Wednesday 28 March 2018

Market Mantra: Nifty, Bank Nifty and SPX-500 Future (28_03_18)

Market Mantra: 28/03/2018

SGX-NF: 10175 (09:00)

For the Day: updated: 13:05

March-Fut (Key Technical Levels)

Support for NF:

10120/10100-10070/10040-10000/9940-9900/9840

Resistance to NF:

10150/10175-10215/10270-10295/10350-10395/10425

Support for BNF:

24150/23950-23750/23600-23400/23150-22995/22700


Resistance to BNF:

24600/24825-24900/25150-25400/25550-25825/26050

Technical View (Positional):

Technically, Nifty Fut-March (NF) has to sustain over 10215 for a further rally towards 10250/10270-10295/10350-10395/10425-10465/10495 in the short term (under bullish case scenario). 

On the flip side, sustaining below 10195-10175/10150 NF may fall towards 10120/10100-10070/10040-10000/9940-9900/9840 in the short term (under bear case scenario).

Technically, Bank Nifty-Fut (BNF) has to sustain over 24600 for a further rally towards 24825/24900-25150/25400-25550/25825 in the near term (under bullish case scenario).

On the flip side, sustaining below 24550-24350, BNF may fall towards 24150/23950-23750/23600-23400/23150 in the near term (under bear case scenario).

SPX-500: 2616 (LTP)

Support for SPX-500:

2610/2585-2565/2535-2525/2505-2480/2460

Resistance to SPX-500:

2630/2650-2670/2695-2720/2755-2775/2805


Technical View: SPX-500


Technically, SPX-500 now has to sustain over 2650 for 2670/2695-2720/2755-2775/2805; otherwise, sustaining below 2630, it may come down towards 2610/2585-2565/2535-2525/2505 and 2480/2460 in the coming days.



SGX-NF



BNF



SPX-500



Nifty edged up on positive global cues and surprising cut in government borrowing plan & muted GST collections

Market Wrap: 27/03/2018

NSE-NF (March):10176 (+29; +0.29%)

NSE-BNF (March):24407 (+126; +0.52%)

Valuation metrics:

NS: 10184; Q2FY18 EPS: 410; Q2FY18 PE: 24.84; Avg FWD PE: 20; Proj FY-18 EPS: 418; Proj Fair Value: 8360

BNS: 24434; Q3FY18 EPS: 822; Q2FY18 PE: 29.73; Avg FWD PE: 20; Proj FY-18 EPS: 961; Proj Fair Value: 19220

For 28/03/2018:

Updated: 08:10

SGX-NF: 10145 (-31; -0.30%)

Expected BNF opening: 24300 (-0.35%)

(Gap-down amid negative global/US cues after last hour sell-off in techs on the concern of US bar on China investments in US tech sector sensitive for “national security”)

March-Fut (Key Technical Levels)

Support for NF:

10120/10100-10070/10040-10000/9940-9900/9840

Resistance to NF:

10215/10270-10295/10350-10395/10425-10465/10495

Support for BNF:

24150/23950-23750/23600-23400/23150-22995/22700


Resistance to BNF:

24600/24825-24900/25150-25400/25550-25825/26050

Technical View (Positional):

Technically, Nifty Fut-March (NF) has to sustain over 10215 for a further rally towards 10250/10270-10295/10350-10395/10425-10465/10495 in the short term (under bullish case scenario). 

On the flip side, sustaining below 10195-10175 NF may fall towards 10120/10100-10070/10040-10000/9940-9900/9840 in the short term (under bear case scenario).

Technically, Bank Nifty-Fut (BNF) has to sustain over 24600 for a further rally towards 24825/24900-25150/25400-25550/25825 in the near term (under bullish case scenario).

On the flip side, sustaining below 24550-24350, BNF may fall towards 24150/23950-23750/23600-23400/23150 in the near term (under bear case scenario).

The Indian market story on 27/03/2018:

The Indian market (Nifty Fut-March/India-50) closed around 10176 on Tuesday, edged up by almost 0.29% on positive global cues amid easing of trade war tensions and a surprising cut in government borrowing plan for FY-19.

