Wednesday, 27 December 2017

Nifty Edged Up & Scaled Another Record High On Telecom Debt Resolution Plan

Market Wrap: 26/12/2017 (17:00)

NSE-NF (Dec):10530 (+25; +0.24%) 

(TTM PE: 26.93; Abv 2-SD of 25; TTM Q1FY18 EPS: 391; NS: 10531; Avg PE: 20; Proj FY-18 EPS: 418; Proj Fair Value: 8360)

NSE-BNF (Nov):25693 (+27; +0.10%) 

(TTM PE: 29.58; Near 3-SD of 30; TTM Q1FY18 EPS: 867; BNS: 25649; Avg PE: 20; Proj FY-18 EPS: 961; Proj Fair Value: 19220)

For 27/12/2017: Dec-Fut

Key support for NF: 10490/10465-10425/10375

Key resistance for NF: 10555/10575-10610/10650

Key support for BNF: 25600/25400-25200/24950

Key resistance for BNF: 25775/25875-26050/26200

Trading Idea (Positional):

Technically, Nifty Fut-Dec (NF) 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 10490/10465-10425/10375 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 25725-25675 area, BNF may fall towards 25600/25400-25200/24950 & 24850-24700 area in the near term (under bear case scenario).

Indian market (Nifty Fut-Dec/India-50) today (26th Dec) 10525, edged up by almost 25 points (+ 0.24%) after making a day high & low of 10538-10497 amid holiday thinned mixedGlobal/Asian cues and telecom optimism, after R-COM unveiled another debt restructuring plan aiming a definitive deleveraging resolution of its NPA/NPL through selling its core assets by March’18.

Previously, R-COM was supposed for a definitive resolution by Dec’17; but the present resolution plan may be backed by R-Jio, as MDAG group will buy stressed telecom assets of his younger brother ADAG (R-COM), who is in deep “debt crisis”.

Subsequently RIL (R-Jio) rallied as acquisition of stressed telecom assets of R-COM may be beneficial for the co; Yes bank & Bharti Airtel also helped but PSBS lagged on delayed R-COM debt resolution plan and less than expected Govt cash infusion (Rs.0.8 tln capex) by early 2018 for only the “performers”. 

Overall, R-COM debt resolution will be great relief for its loan consortium of around 36 Indian & global banks, if it ultimately works as par ADAG plan; R-COM surged by almost 40% today at day high of 23.20. But as R-COM is now out of SDR (strategic debt resolution), Banks has to treat its NPL as NPA for Q3/Q4FY18, until actual resolution (pay back) took place after selling its telecom assets.

Today Indian market opened almost flat around 10506 and was range bound as most of the institutions & HNI desks are in holiday mood this week. But it rallied soon after R-COM presser and Nifty-50 (Spot) made another life time high of 10545 in late day trading.

As par ADAG (R-COM), there will be no equity conversions & zero debt write-offs for the lenders and the fresh plan will reduce R-COM’s debt by Rs.0.25 tln within Q3FY18. The “new” R-COM will have only Rs.0.06 tln debt on its books and its revenue will primarily come from data centre business involving overseas operations.

Today Nifty was supported mostly by RIL, VEDL, Bharti Airtel, Yes Bank, Bosch, Bharti Infratel, ICICI Bank, Sun Pharma, ITC & Tata Motors by around 28 points altogether, while it was dragged by HDFC Bank, SBI, Infy, HUL, M&M, Maruti, NTPC, IOC, Power Grid & Coal India by almost 11 points cumulatively.

Overall, today Indian market was supported by metals (buzz of price rise), pharma, reality, media, infra, mixed private banks, telecoms, mixed auto, consumptions, while it was dragged by PSBS, mixed techs & selected energies.

After market hours, GST collection figure for Nov’18 came muted at around Rs.0.81 tln vs 0.83 tln in Oct and an average monthly figure of Rs.0.92 tln in Q2FY18. The declining trend of GST revenue may be not only bad news for the fiscal math, but may be also signaling another tepid earnings quarter in Q3FY18, although the sudden fall in GST collections may be also attributable to recalibrations (reduction in tax) in some of the daily usage products & adjustment of IGST credits & exporters refunds.

But compliance may be an issue for GST collections now as around 20% of the registered GST payers have not filed any return at all. Surging Brent Oil above $65 may be another serious macro headwind for the Indian economy & the market right now.




No comments:

Post a Comment