Market Wrap: 16/10/2017 (17:00)
NSE-NF (Oct):10255 (+63; +0.61%)
(TTM PE: 26.57; Abv 2-SD of 25; TTM Q1FY18 EPS: 385;
NS: 10231; Avg PE: 20; Proj FY-18 EPS: 418; Proj Fair Value: 8360)
NSE-BNF (Sep):24757 (+25; +0.10%)
(TTM PE: 28.13; Abv 2-SD of 25; TTM Q1FY18 EPS:
878; BNS: 24703; Avg PE: 20; Proj FY-18 EPS: 961; Proj Fair Value: 19220)
For 17/10/2017:
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).
Indian market (Nifty Fut/India-50)
today closed around 10255, surged by almost 63 points (+0.61%) after making a mid
day low of 10197 and opening session high of 10261 in another day of milestone
high.
Indian market today opened in positive tone amid upbeat global
cues and macro data, stable earnings in Q2 so far coupled with IMF (Lagarde)
booster for India’s GDP after terrible official projection few days ago following
FM’s US/IMF visit. The market has undergone some mild selling just before WPI
data on concern of higher number, coupled with stretched valuation, but later
recovered on stable/lower WPI and some strength in EU market as EUR goes down
on Catalan tensions.
Also, there was some political concern after thumping win by INC
in a Punjab by-poll seat and by SP in a prestigious UP college/university
election; all these seats were a known stronghold of BJP. Although, there is
nothing serious in NAMO’s bid for the 2019 general election, it may be also an
indication that there will be some contest at least between BJP &
INC/Oppositions in the forthcoming elections amid DeMo & GST disruptions
coupled with muted economic growth & huge un/under employment problem of
India.
Thus, forthcoming Gujarat state election may be an acid test for
the Govt for DeMo, GST & overall economic slowdown; Govt may also intensify
its “war against black money” in the coming days to prove that DeMo & GST are
actually intended for “black money holders” and such “surgical strike” is for
the interest of the common people.
Indian market may be also boosted today by a weekend comment of
IMF Chief (Lagarde) that the Indian economy is now on “very solid track” in the
mid & long term despite “a little bit of short term slowdown due to
“monumental structural reforms of DeMo & GST”. Also, upbeat commentary by
FM for the Indian economy, GDP on his US/IMF trips and power of domestic
liquidity may be helping the overall Indian market sentiment right now in the
“Diwali Week” despite stretched valuation.
Recent spate of upbeat macro data
(PMI/CPI/IIP/Trade-Export/Import) is also supporting the overall Indian market
sentiment; India’s exports for Sep, surged by almost 25.7%., fastest in the
last six months to $28.60 bln, shrugging off the GST disruptions narratives and
helped to the cut the trade deficit to $8.90 bln at seven months low, data
showed on Friday evening.
Meanwhile, Indian WPI for Sep, flashed as 2.60% vs estimate of
3.41%; prior: 3.24%; it’s also positive for the market as a higher WPI is
negative for Indian GDP, being a deflator (which may be also one of the primary
reasons behind recent fall in GDP growth as favourable base effect wanes).
Q2FY18 earnings are mixed & stable so far including RIL
(inline/slightly below expected earnings from core petchem operations, but
better than expected EBITDA from R-JIO largely due to onetime accounting
adjustments/new accounting policies).; RIL today rallied by 1.7% on opening
trade but later succumbed to profit booking (selling) & closed 0.17% lower,
dragging the overall market.
Today, Nifty was supported by VEDL, Tata Motors, Bharti
Infratel, Bharti Airtel, HUL, M&M, Bosch, ICICI Bank, Infy & TCS by
around 55 points altogether, while it was dragged by Bajaj Fin, Indusind Bank,
Axis Bank, HDFC, IOC by around 17 points cumulatively.
Overall, Indian market was today supported by telecoms (hopes
for further consolidation & deleveraging after Bharti Airtel & Tata
Tele and buzz of ITC rationalization), selected auto (festive season sale &
e-car optimism), metals (upbeat China data & production curb there), FMCG,
pharma, property developers/reality while it was dragged by selected Private
Banks, PSBS (SBI/BOB).