But the market slipped from the day high of 10211 and made a low of 10147 on not so much bright details of the government borrowing plan, which indicates a window dressing in order to keep the benchmark 10Y Indian bond yield lower by borrowing essentially from other short tenure bonds. The Indian government may also launch inflation-indexed bonds within Q1FY-19.

In any way, as a result of government plan for lower borrowing in H1FY19 and buzz of higher limits for FPIS in the bond (GSEC) market, the yield of 10Y bond tumbled by almost 29 bps to 7.334% from a high of 7.619% and boosted the market sentiment, especially public sector banks and also the whole sector of banks & financials.

The Indian market sentiment was also affected due to muted GST collection figure of Rs.0.85 tln for February against Rs.0.86 tln in January. As par some estimates, the Indian government needs average GST revenue of Rs.1.00-1.15 tln/month to fund its expenditure and capex properly without hurting the fiscal discipline significantly. But so far the average GST collection is subdued around Rs.0.85 tln/month.

The Indian market may be also nervous about ongoing “war of words” between the promoter of the PSBS (public sector banks) and the regulator (RBI) after the PNB fiasco, which has now far-reaching impact on the overall banking system.

On Tuesday, Indian market was helped by PSU and selected private banks, financials, automakers, FMCG, techs, media, metals, pharma, reality, energies, consumption, and infra, while dragged by HDFC twins, Bharti group, RIL, Infy and OMC (higher oil).

Global cues were positive on Tuesday during the Indian market hours:

Global cues were positive during Indian market hours on Tuesday. US stock future (SPX-500) was up 0.55% and European stocks were up 1.53% as global stock markets rally on reduced concerns for a trade war. 

Risk-on trade was also got a boost on Tuesday amid fading concern of US-China trade war following much more diplomatic and measured tone from Trump & Co. On Monday night, Trump himself expressed his “delight” on the record US stock market rally and tweeted that “Trade talks going on with numerous countries that, for many years, have not treated the United States fairly. In the end, all will be happy!”

US Treasury Secretary Mnuchin said he and his Chinese counterpart have been discussing the trade deficit between the two countries and were committed to finding a mutually agreeable way to reduce the trade gap and help China avoid tariffs. Increased M&A activity gave the US and European stocks a boost as well. A higher USD was also helpful for Asian as well as European stocks.

Asian stocks closed higher: Japan +2.65%, Hong Kong +0.79%, China +1.05%, Taiwan +1.35%, Australia +0.72%, Singapore +0.79%, South Korea +0.46%, India +0.33%. Indian market basically underperformed to its Asian peers on Tuesday.

Earlier in Asia, shares were green across the board, with Japan’s Topix Index jumping the most since November 2016. The risk-on sentiment was further improved after North Korean President Kim was said to be making an unannounced visit to China, his first known trip outside North Korea since taking power in 2011.

The ASX 200 and Nikkei 225 were higher with mining names and financials leading Australia, while the Japanese benchmark outperformed on higher USDJPY and following the “safe” testimony by former Japanese tax office chief Sagawa who declared there were no instructions made by PM Abe or his close circle to alter the documents related to the land sale scandal.

Specifically, Sagawa said there was no report to the PMO of documents being altered and added that there were no instructions from PM Abe, his wife, Finance Minister Aso or their aides to doctor the documents. In related news, there were also comments from Finance Minister Aso that PM Abe’s office was not involved with document alterations in the controversial land sale.

Mainland China and Hong Kong shares advance along with other equity markets in hopes that talks with the US will resolve trade tensions. Hong-Kong and China gained after weathering some downward pressure in the last hour of trade; it was its first gain in five sessions on hopes of solid earnings from China’s four big banks.

As trade war tension eased, corporate financial results took center stage in China, with the big 4 banks outperformed after Agricultural Bank of China beat estimates as it kicked off the earnings releases amongst China’s banking behemoths.

European equities have joined the global relief rally (Eurostoxx-600 +1.4%) seen between US and Asia overnight as trade tensions ease. In terms of sector specifics, materials were the outperformers, enjoying a strong rebound from yesterday’s losses.


