Market Wrap: 12/12/2017 (17:00)
NSE-NF (Dec):10265 (-81; -0.79%)
(TTM PE: 26.19; Abv 2-SD of 25; TTM Q1FY18 EPS: 391;
NS: 10240; Avg PE: 20; Proj FY-18 EPS: 418; Proj Fair Value: 8360)
NSE-BNF (Nov):25165 (+56; +0.22%)
(TTM PE: 29.00; Near 3-SD of 30; TTM Q1FY18 EPS:
867; BNS: 25150; Avg PE: 20; Proj FY-18 EPS: 961; Proj Fair Value: 19220)
For 13/12/2017: Dec-Fut
Key support for NF:
10215/10190-10150
Key resistance for NF: 10285/10305-10365
Key support for BNF:
25100-24800
Key resistance for BNF: 25350-25500
Trading Idea (Positional):
Technically, Nifty Fut-Dec (NF) has to sustain over 10305 area for further
rally towards 10365-10425 & 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 zone in the short term (under bear case scenario).
Technically, Bank Nifty-Fut (BNF) has to sustain over 25350 area for further
rally towards 25500-25775 & 25875-26050 zone in the near term (under
bullish case scenario).
On the flip side, sustaining below 25300 area, BNF may fall towards
25200/25100-24800 & 24650-24350 area in the near term (under bear case
scenario).
Indian market (Nifty-Fut/India-50) today (12th Dec) closed around 10265, plunged by almost 81 points (-0.79%)
on muted Global Cues, concern of Fed tightening and surging GSEC bond yields
amid worries of fiscal slippages despite MODI optimism in the GJ election; it
made an opening high of around 10337 and closing session low of 10254.
Regional market sentiment (China & HK) was
also subdued due to further regulatory steps for Chinese insurers to help curb
risks and reports of possible contingency measures by PBOC such as higher
interest rates and tighter capital controls to combat possible outflows and
support CNY from the impact of US tax reform and Fed hikes. Also, surging oil
has affected the airlines & overall market sentiment.
Additionally Indian market came under pressure on higher BrentOil above $65 following temporary shutdown of a vital Oil pipe line in UK
(North Sea-Forties). India imports almost 80% of its oil requirement from
overseas and a combination of higher USD & higher oil may not be good for
the overall economy. Also, OMC &
paint cos are in pressure on higher Crude Oil and they are not being allowed by
the Govt to increase fuel prices because of state elections (GJ) obligation.
Indian 10YGSEC yield jumped to almost 7.24% today, the highest
in last 16 months on concern of higher fiscal deficits & higher inflation
amid surge in Oil and reduction in GST rates for a number of items. Apart from concern of fiscal slippages and
probable rate hikes by RBI in FY-19 to counter Fed hikes, incremental supply of
GSEC bonds may be also responsible for higher Indian bond yields despite
Moody’s upgrade.
Indian Govt is thinking to tap bond markets more than
to banks to fund its incrementally higher capex, mainly infra spending &
fiscal deficits. This will also help to increase the supply of bonds in the
market and positive for higher Indian bond yields & negative for corporates
earnings and even banks & financials, because they will be not able to pass
on the higher interest costs under the present regulatory environment and their
NIM may be affected.
A higher bond yields may be also bad for most of
the PSBS as almost 50% of their EBITDA comes from their GSEC bond holdings and
a drastic fall in bond prices will affect their MTM.
Banks are also in pressure as 13th Dec
may be the deadline for the banks to present a viable restructuring plan or
resolute certain big corporate NPA/NPL, otherwise those may be referred to NCLT
also, prompting higher provisions by the banks. As of now, almost Rs.3.30 tln
high profile big corporates NPA/NPL are referred to the NCLT for resolution,
but actual progress may be very slow due to various issues. As par some
reports, Indian stressed corporates owe almost 85% of the total Banking
NPA/NPL.
After market hours, Indian CPI For Nov came much
higher at 4.88% vs est 4.20%; prior: 3.58%; Core CPI came as 4.58% vs prior:
4.5%. This is much higher than the mid-point of 4% of RBI and is also at 15
moths high for surge in vegetable & oil prices. But the upwards trajectory
of Core Inflation may continue till March’18 and as such any RBI rate cut hopes
are now virtually nil; if such trend continues, then RBI has to hike rates in
FY-19.
On the other side, IIP for Oct plummeted to 2.2%
vs est 3%; prior: 4.1%-R; thus a combination of higher inflation & lower
IIP may be an indication of stagflation of the Indian economy, which is
supposed to run at 8-9% GDP growth rate to generate enough employment opportunities
for its vast pool of young demographics.
Today Nifty was supported mostly by Adani Ports,
ONGC, Infy, DRL & Gail by around 14 points altogether, while it was dragged
by HDFC Bank, IOC, ITC, TCS, HPCL, ICICI Bank, L&T, Bharti Infratel, Eicher
Motors & BPCL by almost 65 points cumulatively.
Overall, today Indian market was dragged by almost
all the sectors, mostly by Banks & Financials, Auto, FMCG, Techs, Media,
Metals, mixed Pharma, Reality & energies. RIL helped to some extent on buzz
of R-Jio IPO (deleveraging).
SGX-NF
BNF
WTI
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