Nifty plunged early Wednesday on subdued global cues amid Trump’s Fed salvo, but recovered on hopes of NBFC/HFC liquidity resolution

The Indian market (Nifty Fut/India-50) closed around 10760, surged by almost +0.73% (+78) in a holiday-thinned market on hopes of NBFC/HFC liquidity issue resolution. The market recovery was led by HDFC twins amid a report that a delegation of NBFCs and HFCs are meeting with the PM Modi under ASSOCHAM banner. Earlier, the Indian market plunged by almost -1.35% (-146.00) to a low of 10536.40 on subdued global cues amid Trump’s Fed salvo and as and as Mnuchin calls bankers and prepares “plunge protection team”.

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Technical View (Nifty, Bank Nifty, USDINR-I):

Technically, Nifty Fut-I (NF) has to sustain over 10800 for a further rally to 10850*/10890-10930/10975 and 11025/11050*-11085/11130 in the near term (under bear case scenario).

On the flip side, sustaining below 10775, NF may further fall to 10715/10665-10580/10540* and 10500/10350*-10250/10200 in the near term (under bear case scenario).

Technically, Bank Nifty Fut-I (BNF) has to sustain over 27100 for a further rally to 27150/27425-27525*/27625 and 27785/27875-27945/28175 in the near term (under bullish case scenario).

On the flip side, sustaining below 27050-27000, BNF may again fall to 26890/26700-265550/26450 and 26300/26150-26000/25700 in the near term (under bear case scenario).

Technically, USDINR-I has to sustain over 69.70 for a further rally to 70.50/70.95*-71.25/71.75 and 72.60*/73.00-73.70/74.25 in the near term (under bullish case scenario).

On the flip side, sustaining below 69.50, USDINR-I may fall to 69.15*/68.50-68.25/68.00 and 67.80/67.00-66.70/66.40 in the near term (under bear case scenario).

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Nifty slumped early Thursday on terrible global cues after less dovish hike by the Fed

The Indian market (Nifty Fut/India-50) is currently trading around 10910 early Thursday, slumped by almost -0.70% (-75) on terrible global cues after less dovish hike by Fed as it set to hike further twice in 2019 against market expectation of no hike or only one hike and will also not alter its B/S tapering pace in any way. As highly expected, the US Fed has hiked Wednesday unanimously its benchmark interest rate by +0.25% to +2.50% but predicted 2 more hikes in 2019 in its latest Dec dot-plots against 3 hikes in the Sep dot-plots.

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Technical View (Nifty, Bank Nifty, USDINR-I):

Technically, Nifty Fut-I (NF) has to sustain over 11025-11050 for a further rally to 11085*/11130-11235/11275 and 11315/11405-11435*/11495 in the near term (under bullish case scenario). 

On the flip side, sustaining below 11000-10985, NF may further fall to 10910/10870-10845/10790 and 10740/10725-10700/10650 in the near term (under bear case scenario).

Technically, Bank Nifty Fut-I (BNF) has to sustain over 27550 for a further rally to 27625/27785-27945/28175 and 28400/28475-28550/28800 in the near term (under bullish case scenario).

On the flip side, sustaining below 27500-27425/27380, BNF may fall to 27100/26900-26750/26550 and 26450/26300-26200/26000 in the near term (under bear case scenario).

Technically, USDINR-I has to sustain over 69.80 for a further rally to 70.75/71.25-71.75/72.60* and 73.30/73.70-74.05/74.85* in the near term (under bullish case scenario).

On the flip side, sustaining below 69.30, USDINR-I may fall to 69.00/68.50-68.25/68.00 and 67.80/67.00-66.70/66.40 in the near term (under bear case scenario).

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Nifty surged early Wednesday on hopes of a dovish monetary policy by the newly appointed RBI Governor Das

The Indian market (Nifty Fut/India-50) is currently trading around 10670 early Wednesday, surged by almost +0.85% (+88) on hopes of a dovish monetary policy by the newly appointed RBI Governor Das. The market is expecting revert to the earlier “neutral” mode from the present “calibrated tightening” by the RBI under the new Governor and a cut in SLR and CRR to enhance system (banking) liquidity. The 10Y Indian bond yield tumbled to 7.42% on hopes for a dovish RBI in the days ahead under the new RBI governor.