Notably, GSK (+6.0%) is a top performer in the FTSE 100 after it announced to purchase a 36.5% stake in Novartis’ healthcare unit for $13 bln. Elsewhere, Akzo Nobel (+3.0%) received a boost after Carlyle has won the bid to acquire the chemical arm unit for approx. EUR 10 bln amid a spate of M&A activities.





SGX-NF


BNF


SPX-500

Tuesday 27 March 2018

Market Mantra: Nifty, Bank Nifty and SPX-500 Future (27_03_18)

Market Mantra: 27/03/2018

SGX-NF: 10175 (09:00)

For the Day: updated: 13:05

March-Fut (Key Technical Levels)

Support for NF:

10125/10100-10040/10000-9940/9900-9840/9800

Resistance to NF:

10190/10230-10295/10350-10395/10425-10465/10495

Support for BNF:

24350-24150/23950-23750/23600-23400/23150-22995/22700

Resistance to BNF:

24500/24650-24775/24875-24975/25100-25175/25400

Technical view (Positional):

Technically, Nifty Fut-March (NF) has to sustain over 10230 for a further rally towards 10295/10350-10395/10425-10465/10495 in the short term (under bullish case scenario). 

On the flip side, sustaining below 10210-10190 NF may fall towards 10125/10100-10040/10000-9940/9900 in the short term (under bear case scenario).

Technically, Bank Nifty-Fut (BNF) has to sustain over 24650 for a further rally towards 24775-24875/24975-25100/25175 in the near term (under bullish case scenario).

On the flip side, sustaining below 24600-24550, BNF may fall towards 24350-24150/23950-23750/23600-23400/23150 in the near term (under bear case scenario).

SPX-500: 2673 (LTP)

Support for SPX-500:

2660/2645-2625/2610-2580/2565

Resistance to SPX-500:

2690/2705-2720/2745-2760/2795

Technical View: SPX-500


Technically, SPX-500 now has to sustain over 2690 for 2705/2720-2745/2760-2795/2805; otherwise, sustaining below 2690, it may again come down towards 2660/2645-2625/2610-2580/2565 in the coming days.



SGX-NF



BNF



SPX-500

Nifty soared on positive global cues on hopes of a truce in US-China trade war narrative and surprised cut in H1FY19 borrowing plan

Market Wrap: 27/03/2018

NSE-NF (March):10159 (+156; -1.55%)

NSE-BNF (March):24303 (+623; +2.50%)

Valuation metrics:

NS: 10131; Q2FY18 EPS: 410; Q2FY18 PE: 24.71; Avg FWD PE: 20; Proj FY-18 EPS: 418; Proj Fair Value: 8360

BNS: 23935; Q3FY18 EPS: 822; Q2FY18 PE: 29.12; Avg FWD PE: 20; Proj FY-18 EPS: 961; Proj Fair Value: 19220

For 27/03/2018:

Updated: 08:10

SGX-NF: 10175 (+16; +0.15%)

Expected BNF opening: 24350 (+0.20%)

(Almost flat despite upbeat global cues on easing of trade war tensions between US & China after reports of backdoor negotiations)

March-Fut (Key Technical Levels)

Support for NF:

10125/10100-10040/10000-9940/9900-9840/9800

Resistance to NF:

10190/10230-10295/10350-10395/10425-10465/10495

Support for BNF:

24350-24150/23950-23750/23600-23400/23150-22995/22700

Resistance to BNF:

24500/24650-24775/24875-24975/25100-25175/25400


Technical View (Positional):

Technically, Nifty Fut-March (NF) has to sustain over 10230 for a further rally towards 10295/10350-10395/10425-10465/10495 in the short term (under bullish case scenario). 

On the flip side, sustaining below 10210-10190 NF may fall towards 10125/10100-10040/10000-9940/9900 in the short term (under bear case scenario).

Technically, Bank Nifty-Fut (BNF) has to sustain over 24650 for a further rally towards 24775-24875/24975-25100/25175 in the near term (under bullish case scenario).

On the flip side, sustaining below 24600-24550, BNF may fall towards 24350-24150/23950-23750/23600-23400/23150 in the near term (under bear case scenario).

