Nifty slips as PNB “loot” gets murkier and begun hitting the “Real Street” after “Dalal Street”

Market Wrap: 27/02/2018 (17:00)

NSE-NF (March):10564 (-36; -0.34%)

(NS: 10554; Q2FY18 EPS: 407; Q2FY18 PE: 25.93; Avg FWD PE: 20; Proj FY-18 EPS: 418; Proj Fair Value: 8360)

NSE-BNF (Jan):25412 (-328; -1.27%)

(BNS: 25384; Q3FY18 EPS: 821; Q2FY18 PE: 30.92; Avg FWD PE: 20; Proj FY-18 EPS: 961; Proj Fair Value: 19220)

For 28/02/2018:

Updated: 08:55

SGX-NF: 10475; (-89 points)

(Gap down on negative global/US cues amid surge in bond yields after Powell testimony)

Expected BNF opening: 25200

March-Fut (Key Technical Levels)

Support for NF: 10470/10415-10330/10290

Resistance for NF: 10525/10585-10640/10675

Support for BNF: 25200/25000-24800/24550

Resistance for BNF: 25550/25650-25800/26000

Trading Idea (Positional):

Technically, Nifty Fut-Jan (NF) has to sustain over 10525 areas for a further rally towards 10585-10640 and 10675-10715 zones in the short term (under bullish case scenario). 

On the flip side, sustaining below 10500-10470 areas, NF may fall towards 10415-10330 and 10290-10240 zones in the short term (under bear case scenario).

Technically, Bank Nifty-Fut (BNF) has to sustain over 25550 areas for a further rally towards 25650-25800 and 26000-26250 zones in the near term (under bullish case scenario).

On the flip side, sustaining below 25500-25350 areas, BNF may fall towards 25200-25000 and 24800-24550 zones in the near term (under bear case scenario).

The Indian market (Nifty Fut-March/India-50) closed around 10564 on Tuesday (27^th Feb), slipped by almost 0.34% as PNB “loot” (theft) gets murkier and began affecting the real street. Nifty Fut made an opening high of 10640 and late day low of 10541 amid mixed global and positive US cues on Tuesday.

PNB has disclosed additional loan fraud of more than Rs.13 bln and government took some strict action across the banking (PSBS) NPA of over Rs.0.5 bln (50 cr) to reassess the same for any similar fraud, willful defaults etc. and market  is concerned that it may affect normal banking activities (lending & borrowing).

The street is now abuzz with fear-mongering from corruption charges for the banking staff and also for the defaulters, even for genuine business failure.

As par Indian banking secretary: PSU Banks told to detect frauds on time and told to examine above Rs.50 cr NPAs for fraud. Subsequently, PSBS (public sector banks) tumbled and dragged the overall market sentiment on Tuesday. Broad-based selling was quite visible in the mid-caps.

There was another instance of a big corporate NPA of above Rs.16 bln (ABG Shipyard) which is not finding any buyer even after significant haircut by the banks and this has cast another shadow of big corporate NPA recovery even at throw away price. As a reminder, ICICI, SBI, IDBI, PNB has huge exposure in the ABG NPA.

Also, the PNB fiasco is now affecting the real street (trade finance). As par reports, foreign lenders (Banks) become more reluctant to accept the guarantees from their local counterparts (Indian Banks) that underpin (guarantee) the loans.

Citigroup, Deutsche Bank, Standard Chartered, and HSBC are among Banks reducing exposure to these transactions, used by smaller companies to access short-term dollar funding as questions are raised about the creditworthiness of guarantees from Indian state-run banks (PSBS); rates have risen by as much as 0.5 percentage point for some types of financing.

Thus, the whole Indian banking system and lending & borrowing practices are under scanner now as this PNB fraud getting murkier day by day; it may be a just tip of the ice-burg as PSBS officials are always prone to hide the NPA for the sake of their careers and a safe retirement life.

All eyes may be now on the Mfg PMI and Q3 GDP along with auto sales data after an upbeat GST collection for the month of January at around Rs.86 bln.

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SGX-NF

BNF

USDJPY

Market Mantra: Nifty and Bank Nifty Future (28_02_18)

Market Mantra: 28/02/2018

SGX-NF: 10475 (-89 points)

For the Day: updated: 09:10

March-Fut (Key Technical Levels)

Support for NF: 10470/10415-10330/10290

Resistance for NF: 10525/10585-10640/10675

Support for BNF: 25200/25000-24800/24550

Resistance for BNF: 25550/25650-25800/26000

Trading Idea (Positional):

Technically, Nifty Fut-Jan (NF) has to sustain over 10525 areas for a further rally towards 10585-10640 and 10675-10715 zones in the short term (under bullish case scenario). 