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More:https://www.iforex.in/news/nifty-stumbled-early-tuesday-patelexit-higher-usdinr-recovered-better-expected-election-outcome-mp-bjp-60387

Technical View (Nifty, Bank Nifty, USDINR-I):

Technically, Nifty Fut-I (NF) has to sustain over 10725 for a further rally to 10765/10785*-10805/10885 and 10915/10975-11025*/11085 in the near term (under bullish case scenario). 

On the flip side, sustaining below 10705-10650, NF may fall to 10600-10575 and 10525/10500*-10435/10400 and 10375/10350-10300*/10250 and further 10200/10180-10050/10000 in the near term (under bear case scenario).

Technically, Bank Nifty Fut-I (BNF) has to sustain over 26600 for a further rally to 26715/26775*-26900/27075* and 27200/27350-27550/28000 in the near term (under bullish case scenario).

On the flip side, sustaining below 26550-26400 BNF may fall to 26200/26100*-25950/25650* and 25400/25200-25000/24650 in the near term (under bear case scenario).

Technically, USDINR-I has to sustain over 71.75 for a further rally to 72.20/72.65*-73.05/73.35 and 73.75/74.00-74.45/74.75* in the near term (under bullish case scenario).

On the flip side, sustaining below 71.25 USDINR-I may fall to 70.90/70.40-70.00/69.75 and 69.30*/68.80-68.50/68.00 in the near term (under bear case scenario).

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Nifty tumbled early Wednesday on terrible global cues; all eyes will be now on the RBI for a dovish hold

The Indian market (Nifty Fut/India-50) is currently trading around 10825 early Wednesday, tumbled by almost -0.75% (-80) on terrible global cues as Dow plunged almost 800 points overnight amid confusions over US-China trade truce and bond yield inversion, indicating a possible slowdown in the US economy down the year. The Indian market is also under stress on a rebound in USD and oil.

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Technical View (Nifty, Bank Nifty, USDINR-I):

Technically, Nifty Fut-I (NF) has to sustain over 10905 for a further rally to 10935/10995*-11025/11085 and 11130/11165-11235/11295 in the near term (under bullish case scenario). 

On the flip side, sustaining below 10885 NF may fall to 10805/10785*-10705/10675 and 10625/10595-10550/10500 in the near term (under bear case scenario).

Technically, Bank Nifty Fut-I (BNF) has to sustain over 26775 for a further rally to 26875/27075*-27200/27350 and 27550/27750-28000/28150 in the near term (under bullish case scenario).

On the flip side, sustaining below 26725 BNF may fall to 26600/26500*-26300/26050 and 25850/25700- 25400/25250 in the near term (under bear case scenario).

Technically, USDINR-I has to sustain over 70.25 for a further rally to 70.90*/71.15-71.85*/72.20 and 72.75/73.05-73.35/73.75 in the near term (under bullish case scenario).

On the flip side, sustaining below 70.00, USDINR-I may fall to 69.45*/69.30-68.95*/68.50 and 68.25/67.65-67.20/66.95 in the near term (under bear case scenario).

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Nifty surged on hopes & hypes of US-China trade truce, PSBS recaps and an improving opinion poll in Rajasthan state election for BJP

The Indian market (Nifty Fut) closed around 10688.45 Tuesday, surged by almost +0.45% (+49.25) on hopes of US-China trade truce, PSBS recaps by the higher amount and an improving opinion poll in Rajasthan for BJP. The Indian market opened around 10610.90, in negative tone and made a low of 10585, slumped by almost -0.50% on negative global cues amid renewed concern of an all-out US-China trade war after Trump commented late Monday he would push ahead with additional China tariffs at 25% (from present 10%) on $200B of Chinese goods initially, threatening another $267B, if China does not seek a trade deal with the US.

But soon after the European market opening, the global risk-on sentiment as-well-as the Indian market zoomed on a report that China’s President Xi and his US counterpart Trump agree to reach mutually beneficial agreements on trade but it soon nosedived after a China clarification that this related to the 1^st Nov phone call by Trump to Xi and nothing new and by that time, the Indian market was almost in the closing session.

Additionally, almost at the same time, there was another India specific news that the government may rework its FY-19 estimates for PSU Banks (PSBS) recaps, which may be raised to Rs.80-100B from a prior estimate of Rs.65B.

As a result, PSBS surged, helping the overall market sentiment as additional recipes by the government may address the issue of MSME and NBFC/HFC funding ahead of the general election. The government is also pressurizing the RBI to let some PSBS under lending restrictions (PCA) to lend again to “kick start” the economy. Private banks are not so much interested to lend the MSME and NBFC/HFC sector aggressively because of NPA risk and thus PSBS has to fund them, whatever may be the outcome in the future. In that sense, PSBS is a victim of political populism in India.

