Market Wrap: 13/11/2017 (17:00)
NSE-NF (Nov):10264 (-70; -0.68%)
(TTM PE: 26.08; Abv 2-SD of 25; TTM Q1FY18 EPS: 392;
NS: 10225; Avg PE: 20; Proj FY-18 EPS: 418; Proj Fair Value: 8360)
NSE-BNF (Nov):25457 (-38; -0.15%)
(TTM PE: 28.88; Near 3-SD of 30; TTM Q1FY18 EPS:
878; BNS: 25358; Avg PE: 20; Proj FY-18 EPS: 961; Proj Fair Value: 19220)
For 14/11/2017:
Key support for NF:
10255-10195
Key resistance for NF: 10320-10360
Key support for BNF: 25400-25200
Key resistance for BNF:
25650-25750/25950
Trading Idea (Positional):
Technically, NF has to sustain over 10320 area for further rally towards 10360-10400
& 10475-10535 zone in the short term (under bullish case scenario).
On the flip side, sustaining below 10300 area, NF may fall towards 10255-10195
& 10150-10100 zone in the short term (under bear case scenario).
Technically, BNF has to
sustain over 25750 area for further rally towards 25825-25950 & 26100-26325
zone in the near term (under bullish case scenario).
On the flip side,
sustaining below 25700-25650 area, BNF may fall towards 25400-25240 &
25100-24950 area in the near term (under bear case scenario).
Indian market (Nifty Fut/India-50)
today closed around 10264, dragged by almost 70 points (-0.68%) after making an
opening minutes high of 10354 and late day low of 10259. Indian market today opened
around 10342; almost flat tracking mixed global/Asian cues amid ongoing
suspense about US tax reform & corporate tax cut and renewed concern Of Hard Brexit/UK Political
Jitters.
Despite a higher USD in the early Asian session, most of the Asia-Pacific markets
were trading lower except China & HK, which may have got some boost through
huge liquidity injection by PBOC coupled with ease of FII holding norms in
Chinese financials (which may be extended to banks also later). Japanese market
was under severe pressure on heavy
profit booking/long unwinding by domestic investors after a monster rally &
lack of any real drivers after the earning season.
EU stocks also came under renewed pressure after opening
firm on lower currency (EUR/GBP) amid muted report card & guidance coupled
with overall anxiety over Brexit uncertainty.
Indian Market Was Under Pressure Amid Dual Combination Of Higher Oil & USD Coupled With Concern Of Fiscal
Deficits After GST Recalibration:
Against these backdrops of subdued global cues,
Indian market also came under renewed pressure and underperforms the regional
peers on concern over dual headwinds of higher oil & higher USD coupled
with lingering concern about fiscal leverage (deficit) after weekend GST
recalibrations from 28% to lower 18% of over 175 items of daily uses/FMCG
products mainly, which may cost the exchequer by around Rs.0.20 tln.
Apart from that overall muted/mixed trend of
earnings so far in Q2FY18 and ongoing GST implementation hang over &
frequent changes in tax slabs may also cause another wave of post-GST
disruptions (de-stocking), which in turn may also result in another subdued Q3
& Q4 earnings in FY-18 and thus hopes of earnings recovery may be almost
shattered now.
Valuations of the Indian market is already
stretched with Nifty TTM PE is now hovering above 26 and Bank Nifty around
29-30 on PSBS recaps narratives; thus market is slowly correcting itself as
overall earnings failed to justify the stretched valuation.
If there will be any “war of bullets” in the gulf area (Saudi Arab-Iran), then WTI may
cross $75 easily and in that scenario, Indian market & economy may be
re-rated. A higher WTI, higher import bills is also positive for USDINR
equation apart from fiscal deficit math and thus USD today soared by almost
0.39% and closed at around 65.56 for USDINR-I. INR was weak today across the
board on concern of fiscal deficits arising out of higher oil & GST
recalibrations.
After market hours, Indian CPI for Oct flashed as 3.58% vs est 3.46%; prior 3.28%; Core
inflation again came sticky at 4.50% vs 4.60% prior; overall inflation data may
be pointing towards upper band of RBI target and thus may have shattered any
hopes for Dec’17 or even any further rate cuts in FY: 18-19; moreover, if such
trend of higher inflation will continue, RBI may hike in the months ahead
instead of cut!!
The headline inflation of 3.58% is fastest in the
last 7 months as a by-product of rising food & fuel prices and at this rate
it may reach almost 4.5% by March’18. Rising Crude oil prices may be a major
contributor for CPI as every $10 rise boosts the CPI by around 0.5% and CAD by
0.4% of GDP.
Looking ahead, individual HRA announcements by
various states Govt may contribute further in the headline CPI, specially
housing inflation, but recalibration of GST rates for the common uses may also
help it to contain if passed on appropriately.
Thus combination of higher CPI & lower IIP and
possible higher fiscal deficits & CAD for the Indian economy may be now
pointing towards a stagflation (higher inflation & lower GDP growth) and
thus may not bore well for the market.
Nifty was
today helped by TCS (higher
USD), IOC, M&M (upbeat report card), HPCL, Sun Pharma (US FDA optimism) by
around 12 points altogether.
Nifty was
dragged by HDFC, Adani Ports (muted
earnings), VEDL, L&T, RIL, ITC, ICICI Bank, ONGC, Bharti Infratel &
Infy by around 66 points cumulatively.
Banks also later succumbed to intense selling and
closed almost flat to negative. SBI was well off the day high; Axis Bank
reversed all the gains out of capital rising optimism after subdued commentary
by the management; L&T was also under pressure for order inflow guidance.
Looking ahead, RCOM may be another major banking NPA issues as it may soon
referred to the NCLT/IBC.
Overall, Indian market today helped by techs (higher USD),
but dragged by almost every sector like banks & financials, automakers,
FMCG, media, metals, health care (renewed US FDA ghosts), property developers
(Reality), commodities, consumption, CPSE, energy, infra, MNC & PSUS.
Europe May Trade Upbeat On Lower EUR/GBP Amid US Tax Reform Jitters & Renewed UK Political Concerns
Asia Stumbled Barring China & HK On Muted Global Cues Amid US Tax Reform & UK Political Jitters
USD Edged Down On US Tax Reform Suspense; GBP Slumped On Renewed UK Political Jitters
SGX-NF
BNF
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