On the flip side, sustaining below 10500-10470 areas, NF may fall towards 10415-10330 and 10290-10240 zones in the short term (under bear case scenario).

Technically, Bank Nifty-Fut (BNF) has to sustain over 25550 areas for a further rally towards 25650-25800 and 26000-26250 zones in the near term (under bullish case scenario).

On the flip side, sustaining below 25500-25350 areas, BNF may fall towards 25200-25000 and 24800-24550 zones in the near term (under bear case scenario).

SGX-NF

SPX-500

Market Mantra: Nifty and Bank Nifty Future (27_02_18)

Market Mantra: 27/02/2018 (09:00)

SGX-NF: 10635 (+41 points)

For the Day: updated: 11:15

March-Fut (Key Technical Levels)

Support for NF: 10615/10540-10490/10440

Resistance for NF: 10675/10715-10775/10825

Support for BNF: 25750/25625-25425/25250

Resistance for BNF: 25850/25975-26100/26250

Trading Idea (Positional):

Technically, Nifty Fut-Jan (NF) has to sustain over 10675 areas for a further rally towards 10715-10775 and 10825-10875 zones in the short term (under bullish case scenario). 

On the flip side, sustaining below 10655 areas, NF may fall towards 10615-10540 and 10490-10440 zones in the short term (under bear case scenario).

Technically, Bank Nifty-Fut (BNF) has to sustain over 25850 areas for a further rally towards 25975-26100 and 26250-26375 zones in the near term (under bullish case scenario).

On the flip side, sustaining below 25800-25750 areas, BNF may fall towards 25625-25425 and 25250-25000 zones in the near term (under bear case scenario).

SGX-NF

BNF

USDJPY

Nifty soared on global Goldilocks rally amid slump in bond yields as inflation and multiple Fed rate hike concern eased

Market Wrap: 26/02/2018 (17:00)

NSE-NF (March):10594 (+90; +0.85%)

(NS: 10583; Q3FY18 EPS: 407; Q2FY18 PE: 26.00; Avg FWD PE: 20; Proj FY-18 EPS: 418; Proj Fair Value: 8360)

NSE-BNF (Jan):25714 (+323; +1.31%)

(BNS: 25688; Q3FY18 EPS: 821; Q2FY18 PE: 31.29; Avg FWD PE: 20; Proj FY-18 EPS: 961; Proj Fair Value: 19220)

For 27/02/2018:

Updated: 07:55

SGX-NF: 10635; (+41 points)

(Gap up on positive global/US cues amid fall in bond yields)

Expected BNF opening: 25815

March-Fut (Key Technical Levels)

Support for NF: 10615/10540-10490/10440

Resistance for NF: 10675/10715-10775/10825

Support for BNF: 25750/25625-25425/25250

Resistance for BNF: 25850/25975-26100/26250

Trading Idea (Positional):

Technically, Nifty Fut-Jan (NF) has to sustain over 10675 areas for a further rally towards 10715-10775 and 10825-10875 zones in the short term (under bullish case scenario). 

On the flip side, sustaining below 10655 areas, NF may fall towards 10615-10540 and 10490-10440 zones in the short term (under bear case scenario).

Technically, Bank Nifty-Fut (BNF) has to sustain over 25850 areas for a further rally towards 25975-26100 and 26250-26375 zones in the near term (under bullish case scenario).

On the flip side, sustaining below 25800-25750 areas, BNF may fall towards 25625-25425 and 25250-25000 zones in the near term (under bear case scenario).

The Indian market (Nifty Fut-March/India-50) closed around 10594 on Monday (26^th Feb), jumped by almost 0.85% on global “Goldilocks” rally amid slump in bond yields as inflation and multiple Fed rate hikes concern eased. But Indian 10Y bond yield edged up to around 7.693% on the fiscal dilemma, higher oil and a hawkish RBI minutes after a brief drop last Friday on reports of government intervention and FPIS limit hike.

On Monday, Indian market opened in an upbeat note tracking positive US/Asian cues and made an opening minute low of 10536 and late day high of 10615 amid firm EU market. The Indian market sentiment was further boosted by scrapping of transaction fees by BSE on its benchmark index of 30 scrips (Sensex).

But there were considerable apprehensions out of the PNB loan fraud saga and reports of multiple big willful defaults/frauds involving other banks & business groups. Government is also now looking into the whole issue after the PNB “loot” (theft) came to the limelight and the accused left the country in January.

As par sources, to cover up the “loss”, PNB has to seek additional financial support from the government and may also sell some of his assets (“family silver”) and also deleverage from some of its JV.