Overall, the Indian market gained by around 2.90% in November (till Tuesday) on the back of over 30% plunge in Brent oil and 4.15% slump in USDINR coupled with a fall in Indian 10Y Bond yields from 8.231% to a low of 7.669% (-56 bps) in line with global trend and some RBI/government action. The market is now discounting no hike in Dec by RBI (dovish hold) and the spread between RBI repo rate (6.50%) and the Indian 10Y Bond yield is now around almost 120 bps, near to the historical average of 100 bps. But as India’s core inflation continues to hover around elevated levels of above 6%, RBI may be cautiously dovish.

The Indian market is also helped by an ease of NBFC liquidity and RBI-government duet tensions. But some fall in USDINR is also restricting a runaway Nifty rally, as almost 50% of Nifty earnings are coming from exports, while a fall in bond yields is also positive for Indian PSU banks as almost 50% of their EBITDA is generating from a bond portfolio.

Nifty jumped early Wednesday on positive global cues on hopes of US-China trade truce:

On early Wednesday, Nifty jumped almost +0.35% (+37.15) on positive global cues amid renewed hopes of US-China trade truce as the WH CEA/NIC Kudlow clarified Trump’s Monday comments about China tariffs of 25%. Kudlow said: “Trump 'means what he says' and may hike tariffs on China if there is no further breakthrough in talks with Xi at the G20 and Trump believes that there is a good possibility a deal can be made with China’s Xi. Although the White House is 'disappointed' so far in China trade talks, if China comes to the G20 table with new ideas, there’s a good possibility Trump can make a deal in the dinner meeting with Xi”.

But Kudlow also warned that “talks on Saturday evening may not conclude with a statement and the White House sees Trump-Xi meeting as a chance for Xi to change the tone and the substance of these talks".

On early Wednesday, the overall rally in the Indian market is quite limited after a report that there is no plan on PSB recaps over budgeted amount this fiscal and bank-wise quantum to be decided after evaluation of Q2 results and the recaps may be limited to the original plan of Rs.65B; i.e. remaining Rs.42B as of now to be done in FY-19.

Technical View (Nifty, Bank Nifty, USDINR-I):

Technically, Nifty Fut-I (NF) has to sustain over 10785-10805 for a further rally 10875*/10905-10975/11025-11085/11165-11230/11295 in the near term (under bullish case scenario). 

On the flip side, sustaining below 10765-10725 NF may fall to 10680*/10620-10595/10550 and 10495/10450-10410/10340 in the near term (under bear case scenario).

Technically, Bank Nifty Fut-I (BNF) has to sustain over 26550 for a further rally to 26625/26700-26900*/27200 and 27350/27550-27750/28000 in the near term (under bullish case scenario).

On the flip side, sustaining below 26500 BNF may fall to 26450/26200- 26050*/25900 and 25700/25425-25350/25200 in the near term (under bear case scenario).

Technically, USDINR-I has to sustain over 70.25 for a further rally to 70.75/71.15-71.85*/72.20 and 72.75/73.05-73.35/73.75 in the near term (under bullish case scenario).

On the flip side, sustaining below 70.00, USDINR-I may fall to 69.45/69.30-68.95*/68.50 and 68.25/67.65-67.20/66.95 in the near term (under bear case scenario).

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Market Mantra (Nifty Fut/Bank Nifty Fut/USDINR/SPX-500): 20/11/2018

The Indian market (Nifty Fut) slips Tuesday on subdued global cues and the concern of RBI autonomy. The Indian market (Nifty Fut/India-50) closed around 10775 Monday, surged by almost +0.83% on positive Asian cues, lower USD, lower oil and hopes of RBI truce with the government coupled with a survey that BJP will win almost 300 seats alone in the forthcoming general election. The market was already discounted that the RBI governor will not resign after his meeting with the PM and FM last week.

So far Nifty rallied almost +3.63% in November after a plunge of almost -11.40% in October and September on higher USD, higher oil, negative global cues, NBFC/HFC liquidity crisis (default-ILF&S), hawkish RBI and “war of words” between the RBI and the Indian government.

