Market Mantra: 14/12/2017 (09:00)
SGX-NF: 10265 (+38)
For the Day: updated: 13:05
For 14/12/2017: Dec-Fut
Key support for NF: 10210/10190-10150/10090
Key resistance for NF:
10305-10365/10395
Key support for BNF:
24950-24800/24650
Key resistance for BNF:
25350-25500/25750
Trading Idea (Positional):
Technically, Nifty Fut-Dec (NF) has to sustain over 10305 area for further
rally towards 10365-10395/10425 & 10475-10510/10535 zone in the short term
(under bullish case scenario).
On the flip side, sustaining below 10285 area, NF may fall towards 10245/10210-10190/10150
& 10090-10040 zone in the short term (under bear case scenario).
Technically, Bank Nifty-Fut (BNF) has to sustain over 25350 area for further
rally towards 25500-25750 & 25875-26050 zone in the near term (under
bullish case scenario).
On the flip side, sustaining below 25300 area, BNF may fall towards
25200/25100-24950/24800 & 24650-24350 area in the near term (under bear
case scenario).
As par early SGX indication, Nifty Fut (Dec) may open around 10265, gap up by almost 38 points
tracking subdued Global/Asian cues on lower USD after an expected “dovish hike”
by Fed yesterday; for India although a lower USD may be good for the overall
economy being import heavy unlike its Asian peers, almost 60% of Nifty earnings
now comes from export and thus a lower USD is also not good for the Indian
market.
Additionally, Indian market may be extremely cautious about
close fight between BJP & INC this time in GJ and thus all focus may be on
today’s evening exit poll, which will be released after market hours.
USD sinks yesterday on muted core CPI and a dovish hike by Fed;
although at a glance, yesterday Fed’s hike & projections of 3 more hikes in
2018 with upgraded forecast of GDP growth and labour market looks quite
hawkish, the fact that Fed is quite concerned about US wage growth & core
inflation outlook and overall maintained the status-co of 2018 dot-plots
projection of 3 hikes may be termed as dovish or rather than less hawkish.
Although, Fed has projected next hike cycles for 2018 at
March/June/Sep or Dec, market is now only giving some importance to the June
meet as new Fed Chief Powell will take charge only in March and Fed will also publish
its upgraded economic projections in its March meet (Q1). By that time, Fed may
have also a clear path of US tax reform (tax deficits) & any other
fiscal/infra spending by Trump & Co and thus there is virtually no
probability of a Fed move before June’18, which is still 6 months to come.
Even if Fed hikes in June’18, the next hike may not come before
Dec’18 as Fed may not take any risk of almost back to back hike in Sep’18 along
with its ongoing B/S tapering. Thus, although Fed is projecting 3 hikes in
2018, in reality, it may be only 1 or 2 hikes and thus credibility of Fed’2018
dot-plots of 3 hikes may be at stake and USD gone lower after Fed. A lower USD
may be good for US economy & the market, but it may not be good for the
export heavy Asian & EU market.
Moreover, after Fed hike yesterday, PBOC has raised its RR &
MLF lending rate today by 0.05%; HK has also raised its base rate by 0.25% to
catch Fed and all these monetary policy tightening may be affecting the overall
regional market sentiment; China & HK is down by around 0.40% & 0.50%,
while Japan dropped by 0.30% on higher Yen & lower US bond yields, negative
for both exporters and banks & financials. China 10Y bond yield is now
around 3.95%, below the panic level of 4%.
Overnight, US market closed mixed on US tax reform optimism
& dovish hike by Fed and some fall in USD/US bond yields; banks &
financials dragged as fall in US bond yield is not favourable for their business/lending
model; energies (lower oil) & media (M&A deal issue) was also down,
while industrials & consumer discretionary helped.
DJ-30 gained by 0.33%, while S&P-500 edged down by around
0.05% to close around 2663 and NQ-100 rose by 0.20% and Rousell-2000 surged by
0.50% as US tax reform package may be more beneficial to SME/mid-corporate.
Although market is quite optimistic about the passage of final
GOP tax bill, there is also some concern about the changing math of US Senate,
where RNC/Trump has now a wafer thin majority of 51-49 after the “shocking” RNC
defeat in Alabama poll yesterday. There was also report that US corp tax will
be slashed to 21% instead of 20% earlier & will be effective from 2018.
US index future (SPX-500) is now trading around 2670, almost
flat (+0.05%) amid muted Asian cues. Technically, SPX-500 will have to now
sustain over 2575 zone for any further “Santa Rally”.
EU market is also poised to open in red on lower USD after dovish
hike by Fed ahead of ECB & BOE today.
Back to home, Indian market
(Nifty-Fut/India-50) is now trading around 10170, sinks by another 0.41% on
concern of GJ exit poll outcome later today coupled with worries about fiscal
slippages as GST collection across the states may be plummeting now.
As par WB Govt (FM), Oct GST collection was down by Rs.0.12 tln
amid 40% plunge in MSME activities & production. At this rate WB alone may
face a revenue shortfall of around Rs.0.85 tln by FY-18; till now the gross shortfall
is around Rs.0.39 tln in the first 4 months since GST roll out.
India’s consolidated higher fiscal deficit above 6.5% may be another
headwind for its rating upgrade from S&P and Fitch. Indian Govt may spend
50% more on infra next year (FY-19) to Rs.6-7 tln with an increase of 10% for
the railways.
Market will also focus on the latest list of 28 high profile corporate
defaulters to be referred to NCLT/IBC as banks have to make higher (100%)
provisions on them, which may also affect the FY-18/19 earnings.
Meanwhile, Indian WPI for Nov came as 3.93% vs est 3.78%; prior:
3.5%; it’s at 8-months high and may be also pointing towards higher headline
CPI in the coming days as it’s equivalent to PPI in India. A higher WPI may be
also negative for Indian GDP as it acts as a deflator also.
Elsewhere, Moody’s has said that although outlook for Indian
corporates are mostly stable, it’s negative for the telecom sector. Indian bond
yields are now hovering around 7.16% and USDINR is down by almost 0.25%.
SGX-NF
SPX-500
No comments:
Post a Comment