Market Wrap: 28/12/2017 (17:00)
NSE-NF (Jan):10512 (-21; -0.20%)
(TTM PE: 26.80; Abv 2-SD of 25; TTM Q1FY18 EPS: 391;
NS: 10478; Avg PE: 20; Proj FY-18 EPS: 418; Proj Fair Value: 8360)
NSE-BNF (Jan):25498 (-61; -0.24%)
(TTM PE: 29.40; Near 3-SD of 30; TTM Q1FY18 EPS:
867; BNS: 25490; Avg PE: 20; Proj FY-18 EPS: 961; Proj Fair Value: 19220)
For 29/12/2017: Jan-Fut
Key support for NF:
10470/10430-10400/10350
Key resistance for NF:
10555/10575-10610/10650
Key support for BNF:
25400/25200-24950/24800
Key resistance for BNF:
25600/25775-25875/26050
Trading Idea (Positional):
Technically, Nifty Fut-Dec (NF)/NS has to sustain over 10575 area for
further rally towards 10610/10650-10695 & 10745-10795 zone in the short
term (under bullish case scenario).
On the flip side, sustaining below 10555 area, NF may fall towards
10470/10430-10400/10350 & 10285-10190 zone in the short term (under bear
case scenario).
Technically, Bank Nifty-Fut (BNF) has to sustain over 25775 area for further
rally towards 25875- 26050 & 26200-26325 zone in the near term (under
bullish case scenario).
On the flip side, sustaining below 25725-25600 area, BNF may fall towards
25400/25200-24950 & 24800-24575 area in the near term (under bear case
scenario).
Indian market (Nifty Fut-Jan/India-50) today (28th Dec) closed around 10512, slips by almost 21 points
(-0.20%) and well off the session high of 10569 on fiscal & LTCG (long term
capital gain tax) worries despite holiday thinned mixed Global/Asian cues and
lower USD, beneficial for the overall economy.
Indian market today opened around 10532 on mixedGlobal/Asian cues & edged up after Govt formally declared about additional
FY-18 borrowing for Rs.0.50 tln yesterday, slightly above market estimates of
Rs.0.25 tln. Indian 10YGESC bond yield today surged to almost 7.39% on probable
higher FY-18 fiscal deficit of around 3.50% (estimates varies from 3.35-3.70%).
Apart from dilemma of fiscal slippages &
fiscal stimulus, populist budget, higher Oil & higher inflation, market may
be also concerned about renewed debate LTCG definition in the forthcoming FY-19
budget; LTCG was deferred last year after DeMo led market disruption. But Govt
may go ahead this year as market is hovering around life time high with no
major risks of disruptions/outflows and Govt revenue is also stretched.
Govt may change the definition of LTCG from
present one year holding to three years or scrap the distinction between STCG
& LTCG (both @15%) as a “meaningful tax contribution by the capital market
towards growth of the country”. By increasing LTCG period, Govt may also
encourage long term investments rather than short term trading/derivatives.
Overall, higher bond yields may continue haunt the
Indian market as 10YGSEC yield is seen around 7.50% in the days ahead; bond
market correctly anticipates higher fiscal deficit despite Moody’s rating
upgrade optimism. A higher bond yield may translate into higher borrowing costs
for the Indian corporates delaying the much awaited earnings recovery.
Such higher bond yields may be a reminder of
Greece few years ago, borrowing heavily to support Govt capex/infra & huge
federal workforce even at the cost of higher borrowings (bond yields).
A lower bond prices (higher bond yields) may be
also bad for the Indian banks/PSBS on MTM loss for the bond portfolio as almost
50% of EBITDA came from this A/C. PSBS suffered most despite recaps narrative.
Market may be also worried about new SEBI proposal
of 10% cross-shareholding caps in MF and an immediate loan defaulter disclosure
by the listed cos.
MDAG Came
To The Rescue Of ADAG:
After market hours, R-COM confirms that R-JIO is
bailing out it from the debt/NPA mess through buy out of all the core telecom
assets; although this is in expected line, NCLT stance here might be
interesting as it’s equivalent to back door entry of the defaulters (connected
entity between younger & elder brother).
But, bailing out of R-COM (ADAG) by R-JIO (MDAG)
may be not good for RIL/R-JIO’s B/S, already heavy with existing telecom &
energy debt; thus at least we may negative reaction on RIL for the short term
& being an index heavy weight, RIL may also drag the market.
Market is expecting improvement in GDP, earnings
recovery, NPA resolution, GST recalibrations as some of the tailwinds while
fiscal slippages, higher bond yields, populist budget, four state elections in
non-BJP rules states, a hawkish RBI and negative global cues/geo-political jitters
as some of the headwinds for Q4FY18.
Today Nifty was mostly supported by HDFC Bank,
VEDL, ICICI Bank, Hindalco, UPL, Tata Steel, TCS, DRL, M&M and IBULLS HSG
by around 17 points altogether.
Nifty was dragged mostly by IOC, SBI, HDFC, Axis
Bank, Tata Motors, Adani Ports, Eicher Motors, Bajaj Fin, Hero Motors &
Kotak Bank by almost 22 points cumulatively.
Overall, Indian market was today helped by metals
(higher commodity/copper prices), reality & selected private banks, while
dragged by PSBS, financials, auto, selected techs, media, healthcare/pharma,
energies/OMC (higher Oil) & consumption stocks to some extent, but Nifty
closed the Dec exp by 2.5% higher after slim win by BJP in GJ & telecom
debt resolution (R-COM) optimism and higher oil & fiscal worries with a
hawkish hold by RBI.
SGX-NF
EURUSD
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