The Indian market (Nifty Fut/India-50) is currently trading around 10753 on Wednesday, edged down by almost 0.25% on subdued global cues amid concern of a hawkish Fed/multiple rate hikes and report of Muller subpoena probability for Trump, related to the ongoing Russian link investigation.
The market opened around 10779 and made a session high of almost 10786 on report of an upbeat collection of GST for the month of April at Rs.1.03 trillion, which may be a landmark in the sense that for the last 8 months (2017), the average monthly GST collection was around Rs.0.90 trillion against target/requirement of around Rs.1.00-1.15 trillion per month.
Although the government has termed the surge in April GST collection as an indication of increased economic activity and better compliance, it has also warned the same may be a seasonal factor, being the financial year ending factor in March-17 and thus may not be repeated in next months. The market was also boosted by some upbeat auto sales figure for April, which was reported yesterday (Tuesday). But Techs are under stress following subdued report card from IT major HCL Tech.
Meanwhile, Indian manufacturing PMI for April came as 51.6, edged up from 51.0 prior and the estimate of 51.3. But India’s March infrastructure output for March slumped to 4.1% from 5.3% clocked in February (Y/Y). USDINR-I edged up by almost 0.15%, while Indian 10Y bond yield slumped to 7.724% from prior 7.767% on Monday after RBI permitted for increased FII/FPI limit for the government bonds (GSEC). Some fall in crude oil may be also helping the bond market.
Although the Indian government is quite confident that price of surging crude oil will be cooled down on higher US shale oil supplies and resolution of geopolitical worries, the market is concerned that crude oil is making a base of $60-65 and in that scenario, India may be de-rated/re-rated.
Thus, the Indian government is not ready to cut additional excise duty on the gasoline (petrol and diesel), even if the Indian consumers are now paying exorbitant prices for the same. As a reminder, every Rupee cut in excise duty on petrol & diesel results in a revenue loss of Rs. 0.13 trillion, which is a significant amount being collected as an “easy revenue”.
Apart from economics, all eyes may be on the politics, especially Karnataka state election, which may be viewed as another acid test for both BJP (NAMO) and INC (RAGA). The overall report card for Q4 was mixed so far; HDFC result was good, while Kotak Bank numbers were subdued on Monday.
Nifty soared on Monday on positive global cues and Indian bond market boost by RBI:
The Indian market closed around 10784 on Monday, surged by almost 0.56% on positive global cues and RBI boost for the Indian bond market. Risk-on global sentiment got some boost on fall in US/EU bond yields coupled with upbeat corporate earnings and increasing prospect of a North Korean truce.
There was also a report that from the month of May, RBI will increase purchase limit of Indian government bonds gradually @0.50% per year, which may bring the surging Indian bond yields lower. RBI is also considering increasing ECB borrowing limit for certain sectors such as real estate. Nifty-I made an opening minute low of around 10727 and late day high of 10788 on Monday.
On Monday, Nifty was helped by HDFC (upbeat report card), TCS, HDFC Bank, L&T, Kotak Bank, Infy, HUL, ITC, Yes Bank, SBI and others by around 101 points (77+24), while it was dragged by RIL (subdued report card), Axis Bank, ICICI Bank, UPL, Bharti Infratel, Eicher Motors, Gail, IBULLS Housing Fin, BPCL, IOC, and others by almost 51 (50+1) points cumulatively.
Overall on Monday, Indian market was helped by PSU banks, selected private banks, financials, automobiles, FMCG, techs, pharma, reality, consumption, infra, MNC (higher USDINR) and media, metals to some extent, while it was dragged by selected private banks (NPA fraud worries), energies (some fall in oil and muted petchem margin and GRM by RIL).
Technical View (Positional-Nifty, Bank Nifty, SPX-500):
Technically, Nifty Fut-I (NF) has to sustain over 10800 for a further rally towards 10840/10870-10900/10930 in the short term (under bullish case scenario).
On the flip side, sustaining below 10780 NF may fall towards 10710/10680-10640/10590 in the short term (under bear case scenario).
Technically, Bank Nifty-Fut (BNF) has to sustain over 25675 for a further rally towards 25775/25850-25915/26050 in the near term (under bullish case scenario).
On the flip side, sustaining below 25625, BNF may fall towards 25400/25150-25000/24800 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 in the near term (under bullish case scenario).
On the flip side, sustaining below 2665, SPX-500 may fall towards 2630/2610-2595/2575 in the near term (under bear case scenario).