Market Mantra: 15/11/2017 (09:00)
SGX-NF: 10185 (-46)
For the Day: updated: 12:30
Key support for NF:
10175/10145-10100/9970
Key resistance for NF:
10225/10260-10320/10360
Key support for BNF:
25300-25100
Key resistance for BNF:
25650-25750
Trading Idea (Positional):
Technically, Nifty
Fut-Nov (NF) has to sustain over
10280 area for further rally towards 10320-10360 & 10400-10475 zone in the
short term (under bullish case scenario).
On the flip side, sustaining below 10260-10225 area, NF may fall towards
10175/10145-10100 & 9970-9825 zone in the short term (under bear case
scenario).
Technically, Bank Nifty-Fut (BNF) has to sustain over 25550 area for further rally towards
25650-25750 & 25825-25950 zone in the near term (under bullish case
scenario).
On the flip side,
sustaining below 25500 area, BNF may fall towards 25300-25100 & 24950-24700
area in the near term (under bear case scenario).
As par early SGX indication, Nifty Fut (Nov) may open around 10185, gap down by almost 46 points
on muted global/Asian cues and worries
about domestic macros; overnight US & EU market was also closed muted.
USD gone lower on US tax reform jitters and EUR gone higher on upbeat EU/Germany economic data (GDP) yesterday
and a combination of lower USD & higher EUR is not good for either Asian or
EU equities, being export savvy in nature. Today’s inline JP economic data
& GDP @1.4% for Q3 may have also supported the Yen, dragging the JP market
further.
Even for Indian market, a consistent lower USD is not good for
Nifty earnings as almost 60% of those earnings are heavily export income
dependent; but a lower USD is certainly good for the import oriented Indian
economy despite the fact that the whole country is running on extreme currency
leverage; almost 80% of crude oil requirement are being imported by the country.
An overnight fall of 2% in crude oil on subdued demand forecast
by EIA coupled with surprised build in US crude stocks has also affected the
energies sector globally and along with that other commodities/metals are also
in pressure on China slowdown fears.
Thus, a combination of lower USD &
lower oil is affecting the overall global/Asian market sentiment to some
extent, although it may be good for Indian perspective, as the market is
concerned over surging CAD & fiscal deficit after terrible trade data for
Oct.
China market is also under pressure on liquidity tightening
& surging bond yields amid Govt effort to deleverage the economy and
ongoing production/capacity cuts to keep the China sky clear in winter.
Apart from hurricane distorted US PPI, USD got some further drag
on reports that Moh El Erian, the
celebrity analyst, now at Allianz (former PIMCO chief) may be entrusted with
the next Fed VC post; Erian may be seen as dovish or at least much more less
hawkish than another potential VC candidate Taylor.
Also, ongoing US tax reform legislation hangover is weighing on
USD; as par latest report, US Senate abruptly adjourned the tax bill debate
yesterday and now it may happen hopefully by today/tomorrow as RNC is
considering repelling the Obamacare individual mandate also along with the tax
reform bill.
Apart from US tax reform uncertainty, USD is also under pressure
on various US political entertainments, which may keep Trump busy after he
returns from his 12 day marathon Asian tour. Also, market may be concerned over
any NK “retaliation” in response to Trump’s recent sets of rhetoric after his
Asian tour.
As par a former US Ambassador to UN (Bolton), NK is very close
to develop a nuke enabled ICBM that could hit US mainland and thus resolution
of this issue is very much important as it could proliferate nuke weapons
around the world.
But the real solution may lies on US as it has to accept NK
as a nuclear power and negotiate accordingly to bring the isolated nation on
the main stream.
Overnight, US market finished lower on US tax reform/corp tax cut suspense &
mixed earnings/concern of stretched valuations; it was further dragged by
energies (lower WTI), Apple, GS, Walt Disney, DuPont, Boeing & GE; DJ-30
fell by 0.13%, S&P-500 lost almost 0.23% to close around 2579, while NQ-100
dropped by almost 0.29%.
Overall, US market was yesterday dragged by energies, materials,
telecoms while supported by defensive plays & high dividend paying like
utilities & consumer staples; an inverted & flattened US bond yield is
inducing the market to focus more on high dividend paying stocks (appeal for
yield hungry investors from so called bond proxies stocks).
As par some influential DNC Senator, the RNC tax plan will force
SMES/small business owners to subsidize the big corporate tax cuts and will
also harm the US economy by reducing tax revenue for infra/fiscal capex that
supports the economic growth.
Thus, although market may be still expecting some
types of compromise between US Senate & House/RNC over fate of US tax reform
bill and the main issue of corp tax cut, there are still many barriers to
overcome.
Global market may be also concerned about stretched valuation,
central banks tightening (QT), geo-political tensions, China debt bomb & a
slowing economy there despite an overall global environment of goldilocks
economy. But any delay in UA corp tax cut to 2019 may be also a big trigger for
the market correction from here.
Although the flattening of the US bond yield may be indicating
some slow down or even a technical recession with time lags of 36 months, it
may be due to central bank (Fed) presence in the bond market.
But it may be
also indicating an outgrowth of Fed hikes in a low inflation environment and
tends to be associated with lower growth and higher rates (risk premiums) in
the future and thus market is somehow worried about it.
US stock future (SPX-500) is now trading around 2568, down by almost 0.35% on
muted Asian cues before EU market opening, which is also set to trade in red on
higher EUR.
Back to home, Indian
market (Nifty/India-50) is now trading around 10185, down by almost 0.45%
on muted global/Asian cues and concern for domestic macros after terrible trade
data and higher inflation.
Surging oil and higher USD may be a big concern for Indian
economy & the market right now apart from Govt’s “war on black money”.
Also, PSBS recaps & resolution of NPA is a major factor for the Indian
market right now.
As par latest report, Govt may ask for the special DeMo
dividend from RBI again, which is so far elusive & even non-existent for
PSBS recap fund!!
Indian market may be clearly worried about the mechanism &
ultimate result of this PSBS bond recaps and any credit growth thereof.
SGX-NF
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