Market Mantra: 15/12/2017 (09:00)
SGX-NF: 10360 (+75)
For the Day: updated: 13:30
For 15/12/2017: Dec-Fut
Key support for NF:
10340/10305-10270/10220
Key resistance for NF:
10405/10425-10495/10535
Key support for BNF:
25200-24950/24800
Key resistance for BNF:
25500-25750/25875
Trading Idea (Positional):
Technically, Nifty Fut-Dec (NF) has to sustain over 10425 area for further
rally towards 10475-10510/10535 & 10580-10640 zone in the short term (under
bullish case scenario).
On the flip side, sustaining below 10405 area, NF may fall towards
10340/10305-10270 & 10220-10190/10150 zone in the short term (under bear
case scenario).
Technically, Bank Nifty-Fut (BNF) has to sustain over 25750 area for further
rally towards 25875- 26050 & 26200-26325 zone in the near term (under
bullish case scenario).
On the flip side, sustaining below 25750-25600 area, BNF may fall towards
24300/25200-25100/24950 & 24800-24650 area in the near term (under bear
case scenario).
As par early SGX indication, Nifty Fut (Dec) may open around 10360, gap up by almost 75 points,
cheering a clean win for NAMO in GJ as par median exit poll forecasts, bucking
the Global/Asian cues, which is quite subdued on lower USD amid renewed US tax
reform uncertainty and ongoing bond yield curve flattening, even after dovish
hike by Fed this time. Also there was renewed NK concern as being expressed by
Russia.
USD sinks further yesterday despite dovish jawboning by Draghi
& upbeat US economic data (core retail sales/jobless claims/mixed PMI) as
market is assuming that Fed will be in the sideline at least till June’18
irrespective of any economic data because of change in Fed leadership. Also,
upbeat retail sales in Nov may be a function of black Friday sales madness
(seasonal).
Further some last minute obstructions for the US tax reform by
some influential RNC Senators on ground of issues like Child tax benefit and
repel of Obama era net neutrality may have affected the USD sentiment (risk-on).
As par reports, at least two RNC Senators may vote against the
tax bill and thus passage of the same may be now doubtful on wafer thin
majority of only 1 vote till Dec’17. For this, US VP (Pence) has cancelled his
ME tour as his vote is required to break any tie. Repel of net neutrality may
also increase the overall costs of business/services/internet and against Trump’s
theme of deregulation.
Overnight, US market closed in red, well off the record day high
on US tax reform squabbling, fall in US bond yields and concern of net neutrality;
DJ-30 fell by 0.31%, S&P-500 lost by 0.41% and closed around 2652, while
NQ-100 dropped by 0.28% & Russel-2000 sinks by 1.2%; banks & financials
dragged the market most as fall in US bond yields is negative for their
business/lending model.
Also, market was further dragged by healthcare, materials &
telecoms, but helped by selected pharma (Teva restructuring), media stocks to
some extent (M&A deal between Walt Disney & 21st Century
Fox) along with selected tech/FANG stocks. As par tax reform leak outs, US corp
tax will be 21% vs 35% now and personal tax will be capped at 27% vs 37% now.
US index future (SPX-500) is now trading around 2659, edged up
by almost 0.11% tracking muted Asian cues ahead of EU market opening. Technically,
SPX-500 now has to sustain above 2650-2640 zone; otherwise expect some
corrections till 2625/19-2605 & 2595 zone.
Most of the Asia-Pacific market except India are now trading in
deep to moderate red on lower USD (upbeat JP economic data including Tankan
business survey) & US tax reform uncertainty and China/HK money market tightening
despite net injection of 150 bln Yuan today by PBOC (net weekly drain 80 bln
Yuan).
Additionally, HK market is in pressure on plunge in a Chinese
property developer (Sunac) on fresh fund raising plan amid tight liquidity
conditions on yearend holidays; techs (Tencent/Apple suppliers) are also
dragging. Australia also edged down on banks & financials and mixed miners.
Overnight EU market closed in red (Stoxx-600: -0.5%) on
exporters (weak USD), banks & financials, utilities & consumer stocks;
EUR initially gone higher on upbeat EU economic data (German Mfg PMI) and GDP forecast
by ECB, but eventually sinks on forecast of core CPI by Draghi; DAX-30 fell
0.4% & CAC-40 was down by 0.80%.
FTSE-100 fell by 0.70% on exporters (higher GBP after upbeat
retail sales), UK political & Brexit jitters, banks & financials (lower
US bond yields), utilities & consumers, retailers (seasonal uptick in
retail sales) while helped by basic raw materials, telecoms & techs.
EU stocks are poised to open lower today amid lower USD and
ongoing political jitters from Italy to Germany.
Back to home, Indian
market (Nifty-Fut/India-50) is now trading around 10365, soared by another
0.85% and outperforming the regional muted trend on MODI magic after almost all
the exit polls predicted a clean win for BJP in the GJ election, although INC
is also poised to improve its figure.
All eyes will be now on 18th
Dec, when actual result will flash out as 110 seats for BJP in GJ is now
already discounted against 115 in 2012 and the magic number of 120 (2/3rd
majority) in the 180 seats GJ assembly.
Now, anything above 120-150 may cause more rally and below
100-80 will be perceived as negative. But after GJ cheer rally, market may go
back to the reality of stretched valuations, NPA resolution, PSBS recaps
mechanism, higher oil & inflation, concerns for fiscal slippages-the
headwinds list is quite long.
USDINR was down by almost 0.50% on NAMO optimism (political
stability & hopes for further vital structural reform like land & labour
etc); as par reports, RBI may have intervened in the FX market to stem the
strength of INR today.
But Indian bond market is not so much upbeat about Indian macros
(higher inflation, lower growth & possibility of higher interest rates) and
is now still hovering around 7.13%, much above the 6.85% level achieved soon
after Moody’s upgrade; 6-months low is around 6.32% vs high of 7.25% (recent).
Divergence between bond & currency/stock market may be worrisome as the
former is being driven by economics, whereas the later is being driven by
politics.
SGX-NF
SPX-500
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