Market Wrap: 12/01/2018 (17:00)
NSE-NF (Jan):10684 (+30; +0.28%)
(NS: 10681; TTM Q2FY18 EPS: 391 TTM PE: 27.32; Abv 2-SD of 25; Avg FWD PE: 20; Proj FY-18 EPS: 418; Proj Fair Value: 8360)
NSE-BNF (Jan):25735 (+66; +0.26%)
(BNS: 25749; TTM Q2FY18 EPS: 867; TTM PE: 29.70; Near 3-SD of 30; Avg FWD PE: 20; Proj FY-18 EPS: 961; Proj Fair Value: 19220)
For 15/01/2018: Jan-Fut
Key support for NF: 10695/10640-10590/10560
Key resistance for NF: 10750/10775-10815/10850
Key support for BNF: 25600/25500-25325/25200
Key resistance for BNF: 25775/25875-26000/26200
Trading Idea (Positional):
Technically, Nifty Fut-Jan (NF) has to sustain over 10775 area for further rally towards 10815/10860- 10955 & 11095-11155 zone in the short term (under bullish case scenario).
On the flip side, sustaining below 10750 area, NF may fall towards 10695/10640-10590/10560 & 10515/10450-10415/10360 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 25600/25500-25325/25200 & 25000-24850 area in the near term (under bear case scenario).
Indian market (Nifty Fut-Jan/India-50) today (12th Jan) closed around 10684, gained another 30 points (+0.28%) but well off the panic low of 10602 as a result of judicial crisis in the country’s top judiciary (SC); earlier it made an opening minutes high of 10695; there was sudden panic in the market after four sitting judges alleged that SC administration is “not in order; efforts to reform have failed”. Overall global cues were mixed today including Asian Cues.
The allegation is serious and may undermine investor’s trust on India’s judiciary as something may have rotten in the system as SC may be bowing down to political pressure; thus market succumbed.
Meanwhile, PM has meet with the law minister and CJI is scheduled to take a proper hearing & may also address a presser to clarify the overall situation and market has also bounced back from the panic day low on hopes of some resolution as Govt signaled to stay “neutral” amid “war of words” between country’s top judges. Also hopes of earnings recovery in Q3 may have helped the market today; Nifty spot made a fresh record high of 10690.40 today on power of domestic (DII) liquidity.
Market may be also concerned about fate of LTCGT issue, but got some boost earlier on news of DDT & STT removal in the budget. Overall, market may be looking for some excuse for long unwinding (profit booking) and fresh shorts amid mixed report card so far & stretched valuation; earnings has to justify the present market euphoria. All eyes may be now on judiciary crisis & Infy earnings along with CPI & IIP data later today.
After market hours, Infy reported Q3 PAT at Rs.5129 cr vs est 3609; but there is an exceptional income tax adjustment regarding US IRS for Rs.1432 cr; thus PAT may be in line with market estimate & overall report card may be soft. Technically, Infy (CMP: 1078) now has to sustain over 1100-1120 area for further rally; otherwise sustaining below 1045-1025, it will come down.
Also, after market hours, Indian CPI for Dec came higher at 5.21% vs est 5.10% (prior: 4.88%); core CPI was also on the higher trajectory at 5.1% vs 4.9% prior. But IIP came upbeat for Nov at 8.4% vs est 4.4%; prior: 2%-R.
The trajectory of core inflation is consistently sticky & on upwards trajectory and may be also above RBI’s projection; coupled with that surging Brent oil around $70 & increasing chorus of global QT, we may see a hawkish RBI in the foreseeable future.
On the other side, combination of higher IIP & PMI may be also indicating that growth is limping back to the Indian economy and we may have higher GDP in H2FY18 as par CSO projections (7%). But combination of higher growth & higher inflation will not persuade RBI for any further rate cuts not only in FY-18 but also in FY-19.
Bond market may be a leading indicator for any market; in that sense, Indian bond market may not be so much optimistic about prospect of Indian economy as 10YGSEC yield is still hovering around 7.454%, eyeing the 7.50% mark irrespective of all the green shoots in the economy.
A consistently higher bond yield is always bad for any equity market and Indian market is also not an exception. The divergence between Indian bond & equity market may not sustain in the day ahead, if earnings do not support the stretched market valuation.
Today, Nifty was supported mostly by ICICI Bank, RIL, HDFC (fund raising), VEDL, Maruti, Bharti Infratel, ZEEL, ONGC, Tata Motors & HPCL by around 48 points altogether.
Nifty was dragged mostly by ITC, HDFC Bank, TCS (muted report card), Axis Bank, Bharti Airtel, Bajaj Fin, Bosch, UPL, Yes Bank & Adani Ports by almost 16 points cumulatively.
Overall, Indian market today was supported by banks & financials, automakers, media, metals & energies, while dragged by FMCG, mixed techs, pharma, selected PSBS & private banks & property developers/reality.