Overall, Indian market sentiment is also boosted by prospects of quicker resolution, better recovery of NPA/NPL with less haircut in the NCLT/IBC process after good response in the Bhushan steel auction case. But this may be an exception and could be further delayed by various legal squabbling. HDFC Bank was also under regulatory scanner amid allegation of earnings leak in some WhatsApp chats group after a similar incident at Axis Bank a few months ago.

On Monday overall Indian market was boosted by private banks and financials, automakers, media, metals, reality, consumption, energy (higher oil) and infra while dragged by PSBS, FMCG, techs (lower USD and H1B visa issues), Pharma (lower USD & renewed concern of US FDA inspection).

On Monday, US stock future was up by +0.37% and European stocks are up +0.51%, both at 3-week highs, as market volatility recedes after the VIX volatility index fell to a 3-week low. Reduced interest rate concerns are also positive for equity prices after the 10-year T-note yield dropped to a 1-week low of 2.85%. The markets eagerly await Tuesday's testimony to Congress from newly appointed Fed Chair Powell.

On Monday, Asian stocks settled higher: Japan +1.19%, Hong Kong +0.74%, China +1.23%, Taiwan +0.39%, Australia +0.71%, Singapore +0.64%, South Korea +0.17%. Asian markets rallied on the heels of the rally in US markets Friday as both China's Shanghai Composite and Japan's Nikkei Stock Index posted 2-week highs.

Asia was also green across the board, with Australia's ASX 200 (+0.7%) and the Nikkei 225 (+1.2%) both higher as earnings fuelled the biggest gainers in Australia, while Japanese exporters weathered a firmer JPY and led the region’s advances.

Elsewhere, Hang Seng (+0.7%) and Shanghai Comp. (+1.2%) were in the green with Geely Auto the outperformer after reports its parent amassed a near 10% stake in Daimler, although Chinese property names were less fortunate with the Shanghai Comp. Property Index slumping 3% in early trade after the latest House data showed efforts to curb the sector were gaining fruition.

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SGX-NF

BNF

USDJPY

Market Mantra: Nifty and Bank Nifty Future (26_02_18)

Market Mantra: 26/02/2018 (09:00)

SGX-NF: 10540 (+33 points)

For the Day: updated: 11:25

March-Fut (Key Technical Levels)

Support for NF: 10510/10470-10415*/10340

Resistance for NF: 10555/10595-10615/10655*

Support for BNF: 25445/25375*-25150/25000

Resistance for BNF: 25500/25650-25775*/25975

Trading Idea (Positional):

Technically, Nifty Fut-Jan (NF) has to sustain over 10615 area for a further rally towards 10655-10725 and 10790-10825 zone in the short term (under bullish case scenario). 

On the flip side, sustaining below 10595 area, NF may fall towards 10555/10510-10470 and 10415-10340 zone in the short term (under bear case scenario).

Technically, Bank Nifty-Fut (BNF) has to sustain over 25650 area for a further rally towards 25775-25975 and 26100-26200 zone in the near term (under bullish case scenario).

On the flip side, sustaining below 25600 area, BNF may fall towards 25445-25375 and 25150-25000 area in the near term (under bear case scenario).

SGX-NF

BNF

SPX-500

Nifty surged on fall in bond yields amid reports of FPIS limit hike and government jawboning

Market Wrap: 23/02/2018 (17:00)

NSE-NF (March):10507 (+118; +1.13%)

(NS: 10491; Q2FY18 EPS: 407; Q2FY18 PE: 25.78; Avg FWD PE: 20; Proj FY-18 EPS: 418; Proj Fair Value: 8360)

NSE-BNF (Jan):25410 (+424; +1.70%)

(BNS: 25302; Q3FY18 EPS: 821; Q2FY18 PE: 30.82; Avg FWD PE: 20; Proj FY-18 EPS: 961; Proj Fair Value: 19220)

For 26/02/2018: March-Fut (Key Technical Levels)

Updated: 07:25

SGX-NF: 10540; (+33 points)

(Gap up on positive global/US cues amid fall in bond yields & lower USD)

Expected BNF opening: 25500

March-Fut (Key Technical Levels)

Support for NF: 10510/10470-10415*/10340

Resistance for NF: 10555/10595-10615/10655*

Support for BNF: 25445/25375-25150/25000

Resistance for BNF: 25500/25650-25775/25975

Trading Idea (Positional):

Technically, Nifty Fut-Jan (NF) has to sustain over 10615 area for a further rally towards 10655-10725 and 10790-10825 zone in the short term (under bullish case scenario). 

