Market Mantra: 13/11/2017 (09:00)
SGX-NF: 10250 (-14)
For the Day: updated: 09:10
Key support for NF:
10255-10195
Key resistance for NF:
10320-10360
Key support for BNF:
25400-25200
Key resistance for BNF:
25650-25750/25950
Trading Idea (Positional):
Technically, NF has to sustain over 10320 area for further rally towards
10360-10400 & 10475-10535 zone in the short term (under bullish case
scenario).
On the flip side, sustaining below 10300-10255 area, NF may fall towards 10195-10150-10100-9995
zone in the short term (under bear case scenario).
Technically, BNF has to
sustain over 25750 area for further rally towards 25825-25950 & 26100-26325
zone in the near term (under bullish case scenario).
On the flip side,
sustaining below 25700-25650 area, BNF may fall towards 25400-25240 &
25100-24950 area in the near term (under bear case scenario).
As par early SGX indication, Nifty Fut (Nov) may open around 10250, almost flat on subdued global cues tracking ongoing US
tax reform suspense, UK political jitters & Brexit uncertainty, miss in
China data and surging bond yields in China.
USD got some boost yesterday on higher US bond yields on expectations
of higher US fiscal deficit, once US tax reform plans get implemented; also US
budget deficit came little higher yesterday and 10YUSTSY yields climb back
above 2.40% again.
Some dovish rhetoric from BOJ’s Kuroda yesterday repeating the
decade old narrative of keeping the “powerful JP monetary easing” may have also
helped the USD to some extent and USDJPY
edged up and closed around 113.63 ahead of deluge of central bank speakers
including Yellen, Draghi, Kuroda & Carney later in the day today.
After yesterday’s subdued “new loan” data, China today reported a set of muted economic data (retail sales,
IP, fixed asset investment & FDI), which may be an indication of Chinese
slowdown. Subsequently China 10YBOND yields surged to 4%, the highest since
2014 coupled with ongoing thrust on deleveraging.
A higher China bond yields is not good for Chinese economy &
the market and when China “sneezes”, global market bound to catch “cold” often,
if not “pneumonia”!!
Overnight, US market edged up on flurry of corporate news and ongoing drama about US
tax reform; DJ-30 gained by almost 0.10%, S&P-500 added only 0.1% (2.55
points) to close around 2585, while NQ-100 rose by almost 0.10%.
Overall, yesterday US market was helped by banks & financials
on higher US bond yields (carry trade) amid hopes of tax cut from 2018 &
higher fiscal deficit because of various tax reform proposals. Also, a high
probable Dec’17 rate hike may be helping US bond yields right now.
But market may be also confused about timing of US corp tax cut
amid duets between US Senate & US House/RNC and expecting some types of
compromises to get the tax reform agenda ahead for legislative approval; may be
corp tax cut will happen in phases by 3%
per year from 2018 to 2023 (total 15% cut).
Although, the current US yield curve flatting is worrisome for
an impending recession with time lag of average 18 months, it may be due to
also for the central bank presence in the bond market.
US market was yesterday dragged by GE (-7.2%) on 50% cut in
dividends and muted guidance or recovery plan in aviation, healthcare & power;
but helped by consumer staples & utilities having high dividend paying
capacity (McDonald and P&G).
Mattel surged by around 21% on M&A buzz; Qualcomm rose by
around 3% on rejection of unsolicited takeover bids from Broadcom.
Market may be also being on slight risk aversion mode as Dec’17
is nearing, when Fed is poised for another hike with ongoing BS tapering programme
in auto-pilot mode; ECB will also start to buy 50% less QE bonds form the
market from Jan’18. Thus, both US & EU bond yields are expected to be on
the higher side amid synchronized global chorus of QT and stocks are bound to
react, being addicted to decade old QE policies.
EU market yesterday was also in pressure on muted earnings from banks
& financials and overall Brexit jitters, but fall in currency (GBP) limited
the plunge in FTSE-100.
US stock future (SPX-500) is now trading around2578, down by almost 0.15% ahead
of EU market opening on muted Asian cues after subdued China data. EU market is
expected to open also edged down on some recovery in EUR.
Indian Market Is Under
Further Pressure On 1% Surge In WPI: (Indian version of PPI)
Back to home, Indian
market (Nifty/India-50) is now trading around 10240, edged down by almost
0.30% after 1% surge in WPI for Oct,
which came at 3.59% vs est 3.01%; prior: 2.60%; this is at 6 months high and
may further force RBI to not only on the neutral side, but may also call for
more hawkish tone to be ready for future rate hikes in line with global central
banks QT.
Meanwhile, OECD came
out with its latest GDP projections for SE, including India & China. As par
OECD, India may grow by around 7.3% in next five years, while China may slow to
6.2%.
Average SE GDP will be around 6.4% for 2017 & 5.2% (2018-22)
and China & India are expected to remain robust on resilient domestic
demand, steady investment and trade recovery. OECD sees main risks from any
rapid QT from DM (advanced economics-Fed/ECB/BOJ).
But Indian market so far not so much convinced about upbeat OECD
commentary amid fears of stagflation for
the Indian economy (higher inflation & lower growth).
SGX-NF
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