Wednesday, 7 March 2018

Nifty plunged as PNB “loot” gets even murkier and begun to affect the private banks

Market Wrap: 06/03/2018 (17:00)

NSE-NF (March):10226 (-139; -1.34%)

(NS: 10249; Q2FY18 EPS: 407; Q2FY18 PE: 25.18; Avg FWD PE: 20; Proj FY-18 EPS: 418; Proj Fair Value: 8360)

NSE-BNF (Jan):24430 (-437; -1.76%)

(BNS: 24448; Q3FY18 EPS: 821; Q2FY18 PE: 29.78; Avg FWD PE: 20; Proj FY-18 EPS: 961; Proj Fair Value: 19220)

For 07/03/2018:

Updated: 08:05

SGX-NF: 10215; (-11 points@0.11%)

(Almost flat on mixed global cues on hopes of a North Korean truce, Trump’s trade war reconciliation and resignation by Gary Cohn, Trump/WH CEA)

Expected BNF opening: 24400

March-Fut (Key Technical Levels)

Support for NF: 10190/10170-10130/10100 and 10040/9960

Resistance for NF: 10260/10290-10330/10360 and 10435/10485

Support for BNF: 24400/24250-24000 and 23850/23600

Resistance for BNF: 24850/25050-25200/25400 and 25550/25650

Technical View (Positional):

Technically, Nifty Fut-Jan (NF) has to sustain over 10290 areas for a further rally towards 10330/10360-10435 and 10485-10525 zones in the short term (under bullish case scenario). 

On the flip side, sustaining below 10260-10240 areas, NF may fall towards 10190/10170-10130/10100 and 10040-9960 zones in the short term (under bear case scenario).

Technically, Bank Nifty-Fut (BNF) has to sustain over 24850 areas for a further rally towards 25050-25200 and 25400-25550/24650 zones in the near term (under bullish case scenario).

On the flip side, sustaining below 24800-24500 areas, BNF may fall towards 24400/24250-24000 and 23850-23600 zones in the near term (under bear case scenario).

Market wrap:

The Indian market (Nifty Fut-March/India-50) closed around 10226 on Tuesday (6th March), plunged by almost 1.34% as PNB “loot” (theft/loan fraud) gets even murkier and begun to affect the old generation private banks.

Nifty-Fut tumbled to a low of 10223 in the last couple of hours of trade on confirmation of earlier news that India’s SIFO (serious fraud investigation office) has summoned CEOs of ICICI & Axis banks to explain its credit exposure to the alleged PNB scam stars of Nirav Modi & his Uncle Mehul Choksi group.

As par reports, ICICI & Axis banks has around Rs.1 bln (1000 cr) & Rs.0.7 bln (700 cr) loan exposure to the Nirav Modi & Choksi led Gitanjali group of companies and they have used various shell cos and FDI routes to launder above Rs.12 bln LOU fund provided by the PNB in conjunction with various public sector as well as private banks since many years (2010).

Previously, ICICI bank has denied any exposure to the Gitanjali group of companies after the PNB scam broke out, but later it was observed that they have an exposure of around Rs.1 bln as a part of bank lenders’ consortium to the group for around Rs.18 bln of the credit line. SIFO has summoned both the CEOs of the ICICI & Axis bank to explain the credit line that may have extended without adequate collateral securities.    

On Tuesday, the Indian market opened in the gap up and made an opening session high of almost 10437 on positive global cues after an indication that Trump may relent on its trade war agenda and some solution could be found before the actual implementation of his tax on imported metals.

But there was news about the SIFO summon even from the beginning and the market slipped soon after opening in positive and tumbled more after the confirmation of the news.

Meanwhile, the Indian market came into more stress on reports about another celebrity high profile borrower Adani group, which owes around Rs.72 bln to various Indian banks and PSBS and that may be already truing into an NPL/NPA. The allegation was made by a high profile BJP anti-corruption crusader (Swamy), very close to the influential RSS group, which controls BJP. Incidentally, Adani group is also very close to India’s Modi government and is also being seen as “too big to fail”.

Although the Adani group has assured that they are servicing their loan of Rs.36 bln to various PSBS without any issue, the market seems to be not so much confidence.

The Indian market sentiment is also being affected by the fact that India’s largest private corporate group (RIL/MDAG) has family relation with scam affected Nirav Modi group.

On Tuesday, overall Indian market was helped by media and was dragged by almost all the other sectors like banks & financials, FMCG, automakers (concern of higher metal/input costs and tighter lending conditions after the bank scam), techs (lower USD), metals (concern of Trump tax), pharma (US-FDA concern), reality, consumption, energy and infra stocks.




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