Market Wrap: 10/11/2017 (17:00)
NSE-NF (Nov):10348 (-25; -0.25%)
(TTM PE: 26.33; Abv 2-SD of 25; TTM Q1FY18 EPS: 392;
NS: 10322; Avg PE: 20; Proj FY-18 EPS: 418; Proj Fair Value: 8360)
NSE-BNF (Nov):25525 (+60; +0.25%)
(TTM PE: 29.04; Near 3-SD of 30; TTM Q1FY18 EPS:
878; BNS: 25499; Avg PE: 20; Proj FY-18 EPS: 961; Proj Fair Value: 19220)
For 10/11/2017:
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).
Indian market (Nifty Fut/India-50)
today closed around 10348, edged down by around 25 points (-0.25%) after making
an opening session high of 10379 and late day low of 10284; Nifty spot today
closed marginally higher around 10322 (+0.12%), but lost 1% for the week amid
worries over surging oil & Govt’s “war on black money/shell cos” (Paradise
papers leak).
Indian market today opened around 10341, gap down by almost 32
points on negative global cues
amid reports of one year delay in US corp tax cut drama and various confusions & uncertainties over implementation of the much awaited tax reforms.
Market was also concerned about surging oil amid intensified Saudi purge on “corruption” and “games of
thrones”. Market may be also concerned about increasing regulatory PMLA actions
by the Govt on financial markets to prevent free flow of unaccounted money in
the system.
Dual combination of higher oil & USD is going to be a big
headwind for the Indian economy as the country imports almost 80% of its crude
requirements from overseas; oil is now hovering around $65 (Brent) and if it
continue to stay at these level for another few months because of various geo-political
issues & Saudi factors, then high valuation multiple for the Indian market
may be also reviewed.
Nifty Succumbed Below 10300 On Muted Global Cues & Worries About
Huge Tax Revenue Loss Because Of GST Recalibration But Recovered After Less
Slippage From SBI & GST Simplification Optimism:
Amid all these geo-political concerns, Indian market succumbed
below 10300 mark today and scaled the day low of 10284 on worries about huge
tax revenue loss & consequent adverse effect on the fiscal deficit because
of recalibration of GST rates for several items of common uses from 28% to 18%
or below.
As par Bihar FM & some reports, cumulative revenue loss may
be around Rs.0.20 tln, which may be significant, considering the overall mixed
trajectory of GST revenue and slowing economy.
But soon after hitting the day low, which is also a vital
technical support zone for Nifty-Fut, market covered their shorts significantly,
keeping in mind surge in PSBS after below expected fresh slippages from SBI
report card & the GST reform meet and closed edged down from deep loses.
After market hours, Govt announced
various GST simplifications &
rate calibrations as highly expected. Although this is certainly an encouraging
step, Govt should further modify GST to only a single rate in future keeping in
mind standard RNR of 18% as the present system of 6 slabs (rates) for various
products even of the same category may be becoming a nightmare of a small
trader/SMES for necessary compliance & accounting cost thereof apart from
the fact of multiple return filling every month.
Govt has also promised to make more rate recalibrations to aid
consumer spending amid slowing economy and may be also thinking about two
standard GST rates in future. Although it’s very encouraging, Govt should have
done all these “trial & error” recalibrations before launching GST hurriedly
as such frequent rate changes may cause more post-GST disruptions because of
de-stockings. Both traders & manufacturers will tend to keep minimal stock
because of frequent rate adjustments and issues of ITC.
Thus, although ongoing GST recalibrations may be good for the
overall economy to some extent, it may not be good for the H2FY18 earnings
because of another wave of high probable de-stocking at trade levels.
Also, fitments of various goods of common uses (non-sin) like
cement, AC, Refrigerator, automobiles etc in the high 28% tax slabs may be very
disappointing and will not support the incremental consumer spending, which is
vital for any economy.
Even the 18% RNR GST rate of India may be much higher compared
to the DM/EM and negative for price stability; Indian core inflation is still
sticky around 4.5%, which may be very high, if we compare it globally or even
with China.
Thus, Govt irrespective of states & centre and all political
colours are only interested to maintain their revenue under GST as par their
previous trends (VAT+ED) and not ready to sacrifice it for the sake of simple
GST regime with moderate inflation & price stability. Govt has to look at
this angle and should take a middle path as both revenue & price stability
is important for the economy; otherwise consumer spending will not pick up.
Govt should also bring all types of products including Petrol
& diesel in the GST regime with a reasonable tax slab like 28%; although it
looks very tough at this stage because of revenue implications & fiscal
deficit concern, this Petro reform is long overdue for the economy, which is a
legacy issue.
Meanwhile, Indian IIP for Sep flashed muted at 3.8% vs EST 4.1%; prior 4.5%-R; it may
be another indication of a slower economy due to DeMo & GST blues after
temporary uptick in Aug because of festival seasons and some revival from
Pre-GST disruptions in June-July.
Today Nifty was helped by SBI (lower slippages on QOQ basis despite overall subdued
report card), L&T (earnings optimism ahead of result), ICICI Bank (boosted
by SBI NPL improvement), HUL/ITC (GST rate recalibration benefits to several
FMCG items of daily use), M&M (upbeat report card), Infy, Ultratech Cement,
Power Grid, Bajaj Auto & Axis Bank (fresh fund raising & stake sale to Bain
capital); together these cos has contributed almost 160 points and out these,
SBI alone contributed almost 43 points.
Nifty was dragged by Tata Motors (muted JLR commentary), RIL, Auro Pharma, HDFC,
HPCL, Bosch (muted earnings), TCS, HDFC Bank, Kotak Bank & BPCL by around
145 points altogether.
Overall, today Indian market was supported by Banks/PSBS & Financials,
FMCG, Media, metals, consumptions, while it was dragged by automakers, techs,
pharma/healthcare, commodities, energies, & PSUS.
Europe May Open Edged Down On Negative Global Cues Amid Delay In US Corp Tax Cut By One Year
Asian Market Inched Lower On Muted Global Cues Amid US Corp Tax Cut Squabbling
USDJPY Almost Flat Amid Dilemma Of US Corp Tax Cut Delay & Hopes Of Legislative Passage
SGX-NF
BNF
10YUSTSY
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