Market Mantra: 24/11/2017 (09:00)
SGX-NF: 10360 (-10)
For the Day: updated: 11:45
Key support for NF:
10340/10305-10270
Key resistance for NF:
10395/10415-10460
Key support for BNF:
25700-25450
Key resistance for BNF:
25800-26000
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
10340/10305-10270 & 10220/10190-10150 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 25950-25800 area, BNF may fall towards 25700-25450 &
25200-24950 area in the near term (under bear case scenario).
Indian market (Nifty Fut/India-50) today closed
around 10360, edged up by almost 8 points (+0.08%) after making an opening session
high OF 10388 and mid day low of 10321.
As par early SGX indication, Nifty Fut (Nov) may open around 10360, edged down by almost 10
points on mixed global/Asian cues and hopes of an imminent rating upgrade from
S&P; USD edged up amid mild
short covering in a holiday thinned market despite reports that BOJ has bought
less JGB by 10 bln Yen today coupled with an upbeat MFG PMI data from JP; a
higher USD is good for export savvy Asian market. Market may be expecting some
positive headline news on US tax reform next week.
On the other side, EUR
inched lower after ECB’s Coeure sounds more like a dove by saying that “ECB
deposit rate will stay at -0.4% for a long time”; but he also commented that “EZ
recovery is robust & homogenized; Internal demand-driven upturn in EZ is satisfying”.
But EUR may also get some support later from Germany’s “robust”
political system; if there will be confirmation about any credible coalition
Govt under Merkel, be it “Jamaican” or “Grand”.
Although, market is quite complacent about strength of German political
maturity & the overall system, in the long term any German political
instability is bound to affect the country’s effort for structural reform in
various sectors, especially in the education & digitization.
But all eyes are now on China’s deleveraging drive, tightening
liquidity & strengthened regulatory clampdown as it now seems that Govt is
unfazed over any significant correction of the market as it vows for “quality
of growth” rather than “quantity of growth”; surging China bond yields above 4%
may prove costly not only for China market, but may be also for the global “risk-on”
sentiment.
Today US market will close early after yesterday’s Thanksgiving
holiday; US stock future (SPX-500) is now trading around 2597, edged up by
almost 0.11% tracking mixed Asian cues and hopes of some positive legislative
action on the US tax reform & the “usual yearly noise” about US Govt shut
down as budget deadline approaching next week.
EU market is also poised to open higher on drops in EUR and hopes for a
German coalition Govt. Overnight EU market closed choppy amid China meltdown,
higher EUR and hopes of German political settlement; Stoxx-600 edged up
fractionally after a relatively volatile day even in a holiday thinned market;
it recovered from deep loses of -0.6% on French economic optimism.
Overall, EU market was yesterday helped by consumer goods &
telecoms, but dragged by financials, utilities & exporters; DAX-30 slumped by 0.50% on muted German
GDP; but CAC-40 jumped by 0.5% from
earlier losses on blockbuster French composite PMI for Nov; both MFG &
Services came quite upbeat and points towards a solid French economy!!
FTSE-100 edged down on 15.5% plunge in utility/energy suppliers led by Centrica
on muted guidance/revenue update (it has lost significant number of customers);
but UK market yesterday was helped by exporters/MNC (some drops in GBP), home
builders/property developers (on affordable housing push by the Govt; it fall
yesterday after Govt said that they could reprocess undeveloped land on delay
in development).
Indian Market May Focus On IBC Mechanism &
Higher Oil:
Back to home, Indian market
(Nifty/India-50) is now trading around 10395, surged by almost 0.28% and so far
made a session high of 10408 on hopes of S&P upgrade as the rating agency
is poised to review the India rating today; Govt is bracing for an action, in
both side despite Moody’s recent upgrade and Govt’s intense lobbying.
If S&P today upgrades India in line with Moody’s perception
of hopes of future structural & institutional report, it may be a surprise
for the market, considering S&P’s recent stance even after Moody’s upgrade.
In that sense, market may move on both sides significantly (+/- 200 points) on
hopes & hypes. Any meaningful rating upgrade from S&P may also lower
the Indian bond yields below 6.85% and vice-versa.
As par previous
observation of S&P: “India has the lowest
level of prosperity among all investment-grade economies, explaining why it has
not upgraded its ratings; among all investment-grade sovereigns, India displays
by far the lowest level of prosperity at about $2,000 per capita, its income
level is a third lower than Morocco’s and the Philippines” !!
“While India’s general government debt was higher than the
median debt level of countries ranked similarly, the impact of the high debt
load is already mitigated somewhat by the large pool of private savings available
to finance government debt”.
“S&P had assigned India the lowest investment grade with a
stable outlook. However, it acknowledged that economic growth in India has been
strong. Fast economic growth has been the reason why economic support for this
rating (lowest investment grade) has been as strong as it is. Without this
economic growth story, we would have assessed economic support at a weaker
level and the rating would probably not be investment grade.”
The agency had last upgraded India by a notch in January 2007 to
BBB- up from junk rating of BB+. “All in all, we still see rather healthy
prospects but there are significant headwinds and the credit metrics are
unlikely to materially improve in the next one to two years,” S&P said.
Investment hasn’t picked up much in India in recent years.
S&P also said “for an upgrade, India would have to address
its weak fiscal balance sheet and weak fiscal performance. Year after year, the
fiscal deficit remains relatively large, with the interest burden and subsidies
taking a big chunk of government spending. So there’s not a lot of room for the
government to maneuver, despite pressing infrastructure needs. A potential rating
grade is likely to come from improved fiscal performance.”
Thus, it’s interesting to see about S&P rating action &
overall observation today regarding strength & weakness of Modinomics.
Indian market may also focus on fine details of recent IBC
amendment as it involved various pros & cons to delay the actual
resolution; Banks are also apprehending that some so called errant promoters
(willful defaulters) may also challenge the Govt in court for their rights to
buy back their own co after NPA settlement with the Bank. On the otherwise,
Banks are also expecting that once the NPA A/C become standard after paying all
the previous dues (no haircuts), such promoters can regain their own co.
Indian market may also focus on oil (WTI), which is now hovering
around 58.45 on mixed EIA report coupled
with another OPEC “trial balloon” that they are going for a 9 month production
cut extension after March’18. Also, Canadian oil supply disruption to US may be
helping the sentiment despite higher US productions.
Looking ahead all eyes may be on Russia for their
stance in any oil production cut extension as the current limit on production
out is hurting their economy on lower sales and investment activities in the
oil sector despite higher oil price now; Russia may not agree for the extension
despite its Oil minister agrees to join the meeting on 30th Nov.
Technically, WTI now has to sustain over 58.50 zone for more rally towards 58.75
& 61.60-65.00 zone in the coming days; otherwise it will correct again;
near term support is now around 57.50-57.15 area.
SGX-NF
WTI
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