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)
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 (26th 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.