Wednesday, 10 January 2018

Nifty May Be In Red On Fiscal Dilemma and Higher Global Bond Yields & Muted Global Cues Despite FDI Optimism



Market Mantra: 10/01/2018 (09:00)

SGX-NF: 10645 (+4)

For the Day: updated: 14:40

For 10/01/2018: Jan-Fut

Key support for NF: 10600/10550-10490/10415

Key resistance for NF: 10675/10700-10775/10815

Key support for BNF: 25600/25450-25300/25200

Key resistance for BNF: 25875/26000-26100/26250

Trading Idea (Positional):

Technically, Nifty Fut-Jan (NF) has to sustain over 10700 area for further rally towards 10750/10775- 10815/10860 & 10955-11095 zone in the short term (under bullish case scenario). 

On the flip side, sustaining below 10675-10655 area, NF may fall towards 10600/10550-10490/10415 & 10350-10200 zone in the short term (under bear case scenario).

Technically, Bank Nifty-Fut (BNF) has to sustain over 25875 area for further rally towards 26000/26100-262000/26250 & 26325-26615 zone in the near term (under bullish case scenario).

On the flip side, sustaining below 25825 area, BNF may fall towards 25600/25450-25300/25200 & 25000-24800 area in the near term (under bear case scenario).

Indian market (Nifty Fut-Jan/India-50) is now trading around 10615, lost by almost 0.39% on muted Asian/EU cues amid lower USD & higher global bond yields (US/EU/JP) despite positive closing in overnight US market.

Earlier, Indian 10YGSEC bond yield today soared to 7.44% at multi-month high on concern for fiscal slippages, Surging oil & stagflation (lower growth & higher inflation); but it then plunged to 7.22% after confirmed news of FDI ease reforms; thus Nifty-Fut also rebounds from session low of 10596 so far after making an opening session high of 10648.

USDINR-I is now trading around 63.80, edged down by almost 0.05% and off the day high of 63.98; so far it made a low of 63.75; technically, it has major support around 63.45-63.35 zone and has to break above 64.00-64.25 area for more rally; RBI may have intervened in the bond market today as it sharply fell by 20 bps within few minutes.

Meanwhile Govt is very hopeful to collect the remaining Rs.3.25 tln out of targeted direct tax figure of Rs.9.8 tln in Q4FY18 on recovery in TDS defaulters, support of IDS (on DeMo led black money) and better corporate tax. But overall TAX/GDP ratio may be still muted despite DeMo.

Govt has also signalled that for PSBS recaps, they will prioritize large PSU banks as prospect of system-wide credit growth remains weak on issues of weak twin B/S. Also, PSBS under RBI prompt corrective action (PCA) may have to shrink in size to stay viable.

Overall, global as well as Indian stock market rally may be in pressure amid surging bond yields & increasing tune of QT.



SGX-NF


10YUSTSY BOND

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