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
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