On the flip side, sustaining below 10595-10555 area, NF may fall towards 10510-10470 and 10415-10340 zone in the short term (under bear case scenario).

Technically, Bank Nifty-Fut (BNF) has to sustain over 25650 area for a further rally towards 25775-25975 and 26100-26200 zone in the near term (under bullish case scenario).

On the flip side, sustaining below 25600-25550 area, BNF may fall towards 25445-25375 and 25150-25000 area in the near term (under bear case scenario).

The Indian market (Nifty Fut-March/India-50) closed around 10507 on Friday (23^rd Feb), soared by almost 1.13% on fall in bond yields. Benchmark 10Y Indian bond yield fell to around 7.68% from earlier panic high of 7.78% mapped on 22^nd Feb, Thursday. The fall in Indian bond yield was in line with similar global/US trend after US treasury secretary downplayed the impact of wage growth on inflation.

The Indian government also tried to talk down the bond (GSEC) yield by commenting that they are watching the bond market closely and may take appropriate action to keep bond yield lower. Government to take an appropriate policy decision on high bond yields as the same is putting pressure on government finances.

There were also some reports that the government may hike the FPIS limit on the Indian bond market, which is currently offering biggest yield among its EM peers in Asia. As par Finance ministry sources, FII cap in government bonds under review and a final decision may be taken at March meeting with the RBI.

On Friday, Indian market made an opening session low of 10386 and late day high of 10516 and was also supported by positive global cues coupled with reports that government is taking several steps to plug various loopholes in the lending & borrowing mechanism of the banks, especially for the PSBS (public sector banks). All PSBS has been asked to ensure linking of SWIFT with their CBS (core banking system) without any manual intervention by government/RBI after the great PNB saga.

But the market may be also worried about huge NPA hit with the Nirav Modi & Choksi group of companies involving in the alleged PNB fraud, which may be around Rs.25 bln for the PNB alone. There are also reports of similar NPA/fraud related to Gems & Jewellery business with other big companies as well.

FICCI (Federation of Indian Chamber of Commerce and Industry) has also called for an immediate privatization of most of the PSBS as only 3 big PSBS is sufficient for the Indian economy. There is an urgent need for improvement of corporate governance in the PSBS.

Apart from banking worries, the market is also concerned about US tightening of H1-B visa rules, which may affect tech/IT companies adversely. There is also another report of a big fraud involving Fortis healthcare accounting and alleged siphoning of funds by the promoter Singh brothers, akin to the infamous Satyam scam.

The Indian government is aiming to be among the top 50 positions in ease of doing business as it’s undertaking system of cleaning political funding procedure in India. The improvement of IBC process and its transparency may also help.

Government is also very aware that unethical practices are significant in India and are growing quite well. Indian model of creating shell cos, round-tripping has continued for decades. The huge banking NPAs are due to business failures, diversion of funds, willful defaults, and bank frauds.

As par the government, no employee raising a red flag is worrisome. Multiple auditors looked the other way or were casual in approach. Inadequate supervision from regulators was responsible for fraud. Regulators need to constantly watch banking sector and unfortunately, regulators are not held accountable in India. But the delinquent person will have to face consequences, like the closure of their company and law will be tightened to find the location of the delinquent person.

Thus, the government is trying to shift all the blame to the banking regulator (RBI) for this PNB “loot” (theft), but at the same time, it’s also true that unholy links between borrowers/corporates, banks, and politicians are also responsible for the present saga of Indian NPA/NPL.

Most of the big corporate celebrity borrowers and likely defaulters’ may have already relocated their base outside India. Their seized assets in India or even abroad will help little in actual recovery because of various legal hurdles and lack of buyers.

On Friday, Nifty was supported mostly by HDFC Bank, RIL, VEDL, Tata Steel, ICICI Bank, Sun Pharma, IOC, Bajaj Finance, Yes Bank and ITC (65 points altogether).

Nifty was dragged by Infy (H1-B visa issues), Asian Paints (higher oil/RM cost), Gail, Eicher Motors and M&M (7 points cumulatively).

Overall on Friday, Indian market was helped by almost all the sectors like banks & financials (fall in bond yield, positive for their MTM in bond portfolio), automakers, FMCG, mixed techs (higher USD and H1-B visa issues), media, metal (encouraging bids for stressed assets under NCLT/IBC auction), Pharma (reports of US FDA relief and higher USD, positive for their export earnings), reality, consumption, energy (higher oil) and infra stocks.

All eyes may be now on India’s Q3FY18 GDP, which is slated to come as 6.9% vs 6.3% prior (Y/Y) and other macro data (PMI/auto sales) apart from the surging oil & the fiscal dilemma.

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SGX-NF

BNF

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