Market Wrap: 11/10/2017 (17:00)
NSE-NF (Oct):10117 (+124; +1.25%)
(TTM PE: 26.22; Abv 2-SD of 25; TTM Q1FY18 EPS: 385;
NS: 10096; Avg PE: 20; Proj FY-18 EPS: 418; Proj Fair Value: 8360)
NSE-BNF (Sep):24382 (+271; +1.12%)
(TTM PE: 27.75; Abv 2-SD of 25; TTM Q1FY18 EPS:
878; BNS: 24361; Avg PE: 20; Proj FY-18 EPS: 961; Proj Fair Value: 19220)
For 13/10/2017:
Key support for NF: 10085-10035
Key resistance for NF: 10165-10205
Key support for BNF: 24300-24000
Key resistance for BNF: 24600-24800
Technicals indicate that, NF has to sustain over 10165 area for
further rally towards 10205-10275 & 10325-10380 area in the short term
(under bullish case scenario).
On the flip side, sustaining below 10145 area, NF may fall towards
10085-10035 & 9990-9950 area in the short term (under bear case scenario).
Similarly, BNF has to sustain over 24600 area for further rally
towards 24800-25050 & 25250-25500 area in the near term (under bullish case
scenario).
On the flip side, sustaining below 24550 area, BNF may fall
towards 24300-24200 & 24000-23750 area in the near term (under bear case
scenario).
Indian market (Nifty Fut/India-50)
today closed around 10117, at day high, surged by almost 124 points (+1.25%),
boosted by a late hours rally; it made an opening session low of 9995.
Indian market today opened around 10118, gap-up by almost 36
points tracking positive global/US/HK cues amid dovish FOMC minutes & Q2
earnings optimism and consolidated till EU market opening. But it caught a bid
after some positive EU market momentum as EUR goes down on Catalan tensions.
Also, in line with estimates results from Indusind Bank coupled
with hopes for a block buster result from RIL (to be released tomorrow after
market hours) may have ignited the sudden short covering and some value buying
today.
Indian market sentiment was further boosted today on upbeat direct
tax collection figure and a “Diwali Gift” by the Govt for around 8 lakh
teachers & educational staffs for the 7-CPC salary increments along with arrears.
Basically, Indian market today tried to catch up the global
market, most of which are at multiyear milestone highs amid earnings & growth
(PMI) optimism despite ongoing geo-political tensions involving NK.
Today Nifty was supported by RIL (earnings optimism), HDFC Bank,
Bharti Infratel (tower deal buzz), TCS (hopes for good earnings), VEDL,
Hindalco, HUL, Bajaj Finance, Tata Motors & Axis Bank cumulatively by
around 78 points.
Nifty was today dragged by IOC (drops plan to merge with Chennai
Petro), Infy, Bharti Airtel, Ultratech Cement & SBI by around 7 points
altogether.
Overall, Indian market was today helped by private banks, FMCG,
metals, healthcare, automakers while it was dragged by PSBS on huge NPA &
recap concerns
Meanwhile, India’s CPI for Sep came as 3.28% vs estimate of 3.60%; prior: 3.36%; core
inflation came as 4.6% vs 4.5% prior. Rate cut hopes by RBI may be diminished
more on sticky nature of core CPI. Also, for an economy, inflation & growth
(GDP) should run proportionally and the “subdued” nature of headline CPI may be
also an indication that GDP may be still muted.
IIP for Aug came as upbeat at 4.3% vs estimate of 2.4%; prior:
1.2%; almost all the sectors including Mfg, Mining, Electricity and Consumer
durables & non-durables has registered solid growth in Aug after Pre-GST
disruptions and may calm the nerves of the policy makers haunting for suitable
fiscal stimulus to reboot the economy from its deepest slump in the last three
years.
Globally, almost all the
major Asia-Pacific stock markets
except China are now trading in deep to moderate green following positive
Global/US cues ahead of earnings deluge & macro data.
Overnight US market edged up & closed in another record milestone on lower USD after a dovish FOMC minutes
(Sep), published yesterday. Although, it seems that Fed is poised to hike in
Dec’17, the rate hikes projections for 2018 may be in doubt on concern of
puzzling subdued US inflation as several Fed members felt that the persistent
lower inflation in the US economy is not transitory.
An environment of lower USD, lower US rates, lower inflation and
a decent real wage growth may be good for the US economy & the stock
market; it’s like a goldilocks situation!! All the three main US stock indexes
closed in another record trifecta; DJ-30 closed around 0.18% higher,
S&P-500 edged up by almost 0.20% to close at 2555, while NQ-100 gained by
almost 0.30%.