Bharti Airtel jumped by over 5% on top of yesterday’s rally of
8% (M&A with Tata Tele) on another reports that Airtel & Tata may consolidate
(merge) their DTH business. There was also news that Airtel has formed a JV
with Millicom S.A in Ghana for telecom operations.
Axis bank was down by around 2% on concern of muted report card
(higher stressed assets) to be released tomorrow. Indusind Bank was down by
around 2% on equity dilution concern after merger announcements with Bharat
Financial (+1.6%) as expected on Saturday. Bajaj Fin lost around 3.6% on muted
report card, while Federal bank surged by almost 7% amid better than expected
report card, although still has significance increase in NPA.
Nifty “Diwali Target” May Be 10495-10585 On Consecutive Closing Abv 10195
(If NK Does Not Test Another ICBM!!):
Looking at the chart, Nifty Fut-Oct may be under EW-C now and the extended target of
the same may be around 10500 by “Diwali”/next few trading days under normal
circumstances, if NK does not test any ICBM in the meantime; 10195 is now a
vital support.
Globally, almost all the
major Asia-Pacific stock markets except
China are in moderate to deep green today and scaled another mile stone highs
tracking positive global/US cues, clear
Abe win optimism in the forthcoming JP election, an upbeat China PPI data and improved macro data coupled with earnings & growth
optimism.
Overnight on Friday
weekend, US market edged up on lower USD,
helpful for US stocks after another subdued US inflation for Sep coupled with
upbeat consumer confidence, retail sales and Q3 earnings optimism. This is like
a goldilocks types of situation for US stock market with an environment of
decent GDP growth, lower interest rate, modest real wage growth with no runaway
inflation. But most of the recent US economic data including NFP, PPI, CPI, and
retail sales are all skewed for the dual US hurricane and thus may not be
conclusive.
DJ-30 edged up by almost 0.13%, S&P-500
closed almost flat at 2553 (+0.09%), while NQ-100
was up by 0.22%. Overall US market was helped by telecoms, energies (higher oil
on Chinese import data) techs (earnings optimism) while dragged by banks on
mixed earnings and fall in US bond yields & subdued guidance.
Health care stocks were also weak on Obamacare/Trumpcare
duet/disruptions (proposal to withdraw insurance subsidies for low-income
Americans in the Obamacare/ACA by Trump, although it may not be passed at all
by the US congress!!).
Overall, US market mood was cautious due to increasing
geo-political tensions out of Iran nuke deal, weekend suspense of NK missile
tests & “earthquakes” and ongoing Q3 earning season. US stock future (SPX-500) is now trading around 2553, almost
unchanged, before the EU market opening.
USDJPY was down on subdued US CPI coupled with ongoing NK tensions.
But it recovered slightly and is now trading around 111.94 after Yellen’s comments about transitory
nature of US & global inflation and US Foreign Sec’s comments that US/Trump
will peruse diplomacy path with NK, until the first “bomb” drops.
Overall, Yellen sounds less dovish in the IMF speech on Sunday
night and basically stressed that despite US inflation “mystery”, which Is the
“biggest surprise of 2017”, inflation will eventually pick up on strength of US
job market and wage growth. Almost all the other key central bankers has the
same opinion about their battle on the muted inflation & growth.
It now seems that Dec’17 rate hike by Fed is almost certain
except any terrible geo-political events and is also priced in by the market;
but beyond that Fed dot-lots for 2018 is uncertain on US inflation “puzzle”,
mixed US economic data, Fed leadership & policy uncertainty after Yellen’s
term ends in March’18, poor visibility of Trumponomics and ongoing
geo-political issues.
EURUSD is now trading around 1.1793, down by almost 0.25% amid
increasing EU geo-political tensions. All eyes may be now on the Catalonian
development on their reply of the Spain notice to explain all the
“independence” drama; any adverse reply may affect the EU/Global market
sentiment, despite it may be seen as “EUR negative”, which is usually stock
market positive (export heavy EU index).