All eyes were on the RBI board meeting on Monday. After almost 9-hours of marathon meeting, it seems that although there may be a truce, for the time being, RBI blinks first and as per the government directive and will increase liquidity (cash flow) in the system. Some of the regulatory power of RBI/MPC will be shared by government appointees BFS (Board for Financial Supervision) or simply by the RBI board. This raises a serious question of central bank independence (autonomy) and RBI/MPC may now function like a corporate board rather than an independent institution, free of political interference.

The government basically wants the RBI to take an “accommodative” stance in lieu of “calibrated tightening” in this global era of dual QT and in the process has entered into an elite membership of some countries, which are now actively interfering in central bank’s monetary policy (Argentina, Turkey and the US/Trump). The Indian government is now “desperate” to kick-start lending to the MSME sector in a big way ahead of the election, which could cause a big surge in NPA/NPL in the years ahead as a result of such political populism. The government is also eyeing the RBI surplus to fund its fiscal deficit, a plan which may be unheard before in the history of central banks.

Technical Aspect:

Updated: 10:00

Nifty-SGX-NF: 10727 (-40; -0.37%)

                                                                 

Bank Nifty-BNF: 26220 (-99; -0.38%)

USDINR-I: 71.39 (-0.34; -0.24%)

SPX-500: 2688 (-8; -0.32%)

Fut-I (Key Technical Levels)

Support for NF:

10690/10635*-10595/10550-10495/10450-10410/10340-10300/10270

Resistance to NF:

10785/10805*-10875/10905-10975/11025-11085/11165-11230/11295

Near-term broad range: 10000-10805

Support for BNF:

26250/26050*-25900/25700-25425/25350-25200/24950-24850/24600

Resistance to BNF:

26400/26550*-26700/26900-27200/27350-27550/27750-28000/28200

Near-term broad range: 24250-26550

Support for USDINR-I:

71.65/71.20-70.90*/70.45-70.15/70.00-69.70/69.30-69.00/68.25

Resistance to USDINR-I:

72.10/72.55-72.85/73.35-73.75/74.05-74.35/74.75-75.00/75.65

Near-term broad range: 70.90-74.75

Support for SPX-500:

2680/2645*-2620/2590-2580/2560-2535/2520-2490/2445

Resistance to SPX-500:

2700/2725*-2755/2775-2795/2820-2835/2860-2880/2905

Near-term broad range: 2590-2820

Technical View (Nifty, Bank Nifty, USDINR-I, SPX-500):

Technically, Nifty Fut-I (NF) has to sustain over 10805 for a further rally to 10875/10905-10975/11025-11085/11165-11230/11295 in the near term (under bullish case scenario). 

On the flip side, sustaining below 10785-10765/10725 NF may fall to 10690/10635-10595/10550-10495/10450-10410/10340 in the near term (under bear case scenario).

Technically, Bank Nifty Fut-I (BNF) has to sustain over 26400 for a further rally to 26550/26700-26900/27200-27350/27550-27750/28000 in the near term (under bullish case scenario).

On the flip side, sustaining below 25350-26250 BNF may fall to 26050/25900-25700/25425-25350/25200-24950/24850 in the near term (under bear case scenario).

Technically, USDINR-I has to sustain over 71.65 for a further rally to 72.10/72.55-72.85/73.35-73.75/74.05-74.35/74.75 in the near term (under bullish case scenario).

On the flip side, sustaining below 71.20, USDINR-I may fall to 70.90/70.45-70.15/70.00-69.70/69.30-69.00/68.25 in the near term (under bear case scenario).

Technically, SPX-500 has to sustain over 2725 for a further rally to 2755/2775-2795/2820-2835/2860-2880/2905 in the near term (under bullish case scenario).

On the flip side, sustaining below 2715-2700 SPX-500 may fall to 2680/2645-2620/2590-2580/2560-2535/2520 in the near term (under bear case scenario).

Valuation metrics:

Nifty-50: 10700; Q2FY19 EPS: 413.70; Q2FY19 PE: 25.86; Avg FWD PE: 20; Proj FY-19 EPS: 425-450; Proj Fair Value: 8500-9000

Bank Nifty: 26200; Q2FY19 EPS: 495.50; Q2FY19 PE: 52.88; Avg FWD PE: 20; Proj FY-19 EPS: 961-1000; Proj Fair Value: 19220-20000 (assuming NPA recovery).

SPX-500: 2700; TTM Q2-2018 EPS: 123; TTM PE: 21.95; Proj 2019 EPS: 150-160; Avg FWD PE: 18; Proj 2019 EPS: 150-165; Proj Fair Value: 2700-2970

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