simplification of tax slabs), some form of fiscal stimulus by the Govt,
even if it breach fiscal discipline by one time.
Indian market was today supported by metals, FMCG, auto,
consumer durables, NDFC and some private banks, while dragged by PSBS,
telecoms, Pharma. Banks, having significant exposure to RCOM were under stress
on worries about fate of the huge debt following merger call-off with Aircel. Maruti
was down by around 1% despite 9% YOY growth in Sep sales as the number came
below consensus. Tata motors has gained by around 4% on upbeat domestic sales
figure (above estimate) and electric cars optimism.
Indian
Market Is In Deep Green Catching The Extended Weekend Positive Global Cues
Ahead Of RBI Tomorrow:
RBI may also consider rate cut transmission issues by the banks
and poor credit growth on account of lack of quality & eligible borrowers
and thus may focus more on NPA management rather than an abrupt rate cut. RBI
may wait for another 2-3 quarters for actual GDP & inflation trajectory
after DeMo & GST, before coming to any firm conclusions & further
policy actions.
On the other side, market may rally moderately if RBI takes a
dovish script tomorrow, considering the poor economic activity & slump in
GDP after DeMo & GST fiasco. Although, it may be very unusual for RBI
credibility, but one can’t ignore the possibility of a “Dewali Gift” to the
nation tomorrow, if Patel/MPC cut the rate by 0.25-0.50% to stimulate the
slowing economy from its deepest slump in the last three years ahead of series
of elections in 2018-19.
No doubt, market may also like to hear from the RBI Gov itself
about trajectory of Indian economy amid debate of fiscal stimulus vs fiscal
discipline; so far RBI was silent in this “national debate”, despite it may be
the primary function of a central bank to ensure an appropriate monetary policy
aiming at maximum employment & growth with decent price stability
(inflation).
Market will focus on RBI/MPC statement along with Patel’s
Q&A (hawkish/dovish/owlish) along with GDP & CPI projection.
India’s Sep auto sales so far came upbeat ahead of Festival
seasons after the GST disruptions; but most of these figures are in line with
market estimates or slightly above. Thus, automobiles are supporting the
overall market sentiment today.
On the other hands, some PSBS & also private banks are
dragging the market today on account of RCOM debt fiasco after the co (RCOM)
& Aircel scrapped the merger deal for regulatory headwinds & also owing
to certain other “vested interests” against the deal. Now, RCOM is relying on
spectrum trading & sharing business and a probable tower stake sale deal
with a Canadian PE fund (Brookfield) to repay its huge debt of around Rs.45000 cr.
RCOM will also peruse to restructure its core business of telecom as an
independent co.
Thus, RCOM may be another victim for the telecom disruption
caused by not only R-Jio, but also by high spectrum, infrastructure & other
costs in India for the telecom business. Indian banks has significant exposure
to the stressed telecom sector, which may be turn into a major headwinds not
only for the banks, but also for the Govt & economy as it contributes
significantly for overall employment, infra capex & GDP.
Meanwhile, India’s Markit Mfg PMI for Sep flashed subdued at
51.2 vs estimate of 51.9; prior: 51.2; new orders sub-index at 51.0 vs 51.5
prior in Aug. Although, the Sep PMI data is unchanged wrt to Aug and it’s still
above the boom/bust line of 50, the overall data may continue to point towards
weak output & subdued new business orders/growth after the recent
implementation & disruptions of GST.
So far market is unfazed, may be because such weak PMI data may
be already discounted after terrible Q1FY18 GDP growth at 5.7%, lowest since
2014. Moreover, a slowing economy may be positive for the stimulus addicted
market, as it may put more pressure on RBI to cut rates. The real question is
now that will RBI oblige this time again? Most probably, it will not as ultimately
RBI has to keep the Indian bond yields attractive enough to fund the Govt
deficit, despite all the narratives.
Govt is also trying to address the GST disruptions by tweaking
GST composition schemes from present Rs.75 lakh to Rs.1 cr/PA and amending
certain GSTN filling provisions. As par some reports, Govt may pursue some
types of direct tax reform and also indirect/GST tax reform further for its
simplification and reducing the slabs of taxes. Basically, GST tax slabs should
be one or max two for a country like India, but presently it has 5-6 slabs with
additional cess, which may be a nightmare for SMES/small traders for necessary
compliance.
Today Nifty was supported by RIL, Tata Motors, HDFC, IOC, ITC,
Bharti Infratel, Bajaj Finance, VEDL, Adani Ports & HPCL collectively by
around 52 points, while it was dragged by Power Grid, Maruti, SBI, L&T,
Bharti Airtel by around 10 points altogether.
Globally, most of the Asia-Pacific market today trading in
positive tone amid positive
global cues after USD goes higher for EU political jitters (Catalonia
referendum) coupled with upbeat US ISM Mfg PMI data, hopes for a hawkish new
Fed chair after Yellen and US tax reform optimism. A higher USD is good for
export heavy Asian & EU economy & the market.
