Market Wrap: 12/04/2018
NSE-NF (April):10465 (+40; +0.38%)
NSE-BNF (April):25175 (+78; +0.31%)
SPX-500: 2664 (+22 +0.83%)
Market Mantra: 13/04/2018
Updated: 08:05
SGX-NF: 10480 (+15; +0.14%)
Expected BNF opening: 25215 (+0.15%)
SPX-500: 2655 (-9; -0.36%)
(Almost flat opening amid mixed global cues on Trump’s Syrian attack suspense; although Trump tweeted in early US morning on Thursday, indicating that an immediate Syrian attack may not be on the card, as par latest report the US may be planning a limited symbolic air strike on Syria by the weekend. Also, there is some risk-aversion mood after renewed concern about US-China trade war and plunge in HKD)
March-Fut (Key Technical Levels)
Support for NF:
10450/10400*-10350/10300-10250/10190-10140/10100
Resistance to NF:
10525*/10575-10630/10665-10725/10765-10815/10875
Support for BNF:
25150*/25050-24950/24800-24600/24400-24250/23950
Resistance to BNF:
25275/25325-25450*/25650-25775/25850-26150/26300
Support for SPX-500:
2640/2620-2605/2575-2545/2525
Resistance to SPX-500:
2665/2685-2705/2730-2750/2785
Technical View (Positional-Nifty, Bank Nifty, SPX-500):
Technically, Nifty Fut-I (NF) has to sustain over 10525 for a further rally towards 10575/10630-10665/10725-10765/10815 in the short term (under bullish case scenario).
On the flip side, sustaining below 10500 NF may fall towards 10450/10400-10350/10300-10250/10190 in the short term (under bear case scenario).
Technically, Bank Nifty-Fut (BNF) has to sustain over 25325 for a further rally towards 25450/24650-25775/25850-26150/26300 in the near term (under bullish case scenario).
On the flip side, sustaining below 25275, BNF may fall towards 25150/25050-24950/24800-24600/24400 in the near term (under bear case scenario).
Technically, SPX-500 now has to sustain over 2685 for a further rally towards 2705-2730/2750-2765/2785 in the near term (under bullish case scenario).
On the flip side, sustaining below 2665, SPX-500 may fall towards 2640/2620-2605/2575-2545/2525 in the near term (under bear case scenario).
Valuation metrics:
Nifty-50: 10459; Q2FY18 EPS: 410; Q2FY18 PE: 25.51; Avg FWD PE: 20; Proj FY-18 EPS: 418; Proj Fair Value: 8360
Bank Nifty: 25195; Q3FY18 EPS: 820; Q2FY18 PE: 30.73; Avg FWD PE: 20; Proj FY-18 EPS: 961; Proj Fair Value: 19220
The Indian and global market story on 12/04/2018:
The Indian market (Nifty Fut/India-50) closed around 10465 on Thursday, jumped by almost 0.38% on earnings optimism and mixed global cues as Trump blinks of both Syrian war as well as US-China trade war. But a surging crude oil hovering around $67 may have also dragged the Indian market sentiment as the country imports almost 80% of its oil requirement. Hawkish FOMC minutes released on Wednesday may be also not good for the Indian market as the probability of another Fed hike increases to almost 85% in June.
Nifty Fut-I made an opening session low of around 10398 and late day high of 10479 after reports that the government has not asked OMC to not hike retail prices of petrol and diesel and some fall in Indian bond yields. Indian 10Y Bond Yield slipped to 7.443% from 7.536% on hopes of a softer core CPI to be released after the market hours.
All focus of the Indian market was on macro data (CPI/IIP) which came mixed. Headline CPI for March edged down to 4.28% from 4.44% in February and lower than the estimate of 4.20% on account of fall in food inflation (vegetables-seasonal factor). But core CPI edged up to 5.3% from 5.1%, looks quite sticky for the last few months hovering much above the median RBI target of 4%.
