Thursday 15 March 2018

Nifty edged up on news of LTCGT benefit on “unlisted securities”!!

Market Wrap: 14/03/2018

NSE-NF (March):10433 (+7; +0.06%)

NSE-BNF (Jan):24960 (+144; +0.58%)

Valuation metrics:

NS: 10411; Q2FY18 EPS: 410; Q2FY18 PE: 25.39; Avg FWD PE: 20; Proj FY-18 EPS: 418; Proj Fair Value: 8360

BNS: 24960; Q3FY18 EPS: 822; Q2FY18 PE: 30.36; Avg FWD PE: 20; Proj FY-18 EPS: 961; Proj Fair Value: 19220

For 15/03/2018:

Updated: 08:05

SGX-NF: 10395; (-38 points; -0.36%)

Expected BNF opening: 24850 (-0.40%)

(Gap-down on negative global/US cues amid renewed concern of trade-war after the U.S. asked China to reduce trade surplus by $100 bln coupled with White House jitters; US has also moved to WTO and filed a case against India for its export subsidies).

March-Fut (Key Technical Levels)

Support for NF:

10340*/10285-10240/10180-10140/10100

Resistance to NF:

10435/10455-10495*/10550-10600/10665

Support for BNF:

24800*/24650-24500/24400-24150/24000

Resistance to BNF:

24900/25100-25250*/25450-25550/25650


Technical View (Positional):

Technically, Nifty Fut-Jan (NF) has to sustain over 10455 for a further rally towards 10495/10515-10550/10600-10615/10665 in the short term (under bullish case scenario). 

On the flip side, sustaining below 10435 NF may fall towards 10380/10340-10285/10240-10180/10140 in the short term (under bear case scenario).

Technically, Bank Nifty-Fut (BNF) has to sustain over 25100 for a further rally towards 25250/25450-25550/25650-25800/26050 in the near term (under bullish case scenario).

On the flip side, sustaining below 25050-24900, BNF may fall towards 24800/24650-24500/24400-24150/24000 in the near term (under bear case scenario).


The Indian market story on 14/03/2018:


The Indian market (Nifty Fut-March/India-50) closed around 10433 on Wednesday, edged up by almost 0.06%, but well off the session low of 10342 on news of the passage of the FY-19 budget (Finance Bill) in the Parliament and some benefits for the LTCGT on “unlisted” securities!! Nifty-Fut made a closing session high of 10438 on news of indexation benefit for “unlisted securities”.

On Wednesday, Indian market opened around 10391, gap down on mixed global cues after Rexit and subsequent political jitters in White House politics. The market soon came into selling spree on news that RBI has banned the use of LOU/LOC in trade finance (import). Also, there were reports of additional “loot” (theft) in the ongoing PNB scam coupled with similar news from some other PSBS (public sector banks).

The Indian market may be concerned about 2019 general election:

On the political front, there was also some jitters after the ruling party BJP lost unexpectedly to SP-BSP combination in two prestigious UP state bye-poll, earlier vacated by the present Chief Minister of the state. In Bihar bye-poll, although BJP-coalition has won with a razor-thin margin, the market is concerned about some “fight” in the 2019 general election on unemployment, DeMo and GST blues.

But Indian market may have also got some traction in the closing session, after World Bank pegged Indian GDP growth at 7.3% for FY-19 and 7.5% for FY-20 with emphasis on PSBS consolidation, level playing ground for the private banks, but warned about the subdued level of private capex in India.

On the economic data front, India’s WPI inflation for February came as 2.48% vs estimate 2.50%; prior: 2.84% with fall in food inflation. WPI for Manufacturing was higher at 3.04% vs prior: 2.78% and thus core WPI inflation may be still sticky and higher as core CPI. WPI may be the Indian version of PPI.

RBI has broken its “silence” on the PNB saga:

After the market hours, RBI Governor has broken his “silence” on the PNB fraud and denied all the responsibilities on RBI alone as the banking regulator is now basically toothless, thanks to several amendments in the banking regulation act by the government. As a result, management of the PSBS (MD/Chairs) now don’t care RBI at all, because RBI has no power to show them the exit door, all such power now lies with the government.

On the other hand, unlike the private banks, PSBS has no such great concern for funding from the market despite poor performance, repeated instances of frauds, lack of basic corporate governance as they are almost sure that the government will come again and again to pay the bill for their sins. Thus, RBI has basically shifted the blame to the government.

But amid all these blame games, the market may be sure that it’s now only a matter of time these small fragile PSBS will be either consolidated with some big PSBS or privatized and merged with some private banks, having much quality management.

U.S. has moved to WTO against India for export subsidies:

In late U.S. session on Wednesday, there were reports that U.S. has also moved to WTO and filed a case against India for its export subsidies. This may be quite disastrous for India’s export effort despite so close relationship between Trump and Modi (“hug politics”).

Global cues were mixed:

On Wednesday, at the time of Indian market hours, U.S. stocks future (SPX-500) was up +0.23% and European stocks are up +0.19% as strength in Chinese factory output bolsters confidence in the global economic outlook. Copper was up +1.07% at a 1-week high and was lifting mining stocks and raw-material producers after China Feb industrial production rose +7.2% year-to-date, the largest increase in 3-years.

Asian stocks settled lower on USD, trade-war pain and Rexit: Japan -0.87%, Hong Kong 0.53%, China -0.57%, Taiwan -0.51%, Australia -0.66%, Singapore -0.40%, South Korea -0.31%. Asian stocks followed Tuesday's losses in U.S. markets and were also under pressure on concern new Secretary of State Pompeo will advance President Trump's agenda of imposing tariffs and hawkish foreign policy.

SPX-500 futures are higher after declining on Tuesday following sudden Rexit and renewed US trade war speculation with China dampened investor sentiment.

In Asia, equity markets were negative across the board as the region tracked the losses on Wall St, where sentiment was dampened after another high-profile departure from the administration in which President Trump fired Secretary of State Rex Tillerson, while trade war concerns were also stoked by reports the U.S. is looking to impose tariffs on Chinese goods.

ASX 200 and Nikkei 225 were negative with financials pressured amid the ongoing royal commission hearings in which NAB employees were said to knowingly approve fake loans to reach targets, while Nikkei 225 was pressured by a firmer JPY and with some analysts also noting ‘Abexit’ worries in the wake of the land-sale/cronyism scandal.


Shanghai Comp. and Hang Seng conformed to the weakness with tech and telecom names weighed as the U.S. seeks to impose tariffs of $60 bln on Chinese goods, which would target tech and telecom products as a punishment for intellectual property infringement. Although, losses in the mainland China were somewhat stemmed from mixed data including higher than expected Industrial Production and Fixed Asset Investments. 







SGX-NF


BNF


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