Overall, yesterday US market was supported by techs and some
defensive bets like McDonald, J&J along with some other names like Black Rock,
Delta Airlines on upbeat Q3 results. But overall market mood was quite cautious
ahead of earnings dump by various big names in banks & financials coupled
with fresh NK saber-rattling.
US stock future (SPX-500) is now trading around 2553, almost flat ahead of EU market
opening. Looking ahead, technically,
SPX-500 need to sustain above 2565 zone for further rally towards 2580-2595
& 2620 area; otherwise it may come down and sustaining below 2540 area, may
further fall towards 2525-2510 & 2485 zone in the coming days.
USDJPY is now trading around 112.30, down by almost 0.14% on renewed
NK rhetoric and dovish FOMC minutes.
In brief, majority of the FOMC are concerned about US inflation
“mystery” and its consistent subdued nature, although they are quite upbeat
about US job market and believe that it will ultimately push wage growth,
higher consumption & inflation, paving the way for more rate hikes or
monetary policy normalization.
Although Dec’17 rate hike may be almost certain now considering
Fed’s credibility, 2018 dot-plots may be in doubt for muted US inflation, mixed
economic data, uncertainty about Fed leadership after Yellen, who is set to
exit by March’18 and poor visibility of Trump’s fiscal stimulus package. FFR is
now showing around 80% probability of a Dec Fed rate hike despite yesterday’s
dovish FOMC minutes.
In reality, Fed will wait for financial market reaction, if any
for its ongoing BS tapering effect, which is slated to start from this month
and also watch the dual QT (Dec rate hike & QE tapering) for another
quarter till March. If everything is fine, then Fed may go for another 2-3 rate
hike in 2018 to bring the Fed rate at around 2.00-2.25% form present 1.25% (3-4
hikes from Dec’17 to Dec’18). Thus RRI for US may be around 0% by 2018, if CPI
also moves around 2% by then and this will be a “new normal” for US economy.
USD was under further pressure early in the Asian session today,
when NK Foreign Minister again issued
some fresh rhetoric by commenting that Trump has “lit the fuse (wick) of
war” with NK by his “bellicose & insane” statements at UN labeling Kim as
“rocket man”. The NK foreign minister further went on by saying that all the
North Koreans wish to “settle the final score” with the Americans only with a
“hail of fire & not words”.
All eyes are now on Trump’s tweeter handle for his counter
rhetoric in this epic game of chickens; but it may be also a great instrument
for Trump to keep USD down despite Fed is going for dual QT. Thus the NK
hangover may continue in the days ahead despite some serious diplomatic effort
by China & Russia and also by a former US Prez (Jimmy Carter) to resolve it
for permanent “peace”.
NK will never abandon its Nuke ambition as it’s an insurance against
any US-SK attack and US will never accept a “nuclear” NK, capable of hitting US
mainland with its ICBM. Thus the “war of words” will continue until any serious
mis-steps by NK or US. USD was also on pressure yesterday after subdued JOLTS job openings report for
Aug, one of the favourite indicator for Yellen.
Meanwhile, EUR is gaining
strength on hawkish scrips by ECB and hopes of an imminent & inevitable
QE tapering and policy normalization, despite Catalonian political uncertainty
and duet between Madrid & Barcelona. As par latest report, Spanish
authority has given 5-8 days to Catalonian autonomous authority to explain
their “independence” bid and to cancel it with clear languages.
It’s now clear that Spanish PM is not interested to negotiate
with Pro-Independence Catalan autonomous authority/party and is dealing with
the whole situation very strictly to keep Spain as united. But, domestic
political compulsion of Catalan may also force them not to budge too much and
thus this political uncertainty in Spain will go on in the days ahead.
Again, strict stance taken by the Spanish authority may be also
good for the EUR as there is no immediate chance of any extreme step
(secession) by Catalonia. But, a higher EUR is not good for the export heavy EU
economy & the market.
Overall, global market is upbeat for earnings and PMI data optimism despite ongoing
geo-political tensions in NK & Catalonia.
Elsewhere, Australian
market (ASX-200) closed around 5794, up by almost 0.40% despite higher
AUDUSD and some fall in iron ore prices today, generally bad for export heavy
AU market was today helped by utilities, IT/techs, industrials, energies, banks
& financials, consumer staples, health care & property developers,
while dragged by basic materials & resources (mining stocks).
AUDUSD is now trading around 0.7834, up by almost 0.40% on broad
weakness in USD after dovish FOMC minutes coupled with upbeat AU home loan data
for Aug and upbeat GDP forecast by IMF day before yesterday. Iron ore is down
amid concern of slower demand from China in winter season as Govt is clamping
down on zombie steel producers to make sure that China got a clear smog free
blue sky this winter.
