Market Wrap: 25/01/2018 (17:00)
NSE-NF (Feb):11060 (-0.45; -0.41%)
(NS: 11070; TTM Q2FY18 EPS: 391 TTM Q2FY18 PE: 28.31;
Abv 2-SD of 25; Avg FWD PE: 20; Proj FY-18 EPS: 418; Proj Fair Value: 8360)
NSE-BNF (Jan):27331 (-158; -0.58%)
(BNS: 27446; TTM Q2FY18 EPS: 867; TTM Q2FY18 PE:
31.66; Abv 3-SD of 30; Avg FWD PE: 20; Proj FY-18 EPS: 961; Proj Fair Value: 19220)
For 29/01/2018: Feb-Fut
Key support for NF:
11020/10950-10900/10840
Key resistance for NF:
11135/11175-11215/11260
Key support for BNF:
27300/27050-26800/26600
Key resistance for BNF:
27650/27825-28075/28405
Trading Idea (Positional):
Technically, Nifty Fut-Jan (NF) has to sustain over 11135 area for further
rally towards 11175-11215 & 11260-11315 zone in the short term (under
bullish case scenario).
On the flip side, sustaining below 11115 area, NF may fall towards 11070/11020-10950/10900
& 10840-10790 zone in the short term (under bear case scenario).
Technically, Bank Nifty-Fut (BNF) has to sustain over 27650 area for further
rally towards 27750-27825 & 28075-28405 zone in the near term (under
bullish case scenario).
On the flip side, sustaining below 27600-27500 area, BNF may fall towards 27300-27050
& 26800-26600 area in the near term (under bear case scenario).
Indian market (Nifty Fut-Feb/India-50) today (25th
Jan) closed around 11060, slumped by almost 45 points
(-0.41%) after making a mid-session low of 11025 and an opening session high of
11126. Nifty spot edged down by 0.15% on renewed concern of fiscal discipline after
RBI reportedly declined additional dividend; Government source also confirmed
that “due to closure of Govt books of accounts for FY-18, there is no provision
for additional income/dividend from RBI”.
Also, below expected PSBS recaps (smaller amount
for well managed big PSBS like SBI and bigger amount for fragile small PSBS
like IDBI Bank) along with various tough caveats/conditions for structural
reforms have dampened the sentiment. But market recovered later on budget
optimism, although selling was quite visible in mid/small caps on MF regulatory
restructuring.
Market was also in pressure on upward trajectory of
Brent crude oil, hovering above the $70 mark and along with it, reports of no
additional dividend by the Govt, Indian 10YGSEC bond yields jumped by 0.43% and
closed around 7.31% on concern of fiscal discipline; consequently Public sector
banks (PSBS) came under renewed pressure; overall global cues were also negative on lower USD & concern of trade war.
But, Nifty closed the Jan series with blockbuster
gain of 5.65%, at multi-month high on global euphoria of similar trend in
equities coupled with domestic optimism about earnings recovery, a market
friendly budget based on reforms & not on political populism, PSBS recaps
& a quick NPA resolution and hopes of fiscal consolidation.
Market may
be disappointed over 1st tranche of PSBS recaps:
The latest PSBS recaps injection through a
combination of non-SLR bonds & cash were just one step in the long process
to clean up India's bad debt, and that the lenders' final capital position will
also depend on how they undertake the central bank's directive to take nearly
40 large corporate loan defaulters to bankruptcy proceedings, which will likely
involve haircuts on their loans; the current recaps amount may be too little
& too late, although rating agencies has termed it credit positive for the
PSBS.
Both Moody’s and S&P termed capital for Indian
banks is a step towards stronger balance sheets; India's capital infusion into
PSU banks is credit positive.
As par some trial balloon, for FY-19 budget, infra
spending may rise nearly 25% to about Rs. 5 tln in 2018-19; power, roads &
highways, renewable energy may get spending fillip; expect hike on electricity-for-all
scheme ‘Saubhagya Yojna’; expect tax rationalization for infrastructure
investment trusts and personal income tax for middle class group; corporate tax
may not be tinkered too much this year.
After market hours, Government announced an upbeat
revenue collection figure of GST for Dec’17 at Rs.0.87 tln, which may be a
positive surprise, considering tax rate revisions.
Today Nifty was helped mostly by ICICI Bank, HDFC
Bank, VEDL, L&T, Axis Bank, IBULLS HSG, Kotak Bank, IOC, Ultratech Cement
& Indusind Bank by around 30 points cumulatively (top ten contributors).
Nifty was mostly dragged by SBI, TCS, UPL, Adani
Ports, Maruti, Infy, Bajaj Fin, Auro Pharma, Hero Motors & Tata Motors by
almost 38 points altogether (top ten draggers).
Overall, Indian market today was supported by
Private Banks (disappointed recaps for large PSBS will help private banks to
capture more corporate lending share), financials, metals (higher metal prices
on slump in USD), while dragged by PSBS, auto makers, FMCG, techs, media,
pharma, reality, infra, energies & consumption stocks.
Overall Q4 report card till day may be also mixed
and not a great surprise to justify the lofty valuation.
SGX-NF
BNF
USDJPY
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