Nifty Surged By Moody’s “Santa Gift” To Modi, But Well Off The Day’s High As Exporters Drag On Weak USD Coupled With Muted Global Cues

Market Wrap: 17/11/2017 (17:00)

NSE-NF (Nov):10299 (+35; +0.34%) 

(TTM PE: 26.23; Abv 2-SD of 25; TTM Q1FY18 EPS: 392; NS: 10284; Avg PE: 20; Proj FY-18 EPS: 418; Proj Fair Value: 8360)

NSE-BNF (Nov):25791 (+241; +0.94%) 

(TTM PE: 29.30; Near 3-SD of 30; TTM Q1FY18 EPS: 878; BNS: 25728; Avg PE: 20; Proj FY-18 EPS: 961; Proj Fair Value: 19220)

For 17/11/2017: 

Key support for NF: 10270-10215/10190

Key resistance for NF: 10305/10365-10410

Key support for BNF: 25700-25500

Key resistance for BNF: 26000-26100

Trading Idea (Positional):

Technically, Nifty Fut-Nov (NF) has to sustain over 10410 area for further rally towards 10460- 10500/10535 & 10575-10675 zone in the short term (under bullish case scenario). 

On the flip side, sustaining below 10390-10365 area, NF may fall towards 10305/10270-10215/10190 & 10150 -10095 zone in the short term (under bear case scenario).

Technically, Bank Nifty-Fut (BNF) has to sustain over 26000 area for further rally towards 26100-26325 & 26400-26675 zone in the near term (under bullish case scenario).

On the flip side, sustaining below 25950 area, BNF may fall towards 25700-25550 & 25400-25200 area in the near term (under bear case scenario).

Indian market (Nifty Fut/India-50) today closed around 10299, surged by almost 35 points (+0.34%) after making an opening session high of 10373 and closing minutes low of 10293; market today opened around 10345, soared by almost 81 points on Moody’s “surprised” upgrade for India coupled with mixed global cues amid US tax reform suspense, Muller’s investigation on Trump’s alleged Russian links & fresh NK tensions.

USD edged down & EUR popped up and a dual combination of that is negative for export heavy Asian as well as EU market; except China almost all the other APC market closed in green, but well off the session highs.  

Indian market rallied by around 0.70% in Nifty Spot (10289) today on Moody’s “Santa Gift” (rating upgrade), but also closed well off the day high (10343), on muted global cues & lower USD, which is also negative for Nifty earnings as almost 60% of it comes from export.

Indian Market Closed Well Off The Moody’s High On Dilemma Over Govt’s Fiscal Spending vs Discipline:

Despite Moody’s boost, Indian market today dragged on in the closing session by exporters/techs as INR got strength after Moody’s upgrade. Also, market may be concerned over Govt’s incremental fiscal spending plan to revive the slowing economy after Moody’s upgrade as this will jeopardize the fiscal math further, inviting downgrade from Moody’s again.

Indian GDP is now heavily dependent on Govt spending (capex) amidst subdued private capex, which is not expected to improve substantially unless consumer spending gets a lift and corporate B/S is out of stress (deleveraging). Also, DeMo and Govt’s war on black money is partially responsible for muted consumption & tepid private capex. In such scenario, if Govt backtracks on its incremental fiscal spending rhetoric for the sake of rating, then it may be further setback for the economy & the market.

Thus, all eyes will be on the Govt now which may officially guide its FRBM path next month for the remaining FY-18 and also for FY-19; i.e. if they stick to the earlier projected 3.2%-3% path or deviate a little bit for the sake of growth. If nominal GDP slows down further from earlier projection, Govt is bound to curtail its fiscal spending to stick with the estimated deficit target to avoid any rating degradation.

Although, Moody’s upgrade may be looked as “unexpected”, it was not surprising at all after India’s jump in ease of doing business and PSBS recaps mechanism; market may have anticipated such rating upgrade considering the recent rally, especially for the PSBS, which may benefit most after Moody’s upgrade, because it will help them to tap capital market for part of their recaps requirement.

Tata Power was biggest gainer of the Nifty (+5.96%) after it secured a huge Indian Navy order for supply of PDDS.

Today Nifty was supported by HDFC, ICICI Bank, HDFC Bank, Tata Motors, RIL, Maruti, ITC, VEDL, SBI & Indusind Bank by around 70 points cumulatively.

Nifty was dragged by Infy, TCS, TECHM, Bosch, Bharti Infratel, HCL Tech, ONGC, Asian Paints, ZEEL & Wipro by around 24 points altogether.

Overall, Indian market was today helped by Banks & financials (on hopes that, rating upgrade will cause lower bond yields & subsequent lower cost of funds), automakers, metals, healthcare/pharma (renewed US FDA optimism after some product approval despite lower USD), property developers (Govt reform on affordable housing by increasing the applicable built up area), mixed energies and consumption stocks, while it was dragged by techs (higher INR after Moody’s upgrade).

Europe Set To Trade Mixed On Lower USD Amid US Tax Reform Squabbling & Fresh NK Tensions

By Asis Ghosh | 17/11/2017 - 09:29

Asia Closed Mixed Amid Positive US Cues And Lower USD On NK/US Geo-Political Tensions & US Tax Reform Suspense

By Asis Ghosh| 17/11/2017 - 14:05 

USDJPY Drifting Towards 112 On Renewed Geo-Political Jitters & US Corp Tax Cut Uncertainty Coupled With Hurricane Distorted Housing Data

By Asis Ghosh | 17/11/2017 - 16:24 

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