The Indian market story on 26/03/2018:

The Indian market (Nifty Fut-March/India-50) closed around 10159 on Monday, soared by almost 1.55% on positive global cues amid hopes of a true in US-China trade war narrative after weekend reports of backdoor negotiations between the two economic superpowers. Apart from easing of trade tensions, the Indian market mood was also boosted by a surprising cut in H1 government borrowing plans for FY-19, which may help to ease the surge in Indian bond yields.

On Monday, as a result of positive global as well as local cues, Nifty-Future (March) saw huge short covering ahead of the derivative expiry on 28th March, Wednesday and made a late day high of 10161 after making an opening session low of 9976, tracking subdued global cues early in the Asian session amid a back Friday because of trade tensions between US and China.

As par some reports, US and China have quietly started negotiations to improve US access to Chinese markets.  The talks are led by US Treasury Secretary Mnuchin and trade representative Lighthizer and Chinese President’s top economic aid Liu.  On Sunday, Treasury Secretary Mnuchin said he's "cautiously hopeful" that the US can reach a trade deal with China, that will avert the need for Trump to impose up to $60 BN in tariffs on China. China's foreign ministry also said that China is willing to have talks with the US to resolve differences.

India cuts surprisingly H1FY19 borrowing plan by almost 10-15%

The Indian market was also boosted by the government plans to borrow Rs.2.88 tln in H1FY19 (April-Sep’18), which is lower than previous years, a move that’s expected to check the upward movement in bond yields as shorter tenor debt addresses concerns of the bond market. The government will issue Rs.2.88 tln of bonds in H1FY19 or about 48% of its annual borrowing plan against 60-65% of total borrowing in H1FY18.

The bond sales are part of the government’s planned near-record borrowings of Rs.6.06 tln for FY19 to finance an estimated budget deficit of 3.3% of the GDP. The lower borrowing may help to ease the concern of bond market and Indian bond yields could stabilize around 7.50%, which will be also helpful for the public sector banks (PSBS) as almost 50% of their operating profit comes from their bond portfolio.

The Indian government will also issue inflation-indexed bonds linked to consumer prices, shorter maturity debt of 1-4 years and 5-9 years and proposes introducing new 2-year and 5-year benchmark bonds. The government is also in talks with the RBI on raising limits for FPIs in government-securities (bonds-GSECS).

Recently, Indian bond yields soared on concerns about excessive debt supply, a wider budget deficit, quickening inflation, surge in oil and higher global yields. India’s bonds have slumped for seven straight months, the longest stretch since 1998. The yield on benchmark 10Y government bond (GSEC) has climbed 115 bps since July to almost 7.78%, the highest among its global peers in Asia. But even after this news, 10Y bond yield closed around 7.619% on Monday, rose by another 7 bps from the Friday level.

On Monday, banks & financials surged on government’s borrowing plans and supported the overall market sentiment along with RIL, L&T, Maruti, ITC, HUL and Bharti Airtel, while Infy and OMCs were under pressure (higher oil).

Although the market may be concerned about government capex as it’s the sole driver of the Indian economy for the last few years amid subdued private capex, the government is quite confident to meet the capex (expenditure) needs without an overdraft. The government has also projected the current fiscal deficit of Rs.6.42 tln for FY18 at 3.3% of GDP against the previous estimate of 3.5% of GDP.

The Indian government will spend over Rs.1 tln of small savings to fund the fiscal deficit and have also decided to reduce bond buyback by Rs.0.25 tln. The government has also projected India as a $5 tln economy (GDP) by 2025.

But, the market sentiment may be also affected by ongoing PNB saga, growing NCLT litigations to resolve big corporate NPA, higher oil, March financial year end sale (profit booking) ahead of new rules for long-term capital gain tax effective from 1st April’18, high probability of a deficient monsoon this year and above all, stretched valuation as Q3FY18 EPS growth for Nifty was still below market estimate.

Global cues were positive during Indian market hours on Monday:

US stock future (SPX-500) was up sharply by 1.23% and European stocks were up +0.49% as concerns eased over a potential US-China trade war. It seems that a potential "Black Monday" has been averted, with global risk sentiment making a full reversal to start the week, and the precipitous selloff from Thursday and (Black) Friday turning into a furious rally on Monday, starting in Asian markets and proceeding to Europe and US stock futures as the market is not expecting a full-blown trade war between the US and China now.