So far, some reports suggest that Catalan leader has indicated
his willingness for a dialogue with Spanish Govt in the next two months, but
still did not confirm about his “independence” bid and the political
uncertainty may remains in Spain, at least for the short term, which in turn
may also help ECB to announce the QE tapering without worrying for the EUR
strength too much as Catalan problem will now act as a “new QE” to help EUR
down.
Also, a weekend exit poll suggests that Merkel’s CDU party may
be defeated by her political opponent SDP in a regional by-poll election, which
may also in tern affect the “Jamaican” coalition Govt prospect/talks of Merkel
on the day after tomorrow. But CDU/Merkel is keeping a brave face for their
coalition Govt prospect, terming this a regional issue, should not affect the
coalition Govt bid on national level.
Thus, these political events at Spain/Catalonia, Germany and
also some shift of political landscape in Austria is keeping EUR under pressure
today despite less than expected dovish ECB talks, basically upbeat about EU
economy prospect despite sluggish wage growth & inflation.
ECB’s trial balloon that they may reduce the QE bond purchase by
50% to EUR 30 bln from Jan’18 till Sep’18 may be positive for the EUR as it
confirms at least gradual QE tapering intention in 2018; no one expects Draghi
to stop QE outright; thus gradual removal of accommodative monetary policy is
on the expected line, but quantity & time may be still not confirmed; ECB
may keep overall QE limit of around EUR 2.5 tln as par some “unnamed ECB
source”.
GBPUSD is now trading around 1.3291, almost unchanged on ongoing
Brexit squabbling. As par some reports, UK PM Theresa may make an unscheduled
visit to Brussels along with Brexit minister Johnson for Brexit talks with EU
Chief Negotiator Barnier & Prez Juncker to resume the negotiation, which is
practically stalled for several months for various issues ranging from Brexit
payments and a two yrs transition period.
As par some earlier reports, EU may Offer UK a two year
transition period subjected to the payments of divorce fees, but this payment
of huge Brexit bill will also be a hot political issues in UK as it will
involve tax payer’s money ultimately, majority of them may be also against the
whole “Brexit soap opera”.
Elsewhere, Australian market
(ASX-200) closed around 5847, up by almost 0.60%, around nine years high on
upbeat China PPI & trade data and rally of metals & oil. AU market was
today helped by mining, basic materials, energy and banks & financials.
AUDUSD is almost flat today, now trading around 0.7882 (-0.04%) on upbeat
China economic data, upbeat metals & higher US bond yields.
Japan (Nikkei-225) closed around 21256, up by almost 0.47% in another milestone
high on election win optimism of Abe, slated to get the 2/3rd
majority in the forthcoming JP snap poll, which may pave the way for the much
needed constitutional & structural reform, vital for the JP economy.
JP market was today supported by exporters, banks & finances
(higher US bond yields), upbeat corporate earnings energies, and Soft bank
merger deal between Sprint & T-Mobile, shrugging off the Kobe steel
falsified data scandal. JP IIP data today came as 2% for Aug vs estimate of
2.1%; prior: 2.1%, although slightly below estimate, it’s still good. Kuroda’s
tone at IMF yesterday was dovish as usual, fighting for the lost battle against
inflation.
China (SSE) closed in negative around 3378, down by almost 0.36% and
bucking the overall regional/global trend ahead of party congress despite an
upbeat China PPI data flashed today for Sep at 6.9% vs estimate/prior of 6.3%;
CPI on MOM also came as 0.5% vs estimate/prior of 0.4%. An upbeat China
PPI/factory gate price index is good for the global reflation rhetoric, China
being the global manufacturing power house; it also confirms no immediate China
slowdown.
But market may be concerned about any abrupt policy &
political changes in the China party congress, scheduled to start from 18th
Oct despite upbeat growth forecasts by PBOC yesterday at IMF meet. Also, PBOC
has warned about China debt & leveraging.
Today China market was dragged by techs on muted guidance apart
from general factors such as PBOC tightening despite higher China banks credit
growth, some concern of slowdown in the housing market and forceful, but
planned steel/metals production curbs ahead of winter season to make a smog
free clear sky (environmental production curb).
