Wednesday, 22 November 2017

Nifty Edged Up On Upbeat Global Cues & Further Supported By RIL & Pharma Optimism, But Dragged By S&P’s India Observation & Higher Oil

Market Wrap: 21/11/2017 (17:00)

NSE-NF (Nov):10352 (+32; +0.31%)

(TTM PE: 26.34; Abv 2-SD of 25; TTM Q1FY18 EPS: 392; NS: 10327; Avg PE: 20; Proj FY-18 EPS: 418; Proj Fair Value: 8360)

NSE-BNF (Nov):25796 (-36; -0.14%)

(TTM PE: 29.34; Near 3-SD of 30; TTM Q1FY18 EPS: 878; BNS: 25758; Avg PE: 20; Proj FY-18 EPS: 961; Proj Fair Value: 19220)

For 22/11/2017:

Key support for NF: 10290-10250/10190

Key resistance for NF: 10395/10415-10460

Key support for BNF: 25700-25500

Key resistance for BNF: 26000-26100

Trading Idea (Positional):

Technically, Nifty Fut-Nov (NF) has to sustain over 10415 area for further rally towards 10460- 10500/10535 & 10575-10675 zone in the short term (under bullish case scenario).

On the flip side, sustaining below 10395 area, NF may fall towards 10290-10250 & 10190-10150 zone in the short term (under bear case scenario).

Technically, Bank Nifty-Fut (BNF) has to sustain over 26000 area for further rally towards 26100-26325 & 26400-26675 zone in the near term (under bullish case scenario).

On the flip side, sustaining below 25950 area, BNF may fall towards 25700-25500 & 25350-25150 area in the near term (under bear case scenario).

Indian market (Nifty Fut/India-50) today closed around 10352, edged up by almost 32 points (+0.31%) after making an opening session high of 10389 and late day low of 10337.

Indian market today opened around 10349, gap-up by almost 31 points amid positiveglobal/Asian cues on higher USD overnight and upbeat techs (Tencent mega rally in HK). A lower EUR because of German political squabbling may have also helped the EU market today despite serious problem for Merkel and that have also supported the Indian market sentiment today.

Indian market also rallied to the day high after market opening tracking upbeat Asian cues, but soon after that it encountered a sharp selloff, may be on news that S&P has virtually denied any near term upgrade for India by commenting that “India's Activity Indicators Continue To Look Lackluster, Although India's Medium-Term Remains Favourable Due To Structural Reforms Taken So Far”. PSBS and some selected private banks has reacted to the S&P observation and fall sharply.

Also, reality stocks were under pressure due to possible inclusion in GST and PMLA action to link UID with every property transactions in the country. Earlier the sector got huge boost from Govt’s push for affordable housing and increase in carpet area for such subsidized scheme.

Today RIL & some pharma counters has provided the much needed support; RIL has multiple triggers such as fresh fund raising for $800 mln at the lowest ever Indian corp rate @3.66% by a 10 year USD dominated bond; the rate was linked to US10YTSY yields +100 bps after Moody’s India upgrade; the loan will be used to refinance existing debt (roll over) having interest rate of 5.88%. Presently RIL has BBB+ & Baa2 rating from S&P and Moody’s, equivalent to India’s sovereign rating.

Also RIL was upgraded by GS for target of 1205, at almost 25% potential upside due to relatively cheaper PE/valuation than the peers coupled with Petchem & telecom business optimism.

Pharma/healthcare sector was in lime light today after DRL got an EIR report from US FDA coupled with multiple product approval for some other pharma cos.

Today Nifty was supported by RIL, Sun Pharma, HDFC Bank, IOC, DRL, UPL, Bharti Airtel, Infy, TECHM & ICICI Bank by around 35 points cumulatively.

Nifty was dragged by ITC, TCS, Kotak Bank, SBI, IBULLS HSG, L&T, Eicher Motors, Power Grid, Bosch, & VEDL by almost 22 points altogether.

Overall, Indian market today was helped by healthcare, automakers, financials, techs, media, metals/commodities, energies, consumer staples while dragged by banks/PSBS, FMCG (GST benefit transmission to consumers) & property developers (reality).