Wednesday 23 May 2018

Market Mantra (Nifty Fut/Bank Nifty Fut/SPX-500): 23/05/2018

Updated: 08:25

SGX-NF: 10535 (-20; -0.19%)

Expected BNF opening: 25785 (-0.20%)

SPX-500: 2717 (-9; -0.32%)

Fut-I (Key Technical Levels)

Support for NF:

10485*/10450-10425/10395-10345/10280-10245/10170

Resistance to NF:

10585*/10605-10650/10700-10740/10800-10875/10935

Support for BNF:

25600*/25400-25300/25100-24950/24700-24550/24300

Resistance to BNF:

25850*/26050-26200/26350-26600/26700-26825/26950

Support for SPX-500:

2715/2695*-2675/2655-2625/2610

Resistance to SPX-500:

2740/2750*-2775/2805-2820/2855

Technical View (Nifty, Bank Nifty, SPX-500):

Technically, Nifty Fut-I (NF) has to sustain over 10605 for a further rally towards 10650/10700-10740/10800-10875/10935 in the short term (under bullish case scenario). 

On the flip side, sustaining below 10585-10555 NF may fall towards 10485/10450-10425/10395-10345/10280 in the short term (under bear case scenario).

Technically, Bank Nifty-Fut (BNF) has to sustain over 26050 for a further rally towards 26200/26350-26600/26700-26825/26950 in the near term (under bullish case scenario).

On the flip side, sustaining below 26000-25950/25850 BNF may fall towards 25600/25400-25300/25100-24950/24700 in the near term (under bear case scenario).

Technically, SPX-500 now has to sustain over 2750 for a further rally towards 2775/2805-2820/2855 and further 2880-2895 in the near term (under bullish case scenario).

On the flip side, sustaining below 2740, SPX-500 may fall towards 2725/2715 and 2695/2675-2655/2625 and further 2610-2590 in the near term (under bear case scenario).

Valuation metrics:

Nifty-50: 10537; Q3FY18 EPS: 403; Q3FY18 PE: 26.15; Avg FWD PE: 20; Proj FY-18 EPS: 418; Proj Fair Value: 8360

Bank Nifty: 25810; Q3FY18 EPS: 807; Q3FY18 PE: 32.02; Avg FWD PE: 20; Proj FY-18 EPS: 961; Proj Fair Value: 19220

SPX-500: 2724; TTM Q4-2017 EPS: 111; TTM PE: 24.54

Note: Flat to a negative opening on muted global cues after renewed concern about US-China “trade war” and US-NK “nuke war” as Trump virtually blamed China for the sudden change of stance by Kim of North Korea and taunted China President Xi as a “world-class poker player”. Overnight US market plunged in last 30 minutes of trading after Trump said he's not happy with China trade talks and North Korea summit may not happen on 12th June and may further delay or may not happen at all.

For the Indian market, oil is going to be a big headwind. Although Brent Crude is not sustaining above $80 due to increasing OPEC squabbling about higher production (supply) to counter the Venezuelan shortfall and any likely supply disruption from Iran in future as a result of Trump (US) sanctions, the Indian CAD is already under pressure on dual combination of higher oil and higher USD.


The Indian government may soon cut additional excise duty on petrol and diesel to counter growing public and political unrest for higher fuel prices and higher inflation. But this may be a double whammy for the government, as the additional taxes of fuels may have also helped it to report a decent fiscal deficit figure of 3.5% of GDP. Thus the fiscal discipline may continue to haunt the market in the coming days. As India’s growth story is largely dependent on government capex and consumption, any drastic fall in fiscal revenue may also result in muted economic activity (GDP) in the days ahead.


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