Nifty Set To Surge On Positive Global Cues & NAMO Optimism In GJ Election

Market Mantra: 08/12/2017 (09:00)

SGX-NF: 10215 (+8)

For the Day: updated: 13:15

For 08/12/2017: Dec-Fut

Key support for NF: 10205-10150/10100

Key resistance for NF: 10275-10325/10385

Key support for BNF: 25100-24850/24750

Key resistance for BNF: 25250-25500/25750

Trading Idea (Positional):

Technically, Nifty Fut-Dec (NF) has to sustain over 10325 area for further rally towards 10345/10385- 10435 & 10475-10535 zone in the short term (under bullish case scenario). 

On the flip side, sustaining below 10300-10275 area, NF may fall towards 10205-10150 & 10100-10040 zone in the short term (under bear case scenario).

Technically, Bank Nifty-Fut (BNF) has to sustain over 25500 area for further rally towards 25750-25875 & 26050-26200 zone in the near term (under bullish case scenario).

On the flip side, sustaining below 25450-25400 area, BNF may fall towards 25100-24850 & 24750-24600 area in the near term (under bear case scenario).

As par early SGX indication, Nifty Fut (Dec) may open around 10215, almost unchanged on positive Global/Asian Cues & renewed NAMO optimism in GJ election after some setback for RAGA from “Patidar” community & “Neech” Politics.

USD trading higher after US Senate votes to pass the stopgap spending bill to avert a potential shut down drama this week; it will be effective till 22^nd Dec and both RNC & DNC will resume their negotiations for a longer term debt shut down solution (two years budget deal); but immigration, tax legislation & Obamacare/Trumpcare issues may also hinder such bipartisan budget deal.

All eyes will be now on today’s US NFP and final version of the tax bill & structure of corp tax cut after reconciliation of Senate & House/RNC version, scheduled to be released on 22^nd Dec.

Overnight US market closed in positive after on “no Govt shut down” optimism coupled with hopes of a market friendly final US tax reform version after WH indicated the lowest possible corp tax rate; market was further helped by techs, industrials & materials as AMT may not be in the final tax version as earlier feared; energies also helped on some rebound in oil amid threat of Nigerian strike.

DJ-30 rose 0.29%, S&P-500 also gained 0.29% and closed around 2637, while NQ-100 surged by almost 0.54% on bargain hunting of tech/FANG stocks; consumer discretionary also helped along with earnings/guidance boost from some leading retail names. But City dropped on concern of huge repatriation tax and Lending Club tumbled 15% on muted earnings & guidance.

US index future (SPX-500) is now trading around 2642, edged up further by almost 0.10% on positive Asian cues after an upbeat China trade and JP GDP data and higher USD, positive for Asian exporters.

In China exports for Nov grew at 12.3% vs est 5%; prior: 6.9%; imports grew by 17.7% vs est 11.3%; prior: 17.2%, indicating a robust China economy despite ongoing deleveraging; but overall China export share globally is also steadily decreasing since 2015-16 amid US & global protectionism.

China (SSE) today rebounds by almost 0.59% on better than expected trade data after yesterday’s plunge led by increasing regulatory supervision, higher margins for commodity trading and muted economic outlook and concern of NPL by Fitch & IMF. 

Similarly, HK surged by around 0.90% on China optimism & rebounds in techs & reality. PBOC today was neutral in cash injection and effectively drains out 510 bln Yuan this week vs 408 bln last week China bond yield is now hovering around 3.91% slightly lower than panic level of 4%.

Although JP GDP looks blockbuster at a glance, the sudden surge in GDP may be a result of lower deflator (0.1%) and most importantly private consumption was also tepid (-0.5%); but business spending helped (+1.1%). Thus despite a higher GDP headline, Yen got weaker and in turn helping JP exporters/market. Japan (Nikkei-225) today closed 1.39% higher and was also helped by techs & reality.

Overnight EU market closed almost flat in Stoxx-600 (+0.03%) after a volatile session on mixed EU economic data and a flat EUR; market was helped by telecom, utility, financials, while dragged by healthcare & basic materials (China concern); DAX-30 rose by 0.4% on better prospect of “grand coalition Govt”; CAC-40 edged up by 0.20%.

FTSE-100 slumped by 0.40% on exporters/MNC as GBP gone higher on renewed prospect of Irish border & Brexit deal and muted London property price; it was also dragged by miners on concern of China Bank health/NPL report by IMF. But some M&A news in the betting and media sector helped, while energies dragged.

EU market is poised to open in green (+0.50%) today on higher USD; but FTSE may trade almost flat amid Brexit suspense & GBP volatility and China optimism today.

Back to home, Indian market (Nifty Fut/India-50) is now trading around 10265, surged by another 0.60% on positive global cues and better prospect of BJP in GJ after sudden change of stance by the “Patidar” community (Hardik) towards INC and change of sentiment for the “Neech” political comments by Ayer of INC.

But, BJP may not get the magic number of 150 in GJ this time, but anything above 120 may be good for BJP & the market (political stability & reform agenda), while anything below 100 may prove disastrous on political populism in future. An election is an “election”, full of uncertainty and thus nothing is final until the result.

Automakers are upbeat on prospect of price hike in 2018 and also helping the overall market.

Meanwhile, Nomura is very upbeat about prospect of Indian economy & market in 2018 (+17%) on story of solid Indian consumption, hopes of pick up in private capex cycle, double digit EPS growth, benefits of GST, IBC and Govt capex/infra spending while concerned on any derailment of current Govt policies (reform agenda on political populism ahead of 2019 general election).

SGX-NF

 BTCUSD