Overnight US market rallied to close at another record level on upbeat economic
data, optimism over US tax reform & Q3 corporate earnings overcoming the
hilarious “act of pure devil” of US mass shootings incident at Las Vegas
yesterday.
Overall, it’s like a goldilocks like situation in US economy
with decent real wage growth, improved GDP, lower inflation, steady consumer
spending and upbeat corporate earnings with an environment of low interest
rates. Market may be also assuming that US corporate earnings will be further
boosted once US tax reform/cut proposal get implemented with retroactive effect
from Jan’17 and it seems that the old “Trump/reflation trade” is back in US
stock market again.
DJ-30 rallied by around 0.70%, while S&P-500 closed at
around 2529, up by almost 0.40% and NQ-100 gained by around 0.3%; US market was
yesterday helped by techs, media, health care, banks & financials and also
by gun maker’s shares after the horrific US mass shooting incident. On the flip
side, market was dragged by hotel & resorts related scrips yesterday.
Although, market may be optimistic about Trump’s tax reform
proposal, the legislative passage of the same may be doubtful under the present
format. US stock future (SPX-500) is
now trading around 2528, almost unchanged after Trump refused his foreign sec’s
(Tillerson) effort for a direct negotiations with Kim, terming it a “an waste
of time” as Trump is not interested to follow the “failed lines” of his three
predecessors.
As par latest SK report, NK may be preparing for another ICBM
test between 8th -18th Oct, coinciding with its party
anniversary and China’s party congress. Looking ahead, SPX-500 now need to
break & sustain over 2335 zone for further rally; otherwise it may fall and
sustaining below 2514 area, time & price correction may be more in the
coming days.
Elsewhere, Australian
market (ASX-200) closed around 5701, down by almost 0.50% dragged by energy
(lower oil), banks & financials (dovish RBA), techs & utilities, while
supported by basic resource materials/metals and certain retail foods &
leisure related shares.
AUDUSD is today down by further 0.20% around 0.78113 after RBA holds rate at 1.50% with a dovish
bias as expected with comments like a higher AUD will slow the AU economy and
restrain inflation. But RBA is also concerned about housing bubble in certain
areas of AU along with subdued wage growth and high household debt, affecting
overall economic growth & spending. Today AU building approvals also came
subdued.
Japan (Nikkei-225) closed around 20614, rallied by almost 1.05% on
lower Yen as USDJPY is now gyrating around 113.10 (+0.30%) on US tax reform
& PMI data optimism coupled with a strong stock market, which may pave the
way for Fed for a Dec’17 rate hike. Fed’s BS tapering is also scheduled to
start from Oct and market mat also watch any effect of it on the overall US
economy & the bond market. JP market was today helped by exporters, autos,
banks & financials while dragged by energies.
China & SK markets are closed today and also for the entire week.
Hong-Kong (HKG-33) future is now trading around 28155, up by almost 2.40%
after extended weekend on upbeat China PMI data and targeted RRR cut by PBOC
for the SMES. HK market was helped by China based banks, materials, casino
based stocks on strong guidance by Macau, China automobiles optimism,
techs/internet stocks, while dragged by energies to some extent.
Meanwhile, Crude Oil
(WTI) is now trading around 50.59 almost unchanged after falling to a low
of 50.05 yesterday on renewed concern of supply glut amid increasing number of
US oil rigs (US oil production) coupled with higher than expected OPEC
production in Sep. Also technical factor of excessive long positions (crowded
trade) may be another reason behind recent plunge in oil.
EU Market Is Almost Flat
On Higher EUR & Concerns of Catalonian Referendum Fiasco:
Elsewhere, EU market
is trading almost unchanged at Stoxx-600 (+0.04%) as EUR goes higher on better
than expected PPP data coupled with ongoing political jitters about Catalonian
referendum fiasco. Catalonia is today observing a general strike against Sunday’s
police atrocities and has warned that it will trigger the “secession” soon
through its “irreversible” legislation process.
But market is so far cool to the Catalonian rhetoric as its
President is still non-committal about any date of “separation” as its
equivalent to creation of another EZ country, which may looks not so easy and
in any real scenario of exit, Catalonia may also ensure a “Brexit” type deal
with Spain & other stakeholders, which may be even more tough, considering
UK’s ongoing experience. Also, Spain will ensure by its highest judiciary &
other means to block such “independence” move.
Germany (DAX-30) is closed today for a public holiday (German
unification day), while CAC-40 is up by almost 0.30%, FTSE-100 gained by around
0.25% and IBEX-35 is down by almost 0.45%, dragging the overall regional
sentiment, despite some rebind of Spanish banks after yesterday’s sell off.
FTSE-100 is also being helped by some fall in GBP after terrible
UK construction PMI and airlines stocks after collapse of low cost airlines
Monarch yesterday (hopes of consolidation).Overall, EU market today was also
supported by basic materials.
USD On Back Foot Ahead Of Yellen & NFP Amid Concern Of US Tax Reforms:
SGX-NF
BNF
GBPUSD
No comments:
Post a Comment