Market Mantra: 07/11/2017 (09:00)
SGX-NF: 10515 (+36)
For the Day: updated at 09:10
Key support for NF:
10445-10415/10390
Key resistance for NF:
10525-10575
Key support for BNF:
25390-25150
Key resistance for BNF:
25800-25950
Trading Idea (Positional):
Technically, NF has to sustain over 10575 area for further rally towards
10625-10675 & 10835-11315 zone in the short term (under bullish case
scenario).
On the flip side, sustaining below 10550 area, NF may fall towards 10505-10445
& 10390-10290 zone in the short term (under bear case scenario).
Technically, BNF has to
sustain over 25800 area for further rally towards 25950-26100 & 26325-26615
zone in the near term (under bullish case scenario).
On the flip side,
sustaining below 25750 area, BNF may fall towards 25390-25150 & 25050-24850
area in the near term (under bear case scenario).
As par early SGX indication, Nifty Fut (Nov) may open around 10515, gap up by almost 36 points
on positive global/Asian cues as USD
drops a bit and oil surges on Saudi purges; exporters & energy shares were
upbeat.
Overnight USD was weak on
games of Saudi thrones and geo-political risk aversion coupled with some
apprehensions about US tax reform and dovish Fed talks by Williams emphasizing
need for above 2% sustainable inflation for more rate hikes in 2018.
Also,
lower US bond yields (10TSY<2.40%) and a flattening US yield curves may have
affected the overall USD sentiment yesterday with no major US cues or economic data
after last weeks’ Fed chair & US tax reform drama.
Market may focus also on a separate version of US tax plan to be
released by US senate this week and the final version of the same, which Trump
could sign.
But as par rating agency Fitch “the likelihood of passage of US tax
reform proposal into law remains far from certain and will be subject to potentially
key changes as the RNC tax proposal could affect revenue significantly for some
states & local jurisdictions, if passed in current form”.
Another factor may be that although market is almost discounted
for the high probability (>90%) Fed rate hike, market may be concerned about
credibility of Fed’s 2018 dot-plots under Powell & a new FOMC team; NY Fed Dudley, an influential permanent FOMC
voter, is also retiring early by mid-2018.
Although Dudley
commented nothing specific about US monetary policy yesterday, he said that new
FOMC committee may be effectively the same as of now on policy continuity, but
he sees little room for fiscal stimulus by Trump to stimulate the economy amid
higher current US fiscal deficits.
Thus, looking ahead, market may have to look
for monetary stimulus from Fed rather than fiscal stimulus from the US Govt and
this may be not good for USD.
Overnight
US stock market closed almost
flat helped by exporters (lower USD), energies (higher oil) coupled with mixed
M&A buzz; Disney may acquire 21-Century Fox; Broadcom made an unsolicited
bids for Qualcomm, while JV between Sprint & T-mobile may have been
shelved.
DJ-30 edged up by 0.04%, S&P-500 closed almost flat at 2591, while NQ-100 gained by almost 0.33%. Overall US market was helped by
energies, chipmakers (M&A/JV buzz; Intel & AMD may make a JV to compete
with Nvidia), while dragged by telecoms (M&A disappointment between Sprint
& T-Mobile).
Meanwhile, Trump is
highly successful in persuading Abe to purchase “lots of US military equipments
to shoot down any NK missiles out of the sky” and thus US defense industry may
be a great beneficiary of additional JP purchase out of NK threats; SK is also
expected to follow soon!!
Incremental defense spending in JP & SK may be equivalent
of a fiscal stimulus for their economy and US will also benefit from NK
rhetoric.
But overall concern for money laundering angle in the latest
Paradise papers scandal & Saudi political turmoil may have also affecting
the overall US/global market sentiment right now.
US stock future (SPX-500) is now trading around 2591, edged up (+0.11%) on positive Asian
cues ahead of EU market opening, which is set to open higher.
EU market yesterday closed almost flat in Stoxx-600 (+0.01%) on lower EUR
and commodities (metals/miners/basic resources & oil boost); but Saudi
Purge & renewed Catalan tensions may have also affected the overall risk-on
sentiment. Banks was also in pressure on concern of subdued earnings & some
regulatory investigation by US DOJ & FBI over their roles in selling $2 bln
bond for Mozambique.
FTSE-100 closed almost flat, dragged by exporters (higher GBP),
banks (regulatory concern & muted guidance/analyst outlook) while helped by
commodities (metals/miners/energy), mixed health care.
Back to home, Indian
market (Nifty/India-50) is now trading around 10450, down by almost 0.38%
and bucking the overall regional trend on PMLA concern from Panama to the
latest Paradise papers fiasco as significant numbers of high profiles super rich
and cos are involved in the so called money laundering scandal
(legally/illegally, whatever may be the case).
Govt has also geared up with multimodal agencies
to probe the matter in its effort of “war on black money & shell cos” on
the 1st anniversary of DeMo; Govt may speed up its “surgical war on
corruption” ahead of series of state elections and also the general election in
early 2019.
As Indian Govt has banned/tightened P-Notes in FNO,
volumes of FIIs (under P-Notes suspected for round tripling of Indian black
money) may shift to SGX, where Nifty-50 scrips may be permitted to trade.
Market will also focus on GST simplifications and any “big” announcement for tax relief on
traders. As par reports, apart from slashing abnormally high GST rates of 28%
for several common items, Govt may change the monthly return filing norms to
quarterly and hike the limit of composite dealers to Rs.1.5 cr.
This may be a big positive headline, but may not
solve the poor IT network connectivity issues across the country, which is most
vital for a smooth GST implementations. Also, most of the MSME/traders are adverse
to maintain their books of accounts properly due to high compliance cost,
unviable for their business models and also for the fear of past suppression of
tax payments (legacy issues).
Although, Govt will try to announce something big
to simplify the GST and to address the small traders (key voters) ahead of
elections, it may be a political controversy as EC may also object for any big
bang announcement & PR campaign.
SGX-NF
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