Japan (Nikkei-225) closed around 20955, up by almost 0.35% at another mile stone
multiyear record high on Q3 earnings optimism and hopes for a clear win by Abe,
positive for JP monetary stimulus addicted market. JP market was today helped by
health care, techs (Soft Bank), mixed exporters (slightly lower USD), while
dragged by automakers (Kobe auto steel quality issues), banks & financials
& energies. Scandal ridden Kobe steel today recovered by almost 1% after
two days slump.
Today’s overall JP economic data was mixed; PPI was in line with
market estimates, while bank lending (credit growth) came as upbeat, but
industry activity index flashed as subdued. Generally, JP economic data does
not affect USDJPY in a big way.
China (SSE) closed around 3386, down by almost 0.10% bucking the overall
regional trend on concern of any fresh policy tweaking in the forthcoming twice
a decade party congress. Today China market was helped by defence stocks on SOE
reform hope and yesterday’s US nay/warship entering into the South China Sea
news, while it was dragged by basic resources/miners/commodities (production
cuts to prevent winter air pollution) & energy related shares (lower oil).
Overall market move may be cautious as all focus now on ant
policy clarity or fresh reform measures in the party congress along with deluge
of Q3 earnings. Today PBOC Gov has signalled for some imminent financial reform
announcement on foreign investment liberation and removal of capital control on
out ward remittances by FPIS.
PBOC today fixed mid-point of USDCNY at 6.5808 vs 6.5841,
marginally lower with a net drain of40 bln Yuan by its daily OMO.
Hong-Kong (HKG-33) stock
future is now trading around 28425, up by almost 0.40% after yesterday’s sudden
fall on muted policy speech by the HK CEO. Today HK market is being helped by
tech/internet stocks (Tencent), banks & insurers, automakers, gaming stocks
(Macau on upbeat earnings forecast), mixed property developers, while dragged
by energies.
Meanwhile Crude Oil (WTI)
is now trading around 50.95, down by almost 0.68% on surprised stock glut in
the API report; all eyes now will be on the official EIA report later in the day
amid ongoing OPEC jawboning for a faster rebalancing and geo-political tensions
in Kurdish region.
Technically, WTI now need to stay above 51.60 area for further rally
towards 52.75; otherwise it will come down and sustaining below 50.00, it may
further fall towards 48.90-47.85 area in the days ahead.
EU Market Is Trading Mixed Despite Upbeat Global Cues & Lower EUR
Amid Catalan Uncertainty; EU Stocks Are Dragged By Banks On Lower Bond Yields
EU stocks are now almost flat in Stoxx-600, up marginally by
0.04%; DAX-30 is edged up by around 0.20%; CAC-40 edged down by almost 0.05%, FTSE-100
has gained by 0.27%, while IBEX-35 is down by around 0.25%.
Overall, EU market is being affected by ongoing
Catalan political uncertainty and also being dragged by banks & financials
on lower US/EU bond yields after a dovish FOMC minutes; lower bond yields are
negative for business models of the banks. EUR is also being affected by
Catalonia issue and subdued inflation or rather than deflation in France ahead of
Draghi & tomorrow’s EUR/German CPI.
Although, Catalan leaders have dialed back their “immediate”
independence bid, the issue is far from over and is shaping into a major
political headwind for Spain. As par latest report,
Spanish authority has given 5-8 days to Catalonian autonomous authority to
explain their “independence” bid and to cancel it with clear languages;
otherwise Spanish authority may suspend Catalan autonomy and rule the region
directly.
Thus, the duet between Madrid & Barcelona is far from over
and It’s now clear that Spanish PM is not interested to negotiate with Pro-Independence
Catalan autonomous authority/party and is dealing with the whole situation very
strictly to keep Spain as united. But, domestic political compulsion of Catalan
may also force them not to budge too much and thus this political uncertainty in
Spain will go on in the days ahead. Thus Spain
market (IBEX-35) is in renewed pressure today.
DAX-30 is being helped by airlines consolidation; Lufthansa signed a
deal to buy insolvent German carrier Air Berlin. Also, another airlines stock, Easyjet
is upbeat (another potential bidder of Air Berlin). Volkswagen also helping the
German market on analyst upgrade.
FTSE-100 is being helped by some fall in GBP amid talks of a “Hard
Brexit”; UK may be preparing to exit EU without any deal at all; a lower GBP is
good for export heavy FTSE !!
Today, UK market is being helped by Sky TV (upbeat earnings)
& Just Eat (approval of M&A deal), while it was dragged by Stanc on IMF’s
guidance warning about Asia focused banks coupled with concern for stretched
valuations. Overall EU market sentiment
may be also cautious on Q3 earnings trajectory amid strong EUR, negative for
the export heavy EZ market.
USD Edged Down As Fed's Inflation Debate Heats Up:
SGX-NF
BNF
GBPUSD
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