Market Wrap: 13/12/2017 (17:00)
NSE-NF (Dec):10227 (-37; -0.37%)
(TTM PE: 26.07; Abv 2-SD of 25; TTM Q1FY18 EPS: 391;
NS: 10193; Avg PE: 20; Proj FY-18 EPS: 418; Proj Fair Value: 8360)
NSE-BNF (Nov):25048 (-130; -0.52%)
(TTM PE: 28.84; Near 3-SD of 30; TTM Q1FY18 EPS:
867; BNS: 25000; Avg PE: 20; Proj FY-18 EPS: 961; Proj Fair Value: 19220)
For 14/12/2017: Dec-Fut
Key support for NF:
10215/10190-10150
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 10245/10215-10190/10150
& 10100-10040 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).
Indian market (Nifty-Fut/India-50) today (13th Dec) closed around
10227 sinks by almost 37 points (-0.37%) and well off
the day high of 10333 on concern about GJ poll outcome, higher fiscal
deficits/bond yields and Govt’s “war against black money” despite supportiveregional (HK) cues today; it made a late session low of 10190 in a volatile day
of trading. Market may have also worried about Fed stance later today.
Although, the exact trigger behind such sudden
& sharp fall from the day high is not clear, it may be a combination of
factors like exit poll tomorrow for the GJ election; market may be concerned
about any below expected result from BJP this time amid DeMo & GST blues
being faced by GJ traders & common man and issue of un/under employment.
As par some opinion poll, BJP may get around 83
seats vs INC’s 95 seats this time; it may be unbelievable, but probability of a
neck & neck fight may have kept the market on toes and thus we are seeing
heavy selling/profit booking at every rise.
Market may have also concerned about country wide
raid by IT dept against Bitcoin trading and Govt’s action for overall linkage
issue of UID card with bank A/C, PAN, DEMAT & practically every aspect of
financial transactions to fight against unaccounted money. Market may have also
worried about NAMO’s sudden decision to address FICCI (industry body) on
apprehension about any further “DeMo like structural reform” announcement.
After opening lower today, Indian market rallied
quite smartly & surged by almost 0.65% and
well off the opening session low of 10220, mirroring rebound in regional market
(HK & China); drops of Brent from $65 may have also helped.
But overall market sentiment was choppy ahead of Fed & ECB.
As par reports, Indian 2-W sales slows down significantly despite huge
discounts being offered by the Auto cos to woo customers, especially from rural
area. This may be another spillover effect of DeMo & un/under employment
problem across India.
Market may be also concerned about renewed surged in Indian bond
yields, hovering around 7.15-7.25% after higher core CPI, which is consistently
sticky and pointing towards GST led price distortions. Oil may be also in a
tight supply position after OPEC deal despite increasing US productions; if
Brent sustains above $65, then Indian economy & market outlook may be
reviewed.
The sticky nature of core inflation, hovering consistently
around 5% and much above RBI’s mid-point of 4% coupled with global chorus of QT
may keep RBI not on the side line in FY-19, but RBI may be compelled to also
hike in late 2018, if Fed goes on their dot-plots of 3 hikes in 2018,
everything being equal.
Stagflation like situations in Indian economy (higher core
inflation, higher bond yields, lower IIP/growth & muted labour market) may
be also a worrying factor for the market. Also huge stressed assets (NPA/NPL)
and the ongoing politics on it & slow pace of resolution may be a serious
headwind for the economy & the market.
PM is also worried about muted cash-flow position for the MSMEs
and urged the industry/corporates to make their payment obligation prompt, but
the real reason may be GST & DeMo blues and subsequent hardships being
faced by MSME across the country including the poll bound GJ. Even after some recalibrations,
GST is still too complex for MSMEs and the overall cost of compliances may be
unviable for their small business model.
But there was some good news too yesterday; India’s CAD narrowed
unexpectedly in Q2FY18 to $7.2 bln vs est 8.3; prior: 15 (QOQ) at 1.2% of GDP
estimate; but it was substantially higher than $3.4 bln recorded last year
(Q2FY17).
In any way, all these optimisms should reflect in earnings (EPS)
which is continued to be muted irrespective of political stability &
various structural reforms and a series of RBI rate cuts for the last few
years, making India one of the most expensive market globally at over 26 TTM PE
now against regional PE of 15 (HK/China/JP) and US/EU’s 20.
Today Nifty was helped by mostly IOC, Kotak Bank, HPCL, TCS,
BPCL, Ultratech Cement, Bharti Infratel, Eicher Motors, HDFC Bank & ONGC by
almost 21 points altogether.
Nifty was dragged mostly by VEDL, ICICI Bank, HDFC, ITC, SBI,
Adani Ports, L&T, Tata Motors, Bajaj Fin & Infy by around 50 points
cumulatively.
Overall, today Indian market was helped by energy/OMC (fall of
Brent from $65 level & perception that they will be able to hike rate soon
after GJ election), cements counters (SC relief to allow use of pet-coke
despite pollution hazards), while it was dragged by banks & financials,
auto, FMCG, techs, metals, pharma, reality (Unitech fiasco & Govt
clampdown), consumer staples & infra.
SGX-NF
BNF
USDJPY
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