Technical & Macro Analysis Of Indian & Global Market----: Market Mantra (Nifty Fut/Bank Nifty Fut/USDINR/SPX-500): 15/10/2018

The Indian market is under stress Monday on the rebound in USD and oil in line with global trends. Overall global cues are subdued on renewed US-China “trade war” as-well-as “cold war” tensions. The 10Y US bond yield is also ticked up. Oil surged on Saudi-US geopolitical tensions amid the WaPo journalist “disappearance” issue in the Saudi consulate in Turkey and subsequent warning by Trump for the Saudi Kingdom.

The Indian market roared back last Friday on positive global cues amid hopes of Trump-Xi meet and lower USDINR on reports of NRI bonds issuance to tide over the present forex crisis. In September and October (till date), Nifty corrected by almost 11% and is already in the bear market zone technically as it’s sustaining well below the 200 DEMA zone of 10800, although in market terms, if Nifty corrects 20% from the recent high of 10929; i.e. below 8740, it could be termed as “official bear market”.

The main problems for the Indian market are now higher USD, boiling oil/domestic fuel price, higher bond yields, higher current account deficits, and fiscal deficits. The combination of higher borrowing costs, cross currency headwinds, higher imported inflation and worsening macros (ahead of the election/political populism) will not bore well for the economy as-well-as corporate earnings, despite higher USD would be good for the export savvy corporates (50% of Nifty earnings are now coming from export). But Trump may also shift his focus on India “soon” for high imported tariffs (“Tariffs King”), currency devaluation and import of Iranian oil issues.

Updated: 10:00

Nifty-SGX-NF: 10435 (-50; -0.48%)

Bank Nifty-BNF: 25200 (-205; -80%)

USDINR-I: 73.97 (+0.27.; +0.36%)

SPX-500: 2762 (-6; -0.23%)

Fut-I (Key Technical Levels)

Support for NF:

10425/10400*-10370/10325*-10275/10190-10140/10095-10000/9950

Resistance to NF:

10520/10540*-10575/10605*-10635/10675-10740/10775-10815/10845

Near-term broad range: 9950-10540

Support for BNF:

25100*/24900-24800*/24650-24400/24200-24100/24000-23800/23600

Resistance to BNF:

25475*/25525-25575*/25675-25750/25875-26050/26200-26350/26425

Near-term broad range: 23600-25575

Support for USDINR-I:

73.45/73.00*-72.55*/72.25-72.00/71.50-71.25/70.95-70.70/70.35

Resistance to USDINR-I:

74.05/74.35*-74.75*/75.00-75.65/76.00-76.55/77.00-77.50/79.70

Near-term broad range: 73.00-75.00

Support for SPX-500:

2745/2710*-2690*/2675-2650/2620-2600/2580-2550/2535

Resistance to SPX-500:

2775/2790*-2815/2840*-2875/2890-2905/2925-2945/2960

Near-term broad range: 2690-2790

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

Technically, Nifty Fut-I (NF) has to sustain over 10540 for a further rally to 10575/10605-10635/10675-10740/10775-10815/10845 in the near term (under bullish case scenario).

On the flip side, sustaining below 10520 NF may fall to 10425/10400-10370/10325-10275/10190-10140/10095 in the near term (under bear case scenario).

Technically, Bank Nifty Fut-I (BNF) has to sustain over 25475 for a further rally to 25525/25575-25675/25750-25875/26050-26200/26350 in the near term (under bullish case scenario).

On the flip side, sustaining below 25425-25300 BNF may fall to 25100/24900-24800/24650-24400/24200-24100/24000 in the near term (under bear case scenario).

Technically, USDINR-I has to sustain over 73.45 for a further rally to 74.05/74.35-74.75/75.00-75.65/76.00-76.55/77.00 in the near term (under bullish case scenario).

On the flip side, sustaining below 73.00, USDINR-I may fall to 72.55/72.25-72.00/71.50-71.25/70.95-70.70/70.35 in the near term (under bear case scenario).

Technically, SPX-500 has to sustain over SPX-500 has to sustain over 2790 for a further rally to 2815/2840-2875/2890-2905/2925-2945/2960 in the near term (under bullish case scenario).

On the flip side, sustaining below 2775, SPX-500 may fall to 2745/2715-2690/2675-2650/2620-2600/2580 in the near term (under bear case scenario).

Valuation metrics:

Nifty-50: 10400; Q4FY18 EPS: 402; Q4FY18 PE: 25.87; Avg FWD PE: 20; Proj FY-19 EPS: 425-450; Proj Fair Value: 8500-9000

Bank Nifty: 25200; Q4FY18 EPS: 519; Q4FY18 PE: 48.55; Avg FWD PE: 20; Proj FY-19 EPS: 961-1000; Proj Fair Value: 19220-20000 (assuming NPA recovery).

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