Market Wrap: 05/01/2018 (17:00)
NSE-NF (Jan):10578 (+52; +0.49%)
(TTM PE: 27.00; Abv 2-SD of 25; TTM Q1FY18 EPS: 391;
NS: 10559; Avg PE: 20; Proj FY-18 EPS: 418; Proj Fair Value: 8360)
NSE-BNF (Jan):25661 (+165; +0.65%)
(TTM PE: 29.53; Near 3-SD of 30; TTM Q1FY18 EPS:
867; BNS: 25602; Avg PE: 20; Proj FY-18 EPS: 961; Proj Fair Value: 19220)
For 08/01/2018: Jan-Fut
Key support for NF: 10605/10575-10525/10485
Key resistance for NF:
10675/10725-10795/10815
Key support for BNF:
25500/25200-25000/24800
Key resistance for BNF: 25700/25900-26100/26250
Trading Idea (Positional):
Technically, Nifty Fut-Jan (NF) has to sustain over 10675 area for further
rally towards 10725-10755/10795 & 10815-10860 zone in the short term (under
bullish case scenario).
On the flip side, sustaining below 10650 area, NF may fall towards 10605/10575-10525
& 10485-10425 zone in the short term (under bear case scenario).
Technically, Bank Nifty-Fut (BNF) has to sustain over 25900 area for further
rally towards 26100-26250 & 26325-26615 zone in the near term (under
bullish case scenario).
On the flip side, sustaining below 25850-25700 area, BNF may fall towards 25500-25300/25200
& 25000-24800 area in the near term (under bear case scenario).
Indian market (Nifty Fut-Jan/India-50) today (5th Jan) closed around 10578, jumped by 52 points (+0.49%)
and closed at another record high mirroring similar global trend after late
hour reports that RBI has given “green signal” for extra dividend to Govt (in
the long disputed issue of DeMo led windfall profit to the central bank- narrative
of Demonetized currency notes, which have not returned to the RBI, thereby
reducing B/S liabilities of RBI). Nifty (spot) gained
around 0.2% for the 1st week of 2018 and scaled a record high of
10566.
As par reports, Govt had sought Rs.0.13 tln as
“additional dividend” (DeMo profit) from RBI; the central bank may pass it to
the Govt as additional “trading income” on account of its FX & bond
portfolio and close this issue; RBI does not recognize any DeMo profit, but a
B/S treatment of assets & liabilities.
It seems that Govt is in dire need of additional
funds for the sake of fiscal discipline amid subdued revenue collection and higher
capex, PSBS recaps & surging oil. So far RBI has transferred around Rs.0.31
tln surplus profit to the Govt for FY-17 vs Rs.0.66 tln for FY-16.
Shortfall of RBI dividend is one of the major
headwinds for Govt’s fiscal slippages this year; RBI profit plunged due to
additional expense for DeMo led currency notes management. Govt has already communicated
to borrow additional Rs.0.50 tln for FY-18 and thus “additional dividend” of
Rs.0.13 tln by RBI may help the Govt to prune fiscal deficit.
Indian market today opened around 10550, edged up
following global Goldilocks & extended New Year rally on global growthoptimism; but overall sentiment may be cautious on higher oil as Brent is
hovering around $68, which is a serious headwind for Indian macro; Indian
market made a opening session low of around 10536 & late day high of 10582
after a days of range bound trade.
Indian bond yield fell to 7.28% from earlier 7.34%
after news of RBI additional dividend; but still significantly higher on
concern for fiscal slippages; as par reports, PSBS recaps bonds by the Govt may
offer interest as high as 7.75% to attract investors to participate in PSBS
recaps. As PSBS recaps news is now almost discounted, market will now focus on
fiscal math and corporate lending recovery & any subsequent boost to
private capex, which is still muted for various reasons.
Indian market sentiment today may have also
boosted by a Fitch report that India may be the fastest growing economy over
next 5 years (2017-22) at an annual average rate of 6.7% against China’s 5.5%.
For 2017 Fitch has predicted India’s GDP growth as
6.4% citing GST/DeMo spillover effect and then gradual pick up to 7.3-7.6%
(2018-19) on proper implementation of these structural reforms aided further by
favourable demography, PSBS reaps & subsequent expected revival of corporate
lending.
As par Fitch, the key risks to its forecast may be
poor access of proper education to certain section of the economy and stagnant
private capex, which could derail productivity & overall investment growth
for the Indian economy.
Today Nifty was supported mostly by Yes Bank (UID
enabled PIN less ATM/Debit card) HDFC, Bajaj Fin, Adani Ports, Indusind Bank, Bharti
Airtel, TCS, Eicher Motors, ITC & RIL by almost 52 points altogether.
Nifty was dragged mostly by IOC, Bharti Airtel,
ICICI Bank, SBI, Infy, HPCL, Hindalco, UPL, ONGC & BPCL by around 18 points
cumulatively.
Overall, today Indian market was helped by
selected private banks & financials (fall of bond yields after RBI
indication of additional dividend to the Govt & Fitch optimism about Indian
GDP), automakers, FMCG, selected techs, media, metals (global & domestic
growth optimism), pharma, reality, infra & consumer staples, while dragged
by PSBS (concern of EQ dilution after recaps & various hurdles for NPA
resolution through NCLT), OMC (higher crude oil and not being able to pass the
same).
On the broader market, liquor stocks soared on
solid earnings from GM Breweries, IFCI jumped on deleveraging news, RCOM surged
as China Development Bank withdraws its IBC/NCLT petition, Bharat Forge rose on
upbeat North America truck sales, IOB soared on bank’s plan to adjust its
accumulated loses of Rs.0.08 tln with its share premium accounts (recaps
money), Idea roared on fund raising plan & analyst optimism.
SGX-NF
BNF
USDJPY
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