Market Wrap: 26/03/2018
NSE-NF (March):10003 (-125; -1.23%)
NSE-BNF (Jan):23680 (-492; -2.03%)
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
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:
Resistance to NF:
Support for BNF:
Resistance to BNF:
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.