Friday, 25 May 2018

Market Mantra (Nifty Fut/Bank Nifty Fut/SPX-500): 25/05/2018

Updated: 08:15

SGX-NF: 10510 (-12; -0.11%)

Expected BNF opening: 25930 (-0.15%)

SPX-500: 2735 (+8; +0.29%)

Fut-I (Key Technical Levels)

Support for NF:


Resistance to NF:


Support for BNF:


Resistance to BNF:


Support for SPX-500:


Resistance to SPX-500:


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

Technically, Nifty Fut-I (NF) has to sustain over 10565 for a further rally to 10605/10655-10700/10740-10800/10875 in the near term (under bullish case scenario). 

On the flip side, sustaining below 10545 NF may fall to 10490/10470-10425/10395-10360/10340 in the near term (under bear case scenario).

Technically, Bank Nifty-Fut (BNF) has to sustain over 26050 for a further rally to 26150/26300-26450/26650-26825/26950 in the near term (under bullish case scenario).

On the flip side, sustaining below 26000 BNF may fall to 25900/25800-25600/25500-25400/25300 in the near term (under bear case scenario).

Technically, SPX-500 now has to sustain over 2760 for a further rally to 2775/2805-2820/2855-2880/2895 in the near term (under bullish case scenario).

On the flip side, sustaining below 2745, SPX-500 may fall to 2725/2715-2695/2675-2655/2625 in the near term (under bear case scenario).

Valuation metrics:

Nifty-50: 10514; Q3FY18 EPS: 403; Q3FY18 PE: 26.09; Avg FWD PE: 20; Proj FY-18 EPS: 418; Proj Fair Value: 8360

Bank Nifty: 26017; Q3FY18 EPS: 807; Q3FY18 PE: 32.24; Avg FWD PE: 20; Proj FY-18 EPS: 961; Proj Fair Value: 19220

SPX-500: 2728; TTM Q4-2017 EPS: 111; TTM PE: 24.58

Note: Negative opening on mixed global cues after Trump dumps Kim and suddenly cancels the scheduled NK summit on 12th June. The US market plunged as a knee-jerk reaction, but it recovered to some extent and closed only 0.20% lower on the perception that increasing NK “nuke” as well as China “trade” war concern may also prompt Fed to stay in the sideline after June hike till at least Dec’18.

In the morning Asian session, risk-on sentiment got some boost after a measured and conciliatory reaction from NK in lieu of the usual “fire & fury” mode, requesting to “re-consider” Trump’s decision to cancel the summit on 12th June. After Trump “walks out” from the well planned NK summit, overall reaction from US officials including Trump may also be measured and thus the market is calm on renewed hopes of NK truce and summit next month or later.

The Indian market may watch government’s steps to cut back the retail price of petrol/diesel. As par some report, the government may ask a huge windfall amount (compensation) from oil producers like ONGC, RIL/BP to bring the gasoline prices lower instead of any cut in excise duties or VAT from the states. This may be one of the reasons behind sudden last hour NAMO "anniversary" rally of the Indian market on Thursday as it will not hamper the fiscal deficit equation.

Apart from oil cess, the market was also boosted by exporters (techs/pharma) on higher USD, as USDINR still up by around 7% YTD. Tech shares were also upbeat on analyst optimism about prospect higher work orders from US banks and financials and other sectors as a result of higher capex after the Trump tax reform.

The Indian market may also watch the floor test today in the Karnataka assembly for any “surprise” from the BJP in the great game of “horse trading”. But increasing political populism such as farm loan waiver by both BJP and INC/JDS may be also a cause of concern.






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