As a reminder, RBI is quite concerned about adverse effect of higher oil, proposed MSP hike on agri products, fiscal slippages and higher bond yields on inflation and thus RBI is expected to be on the sideline in July also, but RBI may take hawkish tone as core CPI is consistently printing above the 5% red line.
IIP for February edged down to 7.1% from 7.4% in January against an estimate of 7%, while manufacturing output also edged up to 8.7% from 8.6%.
On Thursday, Nifty was helped by Infy, TCS (earnings optimism due to cross-currency tailwinds), HDFC, HCL Tech, HDFC Bank, Axis Bank, ICICI Bank, Tech-M, Kotak Bank, L&T and others by around 75 points, while it was dragged by ITC, VEDL, Maruti, SBI, RIL, Bharti Airtel, Tata Steel, Sun Pharma, Ultratech Cement, DRL and others by almost 34 points altogether.
Overall, on Friday Indian market was helped by Private Banks, financials, techs, while dragged by mixed automakers, FMCG, metals (China concern), pharma, reality, consumption, energies, and infra stocks to some extent.
Global cues were mixed during Indian market hours on Thursday:
US stock future (SPX-500) was up by 0.57% and European stocks were up by 0.41% as the markets await Trump's decision on military action against Syria amid ongoing suspense. Later, Trump tweeted on early US morning that he "never said when an attack on Syria would take place. Could be very soon or not so soon at all." Risk-on trade got a boost on the reduced probability of an imminent attack on Syria by the US.
Elsewhere, UK Prime Minister May called for an emergency Cabinet meeting to discuss how the UK will respond to the Syrian government's suspected chemical attacks on its own people. French President Macron said a decision on how to respond to the Syrian chemical attacks will come when France and its allies "find it the most useful and efficient."
Crude oil prices were just below Wednesday's 3-1/3 year high on rising tensions in the Middle East. Along with the Syrian situation, Saudi Arabia intercepted a ballistic missile fired at Riyadh Wednesday and shot down 2 drones in another part of the country as Yemeni rebels step up their attacks.
A rally in European airline stocks was helping to lift the overall market sentiment on increased M&A activity after British Airways owner IAG said it could make a bid for Norwegian Airlines. Asian stocks closed mostly lower: Japan -0.12%, Hong Kong -0.22%, China -0.87%, Taiwan -0.17%, Australia -0.23%, Singapore -0.32%, South Korea +0.09%, India +0.47%. Thus Indian market outperformed its Asian peers on Thursday.
Asian equity markets traded mixed as sentiment settled down from the bullishness seen from Chinese President Xi’s conciliatory tone on Tuesday which resulted to a solid performance on Wall St, while attention turned to the geopolitical climate with a possible announcement on Syria said to be imminent.
ASX 200 failed to sustain mild opening gains as softer Australian consumer sentiment data and weaker than expected Chinese inflation figures clouded the upside seen in commodity-related sectors. Energies helped on higher oil.
Nikkei 225 was also lackluster with J Front the worst off amongst the retailers on expectations of weaker profits this year, while SoftBank outperformed on M&A hopes after reports its unit Sprint and T-Mobile renewed merger talks.
Hang Seng and Shanghai were initially choppy as participants digested the miss on Chinese CPI and PPI data, although stocks gradually found some comfort from efforts by PBOC Governor to build upon the momentum from President Xi at the Boao forum in which the PBOC Governor talked about opening up and announced to increase stock connect quotas. Hong-Kong was also under pressure on the plunge in HKD, which prompted the central bank authority to intervene to defend the peg, first time since 2005.
European Equities began the day trading slightly lower with the risk-on sentiment seen in yesterday’s trade not being echoed early on. This comes to fruition despite the revelations from Chinese President Xi mentioning a preference to implement auto tariff cuts as soon as possible (this relating to a possible reduction on import taxes on autos by half from 25% currently). Market sentiment was largely being guided by increased tensions in Syria amid potentially imminent military action by the US. This follows on from overnight news of increased air traffic over Syrian airspace and condemnation from the international community.
SGX-NF
BNF
SPX-500
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