Technical & Macro Analysis Of Indian & Global Market----: Market Mantra (Nifty Fut/Bank Nifty Fut/USDINR/SPX-500): 17/10/2018

The Indian market opened with a bang Wednesday on positive global cues amid an overnight rally in Dow for over 550 points and some fall in USDINR tracking broader weakness in US dollar index. The US market soared Tuesday on earnings optimism, upbeat economic data and an ease of Saudi tensions. The Indian market also jumped on Tuesday after lower core WPI and trade deficit data coupled with a fall in its 10Y bond (GSEC) yield to 7.870%.

But on Wednesday mid-session, the mood of the Indian market changed suddenly after a rating agency (India rating) downgraded various mutual fund (MF) schemes connected to IL&FS and placed to rating watch negative. Meanwhile, Moody’s has also warned that the Indian IT industry is facing challenges and it’s important for companies to maintain solid liquidity buffers to respond to changing business conditions.

India is also under stress on surging USD demand for huge oil as-well-as increasing gold imports and may be thinking various alternative payment systems in rupee or even a “barter” system with Iran (say oil for rice). India may also go for the NRI bond issuance path to tide over the crisis, although it may be temporary. The government is now clearly panicking for the overall situation after downplaying it for months. Looking ahead the trifecta of higher USD, higher oil and higher bond yields could be a major crisis for the Indian economy and the market.

Updated: 10:30

Nifty-SGX-NF: 10620 (+30; +0.26%)

Bank Nifty-BNF: 25675 (+50; +0.20%)

USDINR-I: 73.55 (-0.07.; -0.08%)

SPX-500: 2816 (-2; -0.05%)

Fut-I (Key Technical Levels)

Support for NF:

10600/10570*-10535/10500*-10450/10400-10370/10325-10275/10190

Resistance to NF:

10655/10675*-10725/10780*-10815/10845-10895/10915-10955/11015

Near-term broad range: 9950-10845

Support for BNF:

25550*/25400-25250/25000-24650*/24400-24250/24100-24000/23800

Resistance to BNF:

26075*/26200-26350/26425-26575/26775-26975/27200-27300/27750

Near-term broad range: 23600-26075

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:

2820*/2800-2770*/2745-2710/2690-2675/2650-2620/2600

Resistance to SPX-500:

2840*/2875-2890*/2905-2925/2945-2960/2990-3010/3035

Near-term broad range: 2690-2890

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

Technically, Nifty Fut-I (NF) has to sustain over 10675 for a further rally to 10725/10780-10815/10845-10895/10915-10955/11015 in the near term (under bullish case scenario).

On the flip side, sustaining below 10655 NF may fall to 10600/10570-10535/10500-10450/10400-10370/10325 in the near term (under bear case scenario).

Technically, Bank Nifty Fut-I (BNF) has to sustain over 26075 for a further rally to 26200/26350-26425/26575-26775/26975-27200/27300 in the near term (under bullish case scenario).

On the flip side, sustaining below 26025-25975 BNF may fall to 25550/25400-25250/25000-24650/24400-24250/24100 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 2840 for a further rally to 2875/2890-2905/2925-2945/2960-2990/3010 in the near term (under bullish case scenario).

On the flip side, sustaining below 2830-2820, SPX-500 may fall to 2800/2770-2745/2710-2690/2675-2650/2620 in the near term (under bear case scenario).

Valuation metrics:

Nifty-50: 10600; Q4FY18 EPS: 402; Q4FY18 PE: 26.37; Avg FWD PE: 20; Proj FY-19 EPS: 425-450; Proj Fair Value: 8500-9000

Bank Nifty: 25600; Q4FY18 EPS: 519; Q4FY18 PE: 49.33; Avg FWD PE: 20; Proj FY-19 EPS: 961-1000; Proj Fair Value: 19220-20000 (assuming NPA recovery).

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