Asian stocks closed mixed: Japan +0.72%, Hong Kong +0.79%, China -0.60%, Taiwan +0.15%, Australia -0.52%, Singapore -0.26%, South Korea +0.79%, India +1.44%. 

China's Shanghai Composite fell to a 1-1/2 month low, although closed well above its lows, and Japan's Nikkei Stock Index rebounded from over 5 months low and closed higher on optimism the US and China can reach an agreement over trade tariffs. Shanghai Comp was also weighed by trade tensions and rising Chinese money market rates (HKD 12-month HIBOR at 9-year high). A higher USD may have also impacted the mood of the export savvy Asian market on Monday.

Asian stocks began the week mostly negative as trade concerns remained at the forefront of market focus and following last week’s losses on Wall Street, where stocks posted their worst weekly performance in over 2 years and the US market slipped into correction territory.

ASX 200 was negative with the index led lower by its largest-weighted financials sector after the harsher losses seen in its US counterparts, while Nikkei 225 fell to a near 6-month low, before staging a late rally back into positive territory.

But, KOSPI bucked the trend after news that the US and South Korea agreed in principle to a revised FTA and with South Korea to be exempted from US tariffs.

European stocks were higher across the board with the exception of the FTSE, shrugging off the negative sentiment on Wall Street and Asia dictated by looming trade disputes between China and the US. Sectors are making broad gains, healthcare was outperforming after a positive news update from Roche and energy is underpinned despite slightly softer oil prices.


But higher local currency (EUR, GBP) may have also affected the EU market sentiment along with rising probability of a “bizarre coalition” government in Italy as anti-establishment 5-Star Movement and the anti-migrant League might explore an alliance to form a government.




SGX-NF


BNF


USDJPY


Monday 26 March 2018

Nifty plunged on Friday on terrible global cues amid concern of an all-out trade war between US and China and ongoing PNB saga

Market Wrap: 26/03/2018

NSE-NF (March):10003 (-125; -1.23%)

NSE-BNF (Jan):23680 (-492; -2.03%)

Valuation metrics:

NS: 9998; Q2FY18 EPS: 410; Q2FY18 PE: 24.39; Avg FWD PE: 20; Proj FY-18 EPS: 418; Proj Fair Value: 8360

BNS: 23670; Q3FY18 EPS: 822; Q2FY18 PE: 28.80; Avg FWD PE: 20; Proj FY-18 EPS: 961; Proj Fair Value: 19220

For 27/03/2018:

Updated: 09:15

SGX-NF: 10015 (+12; +0.12%)

Expected BNF opening: 23750 (+0.15%)

(Almost flat on muted global cues amid ongoing US-China trade war and White House Turmoil concern)

March-Fut (Key Technical Levels)

Support for NF:

9950/9920-9865/9815-9760/9705-9680/9585
Resistance to NF:

10055/10110-10150/10210-10250/10300-10350/10400

Support for BNF:

23600/23400-23150/22995-22700/22500-22250/22000

Resistance to BNF:

23900/24000-24200/24400-24600/24900-25150/25250


Technical View (Positional):

Technically, Nifty Fut-Jan (NF) has to sustain over 10110 for a further rally towards 10150/10210-10250/10300-10350/10400 in the short term (under bullish case scenario). 

On the flip side, sustaining below 10090-10055 NF may fall towards 10000/9950-9920/9865-9815/9760-9705/9680 in the short term (under bear case scenario).

Technically, Bank Nifty-Fut (BNF) has to sustain over 24050 for a further rally towards 24200/24400-24600/24900-25150/25250 in the near term (under bullish case scenario).

On the flip side, sustaining below 24000-23950, BNF may fall towards 23600/23400-23150/22995-22700/22500 in the near term (under bear case scenario).

The Indian market story on 23/03/2018:

The Indian market (Nifty Fut-March/India-50) closed around 10003 on Friday, plunged by almost 1.23% on terrible global cues amid concern of an all-out trade war between US and China coupled with domestic worries about the widening impact of PNB saga and an almost broken down Indian banking system, under severe trust deficit. Nifty Fut made a day high of around 10044 and a late day low of 9960 on negative EU cues and higher oil.