Today, PBOC fixed mid-point of USDCNY at 6.5839 vs 6.5866, a little lower with neutral OMO.
Overall, China market is continuing to trade in a narrow range for the last few
days ahead of the Party congress, in which Prez XI may be amassed with greater
power along with other political elites. China security regulator has also
warned any “dumping of stocks” during the politically sensitive Party congress.
China may grow modestly in the next six months and all the
upbeat growth & economic data may be already priced in, considering the
steep rally recently. All eyes may be now on China GDP, to be released on 19th
Oct.
Hong-Kong stock future
(HKG-33) is now trading around 28705, at ten years
high, rallied by almost 0.80% and driving the overall regional market sentiment
amid upbeat China economic data & growth forecast.
Meanwhile, Crude Oil
(WTI) is now trading around 52.15, up by almost 1.38% on Iraq-Kurdish
conflict news along with Trump’s Iran nuke deal squabbling. Also, upbeat Crude
import data from China is helping the “black gold” to some extent coupled with
some drops in US oil rigs data on Friday.
European Stocks Almost Flat On Duet Between Madrid & Barcelona
(Catalonian Political Uncertainty) & Lower EUR:
EU stocks are trading almost flat in Stoxx-600 (+0.04%) on political uncertainty in Spain-Catalonian
duet and a lower EUR, helpful for export savvy EU economy & the market.
All eyes were today on Catalonian reply of the Spain notice to
explain their “independence” stance; So far, some reports suggest that the
Catalan autonomous Prez has indicated their willingness for a face to face
dialogue with Spanish Govt/PM in the next two months, but still did not confirm
or deny about their “independence” bid and Spain Govt has rejected the Catalan
letter and give them until 19th Oct to denounce the “independence”
bid clearly.
Thus, political uncertainty in Spain/Catalonia may continue as
it may be a “double sword” situation there; if Catalonia does not deny their
independence referendum & secession bid clearly, then Madrid (Spain) may
apply its article-155 of Spanish constitution and regain the control over
Barcelona (Catalonia) with arrest of several top Catalan leaders including Prez
& the police chief, which may also cause huge unrest/political instability
in the region, despite significant support in favour of “unity”.
On the other side, if Catalan Prez dials back the “independence”
referendum, the political leadership may be in trouble and the Govt may split
causing more political & administration chaos in Catalonia, which
contributes significantly to the GDP of the whole country (Spain). But, in this
scenario Spain Govt may also impose central rule more easily on Catalonia and
bring the overall situation under control.
Also, a weekend exit poll suggests that Merkel’s CDU party may
be defeated by her political opponent SDP in a regional by-poll election, which
may also in tern affect the “Jamaican” coalition Govt prospect/talks of Merkel
on the day after tomorrow. But CDU/Merkel is keeping a brave face for their
coalition Govt prospect, terming this a regional issue, should not affect the
coalition Govt bid on national level.
Thus, these political events at Spain/Catalonia, Germany and
also some shift of political landscape in Austria is keeping EUR under pressure
today despite less than expected dovish ECB talks, basically upbeat about EU
economy prospect despite sluggish wage growth & inflation. A lower EUR is
good for export savvy EU market and thus DAX-30
edged up by almost 0.13%, CAC-40 has
gained by almost 0.20%, while IBEX-35
slumped by around 0.95%.
Overall EU market is today dragged by Catalonian banks &
financials, while helped by basic materials/miners/metals (upbeat China data)
and some retailers (supermarkets) stocks; Siemens RE SA plunged by around 7%.
FTSE-100 is almost flat (-0.02%) on dilemma between Soft & Hard
Brexit concern and some fall in GBP; earlier it goes higher on news that
Theresa may visit Brussels for an unscheduled negotiation along with Johnson.
Metals & miners have supported the overall UK market today on upbeat China
PPI and other weekend economic data. Utilities & consumer stocks dragged
the market today to some extent along with mixed energies.
USDJPY Hovering Below 112 On Fed Uncertainty In 2018 & Korean Tensions Despite A Brave Yellen:
SGX-NF
BNF
USDJPY
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