Market Wrap: 18/12/2017 (17:00)
NSE-NF (Dec):10411 (+51; +0.50%)
(TTM PE: 26.57; Abv 2-SD of 25; TTM Q1FY18 EPS: 391;
NS: 10389; Avg PE: 20; Proj FY-18 EPS: 418; Proj Fair Value: 8360)
NSE-BNF (Nov):25641 (+131; +0.51%)
(TTM PE: 29.52; Near 3-SD of 30; TTM Q1FY18 EPS:
867; BNS: 25595; Avg PE: 20; Proj FY-18 EPS: 961; Proj Fair Value: 19220)
For 19/12/2017: Dec-Fut
Key support for NF: 10390/10315-10280/10230
Key resistance for NF: 10435/10475-10535/10580
Key support for BNF: 25400/25200-24950/24800
Key resistance for BNF:
25775/25875-26050/26200
Trading Idea (Positional):
Technically, Nifty Fut-Dec (NF) has to sustain over 10495 area for further
rally towards 10535-10580 & 10640-10695 zone in the short term (under
bullish case scenario).
On the flip side, sustaining below 10475-10435 area, NF may fall towards
10390-10315 & 10280-10230 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 area, BNF may fall towards
24300/25200-25100/24950 & 24800-24650 area in the near term (under bear
case scenario).
Indian market (Nifty-Fut/India-50) today (18th Dec) closed around 10411, edged up by almost 0.50% on
less impressive likely BJP win in GJ election; it made an opening session panic
low of 10060 after opening around 10200, gap down by
almost 157 points as BJP unexpectedly slips in the early trend, quite divergently from the exit poll prediction of
110 seats for BJP or the party’s own estimate for more than 150 seats; in the
opening minutes, INC was seen leading in a neck & neck race.
But market soon recouped the early steep loss on
gradual improvement in BJP’s tally and eventually jumped to day high of 10460
on bargain hunting & huge short covering as it’s clear that BJP is set to
win by a thin margin, but able to form the Govt with magic halfway number.
As par latest trend, BJP is set to win around
100-105 seats vs INC’s 78-73 seats; i.e. the result is slightly below exit
polls median projections, but lower than 116 seats of BJP in 2014 vs 2/3rd
majority of 120 and BJP’s own estimates of 150; i.e. overall BJP’s likely
victory may be far less impressive.
After market hours final tally from GJ came as 99
vs 77 in favour of BJP, much less than the median exit poll projections of
around 110-115; incidentally NOTA (none of the above candidate) votes were
casted significantly this time, which was deciding factor in many closely
contested seats and may be in indication that certain section of the public is
against the BJP Govt for many issues like DeMo, GST, rural agrarian crisis,
un/under-employment etc, but at the same time they are also not ready to
support the INC.
Although, INC is out from another state (HP), no
one perhaps expect an INC win in GJ this time too. But the close fight in GJ
this time shows that NAMO is still the king-maker of BJP; i.e. too much
dependency on NAMO and it’s his leadership & trust of people, which matters
most. In 2014, people actually voted for NAMO’s leadership quality and
Modinomics model for GJ and not for BJP. The same trend is visible in GJ and
recent poll in UP and the will be also a prime factor for 2019 general
election.
Also, rural/farmer distress is now a reality after
DeMo & other structural reason; it’s the urban support which is helping BJP
right now.; youth un/underemployment & the complex form of GST is another
headwind, which may continue to hog the limelight in 2019 general election.
Govt/Modi may be compelled to take the path of political populism instead of
structural reforms to win votes in 2018-19.
For INC, this may be a respectable defeat and RAGA
will be a serious contender for 2019 election and the game will be not one
sided which is very important for a vibrant democracy. An 11% vote swing from
2014 against BJP and 5% in favour of INC may be just a warning signal that in
politics everything is possible as RAGA/INC will be charged up from being a “no
factor” few months ago. After politics, market will now focus on economics;
earnings, PSBS recaps. NPA resolution etc; the list is long.
Govt may now embark more on social welfare &
rural infra spending along with compromises on GST revenue (more
recalibrations) and other political dolls with four states election in 2018,
having large rural voters. This may further complicate the fiscal math in the
coming days with Oil (Brent Crude) hovering above $60; India’s 10YGSEC yield
yesterday hits a high of around 7.22% and closed around 7.18%. Higher bond
yields/borrowing costs may not be good for the Indian corporates.
All eyes now may be on actual budget & fiscal
deficit figure, Q3FY18 earnings and macros as the election phobia is now over;
but less than expected seats in GJ with reduced margin/voting share and lack of
landslide victory may also keep the market disappointed. As equity market is a
slave of earnings, Nifty EPS need to justify the stretched valuations as focus
will now shift from politics to economics.
Today global cues were positive on renewed US taxreform optimism as passage of the legislation is now a mere formality. But
higher tax/fiscal deficits because of US corp/personal tax cut may continue to
be a headwind for the market; all eyes may be now on the actual fine prints of
the tax reform bill.
Market may also hope that after disappointing GJ
election, Govt must think twice before any structural reform like DeMo &
poor implementation of GST with a complex format, but the overall theme may be
reform & perform.
Today Nifty was helped mostly by VEDL, ICICI Bank
(ICICI Sec IPO launch), SBI, TCS, Maruti, L&T, M&M, Bajaj Fin, Eicher
Motors & HDFC Bank (fresh fund raising for growth & analysts’ optimism)
by almost 48 points cumulatively.
Nifty was dragged mostly by IOC, Infy, ITC, Yes
Bank, HPCL, Kotak Bank, HDFC, TECHM, UPL & HCL Tech by around 19 points
altogether.
Overall, today Indian market was helped by banks
& financials (PSBS/RECAPS optimism), auto, mixed techs, media, metals,
pharma, consumption, while dragged by reality, mixed energies/OMC (petro
products price was not increased despite GJ election is over) and mixed private
banks.
SGX-NF
BNF
EURUSD
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