Market Wrap: 19/01/2018 (17:00)
NSE-NF (Jan):10916 (+105; +0.97%)
(NS: 10895; TTM Q2FY18 EPS: 391 TTM Q2FY18 PE:
27.86; Abv 2-SD of 25; Avg FWD PE: 20; Proj FY-18 EPS: 418; Proj Fair Value:
8360)
NSE-BNF (Jan):26894 (+395; +1.49%)
(BNS: 26909; TTM Q2FY18 EPS: 867; TTM Q2FY18 PE:
31.03; Abv 3-SD of 30; Avg FWD PE: 20; Proj FY-18 EPS: 961; Proj Fair Value:
19220)
For 22/01/2018: Jan-Fut
Key support for NF: 10915/10875-10785/10715
Key resistance for NF: 10975/11010-11050/11125
Key support for BNF: 26800/26600-26400/26100
Key resistance for BNF: 27050/27250-27500/27650
Trading Idea (Positional):
Technically, Nifty Fut-Jan (NF) has to sustain over 10975 area for further
rally towards 11010/11050- 11125 & 11205-11315 zone in the short term
(under bullish case scenario).
On the flip side, sustaining below 10955-10915 area, NF may fall towards
10875-10785 & 10715- 10665/10615 zone in the short term (under bear case
scenario).
Technically, Bank Nifty-Fut (BNF) has to sustain over 27100 area for further
rally towards 27150-27250 & 27500-27650 zone in the near term (under
bullish case scenario).
On the flip side, sustaining below 27050-27000 area, BNF may fall towards 26800-26600
& 26400-26100 area in the near term (under bear case scenario).
Indian market (Nifty Fut-Jan/India-50) today (19th Jan) closed around 10916, soared by almost 105 points
(+0.97%) in late hours rally and well off the opening session low of 10792; it
made closing minutes high of 10918; Nifty spot made another new lifetime high
of 10907 before closing at 10895 (fresh closing high) in line with its global peers.
Asian cues were also upbeat overall amid China
growth & tech optimism despite lower USD. Indian market was also boosted by
upbeat earnings report from some blue chips coupled with banks & techs on support of sector
friendly news-flow & economic optimism; yesterday, Govt has recalibrated
(reduced) GST rates for 29 items; one of the major beneficiaries is index heavy
weight L&T for metro railway infra related tax reduction.
Inability of Crude Oil to sustain over $65 and
Govt’s commitments to borrow less additional amount in FY-18 may have also boosted
the overall market sentiment, although 10YGSEC yield is still hovering around
7.50%; yesterday it closed around 7.479%.
Govt May
Redefine LTCGT:
Apart from ongoing GST reform & process of
simplification, market sentiment today may have also boosted by another “trial
balloon” by the Govt that it may change the definition of LTCGT (long term
capital gain tax) from present 1 year to 2 year; i.e. selling of listed
equities within 2 years of purchase will attract short term capital gain tax
(STCGT) @15% (at present), while LTCGT rate will continue to be at 0%; thus Govt
may also collect good revenue from STCGT as most of the investors are short
term (1-2 year) by nature.
Earlier market was concerned that Govt may apply
LTCGT @10% at least as “contribution to the development of the nation” considering
present fiscal deficit dilemma or Govt may redefine the LTCGT to 3 yrs of
holding; thus the proposal of 2 yrs holding period for LTCGT may be better than
expectation & market rallied.
Railway
Reform & Private Railways:
Govt may also allow private companies to run
railways (like private airlines) and other infra related functions (rolling
stock, platform modernization etc) as part of long pending Railways reform,
which is urgently required to push economic growth & employment.
Govt Is
Set To Collect Over Rs.1 tln After ONGC-HPCL Deal & Adhere To Fiscal
Discipline:
On revenue front, Govt has total receipts under
disinvestment A/C now at Rs.0.54 tln vs target of Rs.0.72 tln; Govt has raised
almost 0.02 tln from some unlisted PSU (buy back of shares by those PSU). Govt
is hopeful that higher direct tax revenue coupled with targeted disinvestment
proceeds will adjust shortfall from indirect tax revenue.
After market hours, ONGC has formally announced to
buy Govt stake in HPCL for around Rs.0.37 tln, which is set to help to
achieve/exceed Govt’s disinvestment target after a long time. It seems that
Govt is now focusing on buy back & return of excess cash in hand of the
PSUS to its share holders (Govt) to rein in fiscal discipline.
After market hours, Govt officials has indicated
that Govt is set to meet 3.2% of fiscal deficit target for FY-18 on upbeat
direct tax collections & disinvestment proceeds and do not want to give
negative signal to the market via fiscal slippages.
Govt may also hike MSP for agri products and
Budget may unveil move towards new Agri export policy.
As par report, GST rate rationalization
(reduction) so far alone could costs central Govt around Rs.0.30 tln in FY-18,
which may be adjusted to some extent by hike in custom duties; as such there is
no plan to further lower additional duties (cess/ED) on petrol & diesel.
Govt May Not
Go For FDI Push For The Pvt Banks, But PSBS May Be Preferred:
On Banking FDI push, Govt has reportedly denied
any such proposal of hiking FDI limit in private banks to 100% from present 74%
and has termed the report as purely “speculative & mischievous”; but it
seems that it did not deny hiking the same for the PSBS from present 24% to 49%
either.
Thus, Govt may go on for PSBS FDI hike to 49% for
ease of recaps & fund raising from the market and put the PSBS at
comparable level its private peers. Frankly speaking private Banks do not
require any hike in FDI also at this point of time also. PSBS got some boost
today, while private banks were mixed. RBI may not approve 100% FDI for private
banks as they are not comfortable with the idea that an Indian private bank is
owned by a foreign entity.
Q3FY18 Report
Cards Were Mixed Overall & Largely In Line With Market Estimates:
Overall earnings reported today may be termed as
mixed and in line with market estimates. But ITC disappointed on slump in its
core business of Cigarette; Jubilant Food surprised the market by its 17.8%
growth in SSSG (same stores sales growth) and EBITDA/margin on account of
shrinkflation (product price was kept at same level, while size/weight of
Dominos’ Pizza has reduced under new CEO); Jubilant is also a major beneficiary
of GST earlier.
After market hours, RIL reported another stellar
number and surprised PAT for R-Jio on account of mainly reduction in inter
connection charges (IUC) by the Govt.
Overall, Nifty was today helped by ICICI Bank,
HDFC Bank (upbeat report card today) & RIL (earnings optimism ahead of
result today), SBI, TCS and boosted by optimism about earnings recovery, market
friendly budget, reforms in railway, hopes for FDI in PSBS and closed at new
lifetime high in line with global euphoria.
Nifty was supported mostly by ICICI Bank, RIL,
IOC, HDFC Bank, Adani Ports (analyst optimism about Govt’s infra/logistic
push), IBULLS HSG Fin, TCS, Bajaj Fin, SBI & VEDL by almost 65 points
altogether.
Nifty was dragged by Infy, Ultratech Cem, Ambuja
Cements, Maruti, Sun Pharma, Tata Motors, Power Grid, Auro Pharma, ONGC & Cipla
by around 11 points cumulatively.
Overall, today Indian market was helped by banks
& financials, FMCG, mixed techs & auto, media, metals, reality, mixed
energies, infra & consumption stocks; today’s rally was quite broad based
on back of short covering in mid-caps.
But US Govt shut down on debt limit extension
fiasco may also spoil the global party on Monday and thus, Nifty 11k may be
very tough to conquer as valuations are also extremely stretched now at almost
28 (TTM PE).
SGX-NF
BNF
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