Market Mantra: 13/11/2017 (09:00)
SGX-NF: 10330 (-18)
For the Day: updated: 13:00
Key support for NF:
10280-10240/10225
Key resistance for NF:
10380-10425
Key support for BNF:
25200-24950
Key resistance for BNF:
25700-25950
Trading Idea (Positional):
Technically, NF has to sustain over 10380 area for further rally towards
10425-10475 & 10535-10595 zone in the short term (under bullish case
scenario).
On the flip side, sustaining below 10360 area, NF may fall towards
10280-10240/10225 & 10190-10150 zone in the short term (under bear case
scenario).
Technically, BNF has to
sustain over 25550 area for further rally towards 25700-25800 & 25950-26100
zone in the near term (under bullish case scenario).
On the flip side,
sustaining below 25500 area, BNF may fall towards 25300/25200-24950 &
24800-24550 area in the near term (under bear case scenario).
As par early SGX indication, Nifty Fut (Nov) may open around 10330, edged down by almost 18
points on muted global/Asian cues
amid ongoing impasses about US tax reform & squabbling of corporate tax
cut. Overall global risk-on mood may have also affected on renewed concern
about a high probable hard Brexit & UK political jitters after 40 Tories
has called for UK PM Theresa’s resignation on Brexit negotiation issues &
payment of a hefty divorce settlement fees for leaving EU.
Despite a higher USD, most of the Asia-Pacific markets are trading lower except
China & HK, which may have got some morning boost through huge liquidity
injection by PBOC. USD got slight boost in the early Asian session today on some
hawkish jawboning by Fed’s Harker, penciling one more hike in 2017 (Dec) and 3
more hikes in 2018 coupled with probability of almost “life-long” BOJ QQE as
seen by some analysts at GS, even if Japan formally declared that deflation is
over (a political stance to promote Abenomics).
USD got some further boost
amid signs of truce for NK by Trump; who may have toned down his hot rhetoric about
the “short & fat boy” Kim. Trump said that “it is certainly a possibility
that he could become friends with Kim” in response to Philippines Prez calling
for Trump to “tone down his rhetoric on NK”.
Overnight on Friday
weekend, US market closed in red &
negative for the week and snapped the 8-weekly gain on concerns of US corp tax
cut delay and muted earnings from selected healthcare balanced by some upbeat
report card from techs/semiconductor stocks; consumer staples/food beverages,
media, industrials were upbeat but utilities/power plants stocks were in
pressure on concern of rising US interest rate.
DJ-30 closed down by almost 0.17%; S&P-500 edged down by 0.09% to around 2582, while NQ-100 was almost unchanged (+0.01%);
selling was visible in small caps for lingering anxiety over US corp tax cut
delay apart from softness in high-yield junk bonds; market may be also
perplexed about rising US bond yields and lower equity market amid flatting of
bond yield curve, waiting for some compromise on the US corp tax cut delay
issues.
Although, US house may debate two versions of tax proposal made
by US Senate Finance Committee & the House RNC and then take a final
version of the tax reform bill, market may be concerned over eventual
legislative delays and doubts over its ultimate passage by Dec’17.
Market may be also concerned about Trump’s Asia visit and
increasing narratives about trade protectionism to make “America great again”
apart from poor visibility of Trumponomics and increasing US political jotters
& stretched valuations on hopes of an imminent cut in US corp tax despite
good earnings support so far in Q3.
US senators may be concerned over huge tax deficits in the RNC
backed tax reform proposals on huge cut in corp tax & various local &
state taxes; there was also some concern about eventual tax pressure on US
middle class. Thus drastic changes may be proposed by the US Senate and the
resultant divergent positions between US House (RNC) & Senate may further
delay or even jeopardize the entire tax reform process, which is being seen as
a “bold deregulation” move by Trump.
On Friday, DJ-30 was also helped by Walt Disney on new “Star
Wars” trilogy and some other live action TV series on scientific classics
despite a poor Q3 report card. Also semiconductor stocks (Nvidia) soared over
5% on upbeat Q3 results, helping the sector and the overall US market
sentiment.
J.C. Penney (departmental retail stores) rallied by almost 15% on
solid revenues (above estimate) & less loss than expected; but healthcare
stocks were under pressure on subdued earnings and energies also dragged the market
on lower crude oil after US oil rig additions in the Baker Hughes data.
US stock future (SPX-500) is now trading around 2578, almost flat on subdued
Asian cues ahead of EU market opening, which may edged up on earnings optimism
and lower EUR/GBP (higher US bond yields & UK political concerns).
Indian Market May Focus On GST Reform &
Earnings Optimism And Concern Of Fiscal Leverage & Surging Oil And CPI
Later Today:
Back to home, Indian
market (Nifty/India-50) is now trading around 10300, down by almost 0.35%
and so far made a session low of 10290 on muted global/Asian cues & mixed
results and PSBS optimism after SBI reported less than expected slippages in
Q3. PSBS are also upbeat after “Manthan” speeches by FMO, who stressed for the
need of a “healthy PSBS” to support the economic growth of the country, which
is “paying” for the PSBS/NPL.
Although Govt is committed to recaps the PSBS as earlier
promised, it may come with various caveats including quality of the management and
commercial decision making process. Now all will depend upon the extent of corporate
NPA/NPL resolution & growth in corporate credits; it’s not that Bank’s credit
growth issues are for liquidity or capital concern, there may be distinct lack
of eligible & quality corporate borrowers in the system now amid stressed
B/S.
All eyes may be now on Indian CPI today for Oct, which is slated
to come as 3.46% vs 3.28% prior to gauze the extent of economic activity
recovery; a higher CPI is good for growth (GDP), but for an economy like India,
price stability is a big headwind as currency (INR) is traditionally weaker
than its EM peers; oil is an example of imported inflation.
Apart from oil, mixed/muted Q2 earnings, subdued IIP data,
Indian market may be also concerned about frequent changes in GST rates, political
populism and eventual fiscal leverage; although reduction in GST rates for
several common daily uses items (mostly FMCG & hotels/eating out) are
welcome, its fiscal burden may be significant to the tune of Rs.0.20 tln.
Also, keeping GST rates of 28% for cements, certain consumer
durables like AC, refrigerators, cars etc are also disappointing as these items
are now belong to common man and not termed as luxury items and might have
helped the Indian consumption story going forward by some extent, if lowered to
18%.
SGX-NF
No comments:
Post a Comment