Market Wrap:
13/03/2018
NSE-NF (March):10423 (-10; -0.09%)
NSE-BNF (Jan):24810 (+62; +0.25%)
Valuation metrics:
NS: 10427; Q2FY18 EPS: 410; Q2FY18 PE: 25.43; Avg
FWD PE: 20; Proj FY-18 EPS: 418; Proj Fair Value: 8360
BNS: 24739; Q3FY18 EPS: 822; Q2FY18 PE: 30.10; Avg
FWD PE: 20; Proj FY-18 EPS: 961; Proj Fair Value: 19220
For 14/03/2018:
Updated: 08:00
SGX-NF: 10390; (-33 points; -0.33%)
Expected BNF opening: 24720 (-0.33%)
(Gap-down on subdued global/US cues after Rexit and
White House turmoil despite a soft US inflation report on Tuesday, favorable
for the US stock market)
March-Fut (Key Technical Levels)
Support for NF:
10360*/10325-10285/10240-10180/10140
Resistance to NF:
10435/10465-10500/10520*-10570/10615
Support for BNF:
24800*/24600-24500/24400-24150/24000
Resistance to BNF:
24900/25100-25250*/25450-25550/25650
Technical
View (Positional):
Technically, Nifty Fut-Jan (NF) has to sustain over 10435 for
a further rally towards 10465/10500-10520/10570-10615/10665 in the short term
(under bullish case scenario).
On the flip side, sustaining below 10415 NF may fall
towards 10360/10325-10285/10240-10180/10140 in the short term (under bear case
scenario).
Technically, Bank Nifty-Fut (BNF) has to sustain over 24900
for a further rally towards 25100/25250-25450/25650-25800/26050 in the near
term (under bullish case scenario).
On the flip side, sustaining below 24850/24800, BNF may
fall towards 24600/24500-24400/24150-24000/23850 in the near term (under bear
case scenario).
The Indian market
story on 13/03/2018:
The Indian market (Nifty Fut-March/India-50) closed around 10423 on Tuesday,
edged down by almost 0.09%, but well off the earlier opening session high of
10490 on renewed concern about PNB loan fraud payout to other banks. The Indian
market opened almost flat on Tuesday amid muted global cues but surged soon on domestic macro cheers after lower
inflation, but higher IIP data released on Monday.
Additionally, Banks were in
upbeat mood on news that a fragile PSB (BOI-Bank of India) has recovered almost
Rs.0.07 tln in the last two months owing to IBC/NCLT pressure and thrust on NPA
resolution and BOI is also expecting to recover another Rs.0.02 tln of NPAs in
next two months.
PNB
may not pay its huge liabilities to other banks after the alleged loan fraud:
But the market came under
intense selling pressure in late day trading after reports that PNB may not pay
the other banks for the epic loan fraud by the Gitanjali group of companies. Subsequently, Nifty-Fut tumbled to the day low
of around 10374 on panic selling primarily dragged by banks. Bank Nifty-Fut
also plunged to 24636 from the earlier high of 25090, a sharp fall of almost
1.8% in a matter of 30 minutes.
As par earlier reports, PNB may pay the other banks for the
loan fraud arising out of its LOUs with several conditions (caveats). But banking
sources, however, said such an agreement was not yet a done deal. “We are
talking. But then we have not come to a conclusion,” said a senior banker, adding
that PNB had not yet provided concrete assurances of repayment.
Another banker said that, although they were hopeful of
arriving at an “amicable solution” on who takes the liability, but added it
would likely need intervention by India’s central bank (RBI) and the
government.
There was also a report that government is not considering
any proposal for an alternative mechanism
for PSBS consolidation and abolishment of Banks Board Bureau.
Meanwhile, IBA (Indian Banks Association) is also scheduled
to meet shortly to discuss the overall bond market movement in India and
provisioning norms for the MTM losses. As a reminder, the benchmark 10Y Indian bond
yield has surged from 6.4% to 7.8% in the last seven months, putting severe
pressure on Bank’s operating profit (EBITDA) on their bond portfolio amid deep
MTM loses (as bond prices fell drastically).
The government
may blink on the LTCGT:
On Tuesday, the Indian market recovered again from the day
low and closed almost flat on news that government may review the LTCGT (long-term capital gain tax) on request from
various market participants and could hike the limit for such tax on capital
gains of above Rs.0.02 mln from Rs.0.01 mln proposed in the budget. There was
also another speculation that government may withdraw the LTCGT altogether in
order to boost the fragile market sentiment.
As par MOS Finance: LTCG decision to reflect in the official
amendment, if any to Finance bill, 2018.
After the market hours, PNB disclosed another “undiscovered
loot” (theft) of Rs.9.42 bln and RBI banned the use
of LOU/LOC (letter of undertaking/comfort) in trade finance for imports as a
result of the PNB fiasco. This may not only hamper the gems & jewelry business and related employment, but also the overall importers.
In brief, as PNB “loot” is getting murkier day by day and
government is on war footing to nab the willful celebrity defaulters and also
the bankers, suspected in collusion and corruption, there is a sense of fear
psychosis among both the lenders (bankers) and borrowers, which may affect the
overall economic activity severely in the coming days.
As deleveraging pressure intensified on stressed Indian corporates,
Tata sons sold around 1.5% of its stake in the cash cow TCS on Tuesday to pay
for the huge debt in another group of
companies controlled by them. We may see more such deleveraging steps, as banks
are clearly sending the message that “enough is enough; build your brand by
your own money rather than ours”.
SGX-NF
BNF
USDJPY
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