Apart from unconfirmed reports of direct involvement of spouse of top private bank CEOs in the Nirav Modi and some other suspected loan fraud/failure cases involving “stressed” Videocon group, there was another report that CBI has made some arrest involving loan frauds in SBI and certain other PSBS. There seems to a trust deficit on the overall Indian banking system after a sudden surge in such loan scams following the PNB “loot” fall out.

The market is concerned about NCLT path of NPA resolution:

The market is also concerned about the NCLT path of NPA resolution amid increasing litigations and complex rules & regulations despite “overwhelming” response in some “celebrity” corporate stressed assets like Essar Steel, Bhushan Steel, but considerable concern remains about ultimate fate of other “big” corporate stressed assets and the overall “house of debt” in the Indian corporate balance sheet and the attempt of backdoor entry by some celebrity big corporate defaulters at the cost of bank’s haircut.

The Indian market may be also concerned that the NCLT resolution path may not be corruption free despite the stamp of judiciary and bankers are also playing in the back foot amid fears of future investigation and current CBI/ED phobia & acquisitions of frauds.

Global cues were terrible during Indian market hours:

On Friday, US stock future (SPX-500), was down -0.26% at 6 weeks low and European stocks were down around 1.50% at more than 13 months low as global stocks sell-off on heightened trade war concerns.  The trade conflict between the US and China escalated after China unveiled tariffs on $3 billion of US imports of pork, recycled aluminum, steel pipes, fruit and wine in retaliation for $60 bln US tariffs on some Chinese imports and the metal tax. 

The US then declared a temporary exemption for the EU and other countries on steel and aluminum tariffs, signaling out China as the main recipient of the tariffs.  The US will give the EU, Argentina, Australia, Brazil, Canada, Mexico and South Korea until 1st May to negotiated levies on steel and aluminum, eligible for a permanent exemption.

Basically, the US is virtually declaring exemption for the EU and some other selected countries on metal tariffs, signaling out China as the main target of the US tariffs. The market is concerned that such a hard-nosed approach by the US against China may have widespread and lasting consequences on global economy and politics.

With sizeable holdings of US Treasuries and its growing export market, China has considerable leverage over the US. Although China’s reactions so far are quite measured and matured, they may adversely react to Trump’s immaturity and madness in the coming days.

Asian stocks closed sharply lower: Japan -4.51%, Hong Kong -2.45%, China -3.39%, Taiwan -1.66%, Australia -1.96%, Singapore -2.00%, South Korea -3.37%, India -1.24%. Escalation of the trade war between the US and China undercuts the outlook for global economic growth and fueled a slump in Asian equity markets along with a slump in USD, negative for exports savvy Asian economy.

Asian stocks saw hefty losses on trade war fears after the US announced USD $50 bln of tariffs on China and with the latter planning tariffs of USD $3 bln in retaliation, coupled with another report that National Security Advisor McMasters was replaced by policy hawk John Bolton.

The intensified trade tensions triggered a bloodbath across stock markets with ASX 200 led lower by miners as Chinese metals prices slumped on steel demand and tariff concerns, while Nikkei 225 was the worst performer and briefly fell over 1000 points as selling pressure was magnified by a firmer JPY.

Elsewhere, Hang Seng and Shanghai Comp conformed to the sell-off as Chinese stocks felt the pinch from the US trade offensive, while the PBOC refrained from open market operations for a net weekly drain of CNY 320 bln.

European stocks were suffering heavy losses across the board with the Euro Stoxx-600 was down by almost 1.47% hitting its lowest point since August 2017, continuing to remain hampered by the risk-off sentiment seen in US and Asia, after US announced $50 bln tariffs on China triggering a retaliation of $3 bln on US imports.


Taking a closer look at sectors, materials and industrials were lagging behind due to their vast exposure to the Chinese market and are immediately followed by IT, financials and consumer discretionary. Also, a higher EURUSD has affected the EU market sentiment on Friday.






SGX-NF


BNF


SPX-500



 USDJPY