Wednesday 6 December 2017

Nifty Edged Down On Mixed Global Cues & Concern Over GJ Election Outcome & RBI Stance



Market Wrap: 05/12/2017 (17:00)

NSE-NF (Dec):10146 (-13; -0.13%) 

(TTM PE: 25.88; Abv 2-SD of 25; TTM Q1FY18 EPS: 391; NS: 10118; Avg PE: 20; Proj FY-18 EPS: 418; Proj Fair Value: 8360)

NSE-BNF (Nov):25247 (+61; +0.24%) 

(TTM PE: 28.98; Near 3-SD of 30; TTM Q1FY18 EPS: 867; BNS: 25125; Avg PE: 20; Proj FY-18 EPS: 961; Proj Fair Value: 19220)

For 06/12/2017: 

Key support for NF: 10110/10090-10070/10050

Key resistance for NF: 10205/10225-10310

Key support for BNF: 25200/25100-24950/24700

Key resistance for BNF: 25600/25750-25875/26050

Trading Idea (Positional):

Technically, Nifty Fut-Dec (NF) has to sustain over 10225 area for further rally towards 10310-10350 & 10425-10475 zone in the short term (under bullish case scenario). 

On the flip side, sustaining below 10205-10195 area, NF may fall towards 10110/10090-10070/10050 & 10010-9970 zone in the short term (under bear case scenario).

Technically, Bank Nifty-Fut (BNF/BNS) has to sustain over 25600 area for further rally towards 25750-25875 & 26050-26200 zone in the near term (under bullish case scenario).

On the flip side, sustaining below 25550 area, BNF may fall towards 25400-25200/25100 & 24950-24700/24600 area in the near term (under bear case scenario).

Indian market (Nifty Fut/India-50) today (5th Dec) today closed around 10146, edged down by almost 13 points (-0.13%) on mixed global/Asian cues (tech sell off on concern of US tax cut structure) and concern about GJ election outcome coupled with subdued forecast of GDP growth for India by Fitch yesterday.

Also Indian market may be on edge ahead of RBI tomorrow as some economists are expecting a surprise rate cut along with shift in overall stance from neutral to accommodative again; Govt officials/NAMO-Advisers are also for a drastic rate cut by RBI.

Indian market today opened around 10126, gap down by almost 40 points and made a session low of 10091; but recovered quite smartly on strong opening of EU/German market and made a late day high of 10180; as par some opinion poll, the fight between BJP & INC may be neck & neck this time contrary to earlier expectations of a easy ride for NAMO in GJ election to be held on 9th & 14th Dec; result will be announced on 18th Dec; exit poll on 14th Dec after evening.

Also subdued Service & Composite PMI for Nov may have dampened the overall market sentiment today; but Govt’s stimulus/incentives package for exporter’s sops (Rs. 84.5 bln) may have also helped. 

Govt is targeting to double Country’s export by 2020 amid severe slowdown (saturation) in the domestic market after DeMo & GST; especially in labour intensive textiles & farm products. In Oct, Indian export fell significantly for the 1st time in the last 15 months, while core import is steadily increasing indicating some vacuum in the mfg/engineering field/MSMES after DeMo.

All Eyes Will Be On RBI Today For Any Surprise:

Market will also focus on RBI statement tomorrow as rate cut probability is virtually nil; considering all the pros & cons like recovery in GDP, higher core inflation around 4.50-5%, recent surge in oil & food inflation, concern of fiscal slippages, hawkish Fed and global tunes of QT, RBI may not afford to be not only neutral, but it may consider rate hikes in H2FY19, if Fed goes on for its 3-4 rate hike cycles in 2018 amid higher fiscal/tax deficits in US. 

Thus RBI may take a stance of “hawkish hold” tomorrow irrespective of some Govt pressure to cut rates to global levels

Today Nifty was supported by RIL, SBI, Bajaj Fin, Yes Bank, Indusind Bank, Bharti Airtel, ICICI Bank, IBULLS HSG, BPCL & Bharti Infratel by almost 31 points altogether.

Nifty was dragged by HDFC Bank, Eicher Motors, ITC, Hero Motors, ONGC, L&T, Wipro, Tata Steel, NTPC & Bosch by almost 29 points cumulatively.

Overall, Indian market today was supported by Banks (PSBS & Pvt barring HDFC Bank for NPA divergence), media and energies (RIL was also helped by R-Jio optimism after Google announced special app for its low cost phone); while it was dragged by auto, FMCG, techs, metals (slump in Copper on China concern), consumer staples, exporters/pharma to some extent (higher